Delaware
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52-2091509
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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PART I
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FINANCIAL INFORMATION
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Item 1.
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Condensed Consolidated Statements of Comprehensive
Income (Loss)
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Item 2.
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Item 3.
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Item 4.
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PART II
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OTHER INFORMATION
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 1.
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Financial Statements
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
||||||||||||
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2016
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2015
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2016
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2015
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||||||||
Revenues
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$
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206,869
|
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$
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170,657
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$
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406,608
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$
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329,677
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Cost of revenues
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42,679
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44,634
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85,579
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90,030
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Gross margin
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164,190
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126,023
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321,029
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239,647
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Operating expenses:
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Selling and marketing
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80,468
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92,434
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155,672
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161,912
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||||
Software development
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19,547
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16,844
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37,182
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31,992
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General and administrative
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30,227
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29,909
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57,703
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55,272
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||||
Purchase amortization
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5,829
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6,965
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12,052
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14,107
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||||
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136,071
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146,152
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262,609
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263,283
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||||
Income (loss) from operations
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28,119
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(20,129
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)
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58,420
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(23,636
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)
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||||
Interest and other income
|
159
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137
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243
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431
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Interest and other expense
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(2,455
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)
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(2,354
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)
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(4,964
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)
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(4,697
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)
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Income (loss) before income taxes
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25,823
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(22,346
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)
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53,699
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(27,902
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)
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||||
Income tax expense (benefit), net
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10,247
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(7,380
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)
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21,402
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(6,809
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)
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Net income (loss)
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$
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15,576
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$
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(14,966
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)
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$
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32,297
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$
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(21,093
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)
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||||||||
Net income (loss) per share — basic
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$
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0.48
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$
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(0.47
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)
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$
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1.01
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$
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(0.66
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)
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Net income (loss) per share — diluted
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$
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0.48
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$
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(0.47
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)
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$
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1.00
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$
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(0.66
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)
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||||||||
Weighted average outstanding shares — basic
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32,186
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31,991
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32,135
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31,911
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Weighted average outstanding shares — diluted
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32,448
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31,991
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32,415
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31,911
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
||||||||||||
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2016
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2015
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2016
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2015
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Net income (loss)
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$
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15,576
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$
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(14,966
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)
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$
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32,297
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$
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(21,093
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)
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Other comprehensive income (loss), net of tax
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|
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Foreign currency translation adjustment
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(1,925
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)
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1,507
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(2,458
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)
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246
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||||
Net decrease in unrealized loss on investments
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—
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80
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|
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229
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|
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248
|
|
||||
Total other comprehensive income (loss)
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(1,925
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)
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1,587
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(2,229
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)
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494
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|
||||
Total comprehensive income (loss)
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$
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13,651
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$
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(13,379
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)
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$
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30,068
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$
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(20,599
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)
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Six Months Ended
June 30, |
||||||
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2016
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2015
|
||||
Operating activities:
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|
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Net income (loss)
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$
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32,297
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|
|
$
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(21,093
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)
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Adjustments to reconcile net income (loss) to net cash provided by operating activities:
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Depreciation
|
11,257
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9,184
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Amortization
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23,704
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27,303
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Amortization of debt issuance costs
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1,610
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1,656
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Impairment loss
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—
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2,778
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Excess tax benefit from stock-based compensation
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(4,330
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)
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(7,552
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)
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Stock-based compensation expense
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17,670
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15,857
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Deferred income tax expense (benefit), net
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3,474
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(15,784
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)
|
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Provision for losses on accounts receivable
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5,108
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3,550
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Changes in operating assets and liabilities, net of acquisitions:
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Accounts receivable
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(10,868
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)
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(14,650
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)
|
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Prepaid expenses and other current assets
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(2,616
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)
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(723
|
)
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||
Deposits and other assets
|
482
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109
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|
||
Accounts payable and other liabilities
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4,956
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25,812
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|
||
Deferred revenue
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(380
|
)
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|
509
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Net cash provided by operating activities
|
82,364
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26,956
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||
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||||
Investing activities:
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|
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Proceeds from sale and settlement of investments
|
4,700
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|
|
1,350
|
|
||
Purchases of property and equipment and other assets
|
(7,394
|
)
|
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(17,930
|
)
|
||
Acquisitions, net of cash acquired
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(10,795
|
)
|
|
(172,667
|
)
|
||
Net cash used in investing activities
|
(13,489
|
)
|
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(189,247
|
)
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||
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|
||||
Financing activities:
|
|
|
|
|
|
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Payments of long-term debt
|
(20,000
|
)
|
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(10,000
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)
|
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Excess tax benefit from stock-based compensation
|
4,330
|
|
|
7,552
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|
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Repurchase of restricted stock to satisfy tax withholding obligations
|
(13,967
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)
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(15,373
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)
|
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Proceeds from exercise of stock options and employee stock purchase plan
|
3,837
|
|
|
4,704
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|
||
Net cash used in financing activities
|
(25,800
|
)
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(13,117
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)
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||
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|
||||
Effect of foreign currency exchange rates on cash and cash equivalents
|
(742
|
)
|
|
177
|
|
||
Net increase (decrease) in cash and cash equivalents
|
42,333
|
|
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(175,231
|
)
|
||
Cash and cash equivalents at the beginning of period
|
421,818
|
|
|
527,012
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|
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Cash and cash equivalents at the end of period
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$
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464,151
|
|
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$
|
351,781
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1.
