UNITED
STATED SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-K
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the fiscal year ended December 31, 2007
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£
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period
from to
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Commission
file number: 1-33472
TechTarget,
Inc.
(Exact
name of Registrant as Specified in Its Charter)
Delaware
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04-3483216
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(State
or Other Jurisdiction of
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(I.R.S.
Employer
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Incorporation
or Organization)
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Identification
No.)
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117
Kendrick Street, Suite 800
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02494
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Needham,
Massachusetts
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(Zip
Code)
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(Address
of Principal Executive Offices)
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Registrant's
telephone number, including area code: (781) 657-1000
Securities
registered pursuant to Section 12(b) of the Exchange Act:
None
Securities
registered pursuant to Section 12(g) of the Exchange Act:
Common
Stock, $0.001 Par Value
(Title
Of Class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities
Act. Yes
£
No
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Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange
Act. Yes
£
No
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Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past
90 days. Yes
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No
£
Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrant’s
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K
.
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of “large accelerated filer," "accelerated filer” and
"smaller reporting company" in Rule 12b-2 of the Exchange
Act. (Check One):
Large
Accelerated Filer
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Accelerated
Filer
£
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Non-Accelerated
Filer
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(Do
not check if a smaller
reporting
company)
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Smaller
Reporting Company
£
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
£
No
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The
aggregate market value of the registrant's common stock held by
non-affiliates of the registrant was approximately $107.4 million as of
June 30, 2007 (based on a closing price of $12.85 per share as quoted
by the Nasdaq Global Market as of such date). In determining the market value of
non-affiliate common stock, shares of the registrant's common stock beneficially
owned by officers, directors and affiliates have been excluded. The
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
The
registrant had 41,193,571 shares of Common Stock, $0.001 par value per
share, outstanding as of February 29, 2008.
DOCUMENTS
INCORPORATED BY REFERENCE
The
registrant intends to file a definitive proxy statement pursuant to Regulation
14A within 120 days of the end of the fiscal year ended December 31, 2007 (the
"2008 Proxy Statement"). Portions of such proxy statement are incorporated by
reference into Part III of this Form 10-K. With the exception of the
portions of the 2008 Proxy Statement expressly incorporated into this Annual
Report on Form 10-K by reference, such document shall not be deemed filed as
part of this Annual Report on Form 10-K.
Overview
TechTarget,
Inc. was incorporated in Delaware on September 14, 1999. We are a
leading provider of specialized online content that brings together buyers and
sellers of corporate IT products. We sell customized marketing programs that
enable IT vendors to reach corporate IT decision makers who are actively
researching specific IT purchases. We operate a network of approximately
50 websites, each of which focuses on a specific IT sector, such as
storage, security or networking.
IT
professionals rely on our websites for key decision support information tailored
to their specific areas of responsibility. We complement our online offerings
with targeted in-person events and two specialized IT magazines that enable
advertisers to engage buyers throughout their decision-making process for IT
purchases. We work with our advertiser customers to develop customized marketing
programs, often providing them with multiple offerings in order to more
effectively target their desired audience. Our product offerings address both
lead generation and branding objectives of our advertising customers. The
majority of our 2007 revenues are associated with lead generation advertising
campaigns.
As IT
professionals have become increasingly specialized, they have come to rely on
our sector-specific websites for purchasing decision support. Our content
strategy enables IT professionals to navigate the complex and rapidly changing
IT landscape where purchasing decisions can have significant financial and
operational consequences. Our content strategy includes three primary sources of
content which IT professionals use to assist them in their pre-purchase
research: independent content, vendor generated content and user
generated content. As of December 31, 2007, we employed over 100
full-time editors who create original content tailored for specific audiences,
which we complement with content through our association with outside industry
experts. In addition to utilizing our independent content, registered members
are able to conduct their pre-purchase research by accessing vendor content such
as white papers, webcasts and podcasts, across our network of websites. Our
network of websites also allows users to seamlessly interact and contribute
content which is highly valued by IT professionals during their research
process.
We have a
large and growing base of registered members, which totaled approximately 6.7
million as of December 31, 2007. The targeted nature of our user base enables IT
vendors to reach a specialized audience efficiently because our content is
highly segmented and aligned with the IT vendors’ specific products. Since our
founding in 1999, we have developed a broad customer base that now comprises
more than 1,100 active advertisers. During 2007, no one customer
represented more than 10% of revenues and the quarterly renewal rate of our
top 100 customers has consistently exceeded 90%. We generated
revenues of $95 million in 2007, up from $79 million in 2006. Over the same
period, we grew our Adjusted EBITDA from approximately $20 million to
approximately $25 million.
Available
Information
Our
website address is www.techtarget.com. We make available free of charge through
our website our Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, and amendments to these
reports, as soon as reasonably practicable after we electronically file such
material with, or furnish such material to, the Securities and Exchange
Commission (SEC). Our reports filed with the SEC are also available at the SEC’s
website at www.sec.gov. Our Code of Business Conduct and Ethics, and any
amendments to our Code of Business Conduct and Ethics Corporate Governance
Guidelines and Board Committee Charters, are also available on our website. We
are not including the information contained on our website as part of, or
incorporating it by reference into, this Annual Report on
Form 10-K.
Industry
Background
There is
an ongoing shift from traditional print and broad-based advertising to targeted
online advertising. We believe there are three major trends driving this
shift:
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Targeted
Content Channels Lead to Greater Efficiency for
Advertisers
. Advertisers’ desire to reach customers
efficiently has led to the development and proliferation of
market-specific content channels throughout all forms of media. Targeted
content channels increase advertising efficiency by enabling advertisers
to market specifically to the audience they are trying to reach. Content
providers are finding new ways, such as specialized cable television
channels, magazines and events, to offer increasingly targeted content to
their audience and advertisers. The Internet has enabled even more
market-specific content offerings, and the proliferation of
market-specific websites provides advertisers with efficient and targeted
media to reach their customers.
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The
Internet Improves Advertisers’ Ability to Increase and Measure Return on
Investment
. Advertisers are increasingly focused on
measuring and improving their return on investment, or ROI. Before the
advent of Internet-based marketing, there were limited tools for
accurately measuring the results of marketing campaigns in a timely
fashion. The Internet has enabled advertisers to track individual user
responses to their marketing programs. With the appropriate technology,
vendors now have the ability to assess and benchmark the efficacy of their
online advertising campaigns cost-effectively and in real-time. As a
result, advertisers are now increasingly demanding a measurable ROI across
all forms of media.
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The
Internet Is Increasingly Critical in Researching Large, Complex and Costly
Purchases.
The Internet has improved the efficiency and
effectiveness of researching purchases. The vast quantity of information
available on the Internet, together with search engines and directories
that facilitate information discovery, enables potential purchasers to
draw information from many sources, including independent experts, peers
and vendors, in an efficient manner. These benefits are most apparent in
the research of complex and costly purchases which require information
from a variety of sources. By improving the efficiency of product
research, the Internet enables potential purchasers to save significant
time and review a wider range of product
selections.
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Corporate
IT Purchasing
The
trends toward targeted content channels, increased focus on ROI by advertisers
and Internet-based product research are evident in the corporate IT market. Over
the past two decades, corporate IT purchases have grown in size and
complexity. The corporate IT market is comprised of multiple, large
sectors, such as storage, security and networking. Each of these sectors can, in
turn, be further divided into sub-sectors that contain products addressing the
areas of specialization within an enterprise’s IT environment. For example,
within the multi-billion dollar storage sector, there are numerous sub-sectors
such as storage area networks, storage resource management software and backup
software. Furthermore, the products in each sub-sector may service entirely
independent markets. For example, backup software for use in Windows
environments can be distinct from that designed for use in Linux
environments.
In view
of the complexities, high cost and importance of IT decision-making, corporate
IT purchasing decisions are increasingly being researched by teams of functional
experts with specialized knowledge in their particular areas, rather than by one
central IT professional, such as a chief information officer. The corporate IT
purchasing process typically requires a lengthy sales cycle. The ‘‘sales cycle’’
is the sequence of stages that a typical customer goes through when deciding to
purchase a product or service from a particular vendor. Key stages of a sales
cycle typically consist of a customer recognizing or identifying a need;
identifying possible solutions and vendors through research and evaluation; and
finally, making a decision to purchase the product or service. Through various
stages of this sales cycle, IT professionals rely upon multiple inputs from
independent experts, peers and IT vendors. Although there is a vast amount of
information available, the aggregation and validation of these inputs from
various sources can be difficult and time-consuming.
The long
sales cycle for corporate IT purchases, as well as the need for information
support, require substantial investment on the part of IT vendors, which drives
the significant marketing expenditures in the corporate IT market. In addition,
technology changes at an accelerated pace and there are often multiple solutions
to a particular IT need. With each new product or product enhancement, IT
vendors implement new advertising campaigns and IT professionals must research
new technologies.
The
Opportunity
Corporate
IT professionals increasingly are demanding specialized websites, events and
print publications tailored to the sub-sectors of IT solutions that they
purchase. Prior to widespread Internet adoption, corporate IT buyers researching
purchases relied largely on traditional IT media, consisting of broad print
publications and large industry trade shows. As technology, vendors and IT
professionals have all become much more specialized, the Internet has emerged as
a preferred purchase research medium that has drastically reduced and improved
research time. Despite this, most traditional IT media remains general in nature
and disproportionately oriented towards print. Consequently, IT professionals
continue to expend time searching inefficiently for information that is
appropriate to their more specialized IT purchase requirements.
IT
advertisers seek high-ROI marketing platforms that provide access to the
specific sectors of IT buyers that align with the solutions they sell.
Traditional IT media companies with print-based revenue models service a large
circulation with broad content. This minimizes the likelihood of a vendor
reaching a buyer while he or she is actively researching the purchase of a
solution that falls within the vendor’s particular market sector. Although the
Internet now offers advertisers a superior means to reach IT buyers while they
are conducting research, the web properties operated by these traditional IT
media companies offer online content and audiences that are in many cases
derivative of their existing print efforts. Without a more targeted marketing
platform oriented to IT professionals’ need for decision support for specialized
IT purchases, traditional IT media companies have faced difficulty meeting the
ROI needs of IT marketers.
Our
Solution
Our
specialized content strategy enables IT vendors to reach corporate IT
professionals who are actively researching purchases in specific IT sectors. Our
online network of websites is complemented by in person events and two
specialized magazines. IT professionals rely on our platform for decision
support information tailored to their specific purchasing needs. Our solution
benefits from the following competitive advantages:
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Large and Growing Community of
Registered Members.
We have built a registered member database with
detailed business information on approximately 6.7 million IT
professionals as of December 31, 2007. We have collected detailed business
and technology profiles with respect to our registered members, which
allows us to provide them with more specialized content and our
advertisers with highly targeted audiences and sales
leads.
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Strong Advertiser
Relationships.
Since our founding in 1999, we have developed a
broad customer base that now comprises more than 1,100 active advertisers
and the quarterly renewal rate of our top 100 customers has
consistently exceeded 90%.
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Substantial Experience in
Online Media.
We have over eight years of experience in developing
our online media content, with a focus on providing targeted information
to IT professionals and a targeted audience to vendors. Our experience
enables us to develop new online properties rapidly, and to acquire and
efficiently integrate select properties that further serve IT
professionals. We have also developed an expertise in implementing
integrated, targeted marketing campaigns designed to maximize the
measurability of, and improvement in,
ROI.
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Significant Brand Recognition
Among Advertisers and IT Professionals.
Our brand is
well-recognized by advertisers who value our integrated marketing
capabilities and high-ROI advertising programs. At the same time, our
sector-specific websites command brand recognition among IT professionals,
who rely on these websites because of their specificity and depth of
content.
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Favorable Search Engine
Rankings
. Due to our long history of using a targeted approach
toward online publishing, our network of websites has produced
a large repository of archived content that allows us to appear on
search result pages when users perform targeted searches on search engines
such as Google. We are successful in attracting traffic from search
engines, which, in turn, increases our registered
membership.
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Proprietary Lead Management
Technology.
Our proprietary lead management technology enables IT
vendors to prioritize and manage efficiently the leads we provide,
improving the efficacy of their sales teams and optimizing the ROI on
their marketing expenditures with
us.
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Our
solution increases efficiency for both IT professionals and IT vendors. It
facilitates the ability of IT professionals to find specific information related
to their purchase decisions, while enabling IT vendors to reach IT buyers that
are actively researching specific solutions related to vendors’ products and
services. Set forth below are several ways our solution benefits IT
professionals and IT vendors:
Benefits
to IT Professionals
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Provides Access to Integrated,
Sector-Specific Content.
Our websites provide IT professionals with
sector-specific content from the three fundamental sources they value in
researching IT purchasing decisions: industry experts, peers and vendors.
Our in-house staff of editors creates content specific to the sectors we
serve and the key sub-sectors within them. This content is integrated with
other content generated by our network of third-party industry experts,
member-generated content and content from IT vendors. The reliability,
breadth and depth, and accessibility of our content offering enable IT
professionals to make more informed
purchases.
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Increases Efficiency of
Purchasing Decisions.
By accessing targeted and specialized
information, IT professionals are able to research important purchasing
decisions more effectively. Our integrated content offering minimizes the
time spent searching for and evaluating content, and maximizes the time
available for consuming quality content. Furthermore, we provide this
specialized, targeted content through a variety of media that together
address all stages of the purchase decision
process.
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Benefits
to IT Vendors
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Targets Active Buyers
Efficiently.
Our highly targeted content attracts specific,
targeted audiences that are actively researching purchasing decisions.
Using our registered member database, we are able to target further only
those registered members most likely to be of value to IT vendors.
Advertising to only a targeted audience minimizes advertiser expenditures
on irrelevant audiences, increasing advertising
efficiency.
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Generates Measurable, High
ROI.
Our targeted online content offerings enable us to generate
and collect valuable business information about each user and his or her
technology preferences. This information is provided by users prior to
accessing specific content and can be further customized to advertisers’
needs to support their advertising programs. As users access sponsored
content, we register and process this information, and deliver qualified
actionable leads in real-time. As a result, our advertisers are able to
measure and improve the ROI on their advertising expenditures with
us.
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Generates and Prioritizes
Qualified Sales Leads.
Our IT vendors also use our detailed member
database and integrated advertising campaigns to identify and market to
the audience members they consider to have the highest potential value.
Once the leads have been delivered, our proprietary lead management
technology enables customers to categorize, prioritize and market more
effectively to these leads.
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Maximizes Awareness and
Shortens the Sales Cycle.
As a leading distributor of
vendor-provided IT white papers, webcasts and podcasts, we offer IT
vendors the opportunity to educate IT professionals during the research
process, prior to any direct interaction with vendor salespeople. By
distributing proprietary content and reaching their target audiences via
our platform, IT vendors can educate audiences, demonstrate their product
capabilities and proactively brand themselves as specific product leaders.
As a result, an IT professional is knowledgeable about the vendors’
specifications and product by the time he or she engages with the vendor,
which reduces time and cost expended by the vendor’s sales
force.
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Reaches IT Professionals at
All Stages of the Purchase Decision Process.
Because our content
platform encompasses online, event and print offerings, IT vendors can
market to IT professionals at all stages of the purchase decision process
through multiple touch points. In addition to targeting IT professionals
as they conduct purchase research on our website, IT vendors can influence
IT professionals early in the purchase decision process through the
strategic information provided by our magazines and can have face-to-face
interactions with qualified buyers seeking to finalize purchase decisions
at our in-person events.
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Our
Strategy
Our goal
is to deliver superior performance by enhancing our position as a leading
provider of specialized content that connects IT professionals with IT vendors
in the sectors and sub-sectors that we serve. In order to achieve this goal, we
intend to:
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Continue to Develop Our
Content Platform and Product Offerings.
We intend to continue to
launch additional websites and develop our platform in order to capitalize
on the ongoing shift from traditional broad-based media toward more
focused online content that increases the efficiency of advertising
spending. We intend to capture additional revenues from existing and new
customers by continuing to develop our content and to segment it to
deliver an increasingly specialized audience to the IT vendors who
advertise across our media. We also intend to continue to deliver a highly
engaged and growing audience to advertisers, to develop innovative
marketing programs and to improve our service by expanding our sales
force.
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Expand into Complementary
Sectors.
We intend to complement our current offerings by expanding
our business to capitalize on strategic opportunities in existing,
adjacent, or new sectors that we believe to be well-suited to our business
model and core competencies. For example, we are expanding our platform to
address the needs of additional sectors in the IT industry, such as
value-added resellers and vertical industry software applications. Based
on our experience, we believe we are able to capitalize rapidly and
cost-effectively on new market
opportunities.
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Expand Our International
Presence.
We intend to expand our addressable market by increasing
our presence in countries outside the United States. We expect to
penetrate foreign markets further by directly launching additional sector
specific websites in foreign markets, licensing our content in foreign
territories and making strategic acquisitions and investments in overseas
entities. During 2007, less than 5% of our revenues were
derived from international customers. We believe many of the current
trends contributing to our domestic revenue growth also are occurring in
international markets and therefore present a significant future revenue
opportunity.
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Selectively Acquire or Partner
with Complementary Businesses.
We have used acquisitions as a means
of rapidly expanding our content and product offerings, web traffic and
registered members. Historically, our acquisitions can be classified into
three categories; content-rich blogs or other individually published
sites, typically generating less than one million dollars in revenues;
early stage revenue sites, typically generating between one and five
million dollars in annual revenues; and later stage revenue sites,
typically generating greater than five million dollars in annual revenues.
We intend to continue to pursue selected acquisition or partnership
opportunities in our core markets and in adjacent markets for products
with similar characteristics.
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Platform
& Content
Our
integrated content platform consists of a network of websites that we complement
with targeted in-person events and two specialized IT magazines. Throughout all
stages of the purchase decision process, these content offerings meet IT
professionals’ needs for expert, peer and IT vendor information, and provide a
platform on which IT vendors can launch targeted marketing campaigns that
generate measurable, high ROI.
The
diagram below provides a representation of the media products provided by our
platform and the media groups we currently use to categorize our content
offerings:
Media
Groups
Based
upon the logical clustering of our users’ respective job responsibilities and
the marketing focus of the products that our customers are advertising, we
currently categorize our content offerings across eleven distinct media groups.
Each of these media groups services a wide range of IT vendor sectors and
sub-sectors and is driven by the key areas of IT professionals’ interests
described below:
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Storage.
The storage
sector consists of the market for disk storage systems and tape hardware
and software that store and manage data. Growth is fueled by trends
inherent in the industry, such as the ongoing need to maintain
and supplement data stores, and by external factors, such as expanded
compliance regulations and increased focus on disaster recovery solutions.
These latter trends have driven overall storage growth and led to new
specialized solutions such as remote replication software and information
life cycle management solutions. At the same time, established storage
sub-sectors, such as backup and SANs have been invigorated by new
technologies such as disk-based backup, continuous data protection and
storage virtualization. Our online properties in this sector,
SearchStorage.com SearchDataBackup.com and SearchStorage.co.UK address IT
professionals seeking solutions in key sub-sectors such as fibre channel
SANs, IP & iSCSI SANs, NAS, backup hardware and software, and storage
management software. The audiences at our in-person Storage Decision
conferences are comprised almost exclusively of storage decision makers
from within IT organizations. These events are supplemented by regional
seminars on topics such as e-mail archiving and disaster recovery. Our
print magazine, Storage, has an audited circulation of approximately
50,000 qualified IT professionals.
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Security.
Every aspect
of enterprise computing now depends on secure connectivity, data and
applications. The security sector is constantly growing to adapt to new
forms of threats and to secure new technologies such as mobile devices and
wireless networks. Compliance regulations along with highly
publicized identity and intellectual property thefts are driving interest
and investment in increasingly sophisticated security solutions that
supplement common perimeter security solutions such as firewalls and
antivirus software. Our online properties in this sector,
SearchSecurity.com, SearchFinancialSecurity.com and SearchSecurity.co.UK
offer navigable and structured guides on IT vendor and technology
solutions in key sub-sectors such as network security, intrusion defense,
identity management and authentication, application security, and security
information management software. Our annual Security Decisions conference
anchors a calendar of topically-focused regional seminars on issues such
as compliance monitoring and e-mail security. Information Security
magazine offers strategic information for IT security professionals to an
audited circulation of approximately 60,000
subscribers.
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Networking.
Broadly
defined, the networking market includes the hardware, software and
services involved in the infrastructure and management of data
networks. As new sub-sectors of networking have emerged and
grown in importance, IT networking professionals have increasingly focused
their investments in such technologies as VoIP, wireless and mobile
computing, and telecommunication technologies. Our online properties in
this sector, SearchNetworking.com, SearchUnifiedCommunications.com,
SearchMobileComputing.com and SearchTelecom.com aim to address the
specialized needs of these IT networking professionals by offering content
targeted specifically to these emerging growth areas as well as key
initiatives such as network security and access control, application
visibility and performance monitoring, WAN acceleration and optimization,
voice/data/video convergence, and remote office management and
connectivity.
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Windows and Distributed
Computing.
For businesses, the Windows platform no
longer represents an offering of discrete operating systems, but rather a
diverse computing environment with its own areas of specialization around
IT functions such as database administration and security. As Windows
servers have become more stable and scalable, they have taken share in
data centers, and currently represent one of the largest server
sub-sectors. Microsoft enterprise applications have grown as
well, with Exchange Server commanding a large number of seats of many
e-mail servers and SQL Servers. Given the breadth of the Windows market,
we have segmented our Windows-focused media based on IT professionals’
infrastructure responsibilities and purchasing focus. Our seven online
properties in this sector include SearchWindowsSecurity.com and
SearchWinComputing.com—covering servers, storage, and systems management;
SearchSQLServer.com, SearchDomino.com, SearchExchange.com and
SearchWinIT.com—targeted toward senior management for distributed
computing environments; and LabMice.net—addressing desktop issues. This
network of sites provides resources and advice to IT professionals
pursuing solutions related to such topics as Windows backup and storage,
server consolidation, and Vista upgrade planning, and is supplemented by
in-person regional seminars on topics such as e-mail
security.
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Data Center.
Data
centers house the systems and components, such as servers, storage
devices, routers and switches, utilized in large-scale, mission critical
computing environments. A variety of trends and new
technologies have reinvigorated the data center as a priority among IT
professionals. Technologies, such as blade servers and server
virtualization, have driven renewed investment in data center-class
computing solutions. Server consolidation is now a focus, driven by the
decline in large-scale computing prices relative to distributed computing
models. These trends have put pressure on existing data center
infrastructure and are driving demand for solutions that address this. For
example, the deployment of high-density servers has led to increased heat
output and energy consumption in data centers. Power and cooling have thus
become a significant cost in IT budgets, making data center energy
efficiency a priority. Our key online properties in this sector
provide targeted information on the IT vendors, technologies and solutions
that serve these sub-sectors. Our online properties in this
sector include SearchDataCenter.com, covering
disaster recovery, power and cooling, mainframe and UNIX servers, systems
management, and server consolidation; SearchEnterpriseLinux.com, focused
on Linux migration and infrastructures; Search400.com, covering mid-range
computing; SearchServerVirtualization.com, covering the
decision points and alternatives for implementing server virtualization
and SearchVMware.com–focusing on managing and building out virtualized
environments on the most widely installed server virtualization platform.
The solutions and sub-sectors addressed at Data Center Decisions, our
2-day event hosting key decision makers from large data center computing
environments, mirror those covered on our sites. Our Data Center Decisions
regional seminars cover server virtualization implementation
issues.
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CIO and IT Management.
Our CIO and IT Management media group provides content targeted at
Chief Information Officers, or CIOs, and senior IT executives, enabling
them to make informed IT purchases throughout all stages of the purchase
decision process. CIOs’ areas of interest generally align with the major
sectors of the IT market; however, CIOs increasingly are focused on the
alignment between IT and their businesses’ operations. Because businesses’
IT strategies vary significantly based upon company size, we have
segmented the CIO market by providing specific guidance to CIOs of large
enterprises, mid-market enterprises and SMBs. Data center
consolidation, compliance, ITIL/ IT service management, risk management
and Service-Oriented Architecture, or SOA, have all drawn the attention of
IT executives who need to understand the operational and strategic
implications of these issues and technologies on their businesses.
Accordingly, our targeted information resources for senior IT executives
focus on ROI, implementation strategies, best practices and comparative
assessment of vendor solutions related to these initiatives. Our online
properties in this sector include SearchCIO-Midmarket.com which targets IT
managers at small to medium-sized businesses. SearchCIO.com provides CIOs
in large enterprises with strategic information focused on critical
purchasing decisions. Our annual CIO Decisions Conference delivers content
specifically targeted to an invitation-only audience of IT executives from
midsize enterprises.
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Enterprise
Applications.
Our Enterprise Applications media group focuses on
mission critical software for mid-sized and large companies such as
databases and data management applications, enterprise resource planning,
and customer facing applications such as CRM software. Because
these applications are critical to the overall success of the businesses
that use them, there is a high demand for specialized information by IT
professionals involved in their purchase, implementation, and ongoing
support. Our online properties in this sector include SearchCRM.com,
SearchDataManagement.com, SearchOracle.com and SearchSAP.com which are
leading online resources that provide this specialized information to
support mission critical business applications. They cover CRM, business
intelligence, data management, sales force automation, databases and ERP
software. Regional seminars cover topics such as data
management.
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Vertical
Software.
The SMB market supports a high degree of
specialization by software vendors, as applications are offered that
address the business requirements of specific industry verticals such as
health care practices, construction, retail, manufacturing, and many
others. The purchase of these applications requires extensive up-front
research by companies that, in many cases, may not have large or highly
specialized IT staffs. Our web site 2020software.com helps decision-makers
from small to mid-sized companies evaluate specialized business
applications by providing side-by-side comparisons of the leading software
providers in categories such as retail, human resources, financial and
accounting, construction, and medical practice software. Users of the site
can request further information and download trial software from multiple
vendors in a single transaction, simplifying their research process.
ConstructionSoftwareReview.com assists companies in evaluating and
selecting construction software.
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Application
Development.
The application development sector is comprised of a
broad landscape of tools and languages that enable developers to build,
customize and integrate software for their businesses. Our application
development online properties focus on development in enterprise
environments, the underlying languages such as .NET, Java and XML as well
as related application development tools and integrated development
environments or IDEs. Several trends have had a profound impact on this
sector and are driving growth. The desire for more flexible and
interoperable applications architecture continues to propel interest in
SOA and web services technologies. Application integration, application
testing and security, as well as AJAX and rich Internet applications, are
also key areas of continuing focus for vendors and developers. Our online
properties in this sector include TheServerSide.com and TheServerSide.NET
which host independent communities of developers and architects using Java
and .NET, respectively, Ajaxian.com which serves developers of
rich internet applications, SearchWinDevelopment.com serving Windows
developers, SearchSoftwareQuality.com which offers content focused on
application testing and quality assurance, SearchSOA.com which serves
developers and architects building out service oriented architectures and
working with related technologies. Our online properties are supplemented
by domestic and international conferences as well as regional seminars on
enterprise development
technologies.
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Channel.
Our Channel
media group’s properties address the information needs of channel
companies—classified as resellers, value added resellers, solution
providers, and consultants—in the enterprise IT market. As IT
professionals have become more specialized, IT vendors actively have
sought resellers with specific expertise in the vendors’ sub-sectors. Like
IT professionals, channel solution providers now require more focused
technical content in order to operate successfully in their
sectors. The resulting dynamics in the channel are well-suited
to our integrated, targeted content strategy. Our online
properties in this sector include SearchITchannel.com,
SearchStorageChannel.com, SearchSecurityChannel.com,
SearchNetworkingChannel.com and SearchSystemsChannel.com. As channel
companies resell hardware and software from vendors in a particular IT
sector, the key areas of focus tend to parallel those for the sub-sectors
addressed by our IT-focused properties: for storage, backup, storage
virtualization and network storage solutions such as fibre channel SANs,
NAS, IP SANs; for security, intrusion defense, compliance and identity
management; for networking, wireless, network security and VoIP; for
systems, blade servers, consolidation and server virtualization. Our
online properties are supplemented by in-person regional
seminars.
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Laptops and Mobile Technology.
Our Laptops and Mobile Technology media group operates a portfolio
of Internet content sites that provide product reviews, price comparisons
and user forums for mobile technology products such as laptops and
smartphones including NotebookReview.com™, Brighthand.com™ (covering
smartphones) and TabletPCReview.com™ (covering mobile computing devices)
and DigitalCameraReview.com. These sites represent an ideal complement to
our enterprise-IT-focused TechTarget sites because IT professionals
purchase a large volume of laptops, smartphones and mobile computing
devices. Thus, these sites offer additional, complementary, in-depth
content for our IT audience, as well as access for our advertisers to the
broader audiences that visit these sites for
information.
|
User
Generated Content and Vendor Content
ITKnowledgeExchange.com
is our first site devoted entirely to user generated content, and represents our
most concentrated emphasis to date on facilitating peer to peer interaction
amongst our users. The site incorporates a number of important Web
2.0 features, such as the use of tag-based navigation that allows users to
self-classify content, and wiki-based Q&A functionality that allows them to
collaborate with each other to respond to inquiries submitted by other
users.
Bitpipe.com
and KnowledgeStorm.com are sites that we operate and that host vendor-provided
content such as white papers and webcasts. Maintaining centralized
collections of this vendor content helps our users conduct pre-purchase research
more easily, and allows us to maximize the ability of this content to be found
by search engines. We provide contextually relevant inclusion of
vendor content from Bitpipe.com and KnowledgeStorm.com on the other sites in our
network.
Media
Offerings
We use
the following online, event and print offerings to provide IT vendors with
numerous touch points to reach key IT decision makers and to provide IT
professionals with highly specialized content across multiple forms of media. We
are experienced in assisting advertisers to develop custom advertising programs
that maximize branding and ROI. The following is a description of the products
we offer:
·
|
Online.
Our network of
websites forms the core of our content platform. Our websites provide IT
professionals with comprehensive decision support information tailored to
their specific areas of responsibility and purchasing decisions. Through
our websites, we offer a variety of online media offerings to connect IT
vendors to IT professionals. Our lead generation offerings allow IT
vendors to maximize ROI by capturing qualified sales leads from the
distribution and promotion of content to our audience of IT professionals.
Our branding offerings provide IT vendors exposure to targeted audiences
of IT professionals actively researching information related to their
product and services. Our branding offerings include banners and
e-newsletters. Banner advertising can be purchased on specific websites
within our network. We also offer the ability to advertise in
approximately 80 e-newsletters focused on key site sub-topics. These
offerings give IT vendors the ability to increase their brand awareness to
highly specialized IT sectors.
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Our lead
generation offerings include the following:
o
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White Papers.
White
papers are technical documents created by IT vendors to describe business
or technical problems which are addressed by the vendors’ products or
services. IT vendors pay us to have their white papers distributed to our
users and receive targeted promotion on our relevant websites. When
viewing white papers, our registered members and visitors supply their
corporate contact information and agree to receive further information
from the vendor. The corporate contact and other qualification information
for these leads are supplied to the vendor in real time through our
proprietary lead management
software.
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o
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Webcasts and Podcasts.
IT vendors pay us to sponsor and host webcasts and podcasts that bring
informational sessions directly to attendees’ desktops and, in the case of
podcasts, directly to their mobile devices. As is the case with white
papers, our users supply their corporate contact and qualification
information to the webcast or podcast sponsor when they view or download
the content. Sponsorship includes access to the registrant information and
visibility before, during and after the
event.
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o
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Software Package
Comparisons.
Through our 2020software.com website, IT vendors pay
us to post information and specifications about their software packages,
typically organized by application category. Users can request further
information, which may include downloadable trial software from multiple
software providers in sectors such as CRM, accounting software and
business analytics. IT vendors, in turn, receive qualified leads based
upon the users who request their
information.
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o
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Dedicated E-mails.
IT
vendors pay us to further target the promotion of their white papers,
webcasts, podcasts or downloadable trial software by including their
content in our periodic e-mail updates to registered users of our
websites. Users who have voluntarily registered on our websites receive an
e-mail update from us when vendor content directly related to their
interests is listed on our sites.
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o
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List Rentals.
We also
offer IT vendors the ability to message relevant registered members on
topics related to their interests. IT vendors can rent our e-mail and
postal lists of registered members using specific criteria such as company
size, geography or job title.
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o
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Contextual Advertising.
Our contextual advertising programs associate IT vendor white papers,
webcasts, podcasts or other content on a particular topic with our related
sector-specific content. IT vendors have the option to purchase exclusive
sponsorship of content related to their product or
category.
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·
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Events.
Our in-person
events bring together IT professionals to hear from industry experts and
to talk to IT vendors about key topics of interest in the sectors we
serve. The majority of our events are free to IT professionals and
sponsored by IT vendors. Attendees are pre-screened based on
event-specific criteria such as sector-specific budget size, company size,
or job title. Our sponsors value the ability to meet with an audience of
qualified IT decision makers who all have been pre-screened to determine a
high level of buying interest and the ability to execute a purchase
decision. We offer three types of events: multi-day conferences, seminars
and custom events. Multi-day conferences provide independent expert
content for our attendees, and allow vendors to purchase exhibit space and
other sponsorship offerings that enable interaction with the attendees. We
also hold single-day seminars on various topics in major cities. These
seminars provide independent content on key sub-topics in the sectors we
serve, are free to qualified attendees and offer multiple vendors the
ability to interact with specific, targeted audiences actively focused on
buying decisions. Our custom events differ from our seminars in that they
are exclusively sponsored by a single IT vendor, and the content is driven
primarily by the sole sponsor.
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Print.