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ORGANIZATION
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (CONTINUED)
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Foreign currency translation adjustment
|
$
|
(9,617
|
)
|
|
$
|
(7,159
|
)
|
Accumulated net unrealized loss on investments, net of tax
|
(206
|
)
|
|
(435
|
)
|
||
Total accumulated other comprehensive loss
|
$
|
(9,823
|
)
|
|
$
|
(7,594
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
Numerator:
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|||||||||||||||
Net income (loss)
|
$
|
15,576
|
|
|
$
|
(14,966
|
)
|
|
$
|
32,297
|
|
|
$
|
(21,093
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator for basic net income (loss) per share — weighted-average outstanding shares
|
32,186
|
|
|
31,991
|
|
|
32,135
|
|
|
31,911
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock options and restricted stock
|
262
|
|
|
—
|
|
|
280
|
|
|
—
|
|
||||
Denominator for diluted net income (loss) per share — weighted-average outstanding shares
|
32,448
|
|
|
31,991
|
|
|
32,415
|
|
|
31,911
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) per share — basic
|
$
|
0.48
|
|
|
$
|
(0.47
|
)
|
|
$
|
1.01
|
|
|
$
|
(0.66
|
)
|
Net income (loss) per share — diluted
|
$
|
0.48
|
|
|
$
|
(0.47
|
)
|
|
$
|
1.00
|
|
|
$
|
(0.66
|
)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (CONTINUED)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Performance-based restricted stock awards
|
72
|
|
|
55
|
|
|
72
|
|
|
55
|
|
Service-based restricted stock units
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Total shares excluded from computation
|
73
|
|
|
56
|
|
|
73
|
|
|
56
|
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (CONTINUED)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Cost of revenues
|
$
|
1,432
|
|
|
$
|
1,339
|
|
|
$
|
2,813
|
|
|
$
|
2,709
|
|
Selling and marketing
|
1,733
|
|
|
1,202
|
|
|
3,244
|
|
|
2,184
|
|
||||
Software development
|
1,684
|
|
|
1,446
|
|
|
3,218
|
|
|
2,716
|
|
||||
General and administrative
|
4,490
|
|
|
4,428
|
|
|
8,395
|
|
|
8,248
|
|
||||
Total stock-based compensation
|
$
|
9,339
|
|
|
$
|
8,415
|
|
|
$
|
17,670
|
|
|
$
|
15,857
|
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (CONTINUED)
|
3.
|
ACQUISITION
|
Cash and cash equivalents
|
$
|
39
|
|
Accounts receivable
|
4,556
|
|
|
Goodwill
|
107,692
|
|
|
Acquired trade names and other intangible assets
|
23,642
|
|
|
Acquired customer base
|
21,856
|
|
|
Acquired database technology
|
4,076
|
|
|
Acquired building photography
|
2,425
|
|
|
Deferred income taxes, net
|
9,290
|
|
|
Other assets and liabilities
|
(849
|
)
|
|
Fair value of identifiable net assets acquired
|
$
|
172,727
|
|
4.
|
INVESTMENTS
|
Maturity
|
|
Fair Value
|
||
Due:
|
|
|
||
July 1, 2016 — June 30, 2017
|
|
$
|
1,130
|
|
July 1, 2017 — June 30, 2021
|
|
—
|
|
|
July 1, 2021 — June 30, 2026
|
|
—
|
|
|
After June 30, 2026
|
|
9,906
|
|
|
Available-for-sale investments
|
|
$
|
11,036
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Auction rate securities
|
$
|
11,242
|
|
|
$
|
687
|
|
|
$
|
(893
|
)
|
|
$
|
11,036
|
|
Available-for-sale investments
|
$
|
11,242
|
|
|
$
|
687
|
|
|
$
|
(893
|
)
|
|
$
|
11,036
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Auction rate securities
|
$
|
15,942
|
|
|
$
|
610
|
|
|
$
|
(1,045
|
)
|
|
$
|
15,507
|
|
Available-for-sale investments
|
$
|
15,942
|
|
|
$
|
610
|
|
|
$
|
(1,045
|
)
|
|
$
|
15,507
|
|
4.
|
INVESTMENTS — (CONTINUED)
|
|
June 30,
2016 |
|
December 31,
2015 |
||||||||||||
|
Aggregate
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Aggregate
Fair
Value
|
|
Gross
Unrealized
Losses
|
||||||||
Auction rate securities
|
$
|
9,906
|
|
|
$
|
(893
|
)
|
|
$
|
14,455
|
|
|
$
|
(1,045
|
)
|
Investments in an unrealized loss position
|
$
|
9,906
|
|
|
$
|
(893
|
)
|
|
$
|
14,455
|
|
|
$
|
(1,045
|
)
|
5.
|
FAIR VALUE
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
220,977
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
220,977
|
|
Money market funds
|
175,227
|
|
|
—
|
|
|
—
|
|
|
175,227
|
|
||||
Commercial paper
|
67,947
|
|
|
—
|
|
|
—
|
|
|
67,947
|
|
||||
Auction rate securities
|
—
|
|
|
—
|
|
|
11,036
|
|
|
11,036
|
|
||||
Total assets measured at fair value
|
$
|
464,151
|
|
|
$
|
—
|
|
|
$
|
11,036
|
|
|
$
|
475,187
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
405,597
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
405,597
|
|
Money market funds
|
5,043
|
|
|
—
|
|
|
—
|
|
|
5,043
|
|
||||
Commercial paper
|
11,178
|
|
|
—
|
|
|
—
|
|
|
11,178
|
|
||||
Auction rate securities
|
—
|
|
|
—
|
|
|
15,507
|
|
|
15,507
|
|
||||
Total assets measured at fair value
|
$
|
421,818
|
|
|
$
|
—
|
|
|
$
|
15,507
|
|
|
$
|
437,325
|
|
5.
|
FAIR VALUE — (CONTINUED)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Balance at beginning of period
|
$
|
11,036
|
|
|
$
|
16,669
|
|
|
$
|
15,507
|
|
|
$
|
17,151
|
|
Decrease in unrealized loss included in accumulated other comprehensive loss
|
—
|
|
|
80
|
|
|
229
|
|
|
248
|
|
||||
Settlements
|
—
|
|
|
(700
|
)
|
|
(4,700
|
)
|
|
(1,350
|
)
|
||||
Balance at end of period
|
$
|
11,036
|
|
|
$
|
16,049
|
|
|
$
|
11,036
|
|
|
$
|
16,049
|
|
|
Auction
Rate
Securities
|
||
Balance at December 31, 2014
|
$
|
17,151
|
|
Decrease in unrealized loss included in accumulated other comprehensive loss
|
256
|
|
|
Settlements
|
(1,900
|
)
|
|
Balance at December 31, 2015
|
15,507
|
|
|
Decrease in unrealized loss included in accumulated other comprehensive loss
|
229
|
|
|
Settlements
|
(4,700
|
)
|
|
Balance at June 30, 2016
|
$
|
11,036
|
|
5.
|
FAIR VALUE — (CONTINUED)
|
6.
|
GOODWILL
|
|
North America
|
|
International
|
|
Total
|
||||||
Goodwill, December 31, 2014
|
$
|
1,114,363
|
|
|
$
|
24,442
|
|
|
$
|
1,138,805
|
|
Acquisition
|
112,947
|
|
|
2,400
|
|
|
115,347
|
|
|||
Effect of foreign currency translation
|
—
|
|
|
(1,207
|
)
|
|
(1,207
|
)
|
|||
Goodwill, December 31, 2015
|
1,227,310
|
|
|
25,635
|
|
|
1,252,945
|
|
|||
Acquisitions
|
467
|
|
|
5,933
|
|
|
6,400
|
|
|||
Effect of foreign currency translation
|
—
|
|
|
(2,405
|
)
|
|
(2,405
|
)
|
|||
Goodwill, June 30, 2016
|
$
|
1,227,777
|
|
|
$
|
29,163
|
|
|
$
|
1,256,940
|
|
7.