Our two monthly
controlled circulation magazines,
Information Security
magazine and
Storage
magazine,
deliver to readers strategic guidance on major enterprise level
technology
decisions. The circulation of these publications is targeted to users with
specific
qualification
criteria such as technology-specific budget levels, job titles, and
company size. Through
our print
publications, vendors have the opportunity to reach highly qualified
readers with targeted
branding and
awareness-building marketing
campaigns.
|
Customers
We market
to IT vendors targeting a specific audience within an IT sector or sub-sector.
We maintain multiple points of contact with our customers in order to provide
support throughout a given organization and throughout the sales cycle. As a
result, individual customers often run multiple advertising programs with us in
order to reach discrete portions of our targeted audience. Our services
are generally delivered under short-term contracts that run for the length of a
given advertising program, typically 90 days or less. Since our founding in
1999, we have developed a broad customer base that now comprises more than 1,100
active advertisers. During 2007, no one customer represented more than 10% of
revenues and the quarterly renewal rate of our top 100 customers has
consistently exceeded 90%.
Sales
and Marketing
Since our
inception in 1999, we have maintained an internal direct sales department that
works closely with existing and potential customers to develop customized
marketing programs that provide highly targeted access to IT professionals. We
organize the sales force by the sector-specific media groups that we operate, as
well as a national accounts team that works with our largest advertisers. We
believe that our sector-specific sales organization and integrated approach to
our product offerings allows our sales personnel to develop a high level of
expertise in the specific sectors they cover, and to create effective marketing
programs tailored to the customer’s specific objectives. As of December 31,
2007, our sales and marketing staff consisted of 237 people. The majority of our
sales staff is located in our Needham, Massachusetts headquarters and our
offices in San Francisco, California and Alpharetta, Georgia.
We pursue
a variety of marketing initiatives designed to support our sales activities by
building awareness of our brand to IT vendors, and positioning ourselves as a
‘‘thought leader’’ in ROI-based marketing. These initiatives include purchasing
online, event and print sponsorships in media vehicles that target the
technology advertising market, as well as engaging in direct communications with
the database of advertising contacts we have built since inception. Examples of
our direct communications include our monthly e-newsletter,
The IT Agenda,
which delivers
advice for technology marketers, as well as selected direct mail updates on new
product launches and initiatives. We also produce in-person events for
technology marketers where we provide information on the latest best practices
in the field of online marketing.
Online
User Acquisition
Our
primary source of traffic to our websites is through non-paid traffic sources,
such as our existing registered member base and organic search engine traffic.
Organic search engine traffic is also the primary source of new registered
members for our sites. Because our sites focus on specific sectors of the IT
market, our content is highly targeted and is an effective means for attracting
search engine traffic and resulting members. We also make user-focused marketing
expenditures designed to supplement our non-paid traffic and registered members.
We employ a variety of online marketing vehicles such as keyword advertising on
the major search engines and targeted list rentals of opt-in e-mail subscribers
from a variety of targeted media sources.
Technological
Infrastructure
We have
developed an expandable operations infrastructure using hardware and software
systems from established IT vendors to maintain our websites and online
offerings. Our system hardware is co-located at Verizon’s Billerica,
Massachusetts data center. All of the critical components of the system are
redundant, allowing us to withstand unexpected component failure and to undergo
maintenance and upgrades. Our infrastructure is scalable, enabling us to make
incremental additions that fit into the existing environment as our system
requirements grow based on traffic and member growth. Our critical data is
copied to backup tapes daily, which are sent to an off-site storage facility. We
maintain a quality assurance process to monitor constantly our servers,
processes and network connectivity. We have implemented these various
redundancies and backup systems in order to minimize the risk associated with
damage from fire, power loss, telecommunications failure, break-ins, computer
viruses and other events beyond our control. We believe that continued
development of our technological infrastructure is critical to our success. We
have made, and expect to continue to make, technological improvements in this
infrastructure to improve our ability to service our users and
customers.
Competition
We
compete for potential advertisers with a number of different types of companies,
including: broad-based media outlets, such as television, newspapers and
business periodicals that are designed to reach a wide audience; general purpose
portals and search engines; and offline and online offerings of media companies
that produce content specifically for IT professionals. The market for
advertisers is highly competitive, and in each of the sectors we serve as well
as across the products we offer, our primary competitors are the media companies
that produce content specifically for IT professionals. Our three primary
competitors for advertisers, each of which possess substantial resources to
compete, are United Business Media, International Data Group and Ziff Davis
Enterprise, Inc. In the online market we generally compete on the basis of
target audience, quality and uniqueness of information content, ease of use of
our websites for IT professionals, and the quality and quantity of sales leads
generated for advertisers. Our print publications generally compete on the basis
of editorial quality and integrity, as well as the demographic quality of the
circulations that receive the publications. Our events generally compete on the
basis of the quality and integrity of our content offerings, the quality of our
attendees, and the ability to provide events that meet the needs of particular
sector segments. As with the competition for advertisers, we compete for the
users who comprise our target audiences primarily with the media companies that
produce content specifically for IT professionals such as United Business Media,
International Data Group and Ziff Davis Enterprise, Inc.
User
Privacy
We gather
in-depth information about our registered members who elect to provide us
information through one or more of the online registration forms displayed on
our websites. We post our privacy policies on our websites so that our users can
access and understand the terms and conditions applicable to the collection and
use of that information. Our privacy policies also disclose the types of
information we gather, how we use it, and how a user can correct or change this
information. Our privacy policies also explain the circumstances under which we
share this information and with whom. Users who register for our websites have
the option of indicating specific areas of interest in which they are willing to
receive offers via e-mail or postal mail; these offers contain content created
either by us or our third-party IT vendor customers. To protect our disclosures
and obligations to our users, we impose constraints that are generally
consistent with our commitments to our user community on the customers to whom
we provide user data. Additionally, when we provide lists to third parties,
including to our advertiser customers, it is under contractual terms that are
generally consistent with our obligations to our users and with applicable laws
and regulations.
Consumer
Protection Regulation
General.
Advertising and
promotional activities presented to visitors on our websites are subject to
federal and state consumer protection laws that regulate unfair and deceptive
practices. We are also subject to various other federal and state consumer
protection laws, including the ones described below.
CAN-SPAM Act.
Effective
January 1, 2004, the Controlling the Assault of Non-Solicited Pornography and
Marketing Act of 2003, or the CAN-SPAM Act, became effective. The CAN-SPAM Act
regulates commercial e-mails and provides a right on the part of the recipient
to request the sender to stop sending messages, and establishes penalties for
the sending of e-mail messages that are intended to deceive the recipient as to
source or content. Under the CAN-SPAM Act, senders of commercial e-mails (and
other persons who initiate those e-mails) are required to make sure that those
e-mails do not contain false or misleading transmission information. Commercial
e-mails are required to include a valid return e-mail address and other subject
heading information so that the sender and the Internet location from which the
message has been sent are accurately identified. Recipients must be furnished
with an electronic method of informing the sender of the recipient’s decision
not to receive further commercial e-mails. In addition, the e-mail must include
a postal address of the sender and notice that the e-mail is an advertisement.
The CAN-SPAM Act may apply to the e-newsletters that our websites distribute to
registered members and to some of our other commercial e-mail communications.
However, there may be additional FTC regulations indicating that our
e-newsletters are outside the scope of CAN-SPAM Act. At this time, we are
applying the CAN-SPAM requirements to these e-mail communications, and believe
that our e-mail practices comply with the requirements of the CAN-SPAM
Act.
In
addition, several foreign governments have regulations dealing with the
collection and use of personal information obtained from their citizens. Those
governments may attempt to apply such laws extraterritorially or through
treaties or other arrangements with U.S. governmental entities. We might
unintentionally violate such laws, such laws may be modified and new laws may be
enacted in the future. Any such developments (or developments stemming from
enactment or modification of other laws) or the failure to anticipate accurately
the application or interpretation of these laws could create liability to us,
result in adverse publicity and affect negatively our businesses.
Intellectual
Property
We regard
our copyrights, domain names, marks, trade secrets and similar intellectual
property as critical to our success, and rely upon copyright, trademark and
trade secrets laws, as well as confidentiality agreements with our employees and
others, and protective contractual provisions to protect the proprietary
technologies and content that we have developed. We pursue the registration of
our material trademarks in the United States. Currently, our TechTarget
trademark and logo, as well as the KnowledgeStorm and certain other marks and
logos are registered federally in the United States and selected foreign
jurisdictions and we have applied for U.S. and foreign registrations for various
marks. In addition, we have registered approximately 870 domain names that are
or may be relevant to our business, including ‘‘www.techtarget.com,’’
“www.knowledgestorm.com,” ‘‘www.bitpipe.com,’’ and those leveraging the
‘‘search’’ prefix used in the branding of many of our websites. We also
incorporate a number of third-party software products into our technology
platform pursuant to relevant licenses. Some of this software is proprietary and
some is open source. We use third-party software to maintain and enhance, among
other things, the content generation and delivery, and support our technology
infrastructure. We are not substantially dependent upon these third-party
software licenses and we believe the licensed software is generally replaceable,
by either licensing or purchasing similar software from another vendor or
building the software functions ourselves.
Employees
As of
December 31, 2007, we had approximately 584 employees. Our current employees are
not represented by a labor union and are not the subject of a collective
bargaining agreement. We believe that we have a good relationship with our
employees.
The
following discussion highlights certain risks which may affect future operating
results and share price. These are the risks and uncertainties we believe are
most important for our existing and potential stockholders to consider.
Additional risks and uncertainties not presently known to us, which we currently
deem immaterial or which are similar to those faced by other companies in our
industry or business in general, may also impair our business operations. If any
of the following risks or uncertainties actually occurs, our business, financial
condition and operating results would likely suffer.
Risks
Related to Our Business
Because
we depend on our ability to generate revenues from the sale of advertising,
fluctuations in advertising spending could have an adverse effect on our
operating results.
The
primary source of our revenues is the sale of advertising to our customers. Our
advertising revenues accounted for approximately 98% of our total revenues for
the year ended December 31, 2007. We believe that advertising spending on the
Internet, as in traditional media, fluctuates significantly as a result of a
variety of factors, many of which are outside of our control. These factors
include:
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variations
in expenditures by advertisers due to budgetary
constraints;
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·
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the
cancellation or delay of projects by
advertisers;
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·
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the
cyclical and discretionary nature of advertising
spending;
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·
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general
economic conditions, as well as economic conditions specific to the
Internet and online and offline media industry;
and
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the
occurrence of extraordinary events, such as natural disasters,
international or domestic terrorist attacks or armed
conflict.
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Because
all of our customers are in the IT industry, our revenues are subject to
characteristics of the IT industry that can affect advertising spending by IT
vendors.
The IT
industry is characterized by, among other things, volatile quarterly results,
uneven sales patterns, short product life cycles, rapid technological
developments and frequent new product introductions and enhancements. As a
result, our customers’ advertising budgets, which are often viewed as
discretionary expenditures, may increase or decrease significantly over a short
period of time. In addition, the advertising budgets of our customers may
fluctuate as a result of:
·
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weakness
in corporate IT spending resulting in a decline in IT advertising
spending;
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increased
concentration in the IT industry as a result of consolidations, leading to
a decrease in the number of current and prospective customers, as well as
an overall reduction in
advertising;
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spending
by combined entities following such consolidations;
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the
timing of advertising campaigns around new product introductions and
initiatives; and
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economic
conditions specific to the IT
industry.
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Our
quarterly operating results are subject to significant fluctuations, and these
fluctuations may adversely affect the trading price of our common
stock.
We have
experienced and expect to experience significant fluctuations in our quarterly
revenues and operating results. Our quarterly revenues and operating results may
fluctuate significantly from quarter to quarter due to a number of factors, many
of which are outside of our control. In addition to the factors described
elsewhere in this ‘‘Risk Factors’’ section, these factors include:
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the
spending priorities and advertising budget cycles of specific
advertisers;
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the
addition or loss of advertisers;
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the
addition of new sites and services by us or our competitors;
and
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seasonal
fluctuations in advertising
spending.
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Due to
such risks, you should not rely on quarter-to-quarter comparisons of our results
of operations as an indicator of our future results. Due to the foregoing
factors, it is also possible that our results of operations in one or more
quarters may fall below the expectations of investors and/or securities
analysts. In such an event, the trading price of our common stock is likely to
decline.
Our
revenues are primarily derived from short-term contracts that may not be
renewed.
The
primary source of our revenues is the sale of advertising to our customers, and
we expect that this will continue to be the case for the foreseeable future. Our
advertising contracts are almost exclusively short-term, typically 90 days or
less, and are subject to termination without substantial penalty by the customer
at any time, generally with minimal notice requirements of 30 days or less. We
cannot assure you that our current customers will fulfill their obligations
under their existing contracts, continue to participate in our existing programs
beyond the terms of their existing contracts or enter into any additional
contracts for new programs that we offer. If a significant number of advertisers
or a few large advertisers decided not to continue advertising on our websites
or in our print magazines, or conducting or sponsoring events, we could
experience a rapid decline in our revenues over a relatively short period of
time.
If
we are unable to deliver content and services that attract and retain users, our
ability to attract advertisers may be affected, which could in turn have an
adverse affect on our revenues.
Our
future success depends on our ability to deliver original and compelling content
and services to attract and retain users. Our user base is comprised of
corporate IT professionals who demand specialized websites, print publications
and events tailored to the sectors of the IT products for which they are
responsible and that they purchase. Our content and services may not be
attractive to a sufficient number of users to attract advertisers and generate
revenues consistent with our estimates. We also may not develop new content or
services in a timely or cost-effective manner. Our ability to develop and
produce this specialized content successfully is subject to numerous
uncertainties, including our ability to:
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anticipate
and respond successfully to rapidly changing IT developments and
preferences to ensure that our content remains timely and interesting to
our users;
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attract
and retain qualified editors, writers and technical
personnel;
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fund
new development for our programs and other offerings;
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successfully
expand our content offerings into new platform and delivery mechanisms;
and
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promote
and strengthen the brands of our websites and our
name.
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If we are
not successful in maintaining and growing our user base, our ability to retain
and attract advertisers may be affected, which could in turn have an adverse
affect on our revenues.
Our
inability to sustain our historical advertising rates could adversely affect our
operating results.
The
market for advertising has fluctuated over the past few years. If we are unable
to maintain historical pricing levels for advertising on our websites and in our
print publications and for sponsorships at our events, our revenues could be
adversely affected.
Competition
for advertisers is intense, and we may not compete successfully which could
result in a material reduction in our market share, the number of our
advertisers and our revenues.
We
compete for potential advertisers with a number of different types of offerings
and companies, including: broad-based media outlets, such as television,
newspapers and business periodicals that are designed to reach a wide audience;
general purpose portals and search engines; and offline and online offerings of
media companies that produce content specifically for IT professionals,
including International Data Group, United Business Media and Ziff Davis
Enterprise. Advertisers may choose our competitors over us not only because they
prefer our competitors’ online, events and print offerings to ours, but also
because advertisers prefer to utilize other forms of advertising offered by our
competitors that are not offered by us. Although less than 5% of our revenues
for the year ended December 31, 2007 were derived from advertisers located
outside of North America, as we continue to expand internationally, we expect to
compete with many of the competitors mentioned above, as well as with
established media companies based in particular countries or geographical
regions. Many of these foreign-based media companies will be larger than we are
and will have established relationships with local advertisers. Many of our
current and potential competitors have longer operating histories, larger
customer bases, greater brand recognition and significantly greater financial,
marketing and other resources than we have. As a result, we could lose market
share to our competitors in one or more of our businesses and our revenues could
decline.
We
depend upon Internet search engines to attract a significant portion of the
users who visit our websites, and if we were listed less prominently in search
result listings, our business and operating results would be
harmed.
We derive
a significant portion of our website traffic from users who search for IT
purchasing content through Internet search engines, such as Google, MSN and
Yahoo! A critical factor in attracting users to our websites is whether we are
prominently displayed in response to an Internet search relating to IT content.
Search result listings are determined and displayed in accordance with a set of
formulas or algorithms developed by the particular Internet search engine. The
algorithms determine the order of the listing of results in response to the
user’s Internet search. From time to time, search engines revise these
algorithms. In some instances, these modifications may cause our websites to be
listed less prominently in unpaid search results, which will result in decreased
traffic from search engine users to our websites. Our websites may also become
listed less prominently in unpaid search results for other reasons, such as
search engine technical difficulties, search engine technical changes and
changes we make to our websites. In addition, search engines have deemed the
practices of some companies to be inconsistent with search engine guidelines and
have decided not to list their websites in search result listings at all. If we
are listed less prominently or not at all in search result listings for any
reason, the traffic to our websites likely will decline, which could harm our
operating results. If we decide to attempt to replace this traffic, we may be
required to increase our marketing expenditures, which also could harm our
operating results.
We
may not innovate at a successful pace, which could harm our operating
results.
Our
industry is rapidly adopting new technologies and standards to create and
satisfy the demands of users and advertisers. It is critical that we continue to
innovate by anticipating and adapting to these changes to ensure that our
content-delivery platforms and services remain effective and interesting to our
users, advertisers and partners. In addition, we may discover that we must make
significant expenditures to achieve these goals. If we fail to accomplish these
goals, we may lose users and the advertisers that seek to reach those users,
which could harm our operating results.
We
may be unable to continue to build awareness of our brands, which could
negatively impact our business and cause our revenues to decline.
Building
and maintaining recognition of our brands is critical to attracting and
expanding our online user base, attendance at our events and our offline
readership. We intend to continue to build existing brands and introduce new
brands that will resonate with our targeted audiences, but we may not be
successful. In order to promote these brands, in response to competitive
pressures or otherwise, we may find it necessary to increase our marketing
budget, hire additional marketing and public relations personnel or otherwise
increase our financial commitment to creating and maintaining brand loyalty
among our clients. If we fail to promote and maintain our brands effectively, or
incur excessive expenses attempting to promote and maintain our brands, our
business and financial results may suffer.
Given
the tenure and experience of our Chief Executive Officer and President, and
their guiding roles in developing our business and growth strategy since our
inception, our growth may be inhibited or our operations may be impaired if we
were to lose the services of either of them.
Our
growth and success depends to a significant extent on our ability to retain Greg
Strakosch, our Chief Executive Officer, and Don Hawk, our President, both of
whom were founders of our company and have developed, engineered and stewarded
the growth and operation of our business since its inception. The loss of the
services of either of these persons could inhibit our growth or impair our
operations and cause our stock price to decline.
We
may not be able to attract, hire and retain qualified personnel
cost-effectively, which could impact the quality of our content and services and
the effectiveness and efficiency of our management, resulting in increased costs
and losses in revenues.
Our
success depends on our ability to attract, hire and retain at commercially
reasonable rates qualified technical editorial, sales and marketing, customer
support, financial and accounting, legal and other managerial personnel. The
competition for personnel in the industries in which we operate is intense. Our
personnel may terminate their employment at any time for any reason. Loss of
personnel may also result in increased costs for replacement hiring and
training. If we fail to attract and hire new personnel or retain and motivate
our current personnel, we may not be able to operate our businesses effectively
or efficiently, serve our customers properly or maintain the quality of our
content and services. In particular, our success depends in significant part on
maintaining and growing an effective sales force. This dependence involves a
number of challenges, including:
·
|
the
need to hire, integrate, motivate and retain additional sales and sales
support personnel;
|
·
|
the
need to train new sales personnel, many of whom lack sales experience when
they are hired; and
|
·
|
competition
from other companies in hiring and retaining sales
personnel.
|
We
may fail to identify or successfully acquire and integrate businesses, products
and technologies that would otherwise enhance our product offerings to our
customers and users, and as a result our revenues may decline or fail to
grow.
We have
acquired, and in the future may acquire or invest in, complementary businesses,
products or technologies. Acquisitions and investments involve numerous risks
including:
·
|
difficulty
in assimilating the operations and personnel of acquired
businesses;
|
·
|
potential
disruption of our ongoing businesses and distraction of our management and
the management of acquired
companies;
|
·
|
difficulty
in incorporating acquired technology and rights into our offerings and
services;
|
·
|
unanticipated
expenses related to technology and other
integration;
|
·
|
potential
failure to achieve additional sales and enhance our customer bases through
cross marketing of the combined company’s products to new and existing
customers;
|
·
|
potential
litigation resulting from our business combinations or acquisition
activities; and
|
·
|
potential
unknown liabilities associated with the acquired
businesses.
|
Our
inability to integrate any acquired business successfully, or the failure to
achieve any expected synergies, could result in increased expenses and a
reduction in expected revenues or revenue growth. As a result, our stock price
could fluctuate or decline. In addition, we cannot assure you that we will be
successful in expanding into complementary sectors in the future, which could
harm our business, operating results and financial condition.
The
costs associated with potential acquisitions or strategic partnerships could
dilute your investment or adversely affect our results of
operations.
In order
to finance acquisitions, investments or strategic partnerships, we may use
equity securities, debt, cash, or a combination of the foregoing. Any issuance
of equity securities or securities convertible into equity may result in
substantial dilution to our existing stockholders, reduce the market price of
our common stock, or both. Any debt financing is likely to have financial and
other covenants that could have an adverse impact on our business if we do not
achieve our projected results. In addition, the related increases in expenses
could adversely affect our results of operations.
We
have limited protection of our intellectual property and could be subject to
infringement claims that may result in costly litigation, the payment of damages
or the need to revise the way we conduct our business.
Our
success and ability to compete are dependent in part on the strength of our
proprietary rights, on the goodwill associated with our trademarks, trade names
and service marks, and on our ability to use U.S. and foreign laws to protect
them. Our intellectual property includes, among other things, our original
content, our editorial features, logos, brands, domain names, the technology
that we use to deliver our products and services, the various databases of
information that we maintain and make available by license, and the appearance
of our websites. We claim common law protection on certain names and marks that
we have used in connection with our business activities. Although we have
applied for and obtained registration of many of our marks in countries outside
of the United States where we do business, we have not been able to obtain
registration of all of our key marks in such jurisdictions, in some cases due to
prior registration or use by third parties employing similar marks. In addition
to U.S. and foreign laws, we rely on confidentiality agreements with our
employees and third parties and protective contractual provisions to safeguard
our intellectual property. Policing our intellectual property rights worldwide
is a difficult task, and we may not be able to identify infringing
users. We cannot be certain that third party licensees of our content
will always take actions to protect the value of our proprietary rights and
reputation. Intellectual property laws and our agreements may not be sufficient
to prevent others from copying or otherwise obtaining and using our content or
technologies. In addition, others may develop non-infringing technologies that
are similar or superior to ours. In seeking to protect our marks, copyrights,
domain names and other proprietary rights, or in defending ourselves against
claims of infringement that may be with or without merit, we could face costly
litigation and the diversion of our management’s attention and resources. These
claims could result in the need to develop alternative trademarks, content or
technology or to enter into costly royalty or licensing agreements, which could
have a material adverse effect on our business, results of operations and
financial condition. We may not have, in all cases, conducted formal evaluations
to confirm that our technology and products do not or will not infringe upon the
intellectual property rights of third parties. As a result, we cannot be certain
that our technology, offerings, services or online content do not or will not
infringe upon the intellectual property rights of third parties. If we were
found to have infringed on a third party’s intellectual property rights, the
value of our brands and our business reputation could be impaired, and our
business could suffer.
Our
business could be harmed if we are unable to correspond with existing and
potential users by e-mail.
We use
e-mail as a significant means of communicating with our existing users. The laws
and regulations governing the use of e-mail for marketing purposes continue to
evolve, and the growth and development of the market for commerce over the
Internet may lead to the adoption of additional legislation and/or changes to
existing laws. If new laws or regulations are adopted, or existing laws and
regulations are interpreted and/or amended or modified, to impose additional
restrictions on our ability to send e-mail to our users or potential users, we
may not be able to communicate with them in a cost-effective manner. In addition
to legal restrictions on the use of e-mail, Internet service providers and
others typically attempt to block the transmission of unsolicited e-mail,
commonly known as ‘‘spam.’’ If an Internet service provider or software program
identifies e-mail from us as ‘‘spam,’’ we could be placed on a restricted list
that would block our e-mail to users or potential users who maintain e-mail
accounts with these Internet service providers or who use these software
programs. If we are unable to communicate by e-mail with our users and potential
users as a result of legislation, blockage or otherwise, our business, operating
results and financial condition could be harmed.
Changes
in laws and standards relating to data collection and use practices and the
privacy of Internet users and other individuals could impair our efforts to
maintain and grow our audience and thereby decrease our advertising
revenue.
We
collect information from our users who register for services or respond to
surveys. Subject to each user’s permission (or right to decline, which we refer
to as an ‘‘opt-out’’), we may use this information to inform our users of
products and services that may be of interest to them. We may also share this
information with our advertising clients for registered members who have elected
to receive additional promotional materials and have granted us permission to
share their information with third parties. The U.S. federal and various state
governments have adopted or proposed limitations on the collection, distribution
and use of personal information of Internet users. Several foreign
jurisdictions, including the European Union and Canada, have adopted legislation
(including directives or regulations) that may limit our collection and use of
information from Internet users in these jurisdictions. In addition, growing
public concern about privacy, data security and the collection, distribution and
use of personal information has led to self-regulation of these practices by the
Internet advertising and direct marketing industry, and to increased federal and
state regulation. Because many of the proposed laws or regulations are in their
early stages, we cannot yet determine the impact these regulations may have on
our business over time. Although, to date, our efforts to comply with applicable
federal and state laws and regulations have not hurt our business, additional,
more burdensome laws or regulations, including consumer privacy and data
security laws, could be enacted or applied to us or our customers. Such laws or
regulations could impair our ability to collect user information that helps us
to provide more targeted advertising to our users, thereby impairing our ability
to maintain and grow our audience and maximize advertising revenue from our
advertising clients.
There
are a number of risks associated with expansion of our business internationally
that could adversely affect our business.
We have
over 15 license and other arrangements in various countries and maintain a
direct presence in the United Kingdom. In addition to facing many of the same
challenges we face domestically, there are additional risks and costs inherent
in expanding our business in international markets, including:
·
|
limitations
on our activities in foreign countries where we have granted rights to
existing business partners;
|
·
|
the
adaptation of our websites and advertising programs to meet local needs
and to comply with local legal regulatory
requirements;
|
·
|
varied,
unfamiliar and unclear legal and regulatory restrictions, as well as
unforeseen changes in, legal and regulatory
requirements;
|
·
|
more
restrictive data protection regulation, which may vary by
country;
|
·
|
difficulties
in staffing and managing multinational operations;
|
·
|
difficulties
in finding appropriate foreign licensees or joint venture
partners;
|
·
|
distance,
language and cultural differences in doing business with foreign
entities;
|
·
|
foreign
political and economic uncertainty;
|
·
|
less
extensive adoption of the Internet as an information source and increased
restriction on the content of websites;
|
·
|
currency
exchange-rate fluctuations; and
|
·
|
potential
adverse tax requirements.
|
As a
result, we may face difficulties and unforeseen expenses in expanding our
business internationally and even if we attempt to do so, we may be
unsuccessful, which could harm our business, operating results and financial
condition.
Changes
in regulations could adversely affect our business and results of
operations.
It is
possible that new laws and regulations or new interpretations of existing laws
and regulations in the United States and elsewhere will be adopted covering
issues affecting our business, including:
·
|
privacy,
data security and use of personally identifiable
information;
|
·
|
copyrights,
trademarks and domain names; and
|
·
|
marketing
practices, such as e-mail or direct
marketing.
|
Increased
government regulation, or the application of existing laws to online activities,
could:
·
|
decrease
the growth rate of the Internet;
|
·
|
reduce
our revenues;
|
·
|
increase
our operating expenses; or
|
·
|
expose
us to significant liabilities.
|
Furthermore,
the relationship between regulations governing domain names and laws protecting
trademarks and similar proprietary rights is still evolving. Therefore, we might
be unable to prevent third parties from acquiring domain names that infringe or
otherwise decrease the value of our trademarks and other proprietary rights. Any
impairment in the value of these important assets could cause our stock price to
decline. We cannot be sure what effect any future material noncompliance by us
with these laws and regulations or any material changes in these laws and
regulations could have on our business, operating results and financial
condition.
As
a creator and a distributor of content over the Internet, we face potential
liability for legal claims based on the nature and content of the materials that
we create or distribute.
Due to
the nature of content published on our online network, including content placed
on our online network by third parties, and as a creator and distributor of
original content and research, we face potential liability based on a variety of
theories, including defamation, negligence, copyright or trademark infringement,
or other legal theories based on the nature, creation or distribution of this
information. Such claims may also include, among others, claims that by
providing hypertext links to websites operated by third parties, we are liable
for wrongful actions by those third parties through these websites. Similar
claims have been brought, and sometimes successfully asserted, against online
services. It is also possible that our users could make claims against us for
losses incurred in reliance on information provided on our networks. In
addition, we could be exposed to liability in connection with material posted to
our Internet sites by third parties. For example, many of our sites offer users
an opportunity to post unmoderated comments and opinions. Some of this
user-generated content may infringe on third party intellectual property rights
or privacy rights or may otherwise be subject to challenge under copyright laws.
Such claims, whether brought in the United States or abroad, could divert
management time and attention away from our business and result in significant
cost to investigate and defend, regardless of the merit of these claims. In
addition, if we become subject to these types of claims and are not successful
in our defense, we may be forced to pay substantial damages. Our insurance may
not adequately protect us against these claims. The filing of these claims may
also damage our reputation as a high quality provider of unbiased, timely
analysis and result in client cancellations or overall decreased demand for our
products and services.
We
may be liable if third parties or our employees misappropriate our users’
confidential business information.
We
currently retain confidential information relating to our users in secure
database servers. Although we observe security measures throughout our
operations, we cannot assure you that we will be able to prevent individuals
from gaining unauthorized access to these database servers. Any unauthorized
access to our servers, or abuse by our employees, could result in the theft of
confidential user information. If confidential information is compromised, we
could lose customers or become subject to liability or litigation and our
reputation could be harmed, any of which could materially and adversely affect
our business and results of operations.
Our
business, which is dependent on centrally located communications and computer
hardware systems, is vulnerable to natural disasters, telecommunication and
systems failures, terrorism and other problems, which could reduce traffic on
our networks or websites and result in decreased capacity for advertising
space.
Our
operations are dependent on our communications systems and computer hardware,
all of which are located in data centers operated by Verizon, Inc. These systems
could be damaged by fire, floods, earthquakes, power loss, telecommunication
failures and similar events. Our insurance policies have limited coverage levels
for loss or damages in these events and may not adequately compensate us for any
losses that may occur. In addition, terrorist acts or acts of war may cause harm
to our employees or damage our facilities, our clients, our clients’ customers
and vendors, or cause us to postpone or cancel, or result in dramatically
reduced attendance at, our events, which could adversely impact our revenues,
costs and expenses and financial position. We are predominantly uninsured for
losses and interruptions to our systems or cancellations of events caused by
terrorist acts and acts of war.
Our
systems may be subject to slower response times and system disruptions that
could adversely affect our revenues.
Our
ability to attract and maintain relationships with users, advertisers and
strategic partners will depend on the satisfactory performance, reliability and
availability of our Internet infrastructure. Our Internet advertising revenues
relate directly to the number of advertisements and other marketing
opportunities delivered to our users. System interruptions or delays that result
in the unavailability of Internet sites or slower response times for users would
reduce the number of advertising impressions and leads delivered. This could
reduce our revenues as the attractiveness of our sites to users and advertisers
decreases. Our insurance policies provide only limited coverage for service
interruptions and may not adequately compensate us for any losses that may occur
due to any failures or interruptions in our systems. Further, we do not have
multiple site capacity for all of our services in the event of any such
occurrence.
We may
experience service disruptions for the following reasons:
·
|
occasional
scheduled maintenance;
|
·
|
equipment
failure;
|
·
|
volumes
of visits to our websites that exceed our infrastructure’s capacity;
and
|
·
|
natural
disasters, telecommunications failures, power failures, other system
failures, maintenance, viruses, hacking or other
events.
|
In
addition, our networks and websites must accommodate a high volume of traffic
and deliver frequently updated information. They have experienced in the past,
and may experience in the future, slower response times or decreased traffic for
a variety of reasons. There have been instances where our online networks as a
whole, or our websites individually, have been inaccessible. Also, slower
response times, which have occurred more frequently, can result from general
Internet problems, routing and equipment problems involving third party Internet
access providers, problems with third party advertising servers, increased
traffic to our servers, viruses and other security breaches, many of which
problems are out of our control. In addition, our users depend on Internet
service providers and online service providers for access to our online networks
or websites. Those providers have experienced outages and delays in the past,
and may experience outages or delays in the future. Moreover, our Internet
infrastructure might not be able to support continued growth of our online
networks or websites. Any of these problems could result in less traffic to our
networks or websites or harm the perception of our networks or websites as
reliable sources of information. Less traffic on our networks and websites or
periodic interruptions in service could have the effect of reducing demand for
advertising on our networks or websites, thereby reducing our advertising
revenues.
Our
networks may be vulnerable to unauthorized persons accessing our systems,
viruses and other disruptions, which could result in the theft of our
proprietary information and/or disrupt our Internet operations making our
websites less attractive and reliable for our users and
advertisers.
Internet
usage could decline if any well-publicized compromise of security occurs.
‘‘Hacking’’ involves efforts to gain unauthorized access to information or
systems or to cause intentional malfunctions or loss or corruption of data,
software, hardware or other computer equipment. Hackers, if successful, could
misappropriate proprietary information or cause disruptions in our service. We
may be required to expend capital and other resources to protect our websites
against hackers. Our online networks could also be affected by computer viruses
or other similar disruptive problems, and we could inadvertently transmit
viruses across our networks to our users or other third parties. Any of these
occurrences could harm our business or give rise to a cause of action against
us. Providing unimpeded access to our online networks is critical to servicing
our customers and providing superior customer service. Our inability to provide
continuous access to our online networks could cause some of our customers to
discontinue purchasing advertising programs and services and/or prevent or deter
our users from accessing our networks. Our activities and the activities of
third party contractors involve the storage and transmission of proprietary and
personal information. Accordingly, security breaches could expose us to a risk
of loss or litigation and possible liability. We cannot assure that contractual
provisions attempting to limit our liability in these areas will be successful
or enforceable, or that other parties will accept such contractual provisions as
part of our agreements.
We
will continue to incur significant costs as a result of operating as a public
company, and our management will be required to devote substantial time to new
compliance initiatives.
We will continue to incur
significant legal, accounting and other expenses that we did not incur as a
private company. The Sarbanes-Oxley Act of 2002, as well as new rules
subsequently implemented by the SEC and the Nasdaq Stock Market, or Nasdaq, has
imposed various new requirements on public companies, including requiring
changes in corporate governance practices. Our management and other personnel
will need to continue to devote a substantial amount of time to these compliance
initiatives. Moreover, these rules and regulations will increase our legal and
financial compliance costs and will make some activities more time-consuming and
costly. For example, we expect these new rules and regulations to make it more
difficult and more expensive for us to obtain director and officer liability
insurance, and we may be required to incur substantial costs to maintain the
same or similar coverage.
In addition, the
Sarbanes-Oxley Act requires, among other things, that we maintain effective
internal controls for financial reporting and disclosure controls and
procedures. In particular, commencing in fiscal 2006, we began system and
process evaluation and testing of our internal controls over financial reporting
to allow management and our independent registered public accounting firm to
report on the effectiveness of our internal controls over financial reporting,
as required by Section 404 of the Sarbanes-Oxley Act. Our preparation for
compliance with Section 404 requires that we continue to incur substantial
accounting expense and expend significant management efforts. We currently do
not have an internal audit group, and have engaged outside accounting and
advisory services with appropriate public company experience and technical
accounting knowledge. Moreover, if we are not able to comply with the
requirements of Section 404 in a timely manner, or if we or our independent
registered public accounting firm identifies deficiencies in our internal
controls over financial reporting that are deemed to be material weaknesses, the
market price of our stock could decline and we could be subject to sanctions or
investigations by Nasdaq, the SEC or other regulatory authorities, which would
require additional financial and management resources.
If
we fail to maintain proper and effective disclosure controls and procedures and
internal controls over financial reporting, our ability to produce accurate
financial statements could be impaired, which could adversely affect our
operating results, our ability to operate our business and investors’ views of
us.
Ensuring
that we have adequate disclosure controls and procedures, including internal
financial and accounting controls and procedures, in place to help ensure that
we can produce accurate financial statements on a timely basis is a costly and
time-consuming effort that needs to be re-evaluated frequently. We are in the
process of documenting, reviewing and, if appropriate, improving our internal
controls and procedures in connection with the requirements of Section 404 of
the Sarbanes-Oxley Act. Both we and our independent auditors will be testing our
internal controls in connection with the Section 404 requirements and, as part
of that documentation and testing, identifying areas for further attention and
improvement. Implementing any appropriate changes to our internal controls may
entail substantial costs in order to modify our existing accounting systems,
take a significant period of time to complete and distract our officers,
directors and employees from the operation of our business. These changes may
not, however, be effective in maintaining the adequacy of our internal controls,
and any failure to maintain that adequacy, or consequent inability to produce
accurate financial statements on a timely basis, could increase our operating
costs and could materially impair our ability to operate our business. In
addition, investors’ perceptions that our internal controls are inadequate or
that we are unable to produce accurate financial statements may seriously affect
our stock price.
Our
ability to raise capital in the future may be limited.
Our
business and operations may consume resources faster than we anticipate. In the
future, we may need to raise additional funds to expand our sales and marketing
and product development efforts or to make acquisitions. Additional financing
may not be available on favorable terms, if at all. If adequate funds are not
available on acceptable terms, we may be unable to fund the expansion of our
sales and marketing and research and development efforts or take advantage of
acquisition or other opportunities, which could seriously harm our business and
operating results. If we incur debt, the debt holders would have rights senior
to common stockholders to make claims on our assets and the terms of any debt
could restrict our operations, including our ability to pay dividends on our
common stock. Furthermore, if we issue additional equity securities,
stockholders will experience dilution, and the new equity securities could have
rights senior to those of our common stock. Because our decision to issue
securities in any future offering will depend on market conditions and other
factors beyond our control, we cannot predict or estimate the amount, timing or
nature of our future offerings. Thus, our stockholders bear the risk of our
future securities offerings reducing the market price of our common stock and
diluting their interest.
The
impairment of a significant amount of goodwill and intangible assets on our
balance sheet could result in a decrease in earnings and, as a result, our stock
price could decline.
In the
course of our operating history, we have acquired assets and businesses. Some of
our acquisitions have resulted in the recording of a significant amount of
goodwill and/or intangible assets on our financial statements. We had
approximately $110 million of goodwill and net intangible assets as of December
31, 2007. The goodwill and/or intangible assets were recorded because the fair
value of the net tangible assets acquired was less than the purchase price. We
may not realize the full value of the goodwill and/or intangible assets. As
such, we evaluate goodwill and other intangible assets with indefinite useful
lives for impairment on an annual basis or more frequently if events or
circumstances suggest that the asset may be impaired. We evaluate other
intangible assets subject to amortization whenever events or changes in
circumstances indicate that the carrying amount of those assets may not be
recoverable. If goodwill or other intangible assets are determined to be
impaired, we will write off the unrecoverable portion as a charge to our
earnings. If we acquire new assets and businesses in the future, as we intend to
do, we may record additional goodwill and/or intangible assets. The possible
write-off of the goodwill and/or intangible assets could negatively impact our
future earnings and, as a result, the market price of our common stock could
decline.
We
will record substantial expenses related to our issuance of stock-based
compensation which may have a material negative impact on our operating results
for the foreseeable future.
Effective
January 1, 2006, we adopted the Statement of Financial Accounting Standards, or
SFAS, No. 123(R),
Accounting
for Stock-Based Compensation,
as amended by SFAS No. 148,
Accounting for
Stock-
Based
Compensation—Transition and Disclosure
for stock-based employee
compensation. Our stock-based compensation expenses are expected to be
significant in future periods, which will have an adverse impact on our
operating income and net income. SFAS No. 123(R) requires the use of highly
subjective assumptions, including the option’s expected life and the price
volatility of the underlying stock. Changes in the subjective input assumptions
can materially affect the amount of our stock-based compensation expense. In
addition, an increase in the competitiveness of the market for qualified
employees could result in an increased use of stock-based compensation awards,
which in turn would result in increased stock-based compensation expense in
future periods.
The
trading value of our common stock may be volatile and decline
substantially.
The
trading price of our common stock is likely to be volatile and could be subject
to wide fluctuations in response to various factors, some of which are beyond
our control. In addition to the factors discussed in this ‘‘Risk Factors’’
section and elsewhere in this prospectus, these factors include:
·
|
our
operating performance and the operating performance of similar
companies;
|
·
|
the
overall performance of the equity
markets;
|
·
|
announcements
by us or our competitors of acquisitions, business plans or commercial
relationships;
|
·
|
threatened
or actual litigation;
|
·
|
changes
in laws or regulations relating to the provision of Internet
content;
|
·
|
any
major change in our board of directors or
management;
|
·
|
publication
of research reports about us, our competitors or our industry, or positive
or negative recommendations or withdrawal of research coverage by
securities analysts;
|
·
|
our
sale of common stock or other securities in the
future;
|
·
|
large
volumes of sales of our shares of common stock by existing stockholders;
and
|
·
|
general
political and economic conditions.
|
In
addition, the stock market in general, and historically the market for
Internet-related companies in particular, has experienced extreme price and
volume fluctuations that have often been unrelated or disproportionate to the
operating performance of those companies. Securities class action litigation has
often been instituted against companies following periods of volatility in the
overall market and in the market price of a company’s securities. This
litigation, if instituted against us, could result in substantial costs, divert
our management’s attention and resources and harm our business, operating
results and financial condition.
Provisions
of our certificate of incorporation, bylaws and Delaware law could deter
takeover attempts.
Various
provisions in our certificate of incorporation and bylaws could delay, prevent
or make more difficult a merger, tender offer, proxy contest or change of
control. Our stockholders might view any transaction of this type as being in
their best interest since the transaction could result in a higher stock price
than the then-current market price for our common stock. Among other things, our
certificate of incorporation and bylaws:
·
|
authorize
our board of directors to issue preferred stock with the terms of each
series to be fixed by our board of directors, which could be used to
institute a ‘‘poison pill’’ that would work to dilute the share ownership
of a potential hostile acquirer, effectively preventing acquisitions that
have not been approved by our board;
|
·
|
divide
our board of directors into three classes so that only approximately
one-third of the total number of directors is elected each
year;
|
·
|
permit
directors to be removed only for cause;
|
·
|
prohibit
action by less than unanimous written consent of our stockholders;
and
|
·
|
specify
advance notice requirements for stockholder proposals and director
nominations. In addition, with some exceptions, the Delaware General
Corporation Law restricts or delays mergers and other business
combinations between us and any stockholder that acquires 15% or more of
our voting stock.
|
Future
sales of shares of our common stock by existing stockholders could depress the
market price of our common stock.
If our
existing stockholders sell, or indicate an intent to sell, substantial amounts
of our common stock in the public market, the trading price of our common stock
could decline significantly. A large portion of our outstanding shares of common
stock are held by our officers, directors and affiliates. Our
directors, executive officers and their affiliated entities beneficially own
approximately 32 million shares of our common stock, which represents 78% of our
shares outstanding as of December 31, 2007. If these additional shares are sold,
or if it is perceived that they will be sold, in the public market, the trading
price of our common stock could decline substantially.
A
limited number of stockholders will have the ability to influence the outcome of
director elections and other matters requiring stockholder
approval.
Our
directors, executive officers and their affiliated entities beneficially own
approximately 78% percent of our outstanding common stock. These stockholders,
if they act together, could exert substantial influence over matters requiring
approval by our stockholders, including the election of directors, the amendment
of our certificate of incorporation and bylaws and the approval of mergers or
other business combination transactions. This concentration of ownership may
discourage, delay or prevent a change in control of our company, which could
deprive our stockholders of an opportunity to receive a premium for their stock
as part of a sale of our company and might reduce our stock price. These actions
may be taken even if they are opposed by other stockholders.
Item 1B
. Unresolved Staff Comments
None.
Our
corporate headquarters are located in Needham, Massachusetts, where we currently
lease approximately 74,606 square feet; 56,863 square feet of this space expires
in December 2009 and the remaining square footage of 17,743 expires in March
2010. We also lease the following office space: approximately 9,645 square feet
of space in Boston, Massachusetts which expires in July 2008; approximately
12,995 square feet at 303 2nd Street San Francisco CA, under a lease
that expires January 2013; approximately 2,926 square feet at 395 Oyster Point
Blvd. in San Francisco CA, pursuant to a lease that expires August 2008, and
approximately 7,861 square feet in Westborough, Massachusetts, which
expires in December 2009. We also lease approximately 25,762 square feet of
office space in Alpharetta, Georgia pursuant to a lease that expires on November
15, 2010. We do not own any real property. We believe that our leased
facilities are, in general, in good operating condition and adequate for our
current operations and that additional leased space can be obtained if
needed.
We are
not currently a party to any material litigation and we are not aware of any
pending or threatened litigation against us that could have a material adverse
effect on our business, operating results or financial condition.
Item 4
. Submission of Matters to a Vote of Security
Holders
No matter
was submitted to a vote of security holders during the fourth quarter of the
fiscal year ended December 31, 2007 through the solicitation of proxies or
otherwise.
Item 5.
Market for Registrant's Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity
Securities
Our
common stock is listed on the Nasdaq Global Market under the trading symbol
“TTGT”. The following table sets forth the high and low sales prices of our
common stock, as reported by the Nasdaq Global Market, for each quarterly period
within our most recent fiscal year since our initial public
offering:
|
|
High
|
|
|
Low
|
|
Fiscal
2007
|
|
|
|
|
|
|
Quarter
ended June 30, 2007 (since May 16, 2007)
|
|
|
|
|
|
|
|
|
Quarter
ended September 30, 2007
|
|
|
|
|
|
|
|
|
Quarter
ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
closing sale price of our common stock, as reported by the Nasdaq Global Market,
was $11.62 on February 29, 2008.
Holders
As of
February 29, 2008 there were approximately 313 stockholders of record of our
common stock based on the records of our transfer agent.
Dividends
We did
not declare or pay any cash dividends on our common stock during the two most
recent fiscal years. We currently intend to retain earnings, if any, to fund the
development and growth of our business and do not anticipate paying other cash
dividends on our common stock in the foreseeable future. Our payment of any
future dividends will be at the discretion of our board of directors after
taking into account various factors, including our financial condition,
operating results, cash needs and growth plans.
Recent
Sales of Unregistered Securities
Since
January 1, 2005, we have issued the following securities that were not
registered under the Securities Act:
(a)
Issuances of Capital Stock
As of
November 2006, there were outstanding options to purchase 17,456 shares of our
common stock at an exercise price of $2.36 per share, the issuance of which may
not have been exempt from registration or certain qualification requirements
under federal or state securities laws. To address this issue, we made a
rescission offer that was completed in December 2006 to all holders of these
options pursuant to which we offered to repurchase these options for cash or
shares of our common stock. In connection with the completion of the rescission
offer, we issued 10,726 shares and paid out $6,561 in cash, which included
statutory interest. The sales of securities pursuant to the rescission offer
were made in reliance upon the exemption from registration provided by Section
3(b) of the Securities Act of 1933 for transactions by an issuer not involving a
public offering. All of the foregoing securities are deemed restricted
securities for purposes of the Securities Act.
(b)
Grants and Exercises of Stock Options.
During
2007, prior to our initial public offering, we granted stock options to purchase
75,000 shares of our common stock with an exercise price of $13.00 per share to
a director. During 2007, prior to our initial public offering,
pursuant to our 1999 Stock Option Plan, we issued and sold 333,636 shares of our
common stock upon the exercise of stock options for aggregate consideration of
$211,938.
During
2006, pursuant to our 1999 Stock Option Plan, we granted stock options to
purchase 4,243,500 shares of common stock with a weighted average exercise price
of $7.36 per share to our employees. During 2006, 371,634 options were exercised
for aggregate consideration of $553,659. During 2005, pursuant to our 1999 Stock
Option Plan, we granted stock options to purchase 42,500 shares of common stock
with a weighted average exercise price of $6.44 per share to our employees.
During 2005, 141,725 options were exercised for aggregate consideration of
$237,227.
The
issuance of common stock upon exercise of the options was exempt either pursuant
to Rule 701, as a transaction pursuant to a compensatory benefit plan, or
pursuant to Section 4(2), as a transaction by an issuer not involving a public
offering.
(c)
Exercises of Warrants
During
2006, we issued and sold 184,233 shares of our common stock upon the exercise of
a warrant for aggregate consideration of $338,988.
During
2007, we issued 52,764 shares of our common stock upon the cashless exercise of
warrants. We did not receive any consideration from the cashless
exercises apart from the surrender of the underlying warrants.
The
issuances of common stock upon the exercise of the warrants were made in
reliance upon the exemption from registration proved by Section 4(2) of the
Securities Act for transactions by an issuer not involving a public offering.
All of the foregoing securities are deemed restricted securities for purposes of
the Securities Act.
Use
of Proceeds from Public Offering of Common Stock
In
May 2007, we completed our initial public offering (IPO) pursuant to a
registration statement on Form S-1 (File No. 333-140503) that was
declared effective by the SEC on May 16, 2007. Under the registration
statement, we registered the offering and sale of an aggregate of
7,700,000 shares of our common stock, $0.001 par value, of which
6,427,152 shares were sold by the Company and 1,272,848 were sold by certain
selling stockholders. All of the shares of common stock issued
pursuant to the registration statement, including the shares sold by the selling
stockholders, were sold at a price to the public of $13.00 per
share.
As
a result of the IPO, we raised a total of $83.2 million in net proceeds after
deducting underwriting discounts and commissions of approximately $6.4 million
and offering expenses of approximately $2.3 million. In May 2007 we
repaid $12.0 million that we had borrowed against our revolving credit facility
in conjunction with the acquisition of TechnologyGuide.com in April
2007. In November 2007 we acquired KnowledgeStorm, Inc. for
approximately $58 million, consisting of approximately $52 million in cash and
359,820 shares of unregistered common stock of TechTarget valued at $6.0
million.
We
have applied the remaining net proceeds from the IPO to our working capital for
general corporate purposes. We have no current agreements or
commitments with respect to any material acquisitions. We have
invested the remaining net proceeds in cash, cash equivalents and short-term
investments, in accordance with our investment policy. None of the
remaining net proceeds were paid, directly or indirectly, to directors,
officers, persons owning ten percent or more of our equity securities, or any of
our other affiliates.
Equity
Compensation Plan Information
Information
relating to compensation plans under which our equity securities are authorized
for issuance is set forth under “Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters” in our definitive proxy
statement for our 2008 Annual Meeting of Stockholders.
Stock
Performance Graph
The
following graph compares the cumulative total return to stockholders of our
common stock for the period from May 16, 2007, the date of our initial public
offering, to December 31, 2007, to the cumulative total return of the Russell
2000 Index and the S&P 500 Media Industry Index for the same
period. This graph assumes the investment of $100.00 on May 16, 2007
in our common stock, the Russell 2000 Index and the S&P 500 Media Industry
Index and assumes any dividends are reinvested.
COMPARATIVE
STOCK PERFORMANCE
Among
TechTarget, Inc.
The
Russell 2000 Index and
The
S&P 500 Media Industry Index
|
|
May
16, 2007
|
|
|
June
30, 2007
|
|
|
September
30, 2007
|
|
|
December
31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TechTarget,
Inc.
|
|
$
|
100.00
|
|
|
$
|
98.85
|
|
|
$
|
130.00
|
|
|
$
|
113.69
|
|
Russell
2000 Index
|
|
$
|
100.00
|
|
|
$
|
102.57
|
|
|
$
|
99.40
|
|
|
$
|
94.85
|
|
S&P
500 Media Industry Index
|
|
$
|
100.00
|
|
|
$
|
101.07
|
|
|
$
|
94.21
|
|
|
$
|
86.34
|
|
The
information included under the heading “Stock Performance Graph” in Item 5 of
this Annual Report on Form 10-K is “furnished” and not “filed” and shall
not be deemed to be “soliciting material” or subject to Regulation 14A, shall
not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934,
as amended, or otherwise subject to the liabilities of that section, nor shall
it be deemed incorporated by reference in any filing under the Securities Act of
1933, as amended, or the Securities Act of 1934, as amended.
Item 6.
Selected Consolidated Financial
Data
The
following selected consolidated financial data should be read in conjunction
with our audited consolidated financial statements, the related notes and
Management's Discussion and Analysis of Financial Condition and Results of
Operations, which are included in this Annual Report on Form
10-K. The consolidated statement of operations data for the years
ended December 31, 2007, 2006 and 2005, and the selected consolidated
balance sheet data as of December 31, 2007 and 2006 have been derived from
our audited consolidated financial statements and related notes included in this
Annual Report on Form 10-K. The consolidated statement of operations
data for the years ended December 31, 2004 and 2003, and the consolidated
balance sheet data as of December 31, 2005, 2004 and 2003 have been derived
from audited consolidated financial statements and related notes, which are not
included in this Annual Report on Form 10-K. The historical results
are not necessarily indicative of the results to be expected for any future
period
.
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(in
thousands, except share and per share data)
|
|
Consolidated
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online
|
|
$
|
63,686
|
|
|
$
|
51,176
|
|
|
$
|
43,662
|
|
|
$
|
31,342
|
|
|
$
|
21,023
|
|
Events
|
|
|
24,254
|
|
|
|
19,708
|
|
|
|
14,595
|
|
|
|
9,647
|
|
|
|
7,845
|
|
Print
|
|
|
6,725
|
|
|
|
8,128
|
|
|
|
8,489
|
|
|
|
5,738
|
|
|
|
3,598
|
|
Total
revenues
|
|
|
94,665
|
|
|
|
79,012
|
|
|
|
66,746
|
|
|
|
46,727
|
|
|
|
32,466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online
(1)
|
|
|
15,575
|
|
|
|
12,988
|
|
|
|
10,476
|
|
|
|
7,632
|
|
|
|
5,826
|
|
Events
(1)
|
|
|
8,611
|
|
|
|
6,493
|
|
|
|
6,202
|
|
|
|
5,948
|
|
|
|
4,798
|
|
Print
(1)
|
|
|
3,788
|
|
|
|
5,339
|
|
|
|
5,322
|
|
|
|
3,073
|
|
|
|
2,318
|
|
Total
cost of revenues
|
|
|
27,974
|
|
|
|
24,820
|
|
|
|
22,000
|
|
|
|
16,653
|
|
|
|
12,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
66,691
|
|
|
|
54,192
|
|
|
|
44,746
|
|
|
|
30,074
|
|
|
|
19,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
and marketing
(1)
|
|
|
28,048
|
|
|
|
20,305
|
|
|
|
18,174
|
|
|
|
15,138
|
|
|
|
10,736
|
|
Product
development
(1)
|
|
|
7,320
|
|
|
|
6,295
|
|
|
|
5,756
|
|
|
|
4,111
|
|
|
|
3,728
|
|
General
and administrative
(1)
|
|
|
12,592
|
|
|
|
8,756
|
|
|
|
7,617
|
|
|
|
11,756
|
|
|
|
3,991
|
|
Depreciation
|
|
|
1,610
|
|
|
|
1,144
|
|
|
|
1,792
|
|
|
|
1,168
|
|
|
|
1,153
|
|
Amortization
of intangible assets
|
|
|
4,740
|
|
|
|
5,029
|
|
|
|
5,172
|
|
|
|
1,304
|
|
|
|
428
|
|
Total
operating expenses
|
|
|
54,310
|
|
|
|
41,529
|
|
|
|
38,511
|
|
|
|
33,477
|
|
|
|
20,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
|
|
12,381
|
|
|
|
12,663
|
|
|
|
6,235
|
|
|
|
(3,403
|
)
|
|
|
(512
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income (expense), net
|
|
|
1,831
|
|
|
|
321
|
|
|
|
(30
|
)
|
|
|
143
|
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) before provision for (benefit from) income taxes
|
|
|
14,212
|
|
|
|
12,984
|
|
|
|
6,205
|
|
|
|
(3,260
|
)
|
|
|
(533
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for (benefit from) income taxes
|
|
|
6,046
|
|
|
|
5,811
|
|
|
|
(2,681
|
)
|
|
|
32
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
8,166
|
|
|
$
|
7,173
|
|
|
$
|
8,886
|
|
|
$
|
(3,292
|
)
|
|
$
|
(533
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per common share
(2)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.15
|
|
|
$
|
(0.46
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(1.34
|
)
|
|
$
|
(0.51
|
)
|
Diluted
|
|
$
|
0.13
|
|
|
$
|
(0.46
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(1.34
|
)
|
|
$
|
(0.51
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
28,384,303
|
|
|
|
7,824,374
|
|
|
|
7,370,680
|
|
|
|
7,594,470
|
|
|
|
7,901,256
|
|
Diluted
|
|
|
31,346,738
|
|
|
|
7,824,374
|
|
|
|
7,370,680
|
|
|
|
7,594,470
|
|
|
|
7,901,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA (unaudited)
(3)
|
|
$
|
24,565
|
|
|
$
|
20,086
|
|
|
$
|
13,277
|
|
|
$
|
5,352
|
|
|
$
|
1,104
|
|
|
|
As
of December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(in
thousands)
|
|
Consolidated
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
cash equivalents and short-term investments
|
|
$
|
62,001
|
|
|
$
|
30,830
|
|
|
$
|
46,879
|
|
|
$
|
7,214
|
|
|
$
|
7,988
|
|
Total
assets
|
|
|
199,887
|
|
|
|
92,647
|
|
|
|
95,160
|
|
|
|
92,920
|
|
|
|
15,692
|
|
Total
liabilities
|
|
|
19,239
|
|
|
|
21,107
|
|
|
|
32,879
|
|
|
|
39,841
|
|
|
|
7,131
|
|
Total
redeemable convertible preferred stock
|
|
|
-
|
|
|
|
136,766
|
|
|
|
126,004
|
|
|
|
115,383
|
|
|
|
40,392
|
|
Total
stockholders' equity (deficit)
|
|
|
180,648
|
|
|
|
(65,226
|
)
|
|
|
(63,723
|
)
|
|
|
(62,304
|
)
|
|
|
(31,831
|
)
|
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(in
thousands)
|
|
(1)
Amounts
include stock-based
compensation
expense as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of online revenue
|
|
$
|
189
|
|
|
$
|
87
|
|
|
$
|
-
|
|
|
$
|
78
|
|
|
$
|
-
|
|
Cost
of events revenue
|
|
|
53
|
|
|
|
31
|
|
|
|
-
|
|
|
|
236
|
|
|
|
-
|
|
Cost
of print revenue
|
|
|
15
|
|
|
|
12
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Selling
and marketing
|
|
|
2,999
|
|
|
|
606
|
|
|
|
-
|
|
|
|
1,025
|
|
|
|
-
|
|
Product
development
|
|
|
334
|
|
|
|
90
|
|
|
|
-
|
|
|
|
7
|
|
|
|
-
|
|
General
and administrative
|
|
|
2,244
|
|
|
|
424
|
|
|
|
78
|
|
|
|
4,937
|
|
|
|
35
|
|
Total
|
|
$
|
5,834
|
|
|
$
|
1,250
|
|
|
$
|
78
|
|
|
$
|
6,283
|
(a)
|
|
$
|
35
|
|
|
(a)
|
In
May 2004, we offered to repurchase for cash (i) up to 100% of the
issued and outstanding shares of our series A preferred stock; and
(ii) up to 45% of the aggregate issued and outstanding shares of common
stock and/or options to purchase the same (provided the option holder had
either completed four years of service with us as of May 1, 2004, or had
held the option for at least four years as of May 1, 2004), effected to
provide certain stockholders and option holders with liquidity. We
recorded stock-based compensation expense of $6,012,382 related to the
purchase of 1,429,157 options.
|
(2)
|
Basic
and diluted net income (loss) per common share is computed by dividing the
net income (loss) applicable to common stockholders by the basic and
diluted weighted-average number of common shares outstanding for the
fiscal period. See "Note 2 of our Notes to Consolidated
Financial Statements."
|
(3)
|
The
following table reconciles net income (loss) to Adjusted EBITDA for the
periods presented and is unaudited:
|
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
8,166
|
|
|
$
|
7,173
|
|
|
$
|
8,886
|
|
|
$
|
(3,292
|
)
|
|
$
|
(533
|
)
|
Interest
income (expense), net
|
|
|
1,831
|
|
|
|
321
|
|
|
|
(30
|
)
|
|
|
143
|
|
|
|
(21
|
)
|
Provision
for (benefit from) income taxes
|
|
|
6,046
|
|
|
|
5,811
|
|
|
|
(2,681
|
)
|
|
|
32
|
|
|
|
-
|
|
Depreciation
|
|
|
1,610
|
|
|
|
1,144
|
|
|
|
1,792
|
|
|
|
1,168
|
|
|
|
1,153
|
|
Amortization
of intangible assets
|
|
|
4,740
|
|
|
|
5,029
|
|
|
|
5,172
|
|
|
|
1,304
|
|
|
|
428
|
|
EBITDA
|
|
|
18,731
|
|
|
|
18,836
|
|
|
|
13,199
|
|
|
|
(931
|
)
|
|
|
1,069
|
|
Stock-based
compensation
|
|
|
5,834
|
|
|
|
1,250
|
|
|
|
78
|
|
|
|
6,283
|
(a)
|
|
|
35
|
|
Adjusted
EBITDA
|
|
$
|
24,565
|
|
|
$
|
20,086
|
|
|
$
|
13,277
|
|
|
$
|
5,352
|
|
|
$
|
1,104
|
|
|
(a)
|
In
May 2004, we offered to repurchase for cash (i) up to 100% of the
issued and outstanding shares of our series A preferred stock; and
(ii) up to 45% of the aggregate issued and outstanding shares of common
stock and/or options to purchase the same (provided the option holder had
either completed four years of service with us as of May 1, 2004, or had
held the option for at least four years as of May 1, 2004), effected to
provide certain stockholders and option holders with liquidity. We
recorded stock-based compensation expense of $6,012,382 related to the
purchase of 1,429,157 options.
|
Adjusted
EBITDA is a metric used by management to measure operating performance. EBITDA
represents net income (loss) before interest income (expense) net, provision for
(benefit from) income taxes, depreciation and amortization. Adjusted EBITDA
represents EBITDA less stock-based compensation expense. We present Adjusted
EBITDA as a supplemental performance measure because we believe it facilitates
operating performance comparisons from period to period and company to company
by backing out potential differences caused by variations in capital structures
(affecting interest expense), tax positions (such as the impact on periods or
companies of changes in effective tax rates or net operating losses), the age
and book depreciation of fixed assets (affecting relative depreciation expense),
and the impact of non-cash stock-based compensation expense costs. Because
Adjusted EBITDA facilitates internal comparisons of operating performance on a
more consistent basis, we also use Adjusted EBITDA in measuring our performance
relative to that of our competitors. We also use Adjusted EBITDA in connection
with our compensation of our executive officers. Adjusted EBITDA is not a
measurement of our financial performance under GAAP and should not be considered
as an alternative to net income, operating income or any other performance
measures derived in accordance with GAAP or as an alternative to cash flow from
operating activities as a measure of our profitability or liquidity. We
understand that although Adjusted EBITDA is frequently used by securities
analysts, lenders and others in their evaluation of companies, Adjusted EBITDA
has limitations as an analytical tool, and you should not consider it in
isolation, or as a substitute for analysis of our results as reported under
GAAP. Some of these limitations are:
·
|
Adjusted
EBITDA does not reflect our cash expenditures, or future requirements for
capital expenditures or contractual
commitments;
|
·
|
Adjusted
EBITDA does not reflect changes in, or cash requirements for, our working
capital needs;
|
·
|
Adjusted
EBITDA does not reflect the significant interest expense, or the cash
requirements necessary to service interest or principal payments, on our
debts;
|
·
|
Although
depreciation and amortization are non-cash charges, the assets being
depreciated and amortized will often have to be replaced in the future,
and Adjusted EBITDA does not reflect any cash requirements for such
replacements; and
|
·
|
Other
companies in our industry may calculate Adjusted EBITDA differently than
we do, limiting its usefulness as a comparative
measure.
|
Item 7
. Management's Discussion and Analysis of
Financial Condition and Results of Operations
The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and accompanying notes included elsewhere in this Annual Report on
Form 10-K. In this discussion and analysis, dollar, share and
per share amounts are not rounded to thousands unless otherwise indicated.
This discussion and analysis contains forward-looking statements that involve
risks, uncertainties and assumptions. Our actual results could differ materially
from those anticipated in these forward-looking statements as a result of
various factors, including those discussed below and elsewhere in this Annual
Report on Form 10-K particularly under the heading "Risk Factors."
Overview
Background
We are a
leading provider of specialized online content that brings together buyers and
sellers of corporate IT products. We sell customized marketing programs that
enable IT vendors to reach corporate IT decision makers who are actively
researching specific IT purchases.
Our
integrated content platform consists of a network of websites that we complement
with targeted in-person events and two specialized IT magazines. Throughout all
stages of the purchase decision process, these content offerings meet IT
professionals' needs for expert, peer and IT vendor information, and provide a
platform on which IT vendors can launch targeted marketing campaigns that
generate measurable, high ROI. As IT professionals have become increasingly
specialized, they have come to rely on our sector-specific websites for
purchasing decision support. Our content enables IT professionals to navigate
the complex and rapidly changing IT landscape where purchasing decisions can
have significant financial and operational consequences. Based upon the logical
clustering of our users' respective job responsibilities and the marketing focus
of the products that our customers are advertising, we currently categorize our
content offerings across eleven distinct media groups: Application Development;
Channel; CIO and IT Management; Data Center; Enterprise Applications; Laptops
and Mobile Technology; Networking; Security; Storage; Vertical Software; and
Windows and Distributed Computing.
In May
2007, we completed our initial public offering of 8.9 million shares of our
common stock, of which 7.1 million shares were sold by us and 1.8 million shares
were sold by certain of our existing shareholders at a price to the
public of $13.00 per share. We raised a total of $91.9 million
in gross proceeds from the offering, or $83.2 million in net proceeds after
deducting underwriting discounts and commissions of $6.4 million and other
offering costs of approximately $2.3 million. Upon the closing of the offering,
all shares of our redeemable convertible preferred stock automatically converted
into 24.4 million shares of common stock.
Sources
of Revenues
We sell
advertising programs to IT vendors targeting a specific audience within a
particular IT sector or sub-sector. We maintain multiple points of contact with
our customers to provide support throughout their organizations and the sales
cycle. As a result, our customers often run multiple advertising programs with
us in order to reach discrete portions of our targeted audience. There are
multiple factors that can impact our customers' advertising objectives and
spending with us, including but not limited to, product launches, increases or
decreases to their advertising budgets, the timing of key industry marketing
events, responses to competitor activities and efforts to address specific
marketing objectives such as creating brand awareness or generating sales leads.
Our services are generally delivered under short-term contracts that run for the
length of a given advertising program, typically less than
90 days.
We
generate substantially all of our revenues from the sale of targeted advertising
campaigns that we deliver via our network of websites, events and print
publications.
Online.