|
INTANGIBLE ASSETS
|
|
June 30,
2016 |
|
December 31,
2015 |
|
Weighted-
Average
Amortization
Period (in years)
|
||||
Capitalized product development cost
|
$
|
2,275
|
|
|
$
|
2,243
|
|
|
4
|
Accumulated amortization
|
(2,194
|
)
|
|
(2,172
|
)
|
|
|
||
Capitalized product development cost, net
|
81
|
|
|
71
|
|
|
|
||
|
|
|
|
|
|
||||
Building photography
|
17,447
|
|
|
17,677
|
|
|
4
|
||
Accumulated amortization
|
(16,103
|
)
|
|
(15,875
|
)
|
|
|
||
Building photography, net
|
1,344
|
|
|
1,802
|
|
|
|
||
|
|
|
|
|
|
||||
Acquired database technology
|
78,317
|
|
|
77,905
|
|
|
5
|
||
Accumulated amortization
|
(66,966
|
)
|
|
(62,818
|
)
|
|
|
||
Acquired database technology, net
|
11,351
|
|
|
15,087
|
|
|
|
||
|
|
|
|
|
|
||||
Acquired customer base
|
221,730
|
|
|
221,409
|
|
|
10
|
||
Accumulated amortization
|
(140,662
|
)
|
|
(129,782
|
)
|
|
|
||
Acquired customer base, net
|
81,068
|
|
|
91,627
|
|
|
|
||
|
|
|
|
|
|
||||
Acquired trade names and other intangible assets
|
153,848
|
|
|
153,910
|
|
|
13
|
||
Accumulated amortization
|
(29,191
|
)
|
|
(24,179
|
)
|
|
|
||
Acquired trade names and other intangible assets, net
|
124,657
|
|
|
129,731
|
|
|
|
||
|
|
|
|
|
|
||||
Intangible assets, net
|
$
|
218,501
|
|
|
$
|
238,318
|
|
|
|
7.
|
INTANGIBLE ASSETS — (CONTINUED)
|
8.
|
LONG-TERM DEBT
|
8.
|
LONG-TERM DEBT — (CONTINUED)
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Term loan facility
|
$
|
345,000
|
|
|
$
|
365,000
|
|
Debt issuance costs, net
|
(8,278
|
)
|
|
(9,888
|
)
|
||
Total debt
|
336,722
|
|
|
355,112
|
|
||
Current maturities of long-term debt
|
(15,000
|
)
|
|
(20,000
|
)
|
||
Current debt issuance costs, net
|
3,188
|
|
|
3,254
|
|
||
Total long-term debt, less current portion
|
$
|
324,910
|
|
|
$
|
338,366
|
|
9.
|
INCOME TAXES
|
10.
|
COMMITMENTS AND CONTINGENCIES
|
11.
|
SEGMENT REPORTING
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
199,859
|
|
|
$
|
164,486
|
|
|
$
|
393,120
|
|
|
$
|
317,503
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
||||
External customers
|
7,010
|
|
|
6,171
|
|
|
13,488
|
|
|
12,174
|
|
||||
Intersegment revenue
|
10
|
|
|
13
|
|
|
21
|
|
|
21
|
|
||||
Total International revenue
|
7,020
|
|
|
6,184
|
|
|
13,509
|
|
|
12,195
|
|
||||
Intersegment eliminations
|
(10
|
)
|
|
(13
|
)
|
|
(21
|
)
|
|
(21
|
)
|
||||
Total revenues
|
$
|
206,869
|
|
|
$
|
170,657
|
|
|
$
|
406,608
|
|
|
$
|
329,677
|
|
|
|
|
|
|
|
|
|
||||||||
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
||||
North America
|
$
|
45,127
|
|
|
$
|
(1,854
|
)
|
|
$
|
91,991
|
|
|
$
|
11,823
|
|
International
|
432
|
|
|
399
|
|
|
1,390
|
|
|
1,028
|
|
||||
Total EBITDA
|
$
|
45,559
|
|
|
$
|
(1,455
|
)
|
|
$
|
93,381
|
|
|
$
|
12,851
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income (loss)
|
$
|
15,576
|
|
|
$
|
(14,966
|
)
|
|
$
|
32,297
|
|
|
$
|
(21,093
|
)
|
Purchase amortization in cost of revenues
|
5,687
|
|
|
6,576
|
|
|
11,383
|
|
|
12,923
|
|
||||
Purchase amortization in operating expenses
|
5,829
|
|
|
6,965
|
|
|
12,052
|
|
|
14,107
|
|
||||
Depreciation and other amortization
|
5,924
|
|
|
5,133
|
|
|
11,526
|
|
|
9,457
|
|
||||
Interest income
|
(159
|
)
|
|
(137
|
)
|
|
(243
|
)
|
|
(431
|
)
|
||||
Interest expense
|
2,455
|
|
|
2,354
|
|
|
4,964
|
|
|
4,697
|
|
||||
Income tax expense (benefit), net
|
10,247
|
|
|
(7,380
|
)
|
|
21,402
|
|
|
(6,809
|
)
|
||||
EBITDA
|
$
|
45,559
|
|
|
$
|
(1,455
|
)
|
|
$
|
93,381
|
|
|
$
|
12,851
|
|
11.
|
SEGMENT REPORTING — (CONTINUED)
|
11.
|
SEGMENT REPORTING — (CONTINUED)
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Property and equipment, net
|
|
|
|
||||
North America
|
$
|
84,392
|
|
|
$
|
86,191
|
|
International
|
2,116
|
|
|
2,120
|
|
||
Total property and equipment, net
|
$
|
86,508
|
|
|
$
|
88,311
|
|
|
|
|
|
||||
Goodwill
|
|
|
|
|
|
||
North America
|
$
|
1,227,777
|
|
|
$
|
1,227,310
|
|
International
|
29,163
|
|
|
25,635
|
|
||
Total goodwill
|
$
|
1,256,940
|
|
|
$
|
1,252,945
|
|
|
|
|
|
||||
Assets
|
|
|
|
|
|
||
North America
|
$
|
2,158,524
|
|
|
$
|
2,130,202
|
|
International
|
47,298
|
|
|
41,370
|
|
||
Total operating segment assets
|
$
|
2,205,822
|
|
|
$
|
2,171,572
|
|
|
|
|
|
||||
Reconciliation of operating segment assets to total assets
|
|
|
|
|
|
||
Total operating segment assets
|
$
|
2,205,822
|
|
|
$
|
2,171,572
|
|
Investment in subsidiaries
|
(18,344
|
)
|
|
(18,344
|
)
|
||
Intersegment receivables
|
(80,244
|
)
|
|
(73,657
|
)
|
||
Total assets
|
$
|
2,107,234
|
|
|
$
|
2,079,571
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
|
||
North America
|
$
|
509,433
|
|
|
$
|
525,566
|
|
International
|
74,345
|
|
|
72,544
|
|
||
Total operating segment liabilities
|
$
|
583,778
|
|
|
$
|
598,110
|
|
|
|
|
|
||||
Reconciliation of operating segment liabilities to total liabilities
|
|
|
|
|
|
||
Total operating segment liabilities
|
$
|
583,778
|
|
|
$
|
598,110
|
|
Intersegment payables
|
(62,485
|
)
|
|
(62,319
|
)
|
||
Total liabilities
|
$
|
521,293
|
|
|
$
|
535,791
|
|
11.
|
SEGMENT REPORTING — (CONTINUED)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Information and analytics
|
|
|
|
|
|
|
|
||||||||
CoStar Suite
(1)
|
$
|
101,074
|
|
|
$
|
88,771
|
|
|
$
|
198,708
|
|
|
$
|
175,581
|
|
Information services
(2)
|
19,425
|
|
|
18,752
|
|
|
38,850
|
|
|
37,289
|
|
||||
Online marketplaces
|
|
|
|
|
|
|
|
||||||||
Multifamily
(3)
|
54,860
|
|
|
34,742
|
|
|
107,098
|
|
|
60,875
|
|
||||
Commercial property and land
(4)
|
31,510
|
|
|
28,392
|
|
|
61,952
|
|
|
55,932
|
|
||||
Total revenues
|
$
|
206,869
|
|
|
$
|
170,657
|
|
|
$
|
406,608
|
|
|
$
|
329,677
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
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 diminishing value of any acquired trade names and other intangible assets and 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. 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 interest income we generate may be useful for investors to consider and may result in current cash inflows. However, we do not consider the amount of interest income to be a representative component of the day-to-day operating performance of our business.
|
•
|
The amount of interest expense we incur may be useful for investors to consider and may result in current cash outflows. However, we do not consider the amount of interest expense to be a representative component of the day-to-day operating performance of our business.
|
•
|
Income tax expense 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 to be a representative component of the day-to-day operating performance of our business.
|
•
|
Purchase amortization in cost of revenues, purchase amortization in operating expenses, depreciation and other amortization, interest income, interest expense, and income tax expense as previously described above with respect to the calculation of EBITDA.
|
•
|
Stock-based compensation expense may be useful for investors to consider because it represents a portion of the compensation of our employees and executives. Determining the fair value of the stock-based instruments involves a high degree of judgment and estimation and the expenses recorded may bear little resemblance to the actual value realized upon the future exercise or termination of the related stock-based awards. Therefore, we believe it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business.
|
•
|
The amount of acquisition- and integration-related costs incurred may be useful for investors to consider because they generally represent professional service fees and direct expenses related to acquisitions. Because we do not acquire businesses on a predictable cycle we do not consider the amount of acquisition- and integration-related costs to be a representative component of the day-to-day operating performance of our business.
|
•
|
The amount of restructuring costs incurred may be useful for investors to consider because they generally represent costs incurred in connection with a change in a contract or a change in the makeup of our properties or personnel. We do not consider the amount of restructuring related costs to be a representative component of the day-to-day operating performance of our business.
|
•
|
The amount of material settlement and impairment costs incurred outside of our ordinary course of business may be useful for investors to consider because they generally represent gains or losses from the settlement of litigation matters or impairments on acquired intangible assets. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income (loss)
|
$
|
15,576
|
|
|
$
|
(14,966
|
)
|
|
$
|
32,297
|
|
|
$
|
(21,093
|
)
|
Purchase amortization in cost of revenues
|
5,687
|
|
|
6,576
|
|
|
11,383
|
|
|
12,923
|
|
||||
Purchase amortization in operating expenses
|
5,829
|
|
|
6,965
|
|
|
12,052
|
|
|
14,107
|
|
||||
Depreciation and other amortization
|
5,924
|
|
|
5,133
|
|
|
11,526
|
|
|
9,457
|
|
||||
Interest income
|
(159
|
)
|
|
(137
|
)
|
|
(243
|
)
|
|
(431
|
)
|
||||
Interest expense
|
2,455
|
|
|
2,354
|
|
|
4,964
|
|
|
4,697
|
|
||||
Income tax expense (benefit), net
|
10,247
|
|
|
(7,380
|
)
|
|
21,402
|
|
|
(6,809
|
)
|
||||
EBITDA
|
$
|
45,559
|
|
|
$
|
(1,455
|
)
|
|
$
|
93,381
|
|
|
$
|
12,851
|
|
|
|
|
|
|
|
|
|
||||||||
Net cash flows provided by (used in)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating activities
|
$
|
34,438
|
|
|
$
|
(3,213
|
)
|
|
$
|
82,364
|
|
|
$
|
26,956
|
|
Investing activities
|
(13,905
|
)
|
|
(178,153
|
)
|
|
(13,489
|
)
|
|
(189,247
|
)
|
||||
Financing activities
|
(17,575
|
)
|
|
(9,064
|
)
|
|
(25,800
|
)
|
|
(13,117
|
)
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Month, 2016
|
|
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
|
|||||
April 1 through April 30
|
|
190
|
|
|
$
|
178.69
|
|
|
—
|
|
|
—
|
|
May 1 through May 31
|
|
45,117
|
|
|
202.22
|
|
|
—
|
|
|
—
|
|
|
June 1 through June 30
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
45,307
|
|
(1)
|
$
|
202.13
|
|
|
—
|
|
|
—
|
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
|
|
COSTAR GROUP, INC.
|
||
Date:
|
July 28, 2016
|
By:
|
|
/s/ Scott T. Wheeler
|
|
|
|
|
Scott T. Wheeler
Chief Financial Officer
(Principal Financial and Accounting Officer and Duly Authorized Officer)
|
Exhibit No.
|
|
Description
|
2.1
|
|
Agreement and Plan of Merger, dated as of April 27, 2015, by and among CoStar Realty Information, Inc., Orange, LLC, Network Communications, Inc., and Shareholder Representative Services LLC (Incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed with the Commission on April 29, 2015).
|
3.1
|
|
Third Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on June 6, 2013).