The
majority of our revenue is derived from the delivery of our online offerings
from our media groups. Online revenue represented 67%, 65% and 65% of
total revenues for the years ended December 31, 2007, 2006 and 2005,
respectively. We expect the majority of our revenues to be derived through the
delivery of online offerings for the foreseeable future. As a result of our
customers' advertising objectives and preferences, the specific allocation of
online advertising offerings sold and delivered by us, on a period by period
basis, can fluctuate.
Through
our websites we sell a variety of online media offerings to connect IT vendors
to IT professionals. Our lead generation offerings allow IT vendors to capture
qualified sales leads from the distribution and promotion of content to our
audience of IT professionals. Our branding offerings provide IT vendors exposure
to targeted audiences of IT professionals actively researching information
related to their products and services.
Our
branding offerings include banners and e-newsletters. Banner advertising can be
purchased on specific websites within our network. We also offer the ability to
advertise in e-newsletters focused on key site sub-topics across our portfolio
of websites. These offerings give IT vendors the ability to increase their brand
awareness to highly specialized IT sectors.
Our lead
generation offerings include the following:
-
|
White
Papers.
White papers are technical documents created by
IT vendors to describe business or technical problems that are addressed
by the vendors' products or services. IT vendors pay us to have their
white papers distributed to our users and receive targeted promotions on
our relevant websites. When viewing white papers, our registered members
and visitors supply their corporate contact and qualification information
and agree to receive further information from the vendor. The corporate
contact and other qualification information for these leads are supplied
to the vendor in real time through our proprietary lead management
software.
|
-
|
Webcasts and
Podcasts.
IT vendors pay us to sponsor and host webcasts
and podcasts that bring informational sessions directly to attendees'
desktops and, in the case of podcasts, directly to their mobile devices.
As is the case with white papers, our users supply their corporate contact
and qualification information to the webcast or podcast sponsor when they
view or download the content. Sponsorship includes access to the
registrant information and visibility before, during and after the
event.
|
-
|
Software Package
Comparisons.
Through our 2020software.com website, IT
vendors pay us to post information and specifications about their software
packages, typically organized by application category. Users can request
further information, which may include downloadable trial software from
multiple software providers in sectors such as customer relationship
management, or CRM, accounting, and business analytics. IT vendors, in
turn, receive qualified leads based upon the users who request their
information.
|
-
|
Dedicated
E-mails.
IT vendors pay us to further target the
promotion of their white papers, webcasts, podcasts or downloadable trial
software by including their content in our periodic e-mail updates to
registered users of our websites. Users who have voluntarily registered on
our websites receive an e-mail update from us when vendor content directly
related to their interests is listed on our
sites.
|
-
|
List
Rentals.
We also offer IT vendors the ability to message
relevant registered members on topics related to their interests. IT
vendors can rent our e-mail and postal lists of registered members using
specific criteria such as company size, geography or job
title.
|
-
|
Contextual
Advertising.
Our contextual advertising programs
associate IT vendor white papers, webcasts, podcasts or other content on a
particular topic with our related sector-specific content. IT vendors have
the option to purchase exclusive sponsorship of content related to their
product or category.
|
Events.
Events
revenue represented 26%, 25% and 22% of total revenues for the years ended
December 31, 2007, 2006 and 2005, respectively. Most of our media groups
operate revenue generating events. The majority of our events are free to IT
professionals and are sponsored by IT vendors. Attendees are pre-screened based
on event-specific criteria such as sector-specific budget size, company size, or
job title. We offer three types of events: multi-day conferences, single-day
seminars and custom events. Multi-day conferences provide independent expert
content for our attendees and allow vendors to purchase exhibit space and other
sponsorship offerings that enable interaction with the attendees. We also hold
single-day seminars on various topics in major cities. These seminars provide
independent content on key sub-topics in the sectors we serve, are free to
qualified attendees, and offer multiple vendors the ability to interact with
specific, targeted audiences actively focused on buying decisions. Our custom
events differ from our conferences and seminars in that they are exclusively
sponsored by a single IT vendor, and the content is driven primarily by the sole
sponsor.
Print.
Print
revenue represented 7%, 10% and 13% of total revenues for the years ended
December 31, 2007, 2006 and 2005, respectively. As of December 31, 2007, we
publish monthly two controlled-circulation magazines that are free to
subscribers and generate revenue solely based on advertising fees. The highly
targeted magazines we publish are:
Storage
magazine (Storage
Media Group), which we began publishing in 2002; and
Information Security
magazine
(Security Media Group), which we began publishing in 2003. We
discontinued publishing
CIO
Decisions
magazine in November 2007. Our magazines provide
readers with strategic guidance on important enterprise-level technology
decisions. We expect print revenue to decrease as a percentage of total
revenue in the foreseeable future.
Cost
of Revenues, Operating Expenses and Other
Expenses
consist of cost of revenues, selling and marketing, product development, general
and administrative, depreciation, and amortization expenses. Personnel-related
costs are a significant component of most of these expense categories. We grew
from 307 employees at December 31, 2004 to 584 employees at
December 31, 2007. We expect personnel-related expenses to continue to
increase in absolute dollars, but to decline over time as a percentage of total
revenues due to anticipated economies of scale in our business support
functions.
Cost of Online
Revenue.
Cost of online revenue consists primarily of:
salaries and related personnel costs; member acquisition expenses (primarily
keyword purchases from leading Internet search sites); freelance writer
expenses; website hosting costs; vendor expenses associated with the delivery of
webcast, podcast and list rental offerings; stock-based compensation expenses;
and related overhead.
Cost of Events
Revenue.
Cost of events revenue consists primarily of:
facility expenses, including food and beverages for the event attendees;
salaries and related personnel costs; event speaker expenses; stock-based
compensation expenses; and related overhead.
Cost of Print
Revenue.
Cost of print revenue consists primarily of: printing
and graphics expenses; mailing costs; salaries and related personnel costs;
freelance writer expenses; subscriber acquisition expenses (primarily
telemarketing); stock-based compensation expenses; and related
overhead.
Selling and
Marketing.
Selling and marketing expense consists primarily
of: salaries and related personnel costs; sales commissions; travel, lodging and
other out-of-pocket expenses; stock-based compensation expenses; and related
overhead. Sales commissions are recorded as expense when earned by the
employee.
Product
Development.
Product development includes the creation and
maintenance of our network of websites, advertiser offerings and technical
infrastructure. Product development expense consists primarily of salaries and
related personnel costs; stock-based compensation expenses; and related
overhead.
General and
Administrative.
General and administrative expense consists
primarily of: salaries and related personnel costs; facilities expenses;
accounting, legal and other professional fees; stock-based compensation
expenses; and related overhead. General and administrative expense may continue
to increase as a percentage of total revenue for the foreseeable future as we
invest in infrastructure to support continued growth and incur additional
expenses related to being a publicly traded company, including increased audit
and legal fees, costs of compliance with securities and other regulations,
investor relations expense, and higher insurance premiums.
Depreciation.
Depreciation
expense consists of the depreciation of our property and equipment. Depreciation
of property and equipment is calculated using the straight-line method over
their estimated useful lives ranging from three to five years.
Amortization of Intangible
Assets.
Amortization of intangible assets expense consists of
the amortization of intangible assets recorded in connection with our
acquisitions. Separable intangible assets that are not deemed to have an
indefinite life are amortized over their useful lives using the straight-line
method over periods ranging from one to nine years.
Interest Income (Expense),
Net.
Interest income (expense) net consists primarily of
interest income earned on cash and cash equivalent balances less interest
expense incurred on bank term loan balances. We historically have invested our
cash in money market accounts, commercial paper corporate debt securities,
municipal bonds, auction rate securities and variable rate demand
notes.
Application
of Critical Accounting Policies and Use of Estimates
The
discussion of our financial condition and results of operations is based upon
our consolidated financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States. The
preparation of these financial statements requires us to make estimates,
judgments and assumptions that affect the reported amount of assets,
liabilities, revenues and expenses and related disclosure of contingent assets
and liabilities. On an ongoing basis, we evaluate our estimates, including those
related to revenue, long-lived assets, the allowance for doubtful accounts,
stock-based compensation, and income taxes. We based our estimates of the
carrying value of certain assets and liabilities on historical experience and on
various other assumptions that we believe to be reasonable. In many cases, we
could reasonably have used different accounting policies and estimates. In some
cases, changes in the accounting estimates are reasonably likely to occur from
period to period. Our actual results may differ from these estimates under
different assumptions or conditions.
We
believe the following critical accounting policies affect our more significant
judgments used in the preparation of our consolidated financial statements. See
the notes to our financial statements for information about these critical
accounting policies as well as a description of our other accounting
policies.
Revenue
Recognition
We
generate substantially all of our revenue from the sale of targeted advertising
campaigns that we deliver via our network of websites, events and print
publications. We recognize this revenue in accordance with Staff Accounting
Bulletin, or SAB, No. 104,
Revenue Recognition
, and
Financial Accounting Standards Board's, or FASB, Emerging Issues Task Force, or
EITF, Issue No. 00-21,
Revenue Arrangement With Multiple
Deliverables
. In all cases, we recognize revenue only when the price is
fixed or determinable, persuasive evidence of an arrangement exists, the service
is performed and collectibility of the resulting receivable is reasonably
assured.
Online.
We
recognize revenue from our specific online media offerings as
follows:
-
|
White
Papers.
We recognize white paper revenue ratably in the
period in which the white paper is available on our
websites.
|
-
|
Webcasts and
Podcasts.
We recognize webcast revenue in the period in
which the webcast occurs. We recognize podcast revenue in the period in
which it is posted and becomes available on our
websites.
|
-
|
Software Package
Comparisons.
We recognize software package comparison
revenue ratably over the period in which the software information is
available on our websites.
|
-
|
Dedicated E-mails and
E-newsletters.
We recognize dedicated e-mail and
e-newsletter revenue in the period in which the e-mail or e-newsletter is
sent.
|
-
|
List
Rentals.
We recognize list rental revenue in the period
in which the e-mails are sent to the list of registered
members.
|
-
|
Banners.
We
recognize banner revenue in the period in which the banner impressions
occur.
|
We offer
customers the ability to purchase integrated ROI program offerings, which can
include any of our online media offerings packaged together to address the
particular customer's specific advertising requirements. As part of these
offerings, we will guarantee a minimum number of qualified sales leads to be
delivered over the course of the advertising campaign. Throughout the
advertising campaign, revenue is recognized as individual offerings are
delivered, and the lead guarantee commitments are closely monitored to assess
campaign performance. If the minimum number of qualified sales leads is not met
by the scheduled completion date of the advertising campaign, the advertising
campaign is extended, and we will defer recognition of revenue in an amount
equal to the value of the estimated inventory that will be required to fulfill
the guarantee. These estimates are based on our extensive experience in managing
and fulfilling these integrated ROI program offerings. Typically, shortfalls in
fulfilling lead guarantees before the scheduled completion date of an
advertising campaign are satisfied within an average of 45 days of such
scheduled completion date.
As of
December 31, 2007, substantially all of the integrated ROI program
offerings that have guaranteed a minimum number of qualified sales leads have
been delivered within the original contractual term. Integrated ROI program
offerings have not required us to defer a more than $25,000 in any quarter
during 2007, nor have we been required to refund or extend payment terms to
customers to account for these guarantees. These integrated ROI program
offerings represented approximately 35% and 29% of our online revenues, and 23%
and 19% of our total revenues for the years ended December 31, 2007 and
2006, respectively.
Amounts
collected or billed prior to satisfying the above revenue recognition criteria
are recorded as deferred revenue.
While
each of our online media offerings can be sold separately, most of our online
media sales involve multiple online offerings. At inception of the arrangement,
we evaluate the deliverables to determine whether they represent separate units
of accounting under EITF Issue No. 00-21. Deliverables are deemed to be
separate units of accounting if all of the following criteria are met: the
delivered item has value to the customer on a standalone basis; there is
objective and reliable evidence of the fair value of the item(s); and delivery
or performance of the item(s) is considered probable and substantially in our
control. We allocate revenue to each unit of accounting in a transaction based
upon its fair value as determined by vendor objective evidence. Vendor objective
evidence of fair value for all elements of an arrangement is based upon the
normal pricing and discounting practices for those online media offerings when
sold to other similar customers. If vendor objective evidence of fair value has
not been established for all items under the arrangement, no allocation can be
made, and we recognize revenue on all items over the term of the
arrangement.
Events.
We
recognize event sponsorship revenue upon completion of the event in the period
the event occurs. The majority of our events are free to qualified attendees,
however certain events are based on a paid attendee model. We recognize revenue
for paid attendee events upon completion of the event and receipt of payment
from the attendee. Amounts collected or billed prior to satisfying the above
revenue recognition criteria are recorded as deferred revenue.
Print.
We
recognize print revenue at the time the applicable magazine is distributed.
Amounts collected or billed prior to satisfying the above revenue recognition
criteria are recorded as deferred revenue.
Stock-Based
Compensation Expense
Through
December 31, 2005, we accounted for stock option grants in accordance with
Accounting Principles Board, or APB, Opinion No. 25,
Accounting for Stock Issued to
Employees
, and complied with the disclosure provisions of Statement of
Financial Accounting Standards, or SFAS, No. 123,
Accounting for Stock-Based
Compensation
, as amended by SFAS No. 148,
Accounting for Stock-Based
Compensation—Transition and Disclosure
. Under APB 25, deferred
stock-based compensation expense is recorded for the intrinsic value of options
(the difference between the deemed fair value of our common stock and the option
exercise price) at the grant date and is amortized ratably over the option's
vesting period. We also accounted for non-employee option grants on a
fair-value basis using the Black-Scholes model and recognized this expense over
the applicable vesting period.
On
January 1, 2006, we adopted the requirements of SFAS No. 123(R),
Share Based Payment
. SFAS
No. 123(R) requires us to measure the cost of employee services received in
exchange for an award of equity instruments, based on the fair value of the
award on the date of grant, and to recognize the cost over the period during
which the employee is required to provide the services in exchange for the
award. We adopted SFAS 123(R) using the prospective method, which requires
us to apply its provisions only to stock-based awards to employees granted on or
after January 1, 2006. For the years ended December 31, 2007 and 2006,
we recorded expense of $5.83 million and $1.25 million, respectively,
in connection with share-based payment awards. Unrecognized stock-based
compensation expense for non-vested options and restricted stock awards of
$18.9 million and $8.7 million is expected to be recognized using the
straight-line method over a weighted-average period of 1.65 years and 2.05
years, respectively. The actual amount of stock-based compensation expense we
record in any fiscal period will depend on a number of factors, including the
number of equity instruments issued and the volatility of our stock price over
time.
Long-Lived
Assets
Our
long-lived assets consist of property and equipment, goodwill and other
intangible assets. Goodwill and other intangible assets have arisen principally
from our acquisitions. The amount assigned to intangible assets is subjective
and based on our estimates of the future benefit of the intangible assets using
accepted valuation techniques, such as discounted cash flow and replacement cost
models. Our long-lived assets, other than goodwill, are amortized over their
estimated useful lives, which we determined based on the consideration of
several factors including the period of time the asset is expected to remain in
service. We evaluate the carrying value and remaining useful lives of long-lived
assets, other than goodwill, whenever indicators of impairment are present. We
evaluate the carrying value of goodwill annually, and whenever indicators of
impairment are present. Because we have one reporting segment under SFAS No.
142,
Goodwill and Other
Intangible Assets,
we utilize the entity-wide approach to assess goodwill
for impairment and compare our market value to our net book value to determine
if an impairment exists.
Income
Taxes
We are
subject to income taxes in both the United States and foreign jurisdictions, and
we use estimates in determining our provision for income taxes. We account for
income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes
,
which is the asset and liability method for accounting and reporting for income
taxes. Under SFAS No. 109, deferred tax assets and liabilities are
recognized based on temporary differences between the financial reporting and
income tax bases of assets and liabilities using statutory rates.
Our
deferred tax assets are comprised primarily of net operating loss, or NOL,
carryforwards. As of December 31, 2007, we had federal and state NOL
carryforwards of approximately $18.1 million and $18.2 million,
respectively, which may be used to offset future taxable income. The NOL
carryforwards expire at various times through 2027, and are subject to review
and possible adjustment by the Internal Revenue Service. The Internal Revenue
Code contains provisions that limit the NOL and tax credit carryforwards
available to be used in any given year in the event of certain changes in the
ownership interests of significant stockholders. The federal NOL carryforwards
of $18.1 million available at December 31, 2007 were acquired from
KnowledgeStorm and are subject to limitations on their use in future
years.
In
evaluating the ability to realize our net deferred tax assets, we consider all
available evidence, both positive and negative, including past operating
results, the existence of cumulative losses in the most recent fiscal years, tax
planning strategies that are prudent, and feasible and forecasts of future
taxable income. In 2005, we reversed a $6.75 million valuation allowance because
sufficient positive evidence existed to ascertain that it was more likely than
not that we would be able to realize our deferred tax assets. This conclusion
was based on our operating performance over the past few years and our operating
plans for the foreseeable future. In the event that we are unable to generate
taxable earnings in the future and determine that it is more likely than not
that we can not realize our deferred tax assets, an adjustment to the valuation
allowance would be made which may decrease income in the period that such
determination is made, and may increase income in subsequent
periods.
We
adopted the provisions of FIN 48, an interpretation of SFAS No. 109,
Accounting for Income
Taxes
, on January 1, 2007. FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in an enterprise’s financial statements
in accordance with SFAS No. 109 and prescribes a recognition threshold and
measurement process for financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. We did not
recognize any liability for unrecognized tax benefits as a result of adopting
FIN 48 on January 1, 2007 and during the year ended December 31,
2007.
Net
Income (Loss) Per Share
We
calculate net income (loss) per share in accordance with SFAS No. 128,
Earnings
Per Share
(SFAS No. 128). Through May 17, 2007, we calculated net income
per share in accordance with SFAS No. 128, as clarified by EITF Issue No. 03-6,
Participating
Securities and the Two-Class Method Under FASB Statement No. 128, Earnings Per
Share
. EITF Issue No. 03-6 clarifies the use of the "two-class" method of
calculating earnings per share as originally prescribed in SFAS No. 128.
Effective for periods beginning after March 31, 2004, EITF Issue No. 03-6
provides guidance on how to determine whether a security should be considered a
"participating security" for purposes of computing earnings per share and how
earnings should be allocated to a participating security when using the
two-class method for computing basic earnings per share. We determined that our
convertible preferred stock represented a participating security and therefore
adopted the provisions of EITF Issue No. 03-6.
Under the
two-class method, basic net income (loss) per share is computed by dividing the
net income (loss) applicable to common stockholders by the weighted-average
number of common shares outstanding for the fiscal period. Diluted net income
(loss) per share is computed using the more dilutive of (a) the two-class
method or (b) the if-converted method. We allocate net income first to
preferred stockholders based on dividend rights under our charter and then to
preferred and common stockholders based on ownership interests. Net losses are
not allocated to preferred stockholders.
As of May
16, 2007, the effective date of our initial public offering, we
transitioned from having two classes of equity securities outstanding, common
and preferred stock, to a single class of equity securities outstanding, common
stock, upon automatic conversion of shares of redeemable convertible preferred
stock into shares of common stock. In calculating diluted earnings per
share for the period January 1, 2007 to May 16, 2007 shares related to
redeemable convertible preferred stock were excluded because they were
anti-dilutive. In calculating diluted earnings per share for 2006 and 2005,
shares related to redeemable convertible preferred stock and outstanding stock
options and warrants were excluded because they were anti-dilutive.
Subsequent
to our initial public offering, basic earnings per share is computed based
only on the weighted average number of common shares outstanding during the
period. Diluted earnings per share is computed using the weighted average number
of common shares outstanding during the period, plus the dilutive effect of
potential future issuances of common stock relating to stock option programs and
other potentially dilutive securities using the treasury stock method. In
calculating diluted earnings per share, the dilutive effect of stock options is
computed using the average market price for the respective period. In addition,
under SFAS No. 123(R), the assumed proceeds under the treasury stock method
include the average unrecognized compensation expense of stock options that are
in-the-money. This results in the “assumed” buyback of additional shares,
thereby reducing the dilutive impact of stock
options.
Allowance
for Doubtful Accounts
We reduce
gross trade accounts receivable with an allowance for doubtful accounts. The
allowance for doubtful accounts is our best estimate of the amount of probable
credit losses in our existing accounts receivable. We review our allowance for
doubtful accounts on a regular basis, and all past due balances are reviewed
individually for collectibility. Account balances are charged against the
allowance after all means of collection have been exhausted and the potential
for recovery is considered remote. Provisions for allowance for doubtful
accounts are recorded in general and administrative expense. If our historical
collection experience does not reflect our future ability to collect outstanding
accounts receivables, our future provision for doubtful accounts could be
materially affected. To date, we have not incurred any write-offs of accounts
receivable significantly different than the amounts reserved. As of
December 31, 2007 and 2006, the allowance for doubtful accounts was $424
and $580, respectively.
Results
of Operations
The
following table sets forth our results of operations for the periods
indicated:
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(in
thousands)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online
|
|
$
|
63,686
|
|
|
|
67
|
%
|
|
$
|
51,176
|
|
|
|
65
|
%
|
|
$
|
43,662
|
|
|
|
65
|
%
|
Events
|
|
|
24,254
|
|
|
|
26
|
|
|
|
19,708
|
|
|
|
25
|
|
|
|
14,595
|
|
|
|
22
|
|
Print
|
|
|
6,725
|
|
|
|
7
|
|
|
|
8,128
|
|
|
|
10
|
|
|
|
8,489
|
|
|
|
13
|
|
Total
revenues
|
|
|
94,665
|
|
|
|
100
|
|
|
|
79,012
|
|
|
|
100
|
|
|
|
66,746
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online
|
|
|
15,575
|
|
|
|
17
|
|
|
|
12,988
|
|
|
|
16
|
|
|
|
10,476
|
|
|
|
16
|
|
Events
|
|
|
8,611
|
|
|
|
9
|
|
|
|
6,493
|
|
|
|
8
|
|
|
|
6,202
|
|
|
|
9
|
|
Print
|
|
|
3,788
|
|
|
|
4
|
|
|
|
5,339
|
|
|
|
7
|
|
|
|
5,322
|
|
|
|
8
|
|
Total
cost of revenues
|
|
|
27,974
|
|
|
|
30
|
|
|
|
24,820
|
|
|
|
31
|
|
|
|
22,000
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
66,691
|
|
|
|
70
|
|
|
|
54,192
|
|
|
|
69
|
|
|
|
44,746
|
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
and marketing
|
|
|
28,048
|
|
|
|
30
|
|
|
|
20,305
|
|
|
|
26
|
|
|
|
18,174
|
|
|
|
27
|
|
Product
development
|
|
|
7,320
|
|
|
|
8
|
|
|
|
6,295
|
|
|
|
8
|
|
|
|
5,756
|
|
|
|
9
|
|
General
and administrative
|
|
|
12,592
|
|
|
|
13
|
|
|
|
8,756
|
|
|
|
11
|
|
|
|
7,617
|
|
|
|
11
|
|
Depreciation
|
|
|
1,610
|
|
|
|
2
|
|
|
|
1,144
|
|
|
|
1
|
|
|
|
1,792
|
|
|
|
3
|
|
Amortization
of intangible assets
|
|
|
4,740
|
|
|
|
5
|
|
|
|
5,029
|
|
|
|
6
|
|
|
|
5,172
|
|
|
|
8
|
|
Total
operating expenses
|
|
|
54,310
|
|
|
|
58
|
|
|
|
41,529
|
|
|
|
53
|
|
|
|
38,511
|
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
12,381
|
|
|
|
13
|
|
|
|
12,663
|
|
|
|
16
|
|
|
|
6,235
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income (expense), net
|
|
|
1,831
|
|
|
|
2
|
|
|
|
321
|
|
|
|
*
|
|
|
|
(30
|
)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before provision for (benefit from) income taxes
|
|
|
14,212
|
|
|
|
15
|
|
|
|
12,984
|
|
|
|
16
|
|
|
|
6,205
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for (benefit from) income taxes
|
|
|
6,046
|
|
|
|
6
|
|
|
|
5,811
|
|
|
|
7
|
|
|
|
(2,681
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
8,166
|
|
|
|
9
|
%
|
|
$
|
7,173
|
|
|
|
9
|
%
|
|
$
|
8,886
|
|
|
|
13
|
%
|
* Percentage
not meaningful.
Comparison
of Fiscal Years Ended December 31, 2007 and 2006
Revenues
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Increase
(Decrease)
|
|
|
Percent
Change
|
|
|
|
($
in thousands)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online.
The
increase in online revenue was attributable to a $14.7 million increase in
revenue from lead generation offerings due primarily to an increase in webcast
and white paper sales volumes as well as revenues from TechnologyGuide.com,
which we acquired in April 2007 and KnowledgeStorm, which we acquired in
November 2007. The increase is offset by a $2.3 million decrease in revenue from
branding offerings due primarily to decreases in banner and e-newsletter sales
volume.
Events.
The
increase in events revenue was primarily attributable to a $4.2 million
increase in seminar series revenue due to an increase in the number of seminar
series events produced in 2007 as compared to 2006.
Print.
The
decrease in print revenue was attributable to the continued shift of advertising
budgets towards online offerings. Additionally, we discontinued
publishing
CIO
Decisions
magazine in November 2007.
Cost
of Revenues and Gross Profit
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Increase
(Decrease)
|
|
|
Percent
Change
|
|
|
|
($
in thousands)
|
|
Cost
of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Online
Revenue.
The increase in cost of online revenue was in part
attributable to a $888,000 increase in member acquisition expenses, primarily
related to keyword purchases for 2020software.com which we acquired in
May 2006. The increase also reflects $594,000 in additional webcast cost of
sales due to increased webcast sales volume in 2007. Approximately
$516,000 of the increase is attributable to salaries and benefits due to an
increase in average headcount of 10 employees in our online editorial and
operations organizations, as well as an additional $193,000 related to increased
freelancer expenses in 2007. We increased headcount and freelancers expenditures
to support the increase in online revenue volume and to provide additional
editorial content. Approximately $420,000 of the increase related to
the acquisition of KnowledgeStorm, which we completed in November
2007.
Cost of Events
Revenue.
The increase in cost of events revenue was primarily
attributable to a $1.2 million increase in seminar and custom event cost of
sales due to an increase in the number of seminar series and custom events
produced in 2007 as compared to 2006. Approximately $547,000 of the
increase was related to salaries, bonuses, benefits and temporary staffing
expenses to support the increase in seminar series and custom event
volume. Three additional multi-day conferences were held in 2007 as
compared to 2006 resulting in increased conference expenses of approximately
$305,000.
Cost of Print
Revenue.
The decrease in cost of print revenue was
attributable to our efforts in 2007 to reduce production costs for all three
magazines in response to our customer’s advertising budgets continuing to shift
away from print and towards online offerings. Additionally, we
discontinued publishing
CIO
Decisions
magazine in November 2007.
Gross Profit.
The
increase in gross profit reflects a $9.9 million increase in online gross profit
and a $2.4 million increase in events gross profit. The increase in online
gross profit is attributable to an increase in online revenue at a consistent
gross profit percentage. The increase in events gross profit is attributable to
an increase in custom event and seminar series revenue at a higher gross profit
percentage on these events when compared to 2006. We expect our gross profit to
fluctuate from period to period depending on our mix of revenues.
Operating
Expenses and Other
|
|
For
the Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Increase
(Decrease)
|
|
|
Percent
Change
|
|
|
|
($
in thousands)
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Percent
change not meaningful.
Selling and
Marketing.
The increase in selling and marketing expense was
primarily attributable to a $3.9 million increase in salaries, commissions, and
benefits related to an increase in average headcount of 45 employees in our
sales and marketing organizations, as well as increases to employee
compensation. The increase in headcount was to support the growth in revenues.
The increase also reflects a $2.4 million increase in stock-based compensation
expense and a $347,000 increase in travel expense resulting from the growth in
sales personnel. Approximately $945,000 of selling and marketing
expense related to the results of operations of KnowledgeStorm which we acquired
in November 2007.
Product
Development.
The increase in product development expense was
primarily attributable to $612,000 of expense related to the results of
operations of KnowledgeStorm which we acquired in November 2007. An
additional $144,000 of the increase was for consulting expenses related to IT
infrastructure improvements to support the growing number of online
offerings. The increase also reflects a $244,000 increase in
stock-based compensation.
General and
Administrative.
The increase in general and administrative
expense was primarily attributable to a $1.8 million increase in stock-based
compensation and a $482,000 increase in other employee
compensation. The increase was also attributable to a $955,000
increase in audit, legal, and insurance expenses related to operating as a
publicly traded company since May 2007. The increase also reflects a
$259,000 increase in facilities expense due to leasing additional office space
in our Needham, MA headquarters beginning in July 2007.
Depreciation.
The
increase in depreciation expense was attributable to purchases of property and
equipment of $2.7 million in the year ended December 31, 2007 compared to $1.3
million in 2006.
Amortization of Intangible
Assets.
The decrease in amortization of intangible assets
expense was attributable to intangible assets related to acquisitions in prior
years becoming fully amortized, offset in part by the amortization of intangible
assets related to our acquisitions of TechnologyGuide.com in May 2007 and
KnowledgeStorm in November 2007.
Interest Income (Expense),
Net.
The increase in interest income (expense), net reflected
an increase in average cash and short-term investment balances during 2007
compared to 2006.
Provision for Income
Taxes.
The provision for income taxes as a percentage of
income before taxes, or our annual effective tax rate, was 43% in 2007 and 45%
in 2006. The decrease in the effective tax rate was primarily due to
an increase in interest income exempt from Federal taxation.
Comparison
of Fiscal Years Ended December 31, 2006 and 2005
Revenues
|
|
Years
Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Increase
(Decrease)
|
|
|
Percent
Change
|
|
|
|
($
in thousands)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online.
The
increase in online revenue was attributable to a $5.2 million increase in
revenue from lead generation offerings due primarily to an increase in software
package comparison and webcast sales volumes. The increase also reflects a
$2.6 million increase in revenue from branding offerings due primarily to
an increase in banner sales volume.
Events.
The
increase in events revenue was attributable to a $3.0 million increase in
seminar series revenue and a $2.2 million increase in custom event revenue.
We introduced both custom event and seminar series offerings in 2005 and,
therefore, more events associated with these revenue streams were produced in
2006 as compared to 2005.
Print.
The
decrease in print revenue was attributable to the continued shift of advertising
budgets towards online offerings.
Cost
of Revenues and Gross Profit
|
|
Years
Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Increase
|
|
|
Percent
Change
|
|
|
|
($
in thousands)
|
|
Cost
of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Online
Revenue.
The increase in cost of online revenue was
attributable to a $1.2 million increase in member acquisition expenses
primarily related to keyword purchases for 2020software.com, which we acquired
in May 2006. The increase also reflects a $857,000 increase in salaries and
benefits primarily related to an increase in average headcount of 19 employees
in our online editorial and operations organizations, as well as increases in
employee compensation. We increased headcount to support the increase in online
revenue volume and to provide additional editorial content.
Cost of Events
Revenue.
The increase in cost of events revenue was primarily
attributable to a $801,000 increase in salaries and benefits primarily related
to an increase in average headcount of 20 employees in our event organizations,
as well as increases in employee compensation. We increased headcount to support
the increase in seminar series and custom event volume. The increase was offset
in part by a decrease in hotel related costs associated with the operation of
multi-day conferences.
Cost of Print
Revenue.
The increase in cost of print revenue was
attributable to three additional months of publishing
CIO Decisions
magazine during
2006 compared to 2005, offset primarily by a decrease in non-compensation
related expenses incurred publishing our other two magazines.
Gross Profit.
The
increase in gross profit reflects a $5.0 million increase in online gross
profit and a $4.8 million increase in events gross profit. The increase in
online gross profit is attributable to an increase in online revenue at a
consistent gross profit percentage. The increase in events gross profit is
attributable to an increase in custom event and seminar series revenue at a
higher gross profit percentage on these events when compared to 2005. We expect
our gross profit to fluctuate from period to period depending on our mix of
revenues.
Operating
Expenses and Other
|
|
For
the Years Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Increase
(Decrease)
|
|
|
Percent
Change
|
|
|
|
($
in thousands)
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for (benefit from) income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Percent
change not meaningful.
Selling and
Marketing.
The increase in selling and marketing expense was
primarily attributable to a $884,000 increase in salaries, commissions, and
benefits related to an increase in average headcount of 22 employees in our
sales and marketing organizations, as well as increases to employee
compensation. The increase in headcount was to support the growth in revenues.
The increase also reflects a $606,000 increase in stock-based compensation and a
$498,000 increase in travel expense resulting from the growth in sales
personnel.
Product
Development.
The increase in product development expense was
primarily attributable to a $369,000 increase in salaries and benefits primarily
related to an increase in average headcount of six employees in our product
development organizations, as well as increases in employee compensation. We
increased our headcount to support the growing number of online offerings and to
maintain and upgrade our IT infrastructure.
General and
Administrative.
The increase in general and administrative
expense was primarily attributable to a $553,000 increase in employee
compensation and a $491,000 increase in bad debt expense. The increase in bad
debt expense was attributable to bad debt expense of $366,000 in 2006 compared
to ($124,000) in 2005 due to a reduction in the allowance for doubtful accounts
recorded in 2005.
Depreciation.
The
decrease in depreciation expense was attributable to a change effective
January 1, 2006, in the estimated useful life for computer equipment and
software from two years to three years to more closely approximate the service
lives of the assets placed in service to date.
Amortization of Intangible
Assets.
The decrease in amortization of intangible assets
expense was attributable to intangible assets related to acquisitions in prior
years becoming fully amortized, offset in part by the amortization of intangible
assets related to our acquisition of 2020software.com in
May 2006.