|
3.2
|
|
Third Amended and Restated By-Laws (Incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on September 24, 2013).
|
10.1
|
|
CoStar Group, Inc. 2016 Stock Incentive Plan (Incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8 filed June 28, 2016).
|
10.2
|
|
CoStar Group, Inc. 2016 Cash Incentive Plan (filed herewith).
|
10.3
|
|
Form of 2016 Plan Restricted Stock Grant Agreement between the Registrant and certain of its officers, directors and employees (filed herewith).
|
10.4
|
|
Form of 2016 Plan Restricted Stock Grant Agreement for Service Awards between the Registrant and certain of its officers and employees (filed herewith).
|
10.5
|
|
Form of 2016 Plan Restricted Stock Unit Grant Agreement between the Registrant and certain of its officers and employees (filed herewith).
|
10.6
|
|
Form of 2016 Plan Incentive Stock Option Grant Agreement between the Registrant and certain of its officers and employees (filed herewith).
|
10.7
|
|
Form of 2016 Plan Incentive Stock Option Grant Agreement between the Registrant and Andrew C. Florance (filed herewith).
|
10.8
|
|
Form of 2016 Plan Nonqualified Stock Option Grant Agreement between the Registrant and certain of its officers, directors and employees (filed herewith).
|
10.9
|
|
Form of 2016 Plan Nonqualified Stock Option Grant Agreement between the Registrant and Andrew C. Florance (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).
|
101
|
|
The following materials from CoStar Group, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2016 and 2015, respectively; (ii) Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2016 and 2015, respectively; (iii) Unaudited Condensed Consolidated Balance Sheets at June 30, 2016 and December 31, 2015, respectively; (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015, respectively; and (v) Notes to the Unaudited Condensed Consolidated Financial Statements that have been detail tagged.
|
1.
|
Purpose.
The purpose of this Plan is to provide certain employees of CoStar Group, Inc. and its Affiliates with incentive compensation based upon the level of achievement of financial, business and/or other performance criteria. This Plan is intended to permit the payment of Cash Incentives that may qualify as performance-based compensation under Code Section 162(m).
|
2.
|
Definitions.
|
(a)
|
“Affiliate”
means (i) any entity that, directly or indirectly, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest.
|
(b)
|
“Board”
means the Board of Directors of the Company.
|
(c)
|
“Cash Incentive”
means a cash payment made pursuant to this Plan with respect to a particular Performance Period, determined pursuant to Section 8 below.
|
(d)
|
“Cash Incentive Formula”
means as to any Performance Period, the formula established by the Committee pursuant to Section 6 in order to determine the Cash Incentive amounts, if any, to be paid to Participants based upon the level of achievement of targeted goals for the selected Performance Measures. The formula may differ from Participant to Participant or business group to business group. The Cash Incentive Formula shall be of such a nature that an objective third party having knowledge of all the relevant facts could determine whether targeted goals for the Performance Measures have been achieved.
|
(e)
|
“Code”
means the Internal Revenue Code of 1986, as amended.
|
(f)
|
“Committee”
means the Compensation Committee of the Board or any subcommittee thereof formed by the Compensation Committee for the purpose of acting as the Committee hereunder. For purposes of satisfying the requirements of Code Section 162(m) and the regulations thereunder, the Committee is intended to consist solely of “outside directors” as such term is defined in Code Section 162(m).
|
(g)
|
“Company”
means CoStar Group, Inc., a Delaware corporation.
|
(h)
|
“Fiscal Year”
means the calendar year.
|
(i)
|
“Officer
” means an officer of the Company or its Affiliates.
|
(j)
|
“Participant”
means an Officer.
|
(k)
|
“Performance-Based Compensation”
means compensation that qualifies as “performance-based compensation” within the meaning of Code Section 162(m).
|
(l)
|
“Performance Measure”
means any one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a region, business unit, Affiliate or business segment, either individually, alternatively or in any combination, and measured either on an absolute basis or relative to a pre-established target, to a previous period’s results or to a designated comparison group, in each case as specified by the Committee: (i) cash flow (before or after dividends), (ii) earnings or earnings per share (including earnings before interest, taxes, depreciation and amortization), (iii) stock price, (iv) return on equity, (v) total stockholder return, (vi) return on capital or investment (including return on total capital, return on invested capital, or return on investment), (vii) return on assets or net assets, (viii) market capitalization, (ix) economic value added, (x) debt leverage (debt to capital), (xi) revenue, (xii) income or net income, (xiii) operating income, (xiv) operating profit or net operating profit, (xv) operating margin or profit margin, (xvi) return on operating revenue, (xvii) cash from operations, (xviii) operating ratio, (xix) operating revenue, (xx) customer service, (xxi) sales, or (xxii) cost savings.
|
(m)
|
“Performance Period”
means any Fiscal Year or such other period as determined by the Committee.
|
(n)
|
“Plan”
means this CoStar Group, Inc. 2016 Cash Incentive Plan.
|
(o)
|
“Predetermination Date”
means, for a Performance Period, (i) the earlier of 90 days after commencement of the Performance Period or the expiration of 25% of the Performance Period, provided that the achievement of targeted goals under the selected Performance Measures for the Performance Period is substantially uncertain at such time; or (ii) such other date on which a performance goal is considered to be pre-established pursuant to Code Section 162(m).
|
3.
|
Eligibility.
The individuals eligible to participate in this Plan for a given Performance Period shall be Officers.
|
4.
|
Plan Administration.
|
(a)
|
The Plan shall be administered by the Committee. The Committee shall have full power and authority, subject to the provisions of the Plan and subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board, to: (i) select the Participants to whom Cash Incentives may from time to time be paid hereunder; (ii) determine the terms and conditions, not inconsistent with the provisions of the Plan, of each Cash Incentive; (iii) determine the time when Cash Incentives will be granted and paid and the Performance Period to which they relate; (iv) certify the achievement of Performance Measures and the maximum amount of the Cash Incentive payable for each Participant in respect of Performance Periods; (v) determine whether payment of Cash Incentives may be deferred by Participants as provided in Section 8(b); (vi) interpret and administer the Plan and any instrument or agreement entered into in connection with the Plan; (vii) correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Cash Incentive award in the manner and to the extent that the Committee shall deem desirable to carry it into effect; (viii) establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan.
|
(b)
|
Decisions of the Committee shall be final, conclusive and binding on all persons or entities, including the Company, any Affiliate, any Participant and any person claiming any benefit or right under an award or under the Plan.
|
(c)
|
Notwithstanding the foregoing, to the extent consistent with Code Section 162(m), the Committee may delegate the responsibility for administering the Plan, subject to such limitations as the Committee deems appropriate. All references in the Plan to the "Committee" shall be, as applicable, to the Committee or any other committee or officer to whom the Board or the Committee has delegated authority to administer the Plan.
|
5.
|
Term.
This Plan shall be effective upon its approval at the Company’s 2016 annual stockholders meeting. Once approved by the Company's stockholders, this Plan shall continue until the earlier of (i) a termination under Section 9 of this Plan, (ii) the date any stockholder approval requirement under Code Section 162(m) ceases to be met or (iii) the date that is five years after the annual stockholder meeting in 2016 (provided that, for the avoidance of doubt, payments may continue to be made under the Plan with respect to Performance Periods commencing before the date of Plan termination.
|
6.
|
Cash Incentives.
Prior to the Predetermination Date for a Performance Period, the Committee shall designate or approve in writing, the following:
|
(a)
|
Performance Period;
|
(b)
|
Positions or names of employees who will be Participants for the Performance Period;
|
(c)
|
Targeted goals for selected Performance Measures during the Performance Period; and
|
(d)
|
Applicable Cash Incentive Formula for each Participant, which may be for an individual Participant or a group of Participants.
|
7.
|
Determination of Amount of Cash Incentive.
|
(a)
|
Calculation.
After the end of each Performance Period, the Committee shall certify in writing (to the extent required under Code Section 162(m)) the extent to which the targeted goals for the Performance Measures applicable to each Participant for the Performance Period were achieved or exceeded. The Cash Incentive for each Participant shall be determined by applying the Cash Incentive Formula to the level of actual performance that has been certified by the Committee. Notwithstanding any contrary provision of this Plan, the Committee, in its sole discretion, may eliminate or reduce the Cash Incentive payable to any Participant below that which otherwise would be payable under the Cash Incentive Formula. The aggregate Cash Incentive(s) payable to any Participant during any Fiscal Year shall not exceed $10 Million.
|
(b)
|
Right to Receive Payment.
Each Cash Incentive under this Plan shall be paid solely from general assets of the Company and its Affiliates. This Plan is unfunded and unsecured; nothing in this Plan shall be construed to create a trust or to establish or evidence any Participant’s claim of any right to payment of a Cash Incentive other than as an unsecured general creditor with respect to any payment to which he or she may be entitled.
|
8.
|
Payment of Cash Incentives.
|
(a)
|
Timing of Distributions.
The Company and its Affiliates shall distribute amounts payable to Participants as soon as is administratively practicable following the determination and written certification of the Committee for a Performance Period, but in no event later than March 15 after the end of the calendar year in which the Performance Period ends, except to the extent a Participant has made a timely election to defer the payment of all or any portion of such Cash Incentive under a Company-approved deferred compensation plan or arrangement.
|
(b)
|
Payment.
The payment of a Cash Incentive, if any (as determined by the Committee at the end of the Performance Period), with respect to a specific Performance Period requires that the employee be an active employee on the Company’s or its Affiliate’s payroll on the last day of each applicable Performance Period, subject to the terms of any employment agreements in effect prior to the effective date of this Plan and the following:
|
(i)
|
Leave of Absence or Non-Pay Status.
A Participant may receive a Cash Incentive while on an approved leave of absence or non-pay status. Such Cash Incentive shall be prorated in a manner that the Committee determines in it sole discretion.
|
(ii)
|
Disability, Workforce Restructuring, Voluntary Severance Incentive Program, Divestiture or Retirement.
To the extent permitted by Code Section 162(m), a Participant who terminates due to disability, participation in a workforce restructuring or voluntary severance incentive program, divestiture or retirement under the Company’s retirement policies may receive a prorated Cash Incentive to the extent the Cash Incentive would have been paid had the Participant remained actively employed. The method in which a Cash Incentive is prorated shall be determined by the Committee in its sole discretion.
|
(iii)
|
Death.
The estate of a Participant who dies prior to the end of a Performance Period or after the end of a Performance Period but prior to payment may receive a Cash Incentive or prorated Cash Incentive. The method in which a Cash Incentive is prorated shall be determined by the Company in its sole discretion.
|
(c)
|
Change in Status.
A Participant who has a change in status that results in being ineligible to participate in this Plan or eligible in more than one variable pay plan, including this Plan, in a Performance Period may receive a prorated Cash Incentive, if any (as determined by the Committee at the end of the Performance Period), under this Plan. The method in which a Cash Incentive is prorated shall be determined by the Company in its sole discretion.
|
(d)
|
Code Section 409A.
The Cash Incentives payable under the Plan are intended to be excluded from coverage under Code Section 409A pursuant to the “short-term deferral rule.” However, to the extent that any Cash Incentive under the Plan is subject to Code Section 409A, the terms and administration of such Cash Incentive shall comply with the provisions of such Section, applicable IRS guidance and good faith reasonable interpretations thereof, and, to the extent necessary to achieve compliance, shall be modified, replaced, or terminated at the discretion of the Committee.
|
9.
|
Amendment and Termination.
The Committee may amend, modify, suspend or terminate this Plan or any Cash Incentive granted hereunder, in whole or in part, at any time, including the adoption of amendments deemed necessary or desirable to correct any defect or to supply omitted data or to reconcile any inconsistency in this Plan or in any Cash Incentive granted hereunder; provided, however, that no amendment, alteration, suspension or discontinuation shall be made which would increase the amount of compensation payable pursuant to such Cash Incentive.
|
10.
|
Withholding.
Distributions pursuant to this Plan shall be subject to all applicable taxes and contributions required by law to be withheld in accordance with procedures established by the Company.
|
11.
|
No Additional Participant Rights.
|
(a)
|
No individual or Participant shall have any claim to be granted any Cash Incentive under the Plan, and the Company has no obligation for uniformity of treatment of Participants under the Plan.
|
(b)
|
Furthermore, nothing in the Plan or any Cash Incentive granted under the Plan shall be deemed to constitute an employment contract or confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Affiliate or limit in any way the right of the Company or any Affiliate to terminate a Participant's employment or other relationship at any time, with or without cause.
|
12.
|
Successors.
All obligations of the Company or its Affiliates under the Plan with respect to Cash Incentives shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all the business and/or assets of the Company.
|
13.
|
Nonassignment.
The rights of a Participant under this Plan shall not be assignable or transferable by the Participant except by will or the laws of descent and distribution, except to the extent a Participant designates one or more beneficiaries on a Company-approved form who may receive payment under the Plan after the Participant's death.
|
14.
|
Severability.