Interest Income (Expense),
Net.
The increase in interest income (expense), net reflected
an increase in interest income attributable to higher interest rates in
2006.
Provision for Income
Taxes.
We recorded a provision for income taxes in 2006 based
upon a 45% effective tax rate. Our effective tax rate increased after the
adoption of SFAS No. 123(R) because stock-based compensation is a
nondeductible expense in our tax provision. The provision for income taxes is
net of an $85,000 deferred tax benefit recorded to revalue our deferred tax
assets using a federal tax rate of 35%. The $2.7 million benefit from
income taxes in 2005 was primarily attributable to the release of the valuation
allowance against our deferred tax assets. In the fourth quarter of 2005, we
determined that it was more likely than not that we would generate sufficient
future taxable income from operations to realize tax benefits arising from the
use of our existing net operating loss carryforwards.
Selected
Quarterly Results of Operations
The
following table presents our unaudited quarterly consolidated results of
operations and our unaudited quarterly consolidated results of operations as a
percentage of revenue for the eight quarters ended December 31, 2007. The
unaudited quarterly consolidated information has been prepared on the same basis
as our audited consolidated financial statements. You should read the following
table presenting our quarterly consolidated results of operations in conjunction
with our audited consolidated financial statements and the related notes
included elsewhere in this prospectus. The operating results for any quarter are
not necessarily indicative of the operating results for any future
period
.
|
|
For
the Three Months Ended
|
|
|
|
2007
|
|
|
2006
|
|
|
|
Mar.
31
|
|
|
Jun.
30
|
|
|
Sep.
30
|
|
|
Dec.
31
|
|
|
Mar.
31
|
|
|
Jun.
30
|
|
|
Sep.
30
|
|
|
Dec.
31
|
|
|
|
(in
thousands, except per share data)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online
|
|
$
|
13,709
|
|
|
$
|
16,330
|
|
|
$
|
14,687
|
|
|
$
|
18,960
|
|
|
$
|
10,375
|
|
|
$
|
12,812
|
|
|
$
|
12,565
|
|
|
$
|
15,424
|
|
Events
|
|
|
2,939
|
|
|
|
6,350
|
|
|
|
6,912
|
|
|
|
8,053
|
|
|
|
2,327
|
|
|
|
5,742
|
|
|
|
5,893
|
|
|
|
5,746
|
|
Print
|
|
|
1,697
|
|
|
|
1,924
|
|
|
|
1,702
|
|
|
|
1,402
|
|
|
|
2,209
|
|
|
|
2,163
|
|
|
|
1,809
|
|
|
|
1,947
|
|
Total
revenues
|
|
|
18,345
|
|
|
|
24,604
|
|
|
|
23,301
|
|
|
|
28,415
|
|
|
|
14,911
|
|
|
|
20,717
|
|
|
|
20,267
|
|
|
|
23,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online
|
|
|
3,525
|
|
|
|
3,900
|
|
|
|
3,769
|
|
|
|
4,381
|
|
|
|
2,621
|
|
|
|
2,992
|
|
|
|
3,644
|
|
|
|
3,731
|
|
Events
|
|
|
1,372
|
|
|
|
2,410
|
|
|
|
2,283
|
|
|
|
2,546
|
|
|
|
1,274
|
|
|
|
1,735
|
|
|
|
1,632
|
|
|
|
1,852
|
|
Print
|
|
|
1,129
|
|
|
|
999
|
|
|
|
862
|
|
|
|
798
|
|
|
|
1,407
|
|
|
|
1,423
|
|
|
|
1,385
|
|
|
|
1,124
|
|
Total
cost of revenues
|
|
|
6,026
|
|
|
|
7,309
|
|
|
|
6,914
|
|
|
|
7,725
|
|
|
|
5,302
|
|
|
|
6,150
|
|
|
|
6,661
|
|
|
|
6,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
12,319
|
|
|
|
17,295
|
|
|
|
16,387
|
|
|
|
20,690
|
|
|
|
9,609
|
|
|
|
14,567
|
|
|
|
13,606
|
|
|
|
16,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
and marketing
|
|
|
6,152
|
|
|
|
6,388
|
|
|
|
7,271
|
|
|
|
8,237
|
|
|
|
4,432
|
|
|
|
5,191
|
|
|
|
4,932
|
|
|
|
5,750
|
|
Product
development
|
|
|
1,748
|
|
|
|
1,596
|
|
|
|
1,677
|
|
|
|
2,299
|
|
|
|
1,564
|
|
|
|
1,559
|
|
|
|
1,617
|
|
|
|
1,555
|
|
General
and administrative
|
|
|
2,610
|
|
|
|
2,943
|
|
|
|
3,364
|
|
|
|
3,675
|
|
|
|
1,791
|
|
|
|
2,084
|
|
|
|
2,126
|
|
|
|
2,755
|
|
Depreciation
|
|
|
330
|
|
|
|
364
|
|
|
|
401
|
|
|
|
515
|
|
|
|
218
|
|
|
|
238
|
|
|
|
241
|
|
|
|
447
|
|
Amortization
of intangible assets
|
|
|
759
|
|
|
|
1,041
|
|
|
|
1,171
|
|
|
|
1,769
|
|
|
|
1,084
|
|
|
|
1,424
|
|
|
|
1,378
|
|
|
|
1,143
|
|
Total
operating expenses
|
|
|
11,599
|
|
|
|
12,332
|
|
|
|
13,884
|
|
|
|
16,495
|
|
|
|
9,089
|
|
|
|
10,496
|
|
|
|
10,294
|
|
|
|
11,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
720
|
|
|
|
4,963
|
|
|
|
2,503
|
|
|
|
4,195
|
|
|
|
520
|
|
|
|
4,071
|
|
|
|
3,312
|
|
|
|
4,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income (expense), net
|
|
|
(67
|
)
|
|
|
377
|
|
|
|
897
|
|
|
|
624
|
|
|
|
96
|
|
|
|
42
|
|
|
|
(16
|
)
|
|
|
199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes
|
|
|
653
|
|
|
|
5,340
|
|
|
|
3,400
|
|
|
|
4,819
|
|
|
|
616
|
|
|
|
4,113
|
|
|
|
3,296
|
|
|
|
4,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
336
|
|
|
|
2,092
|
|
|
|
1,568
|
|
|
|
2,050
|
|
|
|
175
|
|
|
|
1,739
|
|
|
|
1,709
|
|
|
|
2,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
317
|
|
|
$
|
3,248
|
|
|
$
|
1,832
|
|
|
$
|
2,769
|
|
|
$
|
441
|
|
|
$
|
2,374
|
|
|
$
|
1,587
|
|
|
$
|
2,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per share basic
|
|
$
|
(0.28
|
)
|
|
$
|
0.07
|
|
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
0.00
|
|
Net
income (loss) per share diluted
|
|
$
|
(0.28
|
)
|
|
$
|
0.06
|
|
|
$
|
0.04
|
|
|
$
|
0.06
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
0.00
|
|
Seasonality
The
timing of our revenues is affected by seasonal factors. Our revenues are
seasonal primarily as a result of the annual budget approval process of many of
our customers and the historical decrease in advertising activity in July and
August. Revenues are usually the lowest in the first quarter of each calendar
year, increase during the second quarter, decrease during the third quarter, and
increase again during the fourth quarter. Events revenue may vary depending on
which quarters we produce the event, which may vary when compared to previous
periods. The timing of revenues in relation to our expenses, much of which does
not vary directly with revenue, has an impact on the cost of online revenue,
selling and marketing, product development, and general and administrative
expenses as a percentage of revenue in each calendar quarter during the
year.
The
majority of our expenses are personnel-related and include salaries, stock-based
compensation, benefits and incentive-based compensation plan expenses. As a
result, we have not experienced significant seasonal fluctuations in the timing
of our expenses period to period.
Liquidity
and Capital Resources
|
|
As
of and for the Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(in
thousands)
|
|
Cash,
cash equivalents and short-term investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
provided by operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
used in investing activities
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
provided by (used in) financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Cash
used in investing activities shown net of short-term investment
activity.
Cash,
Cash Equivalents and Short-Term Investments
Our cash,
cash equivalents and short-term investments at December 31, 2007 were held
for working capital purposes and were invested primarily in money market
accounts, municipal bonds, auction rate securities and variable rate demand
notes. We do not enter into investments for trading or speculative
purposes.
At March
20, 2008, we held $6.2 million in auction rate securities. Auction
rate securities are variable-rate bonds tied to short-term interest rates with
maturities in excess of 90 days. Interest rates on these securities
typically reset through a modified Dutch auction at predetermined short-term
intervals, usually every 1, 7, 28 or 35 days. These auctions have
historically provided a liquid market for these securities. In
February and March 2008, our investment in auction rate securities of $6.2
million failed at auction due to sell orders exceeding buy orders. Our ability
to liquidate our auction rate securities and fully recover the carrying value
of our auction rate securities in the near term may be limited or not exist
and we may in the future be required to record an impairment charge on these
investments. The vast majority of our auction rate securities, including those
that have failed, were rated AAA at the time of purchase. We believe we will be
able to liquidate our investments without significant loss within the next year,
and we currently believe these securities are not impaired, primarily due to the
credit worthiness of the issuers of the underlying securities and their ability
to refinance if auctions continue to fail. However, it could take until the
final maturity of the underlying notes (up to 25 years) to realize its
investments' recorded value.
Accounts
Receivable, Net
Our
accounts receivable balance fluctuates from period to period, which affects our
cash flow from operating activities. The fluctuations vary depending on the
timing of our service delivery and billing activity, cash collections, and
changes to our allowance for doubtful accounts. We use days' sales outstanding,
or DSO, calculated on a monthly basis, as a measurement of the quality and
status of our receivables. We define DSO as accounts receivable divided by total
revenue for the applicable period, multiplied by the number of days in the
applicable period. DSO was 55 days at December 31, 2007, 51 days
at December 31, 2006 and 46 days at December 31,
2005.
Operating
Activities
Cash
provided by operating activities primarily consists of net income (loss)
adjusted for certain non-cash items including depreciation and amortization,
provision for bad debt, stock-based compensation, deferred income taxes, and the
effect of changes in working capital and other activities. Cash provided by
operating activities for the year ended December 31, 2007 was
$13.3 million, compared to $12.3 million and $11.3 million in the years
ended December 31, 2006 and 2005, respectively, primarily due to increased
profitability.
Investing
Activities
Cash used
in investing activities primarily consists of purchases of property and
equipment and acquisitions of businesses. Cash used in investing activities, net
of short-term investment activity, for the year ended December 31, 2007 was
$67.9 million and consisted of $64.2 million for the acquisitions of
TechnologyGuide.com in April 2007 and KnowledgeStorm in November 2007, net of
cash acquired, $2.7 million for the purchase of property and equipment and
$1.0 million to acquire certain assets of Ajaxian in February
2007. Cash used in investing activities for the year ended December
31, 2006 was $16.3 million and consisted of $15.0 million for the
acquisition of 2020software.com in May 2006 and $1.3 million for the
purchase of property and equipment. Cash used in investing activities for the
year ended December 31, 2005, net of short-term investment activity, was
$1.9 million due primarily to $2.1 million for the purchase of
property and equipment.
Financing
Activities
Cash
provided by financing activities for the year ended December 31, 2007 was $85.8
million. In May 2007, we completed our initial public offering of 8.9
million shares of our common stock, of which 7.1 million shares were sold by us
and 1.8 million shares were sold by stockholders of ours, all at a price to the
public of $13.00 per share. We raised a total of $91.9 million
in gross proceeds from the offering, or $83.2 million in net proceeds after
deducting underwriting discounts and commissions of $6.4 million and other
offering costs of approximately $2.3 million. In addition, we
received proceeds from the exercise of common stock options and warrants of $2.5
million for the year ended December 31, 2007. Cash used in financing
activities for the year ended December 31, 2006 was $12.1 million and consisted
of net principal payments of $13.0 million towards our bank term loan payable,
offset by approximately $892,000 of proceeds from the exercise of common stock
options and warrants. Cash used in financing activities for the year
ended December 31, 2005 was approximately $2.8 million and consisted of net
principal payments of $3.0 million towards our bank term loan payable, offset by
$238,000 of proceeds from the exercise of common stock options and
warrants.
Term
Loan and Credit Facility Borrowings
We
previously maintained a term loan with a commercial bank under which we made
borrowings net of principal repayments of $3.0 million in 2005. On
August 30, 2006, we entered into a credit agreement with Citizens Bank of
Massachusetts, which included a $10.0 million term loan and a
$20.0 million revolving credit facility. Initial borrowings under the
credit agreements were used to pay off the prior principal balance of
$22.0 million and provide working capital. As of December 31, 2007,
outstanding borrowings under the credit agreements were
$6.0 million.
Our
revolving credit facility matures on August 30, 2011. Unless earlier
payment is required by an event of default, all principal and any unpaid
interest will be due and payable on August 30, 2011. At our option, the
revolving credit facility bears interest at either the lender's prime rate less
1.00% or the London Interbank Offered Rate, or LIBOR, plus the applicable LIBOR
margin. We are also required to pay an unused line fee on the daily
unused amount of our revolving credit facility at a per annum rate of
0.25%. As of December 31, 2007, unused availability under our
revolving credit facility totaled $20.0 million.
In August
2007, we entered into an amendment to the Credit Agreement. The
amendment changes the applicable LIBOR margin from 1.50% to a sliding scale
based on the ratio of total funded debt to EBITDA for the preceding four fiscal
quarters. As of December 31, 2007, the applicable LIBOR margin was
1.25%.
Our term
loan requires the payment of 39 consecutive monthly installments of $250,000
each, plus interest, the first such installment was due on September 30,
2006, with a final payment of the entire unpaid principal balance due on
December 30, 2009. In September 2006, we entered into an interest rate
swap agreement to mitigate interest rate fluctuation, and fix the interest rate
on the term loan at 6.98%.
Borrowings
under our credit agreements are collateralized by an interest in and lien on all
of our assets and certain other guarantees and pledges. Our credit agreements
contain certain affirmative and negative covenants, which require, among other
things, that we meet certain financial ratio covenants and limit certain capital
expenditures. We were in compliance with all covenants under the credit
agreements as of December 31, 2007.
Capital
Expenditures
We have
made capital expenditures primarily for computer equipment and related software
needed to host our websites, internal-use software development costs, as well as
for leasehold improvements and other general purposes to support our growth. Our
capital expenditures totaled $2.7 million, $1.3 million and $2.1 million
for the years ended December 31, 2007, 2006 and 2005, respectively. We expect to
spend approximately $3.0 million in capital expenditures in 2008 primarily
for website development costs, computer equipment and related software, and
internal-use software development costs. We are not currently party to any
purchase contracts related to future capital expenditures.
Contractual
Obligations and Commitments
As of
December 31, 2007, our principal commitments consist of obligations under
leases for office space and principal and interest payments due under our bank
term loan. The offices are leased under noncancelable operating lease agreements
that expire through January 2013. The following table sets forth our commitments
to settle contractual obligations in cash as of December 31,
2007:
|
|
Payments
Due By Period
|
|
|
|
Total
|
|
|
Less
than 1 Year
|
|
|
1
- 3 Years
|
|
|
3
- 5 Years
|
|
|
More
than 5 Years
|
|
|
|
(in
thousands)
|
|
Bank
term loan payable
|
|
$
|
6,000
|
|
|
$
|
3,000
|
|
|
$
|
3,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Operating
leases
(1)
|
|
|
8,620
|
|
|
|
3,125
|
|
|
|
4,833
|
|
|
|
662
|
|
|
|
-
|
|
Total
|
|
$
|
14,620
|
|
|
$
|
6,125
|
|
|
$
|
7,833
|
|
|
$
|
662
|
|
|
$
|
-
|
|
(1)
|
Operating
lease obligations are net of minimum sublease payments of $76,000 due
under various sublease agreements that expire through July
2008.
|
Off-Balance
Sheet Arrangements
We do not
have any off-balance sheet arrangements.
Recent
Accounting Pronouncements
See Note
2 of “Notes to Consolidated Financial Statements” for recent accounting
pronouncements that could have an effect on us.
Item 7A
. Quantitative and Qualitative Disclosures About Market
Risk
Market
risk represents the risk of loss that may impact our financial position due to
adverse changes in financial market prices and rates. Our market risk
exposure is primarily the result of recent auction failures in the auction rate
securities market, fluctuations in foreign exchange rates, and fluctuations in
interest rates. We do not hold or issue financial instruments for trading
purposes.
Auction
Rate Securities Market Risk
At March
20, 2008, we held $6.2 million in auction rate securities. Auction
rate securities are variable-rate bonds tied to short-term interest rates with
maturities in excess of 90 days. Interest rates on these securities
typically reset through a modified Dutch auction at predetermined short-term
intervals, usually every 1, 7, 28 or 35 days. These auctions have
historically provided a liquid market for these securities. In
February and March 2008, our investment in auction rate securities of $6.2
million failed at auction due to sell orders exceeding buy orders. Our
ability to liquidate our auction rate securities and fully recover the carrying
value of our auction rate securities in the near term may be limited or not
exist and we may in the future be required to record an impairment charge on
these investments. The vast majority of our auction rate securities, including
those that have failed, were rated AAA at the time of purchase. We believe we
will be able to liquidate our investments without significant loss within the
next year, and we currently believe these securities are not impaired, primarily
due to the credit worthiness of the issuers of the underlying securities and
their ability to refinance if auctions continue to fail. However, it could take
until the final maturity of the underlying notes (up to 25 years) to realize its
investments' recorded value.
Foreign
Currency Exchange Risk
Our
subsidiary, TechTarget Limited, was established in July 2006 and is located
in London, England. As of December 31, 2007, all of our international
customer agreements have been denominated in U.S. dollars, and aggregate foreign
currency payments made by us through this subsidiary have been less than
$200,000 during the year ended December 31, 2007. We currently believe our
exposure to foreign currency exchange rate fluctuations is financially
immaterial and therefore have not entered into foreign currency hedging
transactions. We continue to review this issue and may consider hedging certain
foreign exchange risks through the use of currency futures or options in the
future.
Interest
Rate Risk
At
December 31, 2007, we had cash, cash equivalents and short-term investments
totaling $62.0 million. These amounts were invested primarily in
money market accounts, municipal bonds, auction rate securities and variable
rate demand notes. The cash and cash equivalents were held for
working capital purposes. We do not enter into investments for
trading or speculative purposes. With the exception of the market
risks associated with the auction rate securities, we believe we do not have any
material exposure to changes in the fair value of our investment portfolio as a
result of changes in interest rates due to the short-term nature of these
investments. Declines in interest rates, however, would reduce future
investment income.
Our
exposure to market risk also relates to the amount of interest expense we must
pay under our revolving credit facility. The advances under this credit facility
bear a variable rate of interest determined as a function of the lender's prime
rate or LIBOR. At December 31, 2007, there were no amounts
outstanding under our revolving credit facility.
Item 8.
Financial Statements and Supplementary
Data
Index
to Consolidated Financial Statements
|
Page
|
|
|
Report
of Independent Registered Public Accounting Firm
|
[ ]
|
Consolidated
Balance Sheets as of December 31, 2007 and 2006
|
[ ]
|
Consolidated
Statements of Operations for the Years Ended December 31, 2007, 2006
and 2005
|
[ ]
|
Consolidated
Statements of Redeemable Convertible Preferred Stock and Stockholders'
Equity (Deficit) for the Years Ended December 31, 2007, 2006 and
2005
|
[ ]
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2007, 2006
and 2005
|
[ ]
|
Notes
to Consolidated Financial Statements
|
[ ]
|
The Board
of Directors and Stockholders
TechTarget,
Inc.
We have
audited the accompanying consolidated balance sheets of TechTarget, Inc. as of
December 31, 2007 and 2006, and the related consolidated statements of
operations, redeemable convertible preferred stock and stockholders’ equity
(deficit), and cash flows for each of the three years in the period ended
December 31, 2007. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. We were not engaged
to perform an audit of the Company’s internal control over financial reporting.
Our audits included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of TechTarget, Inc. at
December 31, 2007 and 2006, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
2007, in conformity with U.S. generally accepted accounting
principles.
As
discussed in Note 2 to the consolidated financial statements, effective January
1, 2006, the Company adopted Statement of Financial Accounting Standards No.
123(R),
Share-Based
Payment
. Additionally, as discussed in Note 2 to the consolidated
financial statements, effective January 1, 2007, the Company adopted Financial
Accounting Standards Board Interpretation No. 48,
Accounting for
Uncertainty in Income Taxes – an
Interpretation of FASB Statement No. 109.
/s/ Ernst
& Young LLP
Boston,
Massachusetts
March 21,
2008
Consolidated
Balance Sheets
(in
thousands, except share and per share data)
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
10,693
|
|
|
$
|
30,830
|
|
Short-term
investments
|
|
|
51,308
|
|
|
|
-
|
|
Accounts
receivable, net of allowance for doubtful accounts of $424 and $580 as of
December 31, 2007 and 2006, respectively.
|
|
|
15,198
|
|
|
|
12,096
|
|
Prepaid
expenses and other current assets
|
|
|
1,962
|
|
|
|
952
|
|
Deferred
tax assets
|
|
|
2,947
|
|
|
|
1,784
|
|
Total
current assets
|
|
|
82,108
|
|
|
|
45,662
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
4,401
|
|
|
|
2,520
|
|
Goodwill
|
|
|
88,326
|
|
|
|
36,190
|
|
Intangible
assets, net of accumulated amortization
|
|
|
21,939
|
|
|
|
6,066
|
|
Other
assets
|
|
|
203
|
|
|
|
854
|
|
Deferred
tax assets
|
|
|
2,910
|
|
|
|
1,355
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
199,887
|
|
|
$
|
92,647
|
|
|
|
|
|
|
|
|
|
|
Liabilities,
Redeemable Convertible Preferred Stock and Stockholders' Equity
(Deficit)
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current
portion of bank term loan payable
|
|
$
|
3,000
|
|
|
$
|
3,000
|
|
Accounts
payable
|
|
|
2,919
|
|
|
|
2,928
|
|
Income
taxes payable
|
|
|
1,031
|
|
|
|
1,854
|
|
Accrued
expenses and other current liabilities
|
|
|
2,473
|
|
|
|
1,904
|
|
Accrued
compensation expenses
|
|
|
2,600
|
|
|
|
2,322
|
|
Deferred
revenue
|
|
|
3,761
|
|
|
|
2,544
|
|
Total
current liabilities
|
|
|
15,784
|
|
|
|
14,552
|
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
|
Other
liabilities
|
|
|
455
|
|
|
|
555
|
|
Bank
term loan payable, net of current portion
|
|
|
3,000
|
|
|
|
6,000
|
|
Total
liabilities
|
|
|
19,239
|
|
|
|
21,107
|
|
|
|
|
|
|
|
|
|
|
Commitments
(Note 8)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Redeemable
convertible preferred stock:
|
|
|
|
|
|
|
|
|
Series
A redeemable convertible preferred stock - $0.001 par value; 36,009,488
shares authorized ; 0 and 35,879,971 shares issued
and
outstanding, liquidation preference of $0 and $30,656 at December 31, 2007
and 2006, respectively.
|
|
|
-
|
|
|
|
30,468
|
|
Series
B redeemable convertible preferred stock - $0.001 par value; 51,470,588
shares authorized ; 0 and 51,470,588 shares issued
and
outstanding, liquidation preference of $0 and $88,296 at December 31, 2007
and 2006, respectively.
|
|
|
-
|
|
|
|
88,260
|
|
Series
C redeemable convertible preferred stock - $0.001 par value; 10,141,302
shares authorized ; 0 and 10,141,302 shares issued
and
outstanding, liquidation preference of $0 and $18,058 at December 31, 2007
and 2006, respectively.
|
|
|
-
|
|
|
|
18,038
|
|
Total
redeemable convertible preferred stock
|
|
|
-
|
|
|
|
136,766
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity (deficit):
|
|
|
|
|
|
|
|
|
Preferred
stock, 5,000,000 shares authorized; no shares issued or
outstanding
|
|
|
-
|
|
|
|
-
|
|
Common
stock, $0.001 par value per share, 100,000,000 shares authorized;
41,081,616 and 7,969,830 shares issued and outstanding
at
December 31, 2007 and 2006, respectively
|
|
|
41
|
|
|
|
8
|
|
Additional
paid-in capital
|
|
|
209,773
|
|
|
|
-
|
|
Warrants
|
|
|
13
|
|
|
|
105
|
|
Accumulated
other comprehensive loss
|
|
|
(102
|
)
|
|
|
(56
|
)
|
Accumulated
deficit
|
|
|
(29,077
|
)
|
|
|
(65,283
|
)
|
Total
stockholders' equity (deficit)
|
|
|
180,648
|
|
|
|
(65,226
|
)
|
|
|
|
|
|
|
|
|
|
Total
liabilities, redeemable convertible preferred stock and stockholders'
equity (deficit)
|
|
$
|
199,887
|
|
|
$
|
92,647
|
|
See
accompanying notes.
Consolidated
Statements of Operations
(in
thousands, except share and per share data)
|
|
For
the Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Online
|
|
$
|
63,686
|
|
|
$
|
51,176
|
|
|
$
|
43,662
|
|
Events
|
|
|
24,254
|
|
|
|
19,708
|
|
|
|
14,595
|
|
Print
|
|
|
6,725
|
|
|
|
8,128
|
|
|
|
8,489
|
|
Total
revenues
|
|
|
94,665
|
|
|
|
79,012
|
|
|
|
66,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Online
(1)
|
|
|
15,575
|
|
|
|
12,988
|
|
|
|
10,476
|
|
Events
(1)
|
|
|
8,611
|
|
|
|
6,493
|
|
|
|
6,202
|
|
Print
(1)
|
|
|
3,788
|
|
|
|
5,339
|
|
|
|
5,322
|
|
Total
cost of revenues
|
|
|
27,974
|
|
|
|
24,820
|
|
|
|
22,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
66,691
|
|
|
|
54,192
|
|
|
|
44,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
and marketing
(1)
|
|
|
28,048
|
|
|
|
20,305
|
|
|
|
18,174
|
|
Product
development
(1)
|
|
|
7,320
|
|
|
|
6,295
|
|
|
|
5,756
|
|
General
and administrative
(1)
|
|
|
12,592
|
|
|
|
8,756
|
|
|
|
7,617
|
|
Depreciation
|
|
|
1,610
|
|
|
|
1,144
|
|
|
|
1,792
|
|
Amortization
of intangible assets
|
|
|
4,740
|
|
|
|
5,029
|
|
|
|
5,172
|
|
Total
operating expenses
|
|
|
54,310
|
|
|
|
41,529
|
|
|
|
38,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
12,381
|
|
|
|
12,663
|
|
|
|
6,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
2,815
|
|
|
|
1,613
|
|
|
|
1,219
|
|
Interest
expense
|
|
|
(984
|
)
|
|
|
(1,292
|
)
|
|
|
(1,249
|
)
|
Total
interest income (expense)
|
|
|
1,831
|
|
|
|
321
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before provision for (benefit from) income taxes
|
|
|
14,212
|
|
|
|
12,984
|
|
|
|
6,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for (benefit from) income taxes
|
|
|
6,046
|
|
|
|
5,811
|
|
|
|
(2,681
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
8,166
|
|
|
$
|
7,173
|
|
|
$
|
8,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.15
|
|
|
$
|
(0.46
|
)
|
|
$
|
(0.24
|
)
|
Diluted
|
|
$
|
0.13
|
|
|
$
|
(0.46
|
)
|
|
$
|
(0.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
28,384,303
|
|
|
|
7,824,374
|
|
|
|
7,370,680
|
|
Diluted
|
|
|
31,346,738
|
|
|
|
7,824,374
|
|
|
|
7,370,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts
include stock-based compensation expense as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of online revenue
|
|
$
|
189
|
|
|
$
|
87
|
|
|
$
|
-
|
|
Cost
of events revenue
|
|
|
53
|
|
|
|
31
|
|
|
|
-
|
|
Cost
of print revenue
|
|
|
15
|
|
|
|
12
|
|
|
|
-
|
|
Selling
and marketing
|
|
|
2,999
|
|
|
|
606
|
|
|
|
-
|
|
Product
development
|
|
|
334
|
|
|
|
90
|
|
|
|
-
|
|
General
and administrative
|
|
|
2,244
|
|
|
|
424
|
|
|
|
78
|
|
See
accompanying notes.
Consolidated
Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity
(Deficit)
(in
thousands, except share and per share data)
|
|
Redeemable
Convertible Preferred Stock
|
|
|
Common
Stock
|
|
|
Treasury
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of Shares
|
|
Redemption
Value
|
|
|
Number
of Shares
|
|
|
$0.001
Par Value
|
|
|
Number
of Shares
|
|
|
Value
|
|
|
Additional
Paid-In Capital
|
|
|
Warrants
|
|
|
Deferred
Compensation
|
|
|
Accumulated
Other Comprehensive Income (Loss)
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2004
|
|
|
97,491,861
|
|
|
$
|
115,383
|
|
|
|
8,108,248
|
|
|
$
|
8
|
|
|
|
836,010
|
|
|
$
|
(4,548
|
)
|
|
$
|
-
|
|
|
$
|
364
|
|
|
$
|
(33
|
)
|
|
$
|
-
|
|
|
$
|
(58,095
|
)
|
|
$
|
(62,304
|
)
|
Accretion
of redeemable convertible preferred stock
|
|
|
|
|
|
|
10,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,621
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,621
|
)
|
Issuance
of common stock from stock options
|
|
|
|
|
|
|
|
|
|
|
141,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
238
|
|
Deferred
compensation related to nonqualified stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73
|
|
|
|
|
|
|
|
(73
|
)
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Amortization
of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
|
78
|
|
Reclassification
from additional paid-in capital to accumulated deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,310
|
)
|
|
|
-
|
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,886
|
|
|
|
8,886
|
|
Balance,
December 31, 2005
|
|
|
97,491,861
|
|
|
$
|
126,004
|
|
|
|
8,249,973
|
|
|
$
|
8
|
|
|
|
836,010
|
|
|
$
|
(4,548
|
)
|
|
$
|
-
|
|
|
$
|
364
|
|
|
$
|
(28
|
)
|
|
$
|
-
|
|
|
$
|
(59,519
|
)
|
|
$
|
(63,723
|
)
|
Accretion
of redeemable convertible preferred stock
|
|
|
|
|
|
|
10,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,762
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,762
|
)
|
Issuance
of common stock from warrants and stock options
|
|
|
|
|
|
|
|
|
|
|
555,867
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
1,150
|
|
|
|
(259
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
892
|
|
Retirement
of treasury stock
|
|
|
|
|
|
|
|
|
|
|
(836,010
|
)
|
|
|
(1
|
)
|
|
|
(836,010
|
)
|
|
|
4,548
|
|
|
|
(4,547
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Amortization
of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
Stock-based
compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,222
|
|
|
|
1,222
|
|
Reclassification
from additional paid-in capital to accumulated deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,159
|
)
|
|
|
-
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in fair value of interest rate swap
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(56
|
)
|
|
|
|
|
|
|
(56
|
)
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
7,173
|
|
|
|
7,173
|
|
Comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,117
|
|
Balance,
December 31, 2006
|
|
|
97,491,861
|
|
|
$
|
136,766
|
|
|
|
7,969,830
|
|
|
$
|
8
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
105
|
|
|
$
|
-
|
|
|
$
|
(56
|
)
|
|
$
|
(65,283
|
)
|
|
$
|
(65,226
|
)
|
Accretion
of redeemable convertible preferred stock
|
|
|
|
|
|
|
2,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,613
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
(2,613
|
)
|
Reclassification
from additional paid-in capital to accumulated deficit prior
to
initial
public offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,492
|
)
|
|
|
-
|
|
Conversion
of redeemable convertible preferred stock to common stock
|
|
|
(97,491,861
|
)
|
|
|
(139,379
|
)
|
|
|
24,372,953
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
108,822
|
|
|
|
356
|
|
|
|
|
|
|
|
|
|
|
|
30,532
|
|
|
|
139,734
|
|
Sale
of common stock in initial public offering, net of issuance
costs
|
|
|
|
|
|
|
|
|
|
|
7,072,097
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
83,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,161
|
|
Issuance
of common stock from warrants, stock options and restricted stock
awards
|
|
|
|
1,306,916
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
2,862
|
|
|
|
(398
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,466
|
|
Issuance
of common stock to acquire KnowledgeStorm
|
|
|
|
|
|
|
|
|
|
|
359,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
Excess
tax benefit - stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,222
|
|
Reclassification
of preferred stock warrants to other liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
(50
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50
|
)
|
Stock-based
compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,834
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in fair value of interest rate swap
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(46
|
)
|
|
|
|
|
|
|
(46
|
)
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,166
|
|
|
|
8,166
|
|
Comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,120
|
|
Balance,
December 31, 2007
|
|
|
-
|
|
|
$
|
-
|
|
|
|
41,081,616
|
|
|
$
|
41
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
209,773
|
|
|
$
|
13
|
|
|
$
|
-
|
|
|
$
|
(102
|
)
|
|
$
|
(29,077
|
)
|
|
$
|
180,648
|
|
See
accompanying notes.
Consolidated
Statements of Cash Flows
(in
thousands)
|
|
For
the Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
8,166
|
|
|
$
|
7,173
|
|
|
$
|
8,886
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
6,350
|
|
|
|
6,173
|
|
|
|
6,964
|
|
Provision
for bad debt
|
|
|
78
|
|
|
|
366
|
|
|
|
(124
|
)
|
Stock-based
compensation
|
|
|
5,834
|
|
|
|
1,250
|
|
|
|
78
|
|
Non-cash
interest expense
|
|
|
312
|
|
|
|
92
|
|
|
|
24
|
|
Deferred
tax benefit
|
|
|
(921
|
)
|
|
|
174
|
|
|
|
(2,995
|
)
|
Excess
tax benefit - stock options
|
|
|
(3,126
|
)
|
|
|
-
|
|
|
|
-
|
|
Changes
in operating assets and liabilities, net of businesses
acquired:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(1,985
|
)
|
|
|
(3,247
|
)
|
|
|
1,161
|
|
Prepaid
expenses and other current assets
|
|
|
1,703
|
|
|
|
(39
|
)
|
|
|
(300
|
)
|
Other
assets
|
|
|
686
|
|
|
|
(774
|
)
|
|
|
(83
|
)
|
Accounts
payable
|
|
|
(246
|
)
|
|
|
(741
|
)
|
|
|
1,204
|
|
Income
taxes payable
|
|
|
(181
|
)
|
|
|
1,539
|
|
|
|
315
|
|
Accrued
expenses and other current liabilities
|
|
|
(855
|
)
|
|
|
399
|
|
|
|
30
|
|
Accrued
compensation expenses
|
|
|
(2,729
|
)
|
|
|
446
|
|
|
|
(2,305
|
)
|
Deferred
revenue
|
|
|
373
|
|
|
|
(418
|
)
|
|
|
(1,642
|
)
|
Other
liabilities
|
|
|
(157
|
)
|
|
|
(54
|
)
|
|
|
122
|
|
Net
cash provided by operating activities
|
|
|
13,302
|
|
|
|
12,339
|
|
|
|
11,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases
of property and equipment, and other assets
|
|
|
(2,709
|
)
|
|
|
(1,263
|
)
|
|
|
(2,141
|
)
|
Purchases
of short-term investments
|
|
|
(354,729
|
)
|
|
|
-
|
|
|
|
-
|
|
Proceeds
from sales and maturities of short-term investments
|
|
|
303,421
|
|
|
|
-
|
|
|
|
33,000
|
|
Proceeds
from sale of assets
|
|
|
-
|
|
|
|
-
|
|
|
|
233
|
|
Acquisition
of assets
|
|
|
(1,013
|
)
|
|
|
-
|
|
|
|
-
|
|
Acquisition
of businesses, net of cash acquired
|
|
|
(64,162
|
)
|
|
|
(15,017
|
)
|
|
|
-
|
|
Net
cash (used in) provided by investing activities
|
|
|
(119,192
|
)
|
|
|
(16,280
|
)
|
|
|
31,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from revolving credit facility
|
|
|
12,000
|
|
|
|
-
|
|
|
|
-
|
|
Payments
made on revolving credit facility
|
|
|
(12,000
|
)
|
|
|
-
|
|
|
|
-
|
|
Proceeds
from bank term loan payable
|
|
|
-
|
|
|
|
10,000
|
|
|
|
-
|
|
Payments
on bank term loan payable
|
|
|
(3,000
|
)
|
|
|
(23,000
|
)
|
|
|
(3,000
|
)
|
Proceeds
from initial public offering, net of stock issuance costs
|
|
|
83,161
|
|
|
|
-
|
|
|
|
-
|
|
Excess
tax benefit - stock options
|
|
|
3,126
|
|
|
|
-
|
|
|
|
-
|
|
Proceeds
from exercise of warrants and stock options
|
|
|
2,466
|
|
|
|
892
|
|
|
|
238
|
|
Net
cash provided by (used in) financing activities
|
|
|
85,753
|
|
|
|
(12,108
|
)
|
|
|
(2,762
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
(20,137
|
)
|
|
|
(16,049
|
)
|
|
|
39,665
|
|
Cash
and cash equivalents at beginning of period
|
|
|
30,830
|
|
|
|
46,879
|
|
|
|
7,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
|
$
|
10,693
|
|
|
$
|
30,830
|
|
|
$
|
46,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
620
|
|
|
$
|
1,286
|
|
|
$
|
1,192
|
|
Cash paid
for taxes
|
|
$
|
4,484
|
|
|
$
|
4,165
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock in connection with
KnowledgeStorm acquisition
|
|
$
|
6,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
See
accompanying notes.
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2007, 2006 and 2005
(In
thousands, except share and per share data)
1.
Organization and Operations
TechTarget, Inc.
(the Company) is a leading provider of specialized online content that brings
together buyers and sellers of corporate information technology, or IT,
products. The Company sells customized marketing programs that enable IT vendors
to reach corporate IT decision makers who are actively researching specific IT
purchases.
The
Company’s integrated content platform consists of a network of approximately 50
websites that are complemented with targeted in-person events and two
specialized IT magazines. Throughout all stages of the purchase decision
process, these content offerings meet IT professionals' needs for expert, peer
and IT vendor information, and provide a platform on which IT vendors can launch
targeted marketing campaigns that generate measurable, high return on investment
(ROI). As IT professionals have become increasingly specialized, they have come
to rely on our sector-specific websites for purchasing decision support. The
Company’s content enables IT professionals to navigate the complex and rapidly
changing IT landscape where purchasing decisions can have significant financial
and operational consequences. Based upon the logical clustering of users'
respective job responsibilities and the marketing focus of the products that the
Company’s customers are advertising, content offerings are currently categorized
across eleven distinct media groups: Application Development; Channel; CIO and
IT Management; Data Center; Enterprise Applications; Laptops and Mobile
Technology; Networking; Security; Storage; Vertical Software; and Windows and
Distributed Computing.
In May
2007, the Company completed its initial public offering of 8.9 million
shares of its common stock, which is more fully described in Note 10 to the
consolidated financial statements.
2.
Summary of Significant Accounting Policies
The
accompanying consolidated financial statements reflect the application of
certain significant accounting policies as described below and elsewhere in
these notes to the consolidated financial statements.
Principles
of Consolidation
The
accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, which include KnowledgeStorm, Inc.,
Bitpipe, Inc., TechTarget Securities Corporation and TechTarget, Ltd.
KnowledgeStorm, Inc. was acquired by the Company on November 6, 2007 and is a
leading online search resource providing vendor generated content targeted
toward corporate IT professionals. Bitpipe, Inc. is a leading
provider of in-depth IT content including white papers, product literature,
and case studies from IT vendors. TechTarget Securities Corporation is a
Massachusetts Securities Corporation incorporated in 2004.
TechTarget, Ltd. is a subsidiary doing business principally in the United
Kingdom. All significant intercompany accounts and transactions have been
eliminated in consolidation.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. accounting
principles generally accepted requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue
Recognition
The
Company generates substantially all of its revenue from the sale of targeted
advertising campaigns that are delivered via its network of websites, events and
print publications. Revenue is recognized in accordance with Staff Accounting
Bulletin (SAB) No. 104,
Revenue Recognition
, and
Financial Accounting Standards Board's (FASB) Emerging Issues Task Force (EITF)
Issue No. 00-21,
Revenue
Arrangements With Multiple Deliverables
. Revenue is recognized only when
the service has been provided and when there is persuasive evidence of an
arrangement, the fee is fixed or determinable and collection of the receivable
is reasonably assured.
Online Media.
Revenue for online media offerings is
recognized for specific online media offerings as follows:
-
|
White
Papers.
White paper revenue is recognized ratably in the
period in which the white paper is available on the Company's
websites.
|
-
|
Webcasts and
Podcasts.
Webcast revenue is recognized in the period in
which the webcast occurs. Podcast revenue is recognized in the period in
which it is posted and becomes available on the Company's
websites.
|
-
|
Software Package
Comparisons.
Software package comparison revenue is
recognized ratably in the period in which the software information is
available on the Company's
websites.
|
-
|
Dedicated E-mails and
E-newsletters.
Dedicated e-mail and e-newsletter revenue
is recognized in the period in which the e-mail or e-newsletter is sent to
registered members.
|
-
|
List
Rentals.
List rental revenue is recognized in the period
in which the e-mails are sent to the list of registered
members.
|
-
|
Banners.
Banner
revenue is recognized in the period in which the banner impressions
occur.
|
The
Company offers customers the ability to purchase integrated ROI program
offerings, which can include any of its online media offerings packaged together
to address the particular customer's specific advertising requirements. As part
of these offerings, the Company will guarantee a minimum number of qualified
sales leads to be delivered over the course of the advertising campaign.
Throughout the advertising campaign, revenue is recognized as individual
offerings are delivered, and the lead guarantee commitments are closely
monitored to assess campaign performance. If the minimum number of qualified
sales leads is not met by the scheduled completion date of the advertising
campaign, the advertising campaign is extended, and the Company will defer
recognition of revenue in an amount equal to the value of the estimated
inventory that will be required to fulfill the guarantee. These estimates are
based on the Company's extensive experience in managing and fulfilling these
integrated ROI program offerings. Typically, shortfalls in fulfilling lead
guarantees before the scheduled completion date of an advertising campaign are
satisfied within an average of 45 days of such scheduled completion
date.
As of
December 31, 2007, substantially all of the integrated ROI program
offerings that have guaranteed a minimum number of qualified sales leads have
been delivered within the original contractual term. Historically, integrated
ROI program offerings have not required a deferral of more than $25,000 in any
quarter during 2007, nor has the Company been required to refund or extend
payment terms to customers to account for these guarantees. These integrated ROI
program offerings represented approximately 35% and 29% of online revenues, and
23% and 19% of total revenues for the years ended December 31, 2007 and
2006, respectively.
Amounts
collected or billed prior to satisfying the above revenue recognition criteria
are recorded as deferred revenue.
While
each online media offering can be sold separately, most of the Company's online
media sales involve multiple online offerings. At inception of the arrangement
the Company evaluates the deliverables to determine whether they represent
separate units of accounting under EITF Issue No. 00-21. Deliverables are
deemed to be separate units of accounting if all of the following criteria are
met: the delivered item has value to the customer on a standalone basis; there
is objective and reliable evidence of the fair value of the item(s); and
delivery or performance of the item(s) is considered probable and substantially
in our control. The Company allocates revenue to each unit of accounting in a
transaction based upon its fair value as determined by vendor objective
evidence. Vendor objective evidence of fair value for all elements of an
arrangement is based upon the normal pricing and discounting practices for those
online media offerings when sold to other similar customers. If vendor objective
evidence of fair value has not been established for all items under the
arrangement, no allocation can be made, and the Company recognizes revenue on
all items over the term of the arrangement.
Event
Sponsorships.
Sponsorship revenues from events are recognized
upon completion of the event in the period that the event occurs. Amounts
collected or billed prior to satisfying the above revenue recognition criteria
are recorded as deferred revenue. The majority of the Company's events are free
to qualified attendees, however certain of the Company's events are based on a
paid attendee model. Revenue is recognized for paid attendee events upon
completion of the event and receipt of payment from the attendee. Deferred
revenue relates to collection of the attendance fees in advance of the
event.
Print
Publications.
Advertising revenues from print publications are
recognized at the time the applicable publication is distributed. Amounts
collected or billed prior to satisfying the above revenue recognition criteria
are recorded as deferred revenue.
Fair
Value of Financial Instruments
Financial
instruments consist of cash and cash equivalents, short-term investments,
accounts receivable, accounts payable, a term loan payable and an interest rate
swap. The carrying value of these instruments approximates their estimated fair
values.
Long-lived
Assets
Long-lived
assets consist of property and equipment, goodwill and other intangible assets.
Goodwill and other intangible assets arise from acquisitions and are recorded in
accordance with Statement of Financial Accounting Standards (SFAS) No. 142,
Goodwill and Other Intangible
Assets
. In accordance with this statement, a specifically identified
intangible asset must be recorded as a separate asset from goodwill if either of
the following two criteria is met: (1) the intangible asset acquired arises
from contractual or other legal rights; (2) the intangible asset is
separable. Accordingly, intangible assets consist of specifically identified
intangible assets. Goodwill is the excess of any purchase price over the
estimated fair market value of net tangible assets acquired not allocated to
specific intangible assets.
As
required by SFAS No. 142, goodwill and indefinite-lived intangible assets
are not amortized, but are reviewed annually for impairment or more frequently
if impairment indicators arise. Separable intangible assets that are not deemed
to have an indefinite life are amortized over their useful lives using the
straight-line method over periods ranging from one to nine years, and are
reviewed for impairment when events or changes in circumstances suggest that the
assets may not be recoverable under SFAS No. 144,
Accounting for the Impairment or
Disposal of Long-Lived Assets
. The Company performs its annual test of
impairment of goodwill on December 31st of each year, and whenever events
or changes in circumstances suggest that the carrying amount may not be
recoverable. Based on this evaluation, the Company believes that, as of each of
the balance sheet dates presented, none of the Company's goodwill or other
long-lived assets was impaired.
Allowance
for Doubtful Accounts
The
Company reduces gross trade accounts receivable by an allowance for doubtful
accounts. The allowance for doubtful accounts is the Company's best estimate of
the amount of probable credit losses in the Company's existing accounts
receivable. The Company reviews its allowance for doubtful accounts on a regular
basis and all past due balances are reviewed individually for collectibility.
Account balances are charged off against the allowance after all means of
collection have been exhausted and the potential for recovery is considered
remote. Provisions for allowance for doubtful accounts are recorded in general
and administrative expenses.
Below is
a summary of the changes in the Company's allowance for doubtful accounts for
the years ended December 31, 2007, 2006, and 2005.
|
|
Balance
at Beginning of Period
|
|
|
Provision
|
|
|
Write-offs
|
|
|
Balance
at End of Period
|
|
Year
ended December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
ended December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and Equipment
Property
and equipment is stated at cost. Property and equipment acquired through
acquisitions of businesses are initially recorded at fair value. Depreciation is
calculated on the straight-line method based on the month the asset is placed in
service over the following estimated useful lives:
|
Estimated
Useful
Life
|
|
|
Computer
equipment and software
|
|
Internal-use
software and website development costs
|
|
|
Shorter
of useful life or life of
lease
|
Property
and equipment consists of the following:
|
|
As
of December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
Computer
equipment and software
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internal-use
software and website development costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Accumulated
depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
expense was $1,610, $1,144 and $1,792 for the years ended December 31,
2007, 2006 and 2005, respectively. Repairs and maintenance charges that do not
increase the useful life of the assets are charged to operations as incurred.
Effective January 1, 2006, the Company changed the estimated useful life for
computer equipment and software from two years to three years to more closely
approximate the service lives of computer equipment and software assets placed
in service to date. The change in accounting estimate did not have a material
effect on the Company's results from operations for the year ended
December 31, 2006. Management does not expect this change in accounting
estimate to have a material effect on results of operations in future
periods. During 2007, the Company reviewed its fixed assets and wrote
off approximately $5.8 million of fully depreciated assets that were no longer
in service.
Internal
Use Software and Website Development Costs
The
Company accounts for website development costs according to the guidance in the
EITF Issue No. 00-2,
Accounting for Web Site Development
Costs,
which requires that costs incurred during the development of
website applications and infrastructure involving developing software to operate
a website be capitalized. Additionally, all costs relating to
internal use software are accounted for under Statement of Position (SOP) 98-1,
Accounting for the Cost of
Computer Software Developed or Obtained for Internal Use
. The
estimated useful life of costs capitalized is evaluated for each specific
project. Capitalized internal use software and website development costs
are reviewed for recoverability whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be
recoverable. An impairment loss shall be recognized only if the carrying
amount of the asset is not recoverable and exceeds its fair value. The
Company capitalized internal-use software and website development costs of $950,
$659 and $495 for the years ended December 31, 2007, 2006 and 2005,
respectively.
Concentrations
of Credit Risk and Off-Balance Sheet Risk
Financial
instruments that potentially expose the Company to concentrations of credit risk
consist mainly of cash and cash equivalents and accounts receivable. The Company
maintains its cash and cash equivalents principally in accredited financial
institutions of high credit standing. The Company routinely assesses the credit
worthiness of its customers. The Company generally has not experienced any
significant losses related to individual customers or groups of customers in any
particular industry or area. The Company does not require collateral. Due to
these factors, no additional credit risk beyond amounts provided for collection
losses is believed by management to be probable in the Company's accounts
receivable.
No single
customer represented 10% or more of total accounts receivable at
December 31, 2007. One customer accounted for 15% of total
accounts receivable at December 31, 2006. No other customer represented 10%
or more of total accounts receivable at December 31, 2006. No
single customer accounted for more than 10% of revenue for the year ended
December 31, 2007. One customer accounted for 11% of revenue for
the year ended December 31, 2006. No other customer accounted for more than
10% of revenue for the year ended December 31, 2006. During fiscal
year 2005, no single customer accounted for greater than 10% of the
Company's total revenue.
Derivative
Instruments
The
Company has adopted the accounting and disclosure requirements of Statement of
Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative
Instruments and Hedging Activities
. SFAS No. 133 requires that all
derivative instruments be recorded on the consolidated balance sheet at their
fair value. In September, 2006, the Company entered into an interest rate swap
agreement to mitigate interest rate fluctuations on its variable rate bank term
loan, as further described in Note 7. Under SFAS No. 133, the interest
rate swap agreement is deemed to be a cash flow hedge and qualifies for hedge
accounting using the shortcut method. Accordingly, changes in the fair value of
the interest rate swap agreement are recorded in "accumulated other
comprehensive loss" on the consolidated statements of redeemable convertible
preferred stock and stockholders' deficit. The Company has no foreign exchange
contracts, option contracts, or other hedging arrangements.
Advertising
Expense
Advertising
expense primarily includes promotional expenditures and are expensed as
incurred. Advertising expense was $30, $102 and $129 for the years ended
December 31, 2007, 2006 and 2005, respectively.
Income
Taxes
The
Company accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes
,
which is the asset and liability method for accounting and reporting for income
taxes. Under SFAS No. 109, deferred tax assets and liabilities are
recognized based on temporary differences between the financial reporting and
income tax bases of assets and liabilities using statutory rates. In addition,
SFAS No. 109 requires a valuation allowance against net deferred tax assets
if, based upon available evidence, it is more likely than not that some or all
of the deferred tax assets will not be realized.
In July
2006, the FASB issued Financial Accounting Standards Interpretation No. 48,
Accounting for Uncertainty in
Income Taxes
, (FIN 48), which clarifies the accounting for uncertainty in
income taxes recognized in an enterprise's financial statements in accordance
with SFAS No. 109. FIN 48 prescribes a recognition and measurement method of a
tax position taken or expected to be taken in a tax return. FIN 48 also provides
guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosures and transitions. The Company adopted the provisions
of FIN 48 effective January 1, 2007. In accordance with FIN 48, the Company
recognizes any interest and penalties related to unrecognized tax benefits in
income tax expense.
Stock-Based
Compensation
At
December 31, 2005, the Company had one stock-based employee compensation
plan which is more fully described in Note 11. Through December 31,
2005, the Company accounted for its stock-based awards to employees using the
intrinsic value method prescribed in APB Opinion No. 25 and related
interpretations. Under the intrinsic value method, compensation expense is
measured on the date of the grant as the difference between the deemed fair
value of the Company's common stock and the exercise or purchase price
multiplied by the number of stock options or restricted stock awards
granted.
Through
December 31, 2005, the Company accounted for stock-based compensation
expense for non-employees using the fair value method prescribed by SFAS
No. 123 and the Black-Scholes option-pricing model, and recorded the fair
value of non-employee stock options as an expense over the vesting term of the
option.
In
December 2004, FASB issued SFAS No. 123(R), which requires companies
to expense the fair value of employee stock options and other forms of
stock-based compensation. The Company adopted SFAS No. 123(R) effective
January 1, 2006. SFAS No. 123(R) requires nonpublic companies that
used the minimum value method in SFAS No. 123 for either recognition or pro
forma disclosures to apply SFAS No. 123(R) using the prospective-transition
method. As such, the Company will continue to apply APB Opinion No. 25 in
future periods to equity awards outstanding at the date of SFAS
No. 123(R)'s adoption that were measured using the minimum value method. In
accordance with SFAS No. 123(R), the Company will recognize the
compensation cost of employee stock-based awards using the straight line method
over the vesting period of the award. Effective with the adoption of SFAS
No. 123(R), the Company has elected to use the Black-Scholes option pricing
model to determine the fair value of stock-based awards granted.
Comprehensive
Income (Loss)
SFAS
No. 130,
Reporting
Comprehensive Income
, establishes standards for reporting and displaying
comprehensive income (loss) and its components in financial statements.
Comprehensive income (loss) is defined to include all changes in equity during a
period, except those resulting from investments by stockholders and
distributions to stockholders. Other comprehensive income (loss) includes
changes in the fair value of the Company’s interest rate swap. For
the year ended December 31, 2005, comprehensive income (loss) was
equal to the reported net income (loss).
Net
Income (Loss) Per Share
The
Company calculates net income (loss) per share in accordance with SFAS No.
128,
Earnings
Per Share
(SFAS No. 128). Through May 17, 2007, the Company calculated
net income per share in accordance with SFAS No. 128, as clarified by EITF Issue
No. 03-6,
Participating
Securities and the Two-Class Method Under FASB Statement No. 128, Earnings Per
Share
. EITF Issue No. 03-6 clarifies the use of the "two-class" method of
calculating earnings per share as originally prescribed in SFAS No. 128.
Effective for periods beginning after March 31, 2004, EITF Issue No. 03-6
provides guidance on how to determine whether a security should be considered a
"participating security" for purposes of computing earnings per share and how
earnings should be allocated to a participating security when using the
two-class method for computing basic earnings per share. The Company determined
that its convertible preferred stock represented a participating security and
therefore adopted the provisions of EITF Issue No. 03-6.
Under the
two-class method, basic net income (loss) per share is computed by dividing the
net income (loss) applicable to common stockholders by the weighted-average
number of common shares outstanding for the fiscal period. Diluted net income
(loss) per share is computed using the more dilutive of (a) the two-class
method or (b) the if-converted method. The Company allocates net income
first to preferred stockholders based on dividend rights under the Company's
charter and then to preferred and common stockholders based on ownership
interests. Net losses are not allocated to preferred stockholders.
As of May
16, 2007, the effective date of the Company’s initial public offering, the
Company transitioned from having two classes of equity securities outstanding,
common and preferred stock, to a single class of equity securities outstanding,
common stock, upon automatic conversion of shares of redeemable convertible
preferred stock into shares of common stock. In calculating diluted
earnings per share for the period January 1, 2007 to May 16, 2007 shares
related to redeemable convertible preferred stock were excluded because they
were anti-dilutive. In calculating diluted earnings per share for 2006 and 2006
shares related to redeemable convertible preferred stock and outstanding stock
options and warrants were excluded because they were anti-dilutive.
Subsequent to the
Company's initial public offering, basic earnings per share is computed based
only on the weighted average number of common shares outstanding during the
period. Diluted earnings per share is computed using the weighted average number
of common shares outstanding during the period, plus the dilutive effect of
potential future issuances of common stock relating to stock option programs and
other potentially dilutive securities using the treasury stock method. In
calculating diluted earnings per share, the dilutive effect of stock options is
computed using the average market price for the respective period. In addition,
under SFAS No. 123(R), the assumed proceeds under the treasury stock method
include the average unrecognized compensation expense of stock options that are
in-the-money. This results in the “assumed” buyback of additional shares,
thereby reducing the dilutive impact of stock options.
A
reconciliation of the numerator and denominator used in the calculation of basic
and diluted net income (loss) per share is as follows:
|
|
For
the Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
8,166
|
|
|
$
|
7,173
|
|
|
$
|
8,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion
of preferred stock dividends
|
|
|
3,948
|
|
|
|
10,762
|
|
|
|
10,621
|
|
Total
net income applicable to preferred stockholders
|
|
|
3,948
|
|
|
|
10,762
|
|
|
|
10,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) applicable to common stockholders
|
|
$
|
4,218
|
|
|
$
|
(3,589
|
)
|
|
$
|
(1,735
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares of common stock outstanding
|
|
|
28,384,303
|
|
|
|
7,824,374
|
|
|
|
7,370,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares of common stock outstanding
|
|
|
28,384,303
|
|
|
|
7,824,374
|
|
|
|
7,370,680
|
|
Effect
of potentially dilutive shares
|
|
|
2,962,435
|
|
|
|
-
|
|
|
|
-
|
|
Total
weighted average shares of common stock outstanding
|
|
|
31,346,738
|
|
|
|
7,824,374
|
|
|
|
7,370,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation
of Net Income Per Common Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) applicable to common stockholders
|
|
$
|
4,218
|
|
|
$
|
(3,589
|
)
|
|
$
|
(1,735
|
)
|
Weighted
average shares of stock outstanding
|
|
|
28,384,303
|
|
|
|
7,824,374
|
|
|
|
7,370,680
|
|
Net
income (loss) per common share
|
|
$
|
0.15
|
|
|
$
|
(0.46
|
)
|
|
$
|
(0.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) applicable to common stockholders
|
|
$
|
4,218
|
|
|
$
|
(3,589
|
)
|
|
$
|
(1,735
|
)
|
Weighted
average shares of stock outstanding
|
|
|
31,346,738
|
|
|
|
7,824,374
|
|
|
|
7,370,680
|
|
Net
income (loss) per common share
|
|
$
|
0.13
|
|
|
$
|
(0.46
|
)
|
|
$
|
(0.24
|
)
|
Recent
Accounting Pronouncements
In
December 2007, the FASB released SFAS No. 141 (revised 2007),
Business Combinations,
or
SFAS No. 141R, which replaces FASB Statement No. 141. SFAS No. 141R establishes
principles and requirements for how an acquirer recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed,
any noncontrolling interest in the acquiree and the goodwill acquired. The
Statement also establishes disclosure requirements which will enable users to
evaluate the nature and financial effects of the business
combination. SFAS No. 141R is to be applied prospectively to business
combinations for which the acquisition date is on or after an entity's fiscal
year that begins after December 15, 2008. The Company is currently evaluating
the potential impact, if any, of the adoption of SFAS No. 141R on its
consolidated financial position and results of operations.
In
February 2007, the FASB released SFAS No. 159,
The Fair Value Option for Financial
Assets and Financial Liabilities,
and is effective for fiscal years
beginning after November 15, 2007. This Statement permits entities to
choose to measure many financial instruments and certain other items at fair
value. The objective is to improve financial reporting by providing entities
with the opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions. The Company is currently analyzing the
effect, if any, SFAS No. 159 will have on its consolidated financial position
and results of operations.
In
September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements
, or
SFAS No. 157. SFAS No. 157 defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles, and
expands disclosures about fair value measurements. SFAS No. 157 applies
under other accounting pronouncements that require or permit fair value
measurements, our board having previously concluded in those accounting
pronouncements that fair value is the relevant measurement attribute.
Accordingly, SFAS No. 157 does not require any new fair value measurements.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. The Company does not expect the adoption of SFAS No. 157 in 2008 to
have a material impact on its results of operations or financial
position.
3.
Acquisitions
KnowledgeStorm,
Inc.
On
November 6, 2007 the Company acquired KnowledgeStorm, Inc. (KnowledgeStorm),
which was a privately held company based in Alpharetta, Georgia, for $51,730 in
cash and 359,820 shares of unregistered common stock of TechTarget valued at
$6,000, as well as $230 in transaction costs. KnowledgeStorm is a
leading online search resource providing vendor generated content addressing
corporate IT professionals. KnowledgeStorm offers IT marketers products with a
lead generation and branding focus to reach these corporate IT professionals
throughout the purchasing decision process. The acquisition of
KnowledgeStorm strengthens the Company’s industry leadership position
and increases its scale, customer penetration and product offerings for
advertisers. Once KnowledgeStorm has been fully integrated, the Company
feels that cost savings can be achieved as a result of sales and operating
efficiencies from the combined operations. Additionally, the Company
anticipates that integration of KnowledegeStorm employees into its workforce
will increase its capabilities against product development, product
management and search engine optimization and marketing.
The
Company applied the guidance included in EITF Issue No. 98-3,
Determining
Whether a Nonmonetary Transaction Involves Receipt of Productive Assets or a
Business
, to conclude that the acquisition of KnowledgeStorm constituted
the acquisition of a business. In connection with the acquisition,
the Company recorded $45,101 of goodwill and $11,620 of other intangible
assets related to customer relationships, technology, trade name, customer
backlog and non-compete agreements with estimated useful lives ranging from 12
to 108 months. Of the goodwill recorded in conjunction with the
acquisition, none is deductible for income tax purposes.
The following
table summarizes the estimated fair values of the assets acquired and
liabilities assumed at the date of acquisition
.
|
|
As
of November 6, 2007
|
|
Cash
and cash equivalents
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities assumed
|
|
|
|
|
|
|
|
|
|
Within
approximately thirty days from the acquisition date, the Company’s management
completed its reorganization plan to consolidate KnowledgeStorm
operations. Liabilities assumed in the acquisition include
approximately $627 of involuntary termination benefits payable to terminated
employees through May 2008, as well as approximately $111 of costs associated
with exiting certain operating leases on office space leased by KnowledgeStorm
under noncancelable leases that expire through December 2008. As of
December 31, 2007, approximately $616 remained payable under these obligations,
all of which is expected to be paid by December 31, 2008.
The
estimated fair value of $11,620 of acquired intangible assets is assigned as
follows:
|
Useful
Life
|
|
Estimated
Fair Value
|
|
Customer
relationship intangible asset
|
|
|
|
|
|
Member
database intangible asset
|
|
|
|
|
|
Trade
name intangible asset
|
|
|
|
|
|
Customer
order backlog intangible asset
|
|
|
|
|
|
SEO/SEM
process intangible asset
|
|
|
|
|
|
Non-compete
agreement intangible asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Company engaged a third party valuation specialist to assist management in
determining the fair value of the acquired assets of
KnowledgeStorm. To value the customer relationship and backlog
intangible assets, an income approach was used, specifically a variation of the
discounted cash-flow method. The projected net cash flows for KnowledgeStorm
were tax affected using an effective rate of 41% and then discounted using a
discount rate of 20.6%. Additionally, the present value of the sum of
projected tax benefits was added to arrive at the total fair value of the
customer relationship and backlog intangible assets.
To value the member
database intangible asset, a replacement cost methodology approach was
used. The replacement cost of the member database was determined by
applying the actual costs incurred to register a new member to the total number
of registered members in the acquired database. Additionally,
opportunity costs and the present value of the sum of projected tax benefits
were added to arrive at the total fair value of the member database intangible
asset.
To value the
trade name intangible asset a relief from royalty method was used to estimate
the pre-tax royalty savings to the Company related to the KnowledgeStorm trade
name. The projected net cash flows from the pre-tax royalty savings
were tax affected using an effective rate of 41% and then discounted using a
discount rate of 20.6% to calculate the value of the trade name intangible
asset. To value the Search Engine Optimization (SEO)/ Search Engine
Marketing (SEM) process intangible asset, a comparative business valuation
method was used. Based on an expected life of three years, management
projected net cash flows for the Company with and without the SEO/SEM process in
place. The present value of the sum of the difference between the net
cash flows with and without the SEO/SEM process in place was calculated using a
discount rate of 20.6%. Additionally, the present value of the sum of projected
tax benefits was added to arrive at the total fair value of the SEO/SEM process
intangible asset.
The
following pro forma results of operations for the years ended December 31, 2007
and 2006 have been prepared as though the acquisition of KnowledgeStorm had
occurred on January 1, 2006. This pro forma unaudited financial
information is not indicative of the results of operations that may occur in the
future.
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results
of operations for KnowledgeStorm have been included in the Company’s results of
operations since the acquisition date of November 6, 2007.
TechnologyGuide,
Inc.
On April
26, 2007, the Company acquired substantially all of the assets of
TechnologyGuide, Inc. (TechGuide), which was a privately-held company based in
Cincinnati, OH, for $15,000 in cash, plus $15 in acquisition related
transaction costs. TechGuide is a network of five online websites
which includes; Notebookreview.com, Brighthand.com, TabletPCReview.com,
DigitalCameraReview.com and SpotStop.com. The websites offer
independent product reviews, price comparisons, and forum-based discussions for
selected technology products. The acquisition provides the Company
with opportunities for growth within the laptop/notebook PC and "smart
phone" markets in which it currently does not have a material
presence.
The
Company applied the guidance included in EITF Issue No. 98-3,
Determining Whether a Nonmonetary
Transaction Involves Receipt of Productive Assets or a Business
, to
conclude that the acquisition of TechGuide constituted the acquisition of a
business. In connection with this acquisition, the Company recorded
$7,035 of goodwill and $7,980 of intangible assets related to developed
websites, customer relationships, and non-compete agreements with estimated
useful lives ranging from 36 to 72 months.
The
estimated fair value of $7,980 of acquired intangible assets is assigned as
follows:
|
Useful
Life
|
|
Estimated
Fair Value
|
|
Developed
websites intangible asset
|
|
|
|
|
|
Customer
relationship intangible asset
|
|
|
|
|
|
Non-compete
agreements intangible asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Company engaged a third party valuation specialist to assist management in
determining the fair value of the acquired assets of TechGuide. To
value the websites and customer relationship intangible assets, an income
approach was used, specifically a variation of the discounted cash-flow
method. For the websites intangible asset, expenses and income taxes
were deducted from estimated revenues attributable to the existing
websites. For the customer relationship intangible asset, expenses
and income taxes were deducted from estimated revenues attributable to the
existing customers. The projected net cash flows for each were then
tax affected using an effective rate of 41% and then discounted using a discount
rate of 22.3% to determine the value of the intangible assets,
respectively. Additionally, the present value of the sum of projected
tax benefits was added to arrive at the total fair value of the intangible
assets, respectively. To value the non-compete agreements a
comparative business valuation method was used. Based on non-compete terms of
36 months, management projected net cash flows for the Company with and
without the non-compete agreements in place. The present value of the sum of the
difference between the net cash flows with and without the non-compete
agreements in place was calculated, based on a discount rate of
22.3%.