If any provision of the Plan or any Cash Incentive is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or any Cash Incentive under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Committee's determination, materially altering the intent of the Plan or the Cash Incentive, such provision shall be stricken as to such jurisdiction, person or Cash Incentive, and the remainder of the Plan and any such Cash Incentive shall remain in full force and effect.
|
15.
|
Governing Law.
The Plan, all Cash Incentives granted hereunder and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the laws of the United States, shall be governed by the laws of the State of Delaware without giving effect to principles of conflicts of law.
|
a.
|
The Stock Grant shall vest as indicated in the vest schedule above. In accordance with Section 4 below, any portion of the Stock Grant that has not vested at your termination of employment, consultancy, directorship or other position making you an eligible participant under the Plan will not thereafter vest, unless the Compensation Committee of the Company’s Board of Directors (or other administrator of the Plan, the “Administrator”) determines otherwise.
|
b.
|
The Stock Grant shall vest immediately 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 your Stock Grant shall vest; provided, that, except in the case of a Change in Control or your death or disability, the Stock Grant shall not vest (i) before the one-year anniversary of the Date of Grant if subject to achievement of performance criteria, and (ii) in all other cases, before the three-year anniversary of the Date of Grant.
|
d.
|
The vesting period of the Stock Grant 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.
|
a.
|
assumption or continuation of outstanding Stock Grants; or
|
b.
|
the substitution for such Stock Grants, with appropriate adjustments as to the number and kind of shares of stock and prices, in which event the Stock Grant 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.
|
a.
|
you have complied with any requests for representations under the Plan;
|
b.
|
the Company has received proof satisfactory to the Company that a person seeking to receive the Shares after your death or disability is authorized and entitled to receive the Shares; and
|
c.
|
you have satisfied any federal, state, or local tax withholding obligations.
|
a.
|
You understand and agree that the Company has not advised you regarding your income tax liability in connection with the grant or vesting of the Stock Grant. You understand that you (and not the Company) shall be solely responsible for your own tax liability that may arise as a result of the transactions contemplated by this Agreement. The grant and vesting of the Stock Grant shall be subject to all applicable income and employment tax withholdings. The Company may refuse to release the restriction on any Shares to you until you satisfy all applicable tax withholding obligations. You acknowledge that the Company has the right, in its discretion, to deduct and retain without notice from shares issuable upon vesting of the Stock Grant (or any portion thereof) or, unless otherwise determined by the Administrator, from salary or other amounts payable to you, shares or cash having a value sufficient to satisfy the tax withholding obligations.
|
b.
|
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 vesting of the Stock Grant or disposition of shares issued as a result of such vesting. By accepting the Stock Grant, you agree that, unless and to the extent you have otherwise satisfied your 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 in respect of the vested portion of the Stock Grant the whole number of shares (rounding down) having a Fair Market Value on the vesting date or, if not a trading day, the first trading day before the vesting 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. Furthermore, the Company shall have the right to deduct and withhold any such applicable taxes from, or in respect of, any dividends or other distributions paid on or in respect of the Common Stock comprising the Stock Grant.
|
c.
|
You are ultimately liable and responsible for all taxes owed by you in connection with the Stock Grant, regardless of any action the Company takes or any transaction pursuant to this Section 14 with respect to any tax withholding obligations that arise in connection with the Stock Grant. The Company makes no representation or undertaking regarding the treatment of any tax withholding in connection with the grant, issuance, or vesting of the Stock Grant or the subsequent sale of any of the shares of Common Stock acquired upon vesting of the Stock Grant. The Company does not commit and is under no obligation to structure the Stock Grant to reduce or eliminate your tax liability.
|
d.
|
You understand that Section 83(a) of the Internal Revenue Code of 1986, as amended (the “
Code
”), taxes as ordinary income the difference between (i) the amount (if any) paid for the Shares, and (ii) the fair market value of the Shares on the date any restrictions on the Shares lapse. You further understand that you may elect to be taxed at the time the Shares are granted rather than when the applicable restrictions lapse by filing an election under Section 83(b) of the Code with the U.S. Internal Revenue Service within 30 days from the date of purchase of the Shares. You shall notify the Company of your intention to make an election under Section 83(b) of the Code at least five (5) business days before making such election and promptly provide a copy of such election to the Company.
|
a.
|
This Agreement and the Plan constitute the entire understanding between you and the Company regarding the Stock Grant. Any prior agreements, commitments or negotiations concerning the Stock Grant 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 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.
|
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.
|
e.
|
This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, beneficiaries, successors and assigns.
|
f.
|
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.
|
g.
|
All questions arising under the Plan or under this Agreement shall be decided by the Administrator in its total and absolute discretion.
|
COSTAR GROUP, INC.
|
|
|
|
|
|
Jonathan Coleman, General Counsel & Secretary
|
|
|
|
You will be deemed to have accepted the terms and conditions of this stock grant agreement if you do not reject the grant and/or the terms and conditions within sixty (60) days of the Date of Grant (defined below). Any rejection of the grant or the terms and conditions thereof should be addressed to: CoStar Group, Inc., 1331 L Street, NW, Washington, DC 20005, Attn: General Counsel.
|
a.
|
This Agreement and the Plan constitute the entire understanding between you and the Company regarding the Stock Grant. Any prior agreements, commitments or negotiations concerning the Stock Grant 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 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.
|
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.
|
e.
|
This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, beneficiaries, successors and assigns.
|
f.
|
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.
|
g.
|
All questions arising under the Plan or under this Agreement shall be decided by the Administrator in its total and absolute discretion.
|
COSTAR GROUP, INC.
|
|
|
|
|
|
Jonathan Coleman, General Counsel & Secretary
|
|
|
|
a.
|
The RSUs shall vest as indicated in the vest schedule above. In accordance with Section 4 below, any portion of the RSUs that have not vested at your termination of employment, consultancy, directorship or other position making you an eligible participant under the Plan will not thereafter vest, unless the Compensation Committee of the Company’s Board of Directors (or other administrator of the Plan, the “Administrator”) determines otherwise.
|
b.
|
The RSUs shall vest immediately 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 your RSUs shall vest; provided, that, except in the case of a Change in Control or your death or disability, the RSUs shall not vest in full (i) before the one-year anniversary of the Date of Grant if subject to achievement of performance criteria, and (ii) in all other cases, before the three-year anniversary of the Date of Grant.
|
d.
|
To the extent consistent with Section 409A of the Code, the vesting period of the RSUs 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.
|
e.
|
RSUs shall be settled by the delivery to you of one Share per vested RSU as soon as reasonably practicable following the vesting of such RSU pursuant to this Section 3, and in all events no later than March 15 of the year following the year of vesting (unless earlier delivery is required by Section 409A of the Internal Revenue Code or delivery is deferred pursuant to a nonqualified deferred compensation plan in accordance with the requirements of Section 409A of the Internal Revenue Code).