Results
of operations for TechGuide have been included in the Company’s results of
operations since the acquisition date of April 26, 2007.
Ajaxian.com
On
February 27, 2007, the Company acquired substantially all of the assets of
Ajaxian, Inc. (Ajaxian) for a purchase price of $1,013 in
cash. Ajaxian is a provider of a website and two events dedicated to
providing information and support for the community of developers for “Ajax”
(Asynchronous Javascript and XML), a web development technique for creating
interactive web applications.
The
Company applied the guidance included in EITF Issue No. 98-3 to conclude
that the acquisition of Ajaxian constituted the acquisition of
assets. The Company did not acquire any tangible assets from
Ajaxian. The following table summarizes the estimated fair value of
the intangible assets acquired by the Company at the date of
acquisition:
|
Useful
Life
|
|
Estimated
Fair Value
|
|
Customer
relationship intangible asset
|
|
|
|
|
|
Non-compete
agreement intangible asset
|
|
|
|
|
|
Trade
name intangible asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent
payments of $150 in May 2008 and $250 in May 2009 are due if certain event
revenue and website traffic milestones are met as defined in the purchase
agreement. Operating expense will be recorded in the period in which
payment of these respective obligations becomes probable under the terms of the
agreement.
2020Software.com
On
May 3, 2006, the Company acquired substantially all of the assets
associated with 2020Software.com (2020Software), which was a privately-held
company based in Los Angeles, California, for $15,000 in cash, plus $17 in
acquisition related transaction costs. 2020Software is a website focused on
providing detailed feature-comparison information and access to trial software
for businesses seeking trial versions of customer relationship management,
accounting, and other business software. The acquisition provides the Company
with an opportunity for growth within segments and in other markets in which it
currently does not have a presence, primarily vertical software applications and
enterprise markets.
The
Company applied the guidance included in EITF Issue No. 98-3 to conclude
the acquisition of 2020Software constituted the acquisition of a business. In
connection with this acquisition, the Company purchased $397 of accounts
receivable, recorded $9,440 million of goodwill and recorded
$5,180 million of intangible assets related to customer relationships,
customer order backlog and a non-compete agreement, with estimated useful lives
ranging from one to five years.
The
estimated fair value of $5,180 million of acquired intangible assets is
assigned as follows:
|
Useful
Life
|
|
Estimated
Fair Value
|
|
Customer
relationship intangible asset
|
|
|
|
|
|
Non-compete
agreement intangible asset
|
|
|
|
|
|
Customer
order backlog intangible asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Company engaged a third party valuation specialist to assist management in
determining the fair value of the acquired assets of 2020Software. To value the
customer relationship and backlog intangible assets, an income approach was
used, specifically a variation of the discounted cash-flow method. The projected
net cash flows for 2020Software were tax affected using an effective rate of 40%
and then discounted using a discount rate of 20.1% to calculate the value of the
customer relationship and backlog intangible assets. Additionally, the present
value of the sum of projected tax benefits was added to arrive at the total fair
value of the customer relationship and backlog intangible assets. To value the
non-compete agreement a comparative business valuation method was used. Based on
a non-compete term of 36 months, management projected net cash flows for
the Company with and without the non-compete agreement in place. The present
value of the sum of the difference between the net cash flows with and without
the non-compete agreement in place was calculated, based on a discount rate of
20.1%.
4.
Cash, Cash Equivalents and Short-Term Investments
Cash and
cash equivalents consist of highly liquid investments with maturities of three
months or less at date of purchase. Cash equivalents are carried at
cost, which approximates their fair market value. Cash and cash
equivalents consisted of the following:
|
|
As
of December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
paper corporate debt securities
|
|
|
|
|
|
|
|
|
Total
cash and cash equivalents
|
|
|
|
|
|
|
|
|
As of
December 31, 2007, short-term investments consist of municipal bonds, auction
rate securities and variable rate demand notes. Auction rate
securities are variable-rate bonds tied to short-term interest rates with
maturities in excess of 90 days. Interest rates on these securities
typically reset through a modified Dutch auction at predetermined short-term
intervals, usually every 1, 7, 28 or 35 days. Variable rate demand
notes are long-term, taxable, or tax-exempt bonds issued on a variable rate
basis that can be tendered by the Company for purchase at par whenever interest
rates reset, usually every 7 days. Despite the long-term nature of
the stated contractual maturities of these variable rate demand notes, the
Company has the intent and, except as discussed below, the ability to quickly
liquidate these securities. Auction rate securities and variable rate
demand notes are recorded at fair market value, which approximates cost because
of their short-term interest rates.
The
Company’s short-term investments are accounted for as available for sale
securities under SFAS No. 115,
Accounting for Certain Investments
in Debt and Equity Securities
. These investments are recorded
at fair market value, which approximates cost, therefore the Company has no
realized or unrealized gains or losses from these investments.
Short-term
investments consisted of the following:
|
|
As
of December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable
rate demand notes
|
|
|
|
|
|
|
|
|
Total
short-term investments
|
|
|
|
|
|
|
|
|
As of
December 31, 2007, auction rate securities have maturity dates that range from
2008 to 2032. Municipal bonds and variable rate demand notes all have
contractual maturity dates within one year. All income generated from these
short-term investments is recorded as interest income.
At March
27, 2008, the Company held $6.2 million in auction rate securities. Dutch
auctions have historically provided a liquid market for these
securities. In February and March 2008, the Company’s investment in
auction rate securities of $6.2 million failed at auction due to sell orders
exceeding buy orders. The Company's ability to liquidate its auction rate
securities and fully recover the carrying value of its auction rate securities
in the near term may be limited or not exist and the Company may in the future
be required to record an impairment charge on these investments. The vast
majority of the Company's auction rate securities, including those that have
failed, were rated AAA at the time of purchase. The Company believes it will be
able to liquidate its investments without significant loss within the next year,
and the Company currently believes these securities are not impaired, primarily
due to the credit worthiness of the issuers of the underlying securities and
their ability to refinance if auctions continue to fail. However, it could take
until the final maturity of the underlying notes (up to 25 years) to realize its
investments' recorded value.
5.
Goodwill
The
changes in the carrying amount of goodwill for the years ended December 31,
2007 and 2006, are as follows:
|
|
As
of December 31,
|
|
|
|
2007
|
|
|
2006
|
|
Balance
as of beginning of period
|
|
|
|
|
|
|
|
|
Goodwill
acquired during the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of end of period
|
|
|
|
|
|
|
|
|
6.
Intangible Assets
The
following table summarizes the Company's intangible assets, net:
|
|
|
|
|
As
of December 31, 2007
|
|
|
|
Estimated
Useful Lives (Years)
|
|
|
Gross
Carrying Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
|
|
Customer,
affiliate and advertiser relationships
|
|
|
1 -
9
|
|
|
$
|
19,077
|
|
|
$
|
(9,140
|
)
|
|
$
|
9,937
|
|
Developed
websites, technology and patents
|
|
|
3 -
6
|
|
|
|
5,976
|
|
|
|
(1,176
|
)
|
|
|
4,800
|
|
Trademark,
trade name and domain name
|
|
|
5 -
7
|
|
|
|
1,994
|
|
|
|
(521
|
)
|
|
|
1,473
|
|
Proprietary
user information database and Internet traffic
|
|
|
3 -
5
|
|
|
|
4,750
|
|
|
|
(174
|
)
|
|
|
4,576
|
|
Non-compete
agreements
|
|
|
1 -
3
|
|
|
|
1,735
|
|
|
|
(582
|
)
|
|
|
1,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
intangible assets
|
|
|
|
|
|
$
|
33,532
|
|
|
$
|
(11,593
|
)
|
|
$
|
21,939
|
|
|
|
|
|
|
As
of December 31, 2006
|
|
|
|
Estimated
Useful Lives (Years)
|
|
|
Gross
Carrying Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
|
|
Customer,
affiliate and advertiser relationships
|
|
|
1 -
5
|
|
|
$
|
11,025
|
|
|
$
|
(6,010
|
)
|
|
$
|
5,015
|
|
Developed
websites, technology and patents
|
|
|
3
|
|
|
|
576
|
|
|
|
(400
|
)
|
|
|
176
|
|
Trademark,
trade name and domain name
|
|
|
5
|
|
|
|
768
|
|
|
|
(321
|
)
|
|
|
447
|
|
Non-compete
agreements
|
|
|
3
|
|
|
|
550
|
|
|
|
(122
|
)
|
|
|
428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
intangible assets
|
|
|
|
|
|
$
|
12,919
|
|
|
$
|
(6,853
|
)
|
|
$
|
6,066
|
|
Intangible
assets are amortized over their estimated useful lives, which range
from one to nine years, using methods of amortization that are
expected to reflect the estimated pattern of economic use. The remaining
amortization expense will be recognized over a weighted-average period of
approximately 3.2 years.
Amortization
expense was $4,740, $5,029 and $5,172 for the years ended December 31,
2007, 2006 and 2005, respectively.
The
Company expects amortization expense of intangible assets to be as
follows:
Years
Ending December 31:
|
|
Amortization
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.
Bank Term Loan Payable
The
Company previously maintained a term loan and security agreement (the "Bank Term
Loan") with a bank. The outstanding balance due under the Bank Term Loan was
$22.0 million at December 31, 2005. In August 2006, the Company
entered into a credit agreement (the "Credit Agreement") with a commercial bank,
which included a $10.0 million term loan (the "Term Loan") and a
$20.0 million revolving credit facility (the "Revolving Credit Facility").
Initial borrowings under the Term Loan were used to repay the remaining
principal and accrued interest balance of the Bank Term Loan.
The
Revolving Credit Facility matures on August 30, 2011. Unless earlier
payment is required by an event of default, all principal and unpaid interest
will be due and payable on August 30, 2011. At the Company's option, the
Revolving Credit Facility bears interest at either the Prime Rate less 1.00% or
the LIBOR rate plus the applicable LIBOR margin. The Company is also required to
pay an unused line fee on the daily unused amount of its Revolving Credit
Facility at a per annum rate of 0.25%. As of December 31, 2007, unused
availability under the Revolving Credit Facility totaled
$20.0 million.
In August
2007, the Company entered into an amendment to the Credit
Agreement. The amendment changes the applicable LIBOR margin from
1.50% to a sliding scale based on the ratio of total funded debt to EBITDA for
the preceding four fiscal quarters. As of December 31, 2007, the
applicable LIBOR margin was 1.25%.
The Term
Loan requires 39 consecutive monthly principal payments of $250, plus interest,
beginning on September 30, 2006 through December 30, 2009. As of
December 31, 2007, the outstanding balance due under the Term Loan was
$6.0 million. There was no accrued interest on the Term Loan at
December 31, 2007.
In
September 2006, the Company entered into an interest rate swap agreement
with a commercial bank to mitigate the interest rate fluctuations on the Term
Loan. With this interest rate swap agreement in place, the Company has fixed the
annual interest rate at 6.98% for the Term Loan. The interest rate swap
agreement terminates in December 2009. Under SFAS No. 133,
Accounting for Derivative
Instruments and Hedging Activities,
the interest rate swap agreement is
deemed to be a cash flow hedge and qualifies for special accounting using the
shortcut method. Accordingly, changes in the fair value of the interest rate
swap agreement are recorded in "accumulated other comprehensive loss" on the
consolidated statements of redeemable convertible preferred stock and
stockholders' equity (deficit). As of December 31, 2007 and 2006, the fair
value of the cash flow hedge was $102 and $56, respectively, and is recorded in
other liabilities.
Borrowings
under the Credit Agreement are collateralized by a security interest in
substantially all assets of the Company. Covenants governing the Credit
Agreement require the maintenance of certain financial ratios. The Company was
in compliance with all financial covenants as of December 31,
2007.
The
future maturities of the Term Loan agreement at December 31, 2007 are as
follows:
Years
Ending December 31:
|
|
Principal
Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.
Commitments and Contingencies
Operating
Leases
The
Company conducts its operations in leased office facilities under various
noncancelable operating lease agreements that expire through January, 2013.
Certain of the Company's operating leases include escalating payment amounts and
are renewable for varying periods. In accordance with SFAS No. 13,
Accounting for Leases
, the
Company is recognizing the related rent expense on a straight-line basis over
the term of the lease. Total rent expense under these leases was approximately
$1,775, $1,447 and $1,348 for the years ended December 31, 2007, 2006 and
2005, respectively.
Future
minimum lease payments under noncancelable operating leases at December 31,
2007, net of minimum sublease rental payments of $76 are as
follows:
Years
Ending December 31:
|
|
Minimum
Lease Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation
From time
to time and in the ordinary course of business, the Company may be subject to
various claims, charges, and litigation. At December 31, 2007
and 2006, the Company did not have any pending claims, charges, or litigation
that it expects would have a material adverse effect on its consolidated
financial position, results of operations, or cash flows.
9. Stock-based
Compensation
Stock
Option Plans
In
September 1999, the Company approved a stock option plan (the 1999 Plan) that
provides for the issuance of up to 12,384,646 shares of common stock
incentives. The 1999 Plan provides for the granting of incentive
stock options (ISOs), nonqualified stock options (NSOs), and stock grants. These
incentives may be offered to the Company’s employees, officers, directors,
consultants, and advisors, as defined. ISOs may be granted at no less
than fair market value on the date of grant, as determined by the Company’s
Board of Directors (the Board) (no less than 110% of fair market value on the
date of grant for 10% or greater stockholders), subject to limitations, as
defined. Each option shall be exercisable at such times and subject to such
terms as determined by the Board, generally four years, and shall expire
within ten years of issuance.
In April
2007, the Board approved the 2007 Stock Option and Incentive Plan (the 2007
Plan), which was approved by the stockholders and became effective upon the
consummation of the Company’s IPO in May 2007. Effective upon the consummation
of the IPO, no further awards will be made pursuant to the 1999 Plan, but any
outstanding awards under the 1999 Plan will remain in effect and will continue
to be subject to the terms of the 1999 Plan. The 2007 Plan allows the
Company to grant ISOs, NSOs, stock appreciation rights, deferred stock awards,
restricted stock and other awards. Under the 2007 Plan, stock options may
not be granted at less than fair market value on the date of grant, and grants
generally vest over a four year period. Stock options granted under the
2007 Plan expire no later than ten years after the grant date. The Company
has reserved for issuance an aggregate of 2,911,667 shares of common stock under
the 2007 Plan plus an additional annual increase to be added automatically on
January 1 of each year, beginning on January 1, 2008, equal to the lesser of (a)
2% of the outstanding number of shares of common stock (on a fully-diluted
basis) on the immediately preceding December 31 and (b) such lower number of
shares as may be determined by our compensation committee. The number
of shares available for issuance under the 2007 Plan is subject to
adjustment in the event of a stock split, stock dividend or other change in
capitalization. Generally, shares that are forfeited or canceled from
awards under the 2007 Plan also will be available for future
awards. In addition, shares subject to stock options returned to the
1999 Plan, as a result of their expiration, cancellation or termination, are
automatically made available for issuance under the 2007 Plan. As of
December 31, 2007 a total of 1,475,768 shares were available for grant
under the 2007 Plan.
Stock
Options
The
Company uses the Black-Scholes option pricing model to calculate the grant-date
fair value of an option award. The Company calculated the fair values
of the options granted using the following assumptions:
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
grant date fair value per share
|
|
|
|
|
|
|
|
|
|
|
|
|
As there
was no public market for the Company’s common stock prior to the Company's IPO
in May 2007, and limited historical information on the volatility of its common
stock since the date of the Company’s IPO, the Company determined the volatility
for options granted in 2007 and 2006 based on an analysis of reported data for a
peer group of companies that issued options with substantially similar terms.
The expected volatility of options granted has been determined using an average
of the historical volatility measures of this peer group of companies for a
period equal to the expected life of the option. The expected life of
options has been determined utilizing the "simplified" method as prescribed by
the SEC's Staff Accounting Bulletin No. 107,
Share-Based
Payment.
The risk-free interest rate is based on a zero coupon
United States treasury instrument whose term is consistent with the expected
life of the stock options. The Company has not paid and does not anticipate
paying cash dividends on its shares of common stock; therefore, the expected
dividend yield is assumed to be zero. In addition, SFAS No. 123(R) requires
companies to utilize an estimated forfeiture rate when calculating the expense
for the period, whereas SFAS No. 123 permitted companies to record
forfeitures based on actual forfeitures, which was the Company’s historical
policy under SFAS No. 123. As a result, the Company applied an
estimated forfeiture rate, based on its historical forfeiture experience during
the previous six years, of 8.40% in determining the expense recorded in
2006. In 2007, the Company changed the estimated forfeiture rate from
8.40% to 4.00% based on a decrease in its historical forfeiture experience
during the previous two years. The Company applied the new forfeiture
rate of 4.00% in determining the expense recorded in 2007.
The
Company has historically granted stock options at exercise prices no less than
the fair market value as determined by the Board, with input from management.
The Board exercised judgment in determining the estimated fair value of the
Company's common stock on the date of grant based on a number of objective and
subjective factors, including operating and financial performance, external
market conditions affecting the Company's industry sector, an analysis of
publicly-traded peer companies, the prices at which shares of convertible
preferred stock were sold, the superior rights and preferences of securities
senior to common stock at the time of each grant and the likelihood of achieving
a liquidity event such as an initial public offering or sale of the Company. On
April 18, 2006, July 25, 2006 and September 27, 2006 the Board granted stock
options to purchase an aggregate of 167,000, 9,000 and 4,017,500 shares of
common stock, respectively, with an exercise price of $7.36 per share. On
October 30, 2006, the Board granted an additional option to purchase 50,000
shares of common stock at $7.80 per share. At the time of these grants, the
exercise price was determined by the Board with input by management based on the
various objective and subjective factors mentioned above. In addition, for
certain stock option grants in 2006, the Company engaged an unrelated third
party valuation specialist to assist management in preparing contemporaneous
valuation reports to document the fair value of its common stock for income tax
considerations.
In
connection with the preparation of its consolidated financial statements for the
year ended December 31, 2006 and in preparing for the initial public offering of
its common stock, management reexamined the valuations of its common stock
during 2006. In connection with this reexamination, the Company engaged a
valuation specialist to assist management in preparing retrospective valuation
reports of the fair value of its common stock for accounting purposes as of July
31, 2006, September 30, 2006 and October 27, 2006. Management believes that the
valuation methodologies used in the retrospective valuations are consistent
with the Practice Aid of the American Institute of Certified Public Accountants
entitled Valuation of Privately Held Company Equity Securities Issued as
Compensation. In its retrospective valuations, the Company determined that the
fair value of its common stock on July 31, 2006, September 30, 2006 and October
27, 2006 was $6.92, $7.44 and $7.80 per share, respectively. A retrospective
valuation for the April 18, 2006 grants was not prepared.
In each
retrospective valuation, a probability-weighted combination of the guideline
public company method and the discounted future cash flow method was used to
estimate the aggregate enterprise value of the Company at the applicable
valuation date. The guideline public company method estimates the fair market
value of a company by applying to that company market multiples, in this case
revenue and EBITDA multiples, of publicly traded firms in similar lines of
business. The companies used for comparison under the guideline public company
method were selected based on a number of factors, including but not limited to,
the similarity of their industry, business model, financial risk and other
factors to those of the Company's. Equal weighting has been applied to the
valuations derived from the using the revenue and EBITDA multiples in
determining the guideline public company fair market value estimate. The
discounted future cash flow method involves applying appropriate risk-adjusted
discount rates of approximately 17% to estimated debt-free cash flows, based on
forecasted revenues and costs. The projections used in connection with this
valuation were based on the Company's expected operating performance over the
forecast period. There is inherent uncertainty in these estimates; if different
discount rates or assumptions had been used, the valuation would have been
different.
In order
to allocate the enterprise value determined under the guideline public company
method and the discounted future cash flow method to its common stock, the
Company used the probability-weighted expected return method. Under the
probability-weighted expected return method, the fair market value of the common
stock is estimated based upon an analysis of future values for the Company
assuming various future outcomes, the timing of which is based on the plans of
its board and management. Share value is based on the probability-weighted
present value of expected future investment returns, considering each of the
possible outcomes available as well as the rights of each share class. The fair
market value of the Company's common stock was estimated using a
probability-weighted analysis of the present value of the returns afforded to
its shareholders under each of three possible future scenarios. Two of the
scenarios assume a shareholder exit, either through an initial public offering,
or IPO, or a sale of the Company. The third scenario assumes operations continue
as a private company and no exit transaction occurs. For the IPO scenario, the
estimated future and present values for the Company's common stock was
calculated using assumptions including; the expected pre-money valuation
(pre-IPO) based on the guideline public company method discussed above; the
expected dates of the future expected IPO; and an appropriate risk-adjusted
discount rate. For the sale scenario, the estimated future and present values
for the Company's common stock was calculated using assumptions including: an
equal weighting of the guideline public company method and the discounted cash
flow method discussed above; the expected dates of the future expected sale and
an appropriate risk-adjusted discount rate. For the private company with no exit
scenario, an equal weighting of the guideline public company method and the
discounted cash flow method based on present day assumptions was used. Finally,
the present value calculated for the Company's common stock under each scenario
was probability weighted based on management's estimate of the relative
occurrence of each scenario. The probability associated with the occurrence of
an IPO was increased from 40% in July 2006 to 45% in September 2006 to 50% in
October 2006. The probability associated with the occurrence of a sale was
decreased from 40% in July 2006 to 35% in September 2006 to 30% in October 2006.
The probability of continuing operations as a private company remained constant
at 20% in each valuation. The estimated fair market value of the Company's
common stock at each valuation date is equal to the sum of the probability
weighted present values for each scenario.
The
Company has incorporated the fair values determined in the retrospective
valuations into the Black-Scholes option pricing model when calculating the
compensation expense to be recognized for the stock options granted in July,
September and October of 2006. In determining the fair value of the April 2006
grants using the Black-Scholes option pricing model, it was assumed that the
fair market value of the common stock was equal to the exercise price of the
stock options.
The
following table details the effect on net income and net income (loss) per share
had stock-based compensation expense been recorded in 2005 based on the
fair-value method under SFAS No. 123,
Accounting for Stock-Based
Compensation.
|
|
Year
Ended December 31, 2005
|
|
|
|
|
|
|
Deduct:
Total stock-based employee compensation expense determined under fair
value-based method for all awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro
forma net loss per share:
|
|
|
|
|
Basic
and diluted - as reported
|
|
|
|
|
Basic
and diluted - pro forma
|
|
|
|
|
A summary
of the stock option activity under the Company's stock option plan for the year
ended December 31, 2007 is presented below:
|
|
Options
Outstanding
|
|
|
Weighted-Average
Exercise Price Per Share
|
|
|
Weighted-Average
Remaining Contractual Term in Years
|
|
|
Aggregate
Intrinsic Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
outstanding at December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
outstanding at December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
exercisable at December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
vested or expected to vest at December 31, 2007
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In
addition to the vested options, the Company expects a portion of the
unvested options to vest at some point in the future. Options expected to
vest is calculated by applying an estimated forfeiture rate to the
unvested options.
|
During
the years ended December 31, 2007 and 2006, the total intrinsic value of options
exercised (i.e. the difference between the market price at exercise and the
price paid by the employee to exercise the options) was $13,760 and $2,196,
respectively, and the total amount of cash received by the Company from exercise
of these options was $2,472 and $554, respectively. The total
grant-date fair value of stock options granted after the adoption of SFAS No.
123(R) on January 1, 2006 that vested during the year ended December 31, 2007
was $6,223. None of the options granted after the adoption of SFAS
No. 123(R) on January 1, 2006 vested during the year ended
December 31, 2006.
Unrecognized
stock-based compensation expense of non-vested stock options of
$18.9 million is expected to be recognized using the straight line method
over a weighted-average period of 1.65 years.
Restricted
Stock Awards
Restricted
stock awards are valued at the market price of a share of the Company’s
common stock on the date of the grant. A summary of the restricted
stock award activity under the Company's stock option plan for the year ended
December 31, 2007 is presented below:
|
|
Shares
|
|
|
Weighted-Average
Grant Date Fair Value Per Share
|
|
|
Aggregate
Intrinsic Value
|
|
Nonvested
outstanding at December 31, 2006
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
Granted
|
|
|
630,269
|
|
|
|
14.52
|
|
|
|
|
|
Vested
|
|
|
(15,494
|
)
|
|
|
14.78
|
|
|
|
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Nonvested
outstanding at December 31, 2007
|
|
|
614,775
|
|
|
$
|
14.52
|
|
|
$
|
9,086
|
|
Unrecognized
stock-based compensation expense of non-vested restricted stock awards of
$8.7 million is expected to be recognized using the straight line method
over a weighted-average period of 2.05 years.
10.
Stockholders' Equity (Deficit)
Shares
Authorized
In April
2007, the Board of Directors approved an amendment and restatement of the
Company’s Certificate of Incorporation to increase the authorized number of
shares of common stock from 44,344,656 to 100,000,000, to authorize 5,000,000
shares of undesignated preferred stock, par value $0.001 per share, and to
eliminate all reference to the designated Series Preferred Stock.
Stock
Offering
In May
2007, the Company completed its initial public offering (IPO) of 8,855,000
shares of its common stock, of which 7,072,097 shares were sold by the Company
and 1,782,903 shares were sold by certain of the Company’s existing shareholders
at a price to the public of $13.00 per share. The Company
raised a total of $91,937 in gross proceeds from the offering, or $83,161 in net
proceeds after deducting underwriting discounts and commissions of $6,436 and
other offering costs of approximately $2,340. Upon the closing of the offering,
all shares of the Company’s redeemable convertible preferred stock automatically
converted into 24,372,953 shares of common stock.
Reverse
Stock Split
On
April 26, 2007, the Company's board of directors approved a 1-for-4 reverse
stock split of the Company's outstanding common stock. The reverse stock split
became effective immediately and all common share and per share amounts in the
accompanying consolidated financial statements and notes to the consolidated
financial statements have been retroactively adjusted for all periods presented
to give effect to the reverse stock split.
Warrants
In
connection with the Company’s original Bank Term Loan agreement, in July 2001
the Company issued to the lender for the Bank Term Loan (the “Lender”) a fully
exercisable warrant to purchase up to 74,074 shares of series A redeemable
convertible preferred stock at $0.5411 per share. In connection with
an amendment to the Bank Term Loan agreement in April 2002 the Company issued to
the Lender an additional fully exercisable warrant to purchase 55,443
shares of series A redeemable convertible preferred stock at a price of
$0.5411 per share. Upon the closing of the Company’s IPO in May
2007, these warrants outstanding converted into warrants to purchase an
aggregate of 32,378 shares of the Company’s common stock at an exercise price of
$2.1644 per share. In 2007, the Lender exercised their warrants to
purchase 32,378 shares of common stock using the conversion rights in the
warrants. As result of the exercise using the conversion rights, the
Company issued 26,740 shares of common stock to the Lender and cancelled the
5,638 shares received in lieu of payment of the exercise price. In
connection with an acquisition in May 2000, the Company issued to the seller a
warrant to purchase 40,625 shares of common stock at a price of $2.36 per
share. The warrant is exercisable immediately and expires on May 10,
2010. In 2007, the seller exercised their warrants to purchase 30,981
shares of common stock using the conversion rights in the
warrants. As result of the exercise using the conversion rights, the
Company issued 26,024 shares of common stock to the seller and cancelled the
4,957 shares received in lieu of payment of the exercise price. At
December 31, 2007 and 2006, there were 9,644 and 73,003 shares, respectively, of
the Company’s common stock reserved for the exercise of all
warrants.
Reserved
Common Stock
As of
December 31, 2007, the Company has reserved common stock for the
following:
|
|
Number
of Shares
|
|
|
|
|
|
Options
outstanding and available for grant under stock option
plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11.
Income Taxes
As of
December 31, 2007, the Company had U.S. federal and state net operating
loss (NOL) carryforwards of approximately $18.1 million and $18.2 million,
respectively, which may be used to offset future taxable income. The NOL
carryforwards expire through 2027, and are subject to review and possible
adjustment by the Internal Revenue Service. The Internal Revenue Code contains
provisions that limit the NOL and tax credit carryforwards available to be used
in any given year in the event of certain changes in the ownership interests of
significant stockholders. The federal NOL carry forwards of $18.1 million
available at December 31, 2007 were acquired from KnowledgeStorm and are
subject to limitations on their use in future years.
The
income tax provision (benefit) for the years ended December 31, 2007, 2006
and 2005 consisted of the following:
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
Current:
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
5,321
|
|
|
$
|
4,321
|
|
|
$
|
248
|
|
State
|
|
|
1,646
|
|
|
|
1,316
|
|
|
|
67
|
|
Total
current
|
|
|
6,967
|
|
|
|
5,637
|
|
|
|
315
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(720
|
)
|
|
|
185
|
|
|
|
(2,553
|
)
|
State
|
|
|
(201
|
)
|
|
|
(11
|
)
|
|
|
(443
|
)
|
Total
deferred
|
|
|
(921
|
)
|
|
|
174
|
|
|
|
(2,996
|
)
|
|
|
$
|
6,046
|
|
|
$
|
5,811
|
|
|
$
|
(2,681
|
)
|
The
income tax provision (benefit) for the years ended December 31, 2007, 2006
and 2005 differs from the amounts computed by applying the statutory federal
income tax rate to the consolidated income (loss) before income taxes as
follows:
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
Provision
(benefit) computed at statutory rate
|
|
$
|
4,974
|
|
|
$
|
4,544
|
|
|
$
|
2,120
|
|
Increase
(reduction) resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation
allowance
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,497
|
)
|
Tax
exempt interest income
|
|
|
(712
|
)
|
|
|
-
|
|
|
|
-
|
|
Stock-based
compensation
|
|
|
624
|
|
|
|
427
|
|
|
|
-
|
|
Other
nondeductible expenses
|
|
|
208
|
|
|
|
88
|
|
|
|
72
|
|
State
income tax provision (benefit)
|
|
|
939
|
|
|
|
849
|
|
|
|
(376
|
)
|
Other
|
|
|
13
|
|
|
|
(97
|
)
|
|
|
-
|
|
Provision
for (benefit from) income taxes
|
|
$
|
6,046
|
|
|
$
|
5,811
|
|
|
$
|
(2,681
|
)
|
Significant
components of the Company's net deferred tax assets and liabilities are as
follows:
|
|
As
of December 31,
|
|
|
|
2007
|
|
|
2006
|
|
Deferred
tax assets:
|
|
|
|
|
|
|
Net
operating loss carryforwards
|
|
$
|
7,429
|
|
|
$
|
1,331
|
|
Intangible
asset amortization
|
|
|
-
|
|
|
|
671
|
|
Purchase
price adjustments
|
|
|
152
|
|
|
|
101
|
|
Accruals
and allowances
|
|
|
463
|
|
|
|
352
|
|
Depreciation
|
|
|
90
|
|
|
|
257
|
|
Stock-based
compensation
|
|
|
1,503
|
|
|
|
223
|
|
Deferred
rent expense
|
|
|
144
|
|
|
|
204
|
|
Gross
deferred tax assets
|
|
|
9,781
|
|
|
|
3,139
|
|
Less
valuation allowance
|
|
|
(940
|
)
|
|
|
-
|
|
Total
deferred tax assets
|
|
|
8,841
|
|
|
|
3,139
|
|
Deferred
tax liabilities:
|
|
|
|
|
|
|
|
|
Intangible
asset amortization
|
|
|
(2,984
|
)
|
|
|
-
|
|
Total
deferred tax liabilities
|
|
|
(2,984
|
)
|
|
|
-
|
|
Net
deferred tax assets
|
|
$
|
5,857
|
|
|
$
|
3,139
|
|
|
|
|
|
|
|
|
|
|
As
reported:
|
|
|
|
|
|
|
|
|
Current
deferred tax assets
|
|
$
|
2,947
|
|
|
$
|
1,784
|
|
Non-current
deferred tax assets
|
|
|
2,910
|
|
|
|
1,355
|
|
Total
deferred tax assets
|
|
$
|
5,857
|
|
|
$
|
3,139
|
|
In
evaluating the ability to realize the net deferred tax asset, the Company
considers all available evidence, both positive and negative, including past
operating results, the existence of cumulative losses in the most recent fiscal
years, tax planning strategies that are prudent, and feasible and forecasts of
future taxable income. In considering sources of future taxable income, the
Company makes certain assumptions and judgments that are based on the plans and
estimates that are used to manage the underlying business of the Company.
Changes in the Company's assumptions and estimates may materially impact income
tax expense for the period. In 2005, the Company reversed a $6,751
valuation allowance because management determined that sufficient positive
evidence existed to conclude that it was more likely than not that the Company
would be able to realize its deferred tax assets. This conclusion was based on
the Company's operating performance over the previous few years and its
operating plans for the foreseeable future. The valuation allowance
of $940 at December 31, 2007 relates to state deferred tax assets acquired from
KnowledgeStorm that the Company determined were not likely to be realized based
on projections of future taxable income in Georgia. To the extent
realization of the state deferred tax assets becomes probable, recognition of
these acquired tax benefits would reduce goodwill.
The
Company adopted the provisions of FIN 48, an interpretation of SFAS No.
109,
Accounting for
Income Taxes
, on January 1, 2007. FIN 48 clarifies the accounting
for uncertainty in income taxes recognized in an enterprise’s financial
statements in accordance with SFAS No. 109 and prescribes a recognition
threshold and measurement process for financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. FIN
48 also provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. At the
adoption date and as of December 31, 2007, the Company had no material
unrecognized tax benefits and no adjustments to liabilities or operations were
required.