|
b.
|
the substitution for such RSUs, with appropriate adjustments as to the number and kind of shares of stock and prices with respect to the underlying Shares, in which event the RSUs 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.
|
b.
|
the Company has received proof satisfactory to the Company that a person seeking to receive the Shares after your death or disability is authorized and entitled to receive the Shares; and
|
a.
|
You understand and agree that the Company has not advised you regarding your income tax liability in connection with the grant or vesting of the RSUs. You understand that you (and not the Company) shall be solely responsible for your own tax liability that may arise as a result of the transactions contemplated by this Agreement. The grant, vesting and settlement of the RSUs shall be subject to all applicable income and employment tax withholdings. The Company may refuse to issue the Shares in settlement of the RSUs to you until you satisfy all applicable tax withholding obligations. You acknowledge that the Company has the right, in its discretion, to deduct and retain without notice from shares issuable upon vesting of the RSUs (or any portion thereof) or, unless otherwise determined by the Administrator, from salary or other amounts payable to you, shares or cash having a value sufficient to satisfy the tax withholding obligations.
|
b.
|
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 vesting or settlement of the RSUs or disposition of shares issued as a result of such settlement. By accepting the RSU Grant, you agree that, unless and to the extent you have otherwise satisfied your 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 in respect of settlement of the RSUs the whole number of shares (rounding down) having a Fair Market Value on the vesting date or, if not a trading day, the first trading day before the vesting 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. Furthermore, the Company shall have the right to deduct and withhold any such applicable taxes from, or in respect of, any dividends or other distributions paid on or in respect of the Common Stock comprising the Shares following settlement of the RSUs.
|
c.
|
You are ultimately liable and responsible for all taxes owed by you in connection with the RSUs, regardless of any action the Company takes or any transaction pursuant to this Section 14 with respect to any tax withholding obligations that arise in connection with the RSUs. The Company makes no representation or undertaking regarding the treatment of any tax withholding in connection with the grant, issuance, vesting or settlement of the RSUs or the subsequent sale of any of the shares of Common Stock issued in settlement of the RSUs. The Company does not commit and is under no obligation to structure the RSUs to reduce or eliminate your tax liability.
|
a.
|
This Agreement and the Plan constitute the entire understanding between you and the Company regarding the RSUs. Any prior agreements, commitments or negotiations concerning the RSUs 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 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.
|
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.
|
e.
|
This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, beneficiaries, successors and assigns.
|
f.
|
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.
|
g.
|
All questions arising under the Plan or under this Agreement shall be decided by the Administrator in its total and absolute discretion.
|
COSTAR GROUP, INC.
|
|
|
|
|
|
Jonathan Coleman, General Counsel & Secretary
|
|
|
|
(1)
|
Vesting
.
|
a.
|
You may exercise the Option on the schedule indicated in the vest schedule above, subject to the expiration provisions set forth in Section 3 below. No portion of the Option that is unexercisable at your termination of employment will thereafter become exercisable, unless the Administrator determines otherwise.
|
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; provided, that, except in the case of a Change in Control or your death or disability (as defined in Section 3(d) below), the Option may not vest before the one-year anniversary of the date of grant.
|
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 later of 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 the expiry date indicated above (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.
|
COSTAR GROUP, INC.
|
|
|
|
|
|
Jonathan Coleman, General Counsel & Secretary
|
|
|
|
(1)
|
Vesting
.
|
a.
|
You may exercise the Option on the schedule indicated in the vest schedule above, subject to the expiration provisions set forth in Section 3 below. Except as specifically provided otherwise herein, no portion of the Option that is unexercisable at your termination of employment will thereafter become exercisable, unless the Administrator determines otherwise.
|
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.
|
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 later of 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 the expiry date indicated above (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.
|
COSTAR GROUP, INC.
|
|
|
|
|
|
Jonathan Coleman, General Counsel & Secretary
|
|
|
|
(1)
|
Vesting
.
|
a.
|
You may exercise the Option on the schedule indicated in the vest schedule above, subject to the expiration provisions set forth in Section 3 below. No portion of the Option that is unexercisable at your termination of employment, consultancy, directorship or other position making you an eligible participant under the Plan will thereafter become exercisable, unless the Administrator determines otherwise.
|
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 later of 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 the expiry date indicated above (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.
|
COSTAR GROUP, INC.
|
|
|
|
|
|
Jonathan Coleman, General Counsel & Secretary
|
|
|
|
(1)
|
Vesting
.
|
a.
|
You may exercise the Option on the schedule indicated in the vest schedule above, subject to the expiration provisions set forth in Section 3 below. Except as specifically provided otherwise herein, no portion of the Option that is unexercisable at your termination of employment, consultancy, directorship or other position making you an eligible participant under the Plan will thereafter become exercisable, unless the Administrator determines otherwise.
|
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.
|
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 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 later of 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 the expiry date indicated above (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 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.
|
COSTAR GROUP, INC.
|
|
|
|
|
|
Jonathan Coleman, General Counsel & Secretary
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of CoStar Group, Inc.;
|
2.
|
Based on my knowledge, this 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 report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this 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 report;
|
4.
|
The registrant's other certifying officer(s) 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 13a-15(f) and 15d-15(f)) for the registrant and 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 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 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 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 officer(s) 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:
|
July 28, 2016
|
By: Andrew C. Florance
|
|
|
|
|
|
/s/ Andrew C. Florance
|
|
|
Andrew C. Florance
Chief Executive Officer
(Principal Executive Officer and Duly Authorized Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of CoStar Group, Inc.;
|
2.
|
Based on my knowledge, this 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 report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this 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 report;
|
4.
|
The registrant's other certifying officer(s) 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 13a-15(f) and 15d-15(f)) for the registrant and 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 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 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 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 officer(s) 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:
|
July 28, 2016
|
By: Scott T. Wheeler
|
|
|
|
|
|
/s/ Scott T. Wheeler
|
|
|
Scott T. Wheeler
Chief Financial Officer
(Principal Financial and Accounting Officer and Duly Authorized Officer)
|
By:
|
|
|
|
|
/s/ Andrew C. Florance
|
|
Andrew C. Florance
Chief Executive Officer
(Principal Executive Officer and Duly Authorized Officer)
|
By:
|
|
|
|
|
/s/ Scott T. Wheeler
|
|
Scott T. Wheeler
Chief Financial Officer
(Principal Financial and Accounting Officer and Duly Authorized Officer)
|