The
Company may from time to time be assessed interest or penalties by major tax
jurisdictions. The Company recognizes interest and penalties related to
uncertain tax positions in income tax expense. No interest and penalties have
been recognized by the Company to date.
Tax years
2004 through 2007 are subject to examination by the federal and state taxing
authorities. There are no income tax examinations currently in
process.
12.
Segment Information
SFAS
No. 131,
Disclosures
About Segments of an Enterprise and Related Information
, establishes
standards for reporting information about operating segments in annual financial
statements and requires selected information of these segments be presented in
interim financial reports to stockholders. Operating segments are defined as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker, or
decision making group, in making decisions on how to allocate resources and
assess performance. The Company's chief operating decision making group, as
defined under SFAS No. 131, consists of the Company's chief executive
officer, president and executive vice president. The Company views its
operations and manages its business as one operating segment.
Geographic
Data
Net sales
to unaffiliated customers by geographic area were as follows:
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13.
401(k) Plan
The
Company maintains a 401(k) retirement savings plan (the Plan) whereby employees
may elect to defer a portion of their salary and contribute the deferred portion
to the Plan. The Company contributes an amount equal to 100% of the employee's
contribution to the Plan, up to an annual limit of one thousand five
hundred dollars. The Company contributed $622, $492, and $482 to the Plan
for the years ended December 31, 2007, 2006 and 2005, respectively.
Employee contributions and the Company's matching contributions are invested in
one or more collective investment funds at the participant's direction. The
Company's matching contributions vest 25% annually and are 100% vested after
four consecutive years of service.
14.
Quarterly Financial Data (unaudited)
|
|
For
the Three Months Ended
|
|
|
|
2007
|
|
|
2006
|
|
|
|
Mar.
31
|
|
|
Jun.
30
|
|
|
Sep.
30
|
|
|
Dec.
31
|
|
|
Mar.
31
|
|
|
Jun.
30
|
|
|
Sep.
30
|
|
|
Dec.
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 9.
Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
None.
Our
management, with the participation of our chief executive officer and chief
financial officer, evaluated the effectiveness of our disclosure controls and
procedures as of December 31, 2007. The term “disclosure controls and
procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act,
means controls and other procedures of a company that are designed to ensure
that information required to be disclosed by a company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the SEC’s rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the company’s management, including its
principal executive and principal financial officers, as appropriate to allow
timely decisions regarding required disclosure. Management recognizes that any
controls and procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving their objectives and management
necessarily applies its judgment in evaluating the cost-benefit relationship of
possible controls and procedures. For the reasons further discussed below, based
on the evaluation of our disclosure controls and procedures as of December 31,
2007, our chief executive officer and chief financial officer concluded that, as
of such date, our disclosure controls and procedures were not
effective.
On
February 13, 2008, the Company filed a Form 8-K that disclosed that we had
improperly classified a portion of our stock-based compensation expense in our
income tax provision as a permanent tax difference when such portion should have
been classified as a temporary tax difference. This resulted in an overstatement
of the income tax provision for the second and third quarters of 2007. On
March 27, 2008, the Company filed a Form 10Q/A for each of the restated
periods.
Our
management has concluded that we have material weaknesses in our internal
control over financial reporting relating to (1) inadequate review of stock
option agreements and option tracking data to determine the income tax
classification of the award as either an “incentive stock option” or
“non-qualified stock option” and (2) ineffective monitoring controls over our
income tax provision calculation due to lack of segregation of
duties. We have received a letter from Ernst & Young LLP, our
registered public accounting firm, confirming that they also believe that these
matters constitute material weaknesses in our internal control over financial
reporting. We have taken the following steps to remediate these
material weaknesses:
·
|
We
engaged a third party to administer our stock incentive plans and classify
stock options as “incentive stock options” or “non-qualified stock
options”; and
|
·
|
We
plan to engage a third party to review our internal income tax provision
calculation on a quarterly basis beginning with the quarter ending March
31, 2008.
|
We
believe that the actions taken to date as well as our planned future actions
will adequately address the material weaknesses.
Except as
described above, no other change in our internal control over financial
reporting occurred during the fiscal quarter ended December 31, 2007 that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
This
annual report does not include a report of management’s assessment regarding
internal control over financial reporting or an attestation report of our
registered public accounting firm due to a transition period established by
rules of the Securities and Exchange Commission for newly public
companies.
None.
Item 10
. Directors, Executive Officers and Corporate
Governance
The
information required by this item is set forth under the captions
“Proposal 1: Election of Class I Directors,” “Information About
Continuing Directors,” “Information About Executive Officers,” “Code of Business
Conduct and Ethics” and “Board Committees — Audit Committee” in our
definitive proxy statement for the 2008 Annual Meeting of Stockholders, and is
incorporated herein by reference.
We are
also required under Item 405 of Regulation S-K to provide information
concerning delinquent filers of reports under Section 16 of the Securities
Exchange Act of 1934, as amended. This information is listed under the caption
“Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive
proxy statement for the 2008 Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission no later than 120 days after the end of
our fiscal year. This information is incorporated herein by reference. The
information regarding executive officers is listed under the section captioned
“Executive Officers of the Company” in our definitive proxy statement for the
2008 Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission no later than 120 days after the end of our fiscal year. This
information is incorporated herein by reference.
The
information required by this item is set forth under the captions “Director
Compensation; Executive Officer Compensation,” “Compensation Committee Report”
and “Compensation Committee Interlocks and Insider Participation” in our
definitive proxy statement for the 2008 Annual Meeting of Stockholders to be
filed with the Securities and Exchange Commission no later than 120 days
after the end of our fiscal year. This information is incorporated herein by
reference.
Item 12.
Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters
The
information required by this item is set forth under the captions “Stock Owned
by Directors, Executive Officers and Greater-Than-5% Stockholders” and
“Securities Authorized for Issuance Under Equity Compensation Plans” in our
definitive proxy statement for the 2008 Annual Meeting of Stockholders to be
filed with the Securities and Exchange Commission no later than 120 days
after the end of our fiscal year. This information is incorporated herein by
reference.
Item 13
. Certain Relationships and Related
Transactions, and Director Independence
The
information required by this item is set forth under the captions “Related Party
Transactions” and “Information About Corporate Governance” in our definitive
proxy statement for the 2008 Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission no later than 120 days after the end of
our fiscal year. This information is incorporated herein by
reference.
Item 14
. Principal Accounting Fees and
Services
The
information required by this item is set forth under the caption “Independent
Registered Public Accountants” in our definitive proxy statement for the 2008
Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission no later than 120 days after the end of our fiscal year. This
information is incorporated herein by reference.
Item 15
. Exhibits, Financial Statement
Schedules
(a)
|
Financial
Statements are filed as part of this Annual Report on Form
10-K.
|
(b)
|
The
following consolidated financial statements are included in Item
8:
|
·
|
Consolidated
Balance Sheets as of December 31, 2007 and
2006
|
·
|
Consolidated
Statements of Operations for the Years Ended December 31, 2007, 2006 and
2005
|
·
|
Consolidated
Statements of Redeemable Convertible Preferred Stock and Stockholders'
Equity (Deficit) for the Years Ended December 31, 2007, 2006 and
2005
|
·
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and
2005
|
·
|
Notes
to Consolidated Financial
Statements
|
(d)
|
The
exhibits listed in the Exhibit Index immediately preceding the exhibits
are filed as part of this Annual Report on Form
10-K.
|
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
TECHTARGET,
INC.
Date:
March 31, 2008
By:
/s/
Greg
Strakosch
Greg
Strakosch
Chief
Executive Officer and Director
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signature
|
Title
|
Date
|
|
|
|
/s/
Greg Strakosch
|
Chief
Executive Officer and Director
|
March
31, 2008
|
Greg
Strakosch
|
(Principal
executive officer)
|
|
|
|
|
|
|
|
/s/
Eric
Sockol
|
Chief
Financial Officer
|
March
31, 2008
|
Eric
Sockol
|
(Principal
financial and accounting officer)
|
|
|
|
|
/s/
Leonard Forman
|
Director
|
March
31, 2008
|
Leonard
Forman
|
|
|
|
|
|
/s/
Jay C. Hoag
|
Director
|
March
31, 2008
|
Jay
C. Hoag
|
|
|
|
|
|
/s/
Bruce Levenson
|
Director
|
March
31, 2008
|
Bruce
Levenson
|
|
|
|
|
|
/s/
Roger M. Marino
|
Director
|
March
31, 2008
|
Roger
M. Marino
|
|
|
|
|
|
/s/
Alan G. Spoon
|
Director
|
March
31, 2008
|
Alan
G. Spoon
|
|
|
|
|
|
|
|
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Incorporated
by Reference to
|
Exhibit
Number
|
|
Description
|
|
Form or
Schedule
|
|
Exhibit
No.
|
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Filing
Date
with
SEC
|
|
SEC
File
Number
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Articles
of Incorporation and By-Laws
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3.1
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|
Fourth
Amended and Restated Certificate of Incorporation of the
Registrant
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10-Q
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3.1
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11/13/2007
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001-33472
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3.2
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Amended
and Restated Bylaws of the Registrant
|
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S-1/A
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3.3
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03/20/2007
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333-140503
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Instruments
Defining the Rights of Security Holders
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4.1
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Specimen
Stock Certificate for shares of the Registrant's Common
Stock
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S-1/A
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4.1
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04/10/2007
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333-140503
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Material
Contracts
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10.1
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Second
Amended and Restated Investors' Rights Agreement by and among the
Registrant, the Investors named therein and SG Cowen Securities
Corporation, dated as of December 17, 2004
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S-1
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10.1
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02/07/2007
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333-140503
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10.2
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Form
of Indemnification Agreement between the Registrant and its Directors and
Officers
|
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S-1/A
|
|
10.2
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05/15/2007
|
|
333-140503
|
10.3
#
|
|
2007
Stock Option and Incentive Plan
|
|
S-1/A
|
|
10.3
|
|
04/20/2007
|
|
333-140503
|
10.4
#
|
|
Form
of Incentive Stock Option Agreement under the 2007 Stock Option and
Incentive Plan
|
|
S-1/A
|
|
10.4
|
|
04/20/2007
|
|
333-140503
|
10.5
#
|
|
Form
of Non-Qualified Stock Option Agreement under the 2007 Stock Option and
Incentive Plan
|
|
S-1/A
|
|
10.5
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|
04/20/2007
|
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333-140503
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10.6
#
|
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Form
of Non-Qualified Stock Option Agreement for Non-Employee
Directors
|
|
S-1/A
|
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10.5.1
|
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04/27/2007
|
|
333-140503
|
10.7
#
|
|
Form
of Restricted Stock Agreement under the 2007 Stock Option and Incentive
Plan
|
|
S-1/A
|
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10.6
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04/20/2007
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333-140503
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10.14
#
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|
Executive
Incentive Bonus Plan
|
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S-1/A
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10.7
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04/20/2007
|
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333-140503
|
10.15
#
|
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1999
Stock Option Plan
|
|
S-1
|
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10.8
|
|
02/07/2007
|
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333-140503
|
10.16
#
|
|
Form
of Incentive Stock Option Grant Agreement under the 1999 Stock Option Plan
(for grants prior to September 27, 2006)
|
|
S-1
|
|
10.9
|
|
02/07/2007
|
|
333-140503
|
10.17#
|
|
Form
of Incentive Stock Option Grant Agreement under the 1999 Stock Option Plan
(for grants on or after September 27, 2006)
|
|
S-1
|
|
10.10
|
|
02/07/2007
|
|
333-140503
|
10.18#
|
|
Form
of Incentive Stock Option Grant Agreement under the 1999 Stock Option Plan
(for grants to executives)
|
|
S-1/A
|
|
10.10.1
|
|
05/01/2007
|
|
333-140503
|
10.19#
|
|
Form
of Nonqualified Stock Option Grant Agreement under the 1999 Stock Option
Plan
|
|
S-1
|
|
10.11
|
|
02/07/2007
|
|
333-140503
|
10.20#
|
|
Lease
Agreement between the Registrant and Wellsford/Whitehall Holdings, L.L.C.
for the premises located at 117 Kendrick Street, Needham, MA, dated as of
November 25, 2003
|
|
S-1
|
|
10.12
|
|
02/07/2007
|
|
333-140503
|
10.21#
|
|
First
Amendment to Lease Agreement between the Registrant and
Wellsford/Whitehall Holdings, L.L.C. for the premises
located atatatoiugbpoh117 Kendrick Street, Needham, MA, dated
July 27, 2004
|
|
S-1
|
|
10.13
|
|
02/07/2007
|
|
333-140503
|
10.22#
|
|
Second
Amendment to Lease Agreement between the Registrant and
Wellsford/Whitehall Holdings, L.L.C. for the premises located at 117
Kendrick Street, Needham, MA, dated December, 2004
|
|
S-1
|
|
10.14
|
|
02/07/2007
|
|
333-140503
|
10.23#
|
|
Third
Amendment to Lease Agreement between the Registrant and Intercontinental
Fund III for the premises located at 117 Kendrick Street, Needham,
MA, dated September 21, 2006
|
|
S-1
|
|
10.15
|
|
02/07/2007
|
|
333-140503
|
10.24#
|
|
Credit
Facility Agreement between the Registrant and Citizens Bank of
Massachusetts, dated August 30, 2006
|
|
S-1
|
|
10.16
|
|
02/07/2007
|
|
333-140503
|
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Additional
Exhibits
|
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99.1
|
|
Agreement
and Plan of Merger by and among the Registrant, Catapult Acquisition Corp.
and KnowledgeStorm, Inc. dated November 1, 2007
|
|
8-K
|
|
99.1
|
|
11/07/2007
|
|
001-33472
|
|
#
Management contract or compensatory plan or arrangement filed as an
Exhibit to this report pursuant to 15(a) and 15(c) of
Form 10-K.
|
TechTarget,
Inc.
Restricted
Stock Unit Agreement
Granted Under 2007 Stock
Option and Incentive Plan
AGREEMENT
made as of this 18th day of December, 2007 between
TechTarget, Inc
., a
Delaware
corporation (the “
Company
”),
and
________________
(the “
Participant
”).
For
valuable consideration, receipt of which is acknowledged, the parties hereto
agree as follows:
1.
Issuance of
RSUs
. In consideration of services rendered or to be rendered
to the Company by the Participant, the Company has granted to the Participant,
subject to the terms and conditions set forth in this Agreement and in the
Company’s 2007 Stock Option and Incentive Plan (the “
Plan
”), _____________________restricted
stock units (the “
RSUs
”), each
representing the right to receive one share of common stock, $0.001 par value,
of the Company (“
Common
Stock
”). The shares of Common Stock that are issuable with
respect to the RSUs are referred to in this Agreement as “
Shares
”. The
Participant agrees that the RSUs shall be subject to the forfeiture provisions
set forth in Section 2 of this Agreement, the restrictions on transfer set
forth in Section 3 of this Agreement, and the distribution provisions set
forth in Section 4 of this Agreement and
Appendix A
attached
hereto.
2.
Vesting
. The
RSUs shall vest in accordance with the provisions of this Section 2 of the
Agreement. Notwithstanding anything herein to the contrary, if the
RSUs do not vest as set forth in this Section 2 or as otherwise provided in any
other agreement with the Company or any parent or subsidiary of the Company, the
RSUs shall automatically be forfeited to the Company.
(a)
In the
event that the Participant ceases to be employed by the Company for any reason
or no reason, with or without cause, prior to December 18, 2011, any Unvested
RSUs (as defined below) shall be automatically forfeited to the
Company. “Unvested RSUs” means the total number of RSUs multiplied by
the Applicable Percentage at the time such RSUs are forfeited or such other
applicable measurement date. The “Applicable Percentage” shall be (i)
100% until December 18, 2008, (ii) less 25% for each year of employment
completed by the Participant with the Company from and after December 18, 2008,
and (iii) zero on or after December 18, 2011. The total number
of Unvested RSUs that become vested on each vesting date shall be referred to as
a “Vesting Tranche”.
(b)
Notwithstanding
the terms of Section 2(a) above, in the event:
(1)
of the
consummation a transaction resulting in a “change in control” of the Company
within the meaning of Section 409A of the Internal Revenue Code (“Section
409A”), all Unvested RSUs shall immediately and without further action be deemed
to be fully-vested; or
(2)
of
termination of the Participant’s employment with the Company pursuant to Section
6(b), (c), (d) or (e) of the Amended and Restated Employment Agreement, by and
between the Company and the Participant (the “Employment Agreement”), or the
failure of the Company to extend the Employment Agreement following the
expiration of the then-current Term, the Unvested RSUs shall vest in accordance
with the terms of the Section 7(b)(iv) of the Employment Agreement.
Any RSUs
that become vested pursuant to this Section 2(b) shall be treated as a Vesting
Tranche and shall be distributed in accordance with Section 4
hereof.
(c)
For
purposes of this Agreement, employment with the Company shall include employment
with a parent or subsidiary of the Company, or any successor to the
Company.
3.
Restrictions on
Transfer
.
(a)
The
Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise
dispose of, by operation of law or otherwise (collectively “
transfer
”) any RSUs,
or any interest therein, until such RSUs have vested and the Shares issuable
with respect thereto have been distributed in accordance with Section 4 of this
Agreement.
(b)
The
Company shall not be required (i) to transfer on its books any of the RSUs which
have been transferred in violation of any of the provisions set forth in this
Agreement or (ii) to treat as owner of such RSUs any transferee to whom such
RSUs have been transferred in violation of any of the provisions of this
Agreement.
4.
Distribution of
Shares.
(a)
Each
Vesting Tranche will be distributed by the Company to the Participant (or to the
Participant’s estate in the event that his death occurs after a vesting date but
before distribution of the corresponding Shares) on the earliest to occur of one
of the Permissible Events described in Section 4(b) below on which date (the
“Distribution Date”), the Participant (or his estate) shall become the owner of
the Shares for all purposes. Notwithstanding the foregoing, and
solely to the extent necessary to avoid the penalty provisions under Section
409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), if the
Distribution Date occurs because of the termination of the Participant’s
employment and the Participant is deemed to be a “specified employee” as defined
under Section 409A, then the Distribution Date shall be the date that is six
months plus one day after the date of termination.
(b)
For
purposes of this Agreement, “Permissible Event” shall be the occurrence of one
of the following: (i) the termination of the Participant’s employment
for any reason, (ii) the Participant becoming disabled within the meaning of
Section 409A, (iii) the death of the Participant, (iv) the occurrence of a
“change in control” of the Company within the meaning of Section 409A, and (v)
the date set forth on
Appendix A
attached
hereto for each such Vesting Tranche.
(c)
Neither
the Company nor the Participant shall have any right to accelerate or defer
distribution of the Shares, except to the extent expressly permitted or required
by Section 409A.
(d)
Notwithstanding
the foregoing, the Company shall not be obligated to issue to the Participant
the Shares upon the Distribution Date unless the issuance and delivery of such
Shares shall comply with all relevant provisions of law and other legal
requirements including, without limitation, any applicable federal or state
securities laws and the requirements of any stock exchange upon which shares of
Common Stock may then be listed.
5.
Provisions of the
Plan
.
This
Agreement is subject to the provisions of the Plan, a copy of which is furnished
to the Participant with this Agreement.
6.
Withholding
Taxes
.
(a)
The
Participant acknowledges and agrees that the Company has the right to deduct
from payments of any kind otherwise due to the Participant any federal, state,
local, provincial or other taxes of any kind required by law to be withheld with
respect to the issuance of the Shares to the Participant or the lapse of the
forfeiture provisions.
(b)
The
Participant has reviewed with the Participant’s own tax advisors the federal,
state, local, provincial and other tax consequences of this investment and the
transactions contemplated by this Agreement. The Participant is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. The Participant understands that
the Participant (and not the Company) shall be responsible for the Participant’s
own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.
7.
Miscellaneous
.
(a)
No Rights to
Employment
. The Participant acknowledges and agrees that the
vesting of the RSUs pursuant to Section 2 hereof is earned only by satisfaction
of the performance conditions and continuing service as an employee at the will
of the Company (not through the act of being hired or being granted the RSUs
hereunder). The Participant further acknowledges and agrees that the
transactions contemplated hereunder and the vesting schedule set forth herein do
not constitute an express or implied promise of continued engagement as an
employee for the vesting period, for any period, or at all.
(b)
Severability
. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
and each other provision of this Agreement shall be severable and enforceable to
the extent permitted by law.
(c)
Waiver
. Any
provision for the benefit of the Company contained in this Agreement may be
waived, either generally or in any particular instance, by the Board of
Directors of the Company.
(d)
Binding
Effect
. This Agreement shall be binding upon and inure to the
benefit of the Company and the Participant and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer set forth in Section 3 of this
Agreement.
(e)
Notice
. Each
notice relating to this Agreement shall be in writing and delivered in person or
by first class mail, postage prepaid, to the address as hereinafter
provided. Each notice shall be deemed to have been given on the date
it is received. Each notice to the Company shall be addressed to it
at its office at 117 Kendrick Street, Needham, MA 02494. Each notice
to the Participant shall be addressed to the Participant at the Participant’s
last known address.
(f)
Pronouns
. Whenever
the context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa.
(g)
Entire
Agreement
. This Agreement and the Plan constitute the entire
agreement between the parties, and supersede all prior agreements and
understandings, relating to the subject matter of this Agreement.
(h)
Amendment
. This
Agreement may be amended or modified only by a written instrument executed by
both the Company and the Participant.
(i)
Governing
Law
. This Agreement shall be construed, interpreted and
enforced in accordance with the internal laws of the State of Delaware without
regard to any applicable conflicts of laws.
(j)
Interpretation
. The
interpretation and construction of any terms or conditions of the Plan, or of
this Agreement or other matters related to the Plan by the Compensation
Committee of the Board of Directors of the Company shall be final and
conclusive.
(k)
Participant’s
Acknowledgments
. The Participant acknowledges that he or she:
(i) has read this Agreement; (ii) has been represented in the preparation,
negotiation, and execution of this Agreement by legal counsel of the
Participant’s own choice or has voluntarily declined to seek such counsel; (iii)
understands the terms and consequences of this Agreement; (iv) is fully aware of
the legal and binding effect of this Agreement; and (v) understands that the law
firm of Wilmer Cutler Pickering Hale and Dorr LLP is acting as counsel to the
Company in connection with the transactions contemplated by the Agreement, and
is not acting as counsel for the Participant.
(l)
Delivery of
Certificates
. Subject to Section 4, the Participant may
request that the Company deliver the Shares in certificated form with respect to
any Shares underlying RSUs that are delivered upon the Distribution
Date.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
TECHTARGET,
INC.
By: ________________________
Name:
Title:
Participant:
_____________________________
Print
Name: ___________________
Address:
_________________
_________________
Appendix
A
Deferral
Schedule
Name
:
RSUs
:
Grant Date
:
Reference
is hereby made to that certain Restricted Stock Unit Agreement dated as of
_________ by and between TechTarget, Inc. and _________ (the “RSU Agreement”).
All capitalized terms used herein and not defined shall have the meanings
ascribed thereto in the RSU Agreement.
Please check the box for the
applicable election:
____ (1)
Pursuant to Section 4 of the Agreement, I hereby elect to have each Vesting
Tranche delivered pursuant to the following schedule:
Vesting
Tranche
|
Number
of RSUs Vesting
|
Vesting
Date
|
Delivery
Date
|
Vesting
Tranche 1
|
|
|
|
Vesting
Tranche 2
|
|
|
|
Vesting
Tranche 3
|
|
|
|
Vesting
Tranche 4
|
|
|
|
____ (2)
I elect to not defer the delivery of the shares underlying my RSUs and take
delivery thereof on the applicable vesting date for each Tranche.
Executed
as of:
Participant:
_________________
Print Name:
______________
Acknowledged:
TechTarget,
Inc.
By:
Its:
Date:
TechTarget,
Inc.
Restricted
Stock Unit Agreement
Granted Under 2007 Stock
Option and Incentive Plan
AGREEMENT
made as of this 18th day of December, 2007 between
TechTarget, Inc
., a
Delaware
corporation (the “
Company
”), and Kevin
Beam
(the “
Participant
”).
For
valuable consideration, receipt of which is acknowledged, the parties hereto
agree as follows:
1.
Issuance of
RSUs
. In consideration of services rendered or to be rendered
to the Company by the Participant, the Company has granted to the Participant,
subject to the terms and conditions set forth in this Agreement and in the
Company’s 2007 Stock Option and Incentive Plan (the “
Plan
”), 52,500
restricted stock units (the “
RSUs
”), each
representing the right to receive one share of common stock, $0.001 par value,
of the Company (“
Common
Stock
”). The shares of Common Stock that are issuable with
respect to the RSUs are referred to in this Agreement as “
Shares
”. The
Participant agrees that the RSUs shall be subject to the forfeiture provisions
set forth in Section 2 of this Agreement, the restrictions on transfer set
forth in Section 3 of this Agreement, and the distribution provisions set
forth in Section 4 of this Agreement and
Appendix A
attached
hereto.
2.
Vesting
. The
RSUs shall vest in accordance with the provisions of this Section 2 of the
Agreement. Notwithstanding anything herein to the contrary, if the
RSUs do not vest as set forth in this Section 2 or as otherwise provided in any
other agreement with the Company or any parent or subsidiary of the Company, the
RSUs shall automatically be forfeited to the Company.
(a)
In the
event that the Participant ceases to be employed by the Company for any reason
or no reason, with or without cause, prior to December 18, 2011, any Unvested
RSUs (as defined below) shall be automatically forfeited to the
Company. “Unvested RSUs” means the total number of RSUs multiplied by
the Applicable Percentage at the time such RSUs are forfeited or such other
applicable measurement date. The “Applicable Percentage” shall be (i)
100% until December 18, 2008, (ii) less 25% for each year of employment
completed by the Participant with the Company from and after December 18, 2008,
and (iii) zero on or after December 18, 2011. The total number
of Unvested RSUs that become vested on each vesting date shall be referred to as
a “Vesting Tranche”.
(b)
Notwithstanding
the terms of Section 2(a) above, in the event:
(1)
of the
consummation a transaction resulting in a “change in control” of the Company
within the meaning of Section 409A of the Internal Revenue Code (“Section
409A”), all Unvested RSUs shall immediately and without further action be deemed
to be fully-vested; and
(2)
of
termination of the Participant’s employment with the Company pursuant to Section
6(b), (c), (d) or (e) of the Amended and Restated Employment Agreement, by and
between the Company and the Participant (the “Employment Agreement”), or the
failure of the Company to extend the Employment Agreement following the
expiration of the then-current Term, the Unvested RSUs shall vest in accordance
with the terms of the Section 7(b)(iv) of the Employment Agreement.
Any RSUs
that become vested pursuant to this Section 2(b) shall be treated as a Vesting
Tranche and shall be distributed in accordance with Section 4
hereof.
(c)
For
purposes of this Agreement, employment with the Company shall include employment
with a parent or subsidiary of the Company, or any successor to the
Company.
3.
Restrictions on
Transfer
.
(a)
The
Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise
dispose of, by operation of law or otherwise (collectively “
transfer
”) any RSUs,
or any interest therein, until such RSUs have vested and the Shares issuable
with respect thereto have been distributed in accordance with Section 4 of this
Agreement.
(b)
The
Company shall not be required (i) to transfer on its books any of the RSUs which
have been transferred in violation of any of the provisions set forth in this
Agreement or (ii) to treat as owner of such RSUs any transferee to whom such
RSUs have been transferred in violation of any of the provisions of this
Agreement.
4.
Distribution of
Shares.
(a)
Each
Vesting Tranche will be distributed by the Company to the Participant (or to the
Participant’s estate in the event that his death occurs after a vesting date but
before distribution of the corresponding Shares) on the earliest to occur of one
of the Permissible Events described in Section 4(b) below on which date (the
“Distribution Date”), the Participant (or his estate) shall become the owner of
the Shares for all purposes. Notwithstanding the foregoing, and
solely to the extent necessary to avoid the penalty provisions under Section
409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), if the
Distribution Date occurs because of the termination of the Participant’s
employment and the Participant is deemed to be a “specified employee” as defined
under Section 409A, then the Distribution Date shall be the date that is six
months plus one day after the date of termination.
(b)
For
purposes of this Agreement, “Permissible Event” shall be the occurrence of one
of the following: (i) the termination of the Participant’s employment
for any reason, (ii) the Participant becoming disabled within the meaning of
Section 409A, (iii) the death of the Participant, (iv) the occurrence of a
“change in control” of the Company within the meaning of Section 409A, and (v)
the date set forth on
Appendix A
attached
hereto for each such Vesting Tranche.
(c)
Neither
the Company nor the Participant shall have any right to accelerate or defer
distribution of the Shares, except to the extent expressly permitted or required
by Section 409A.
(d)
Notwithstanding
the foregoing, the Company shall not be obligated to issue to the Participant
the Shares upon the Distribution Date unless the issuance and delivery of such
Shares shall comply with all relevant provisions of law and other legal
requirements including, without limitation, any applicable federal or state
securities laws and the requirements of any stock exchange upon which shares of
Common Stock may then be listed.
5.
Provisions of the
Plan
.
This
Agreement is subject to the provisions of the Plan, a copy of which is furnished
to the Participant with this Agreement.
6.
Withholding
Taxes
.
(a)
The
Participant acknowledges and agrees that the Company has the right to deduct
from payments of any kind otherwise due to the Participant any federal, state,
local, provincial or other taxes of any kind required by law to be withheld with
respect to the issuance of the Shares to the Participant or the lapse of the
forfeiture provisions.
(b)
The
Participant has reviewed with the Participant’s own tax advisors the federal,
state, local, provincial and other tax consequences of this investment and the
transactions contemplated by this Agreement. The Participant is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. The Participant understands that
the Participant (and not the Company) shall be responsible for the Participant’s
own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.
7.
Miscellaneous
.
(a)
No Rights to
Employment
. The Participant acknowledges and agrees that the
vesting of the RSUs pursuant to Section 2 hereof is earned only by satisfaction
of the performance conditions and continuing service as an employee at the will
of the Company (not through the act of being hired or being granted the RSUs
hereunder). The Participant further acknowledges and agrees that the
transactions contemplated hereunder and the vesting schedule set forth herein do
not constitute an express or implied promise of continued engagement as an
employee for the vesting period, for any period, or at all.
(b)
Severability
. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
and each other provision of this Agreement shall be severable and enforceable to
the extent permitted by law.
(c)
Waiver
. Any
provision for the benefit of the Company contained in this Agreement may be
waived, either generally or in any particular instance, by the Board of
Directors of the Company.
(d)
Binding
Effect
. This Agreement shall be binding upon and inure to the
benefit of the Company and the Participant and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer set forth in Section 3 of this
Agreement.
(e)
Notice
. Each
notice relating to this Agreement shall be in writing and delivered in person or
by first class mail, postage prepaid, to the address as hereinafter
provided. Each notice shall be deemed to have been given on the date
it is received. Each notice to the Company shall be addressed to it
at its office at 117 Kendrick Street, Needham, MA 02494. Each notice
to the Participant shall be addressed to the Participant at the Participant’s
last known address.
(f)
Pronouns
. Whenever
the context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa.
(g)
Entire
Agreement
. This Agreement and the Plan constitute the entire
agreement between the parties, and supersede all prior agreements and
understandings, relating to the subject matter of this Agreement.
(h)
Amendment
. This
Agreement may be amended or modified only by a written instrument executed by
both the Company and the Participant.
(i)
Governing
Law
. This Agreement shall be construed, interpreted and
enforced in accordance with the internal laws of the State of Delaware without
regard to any applicable conflicts of laws.
(j)
Interpretation
. The
interpretation and construction of any terms or conditions of the Plan, or of
this Agreement or other matters related to the Plan by the Compensation
Committee of the Board of Directors of the Company shall be final and
conclusive.
(k)
Participant’s
Acknowledgments
. The Participant acknowledges that he or she:
(i) has read this Agreement; (ii) has been represented in the preparation,
negotiation, and execution of this Agreement by legal counsel of the
Participant’s own choice or has voluntarily declined to seek such counsel; (iii)
understands the terms and consequences of this Agreement; (iv) is fully aware of
the legal and binding effect of this Agreement; and (v) understands that the law
firm of Wilmer Cutler Pickering Hale and Dorr LLP is acting as counsel to the
Company in connection with the transactions contemplated by the Agreement, and
is not acting as counsel for the Participant.
(l)
Delivery of
Certificates
. Subject to Section 4, the Participant may
request that the Company deliver the Shares in certificated form with respect to
any Shares underlying RSUs that are delivered upon the Distribution
Date.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
TECHTARGET,
INC.
By: /s/
Eric Sockol
Name:
Eric Sockol
Title: CFO
Participant:
/s/ Kevin Beam
Kevin
Beam
Print
Name: Kevin Beam
Appendix
A
Deferral
Schedule
Name
:
RSUs
:
Grant Date
:
Reference
is hereby made to that certain Restricted Stock Unit Agreement dated as of
_________ by and between TechTarget, Inc. and _________ (the “RSU Agreement”).
All capitalized terms used herein and not defined shall have the meanings
ascribed thereto in the RSU Agreement.
Please check the box for the
applicable election:
____ (1)
Pursuant to Section 4 of the Agreement, I hereby elect to have each Vesting
Tranche delivered pursuant to the following schedule:
Vesting
Tranche
|
Number
of RSUs Vesting
|
Vesting
Date
|
Delivery
Date
|
Vesting
Tranche 1
|
|
|
|
Vesting
Tranche 2
|
|
|
|
Vesting
Tranche 3
|
|
|
|
Vesting
Tranche 4
|
|
|
|
____ (2)
I elect to not defer the delivery of the shares underlying my RSUs and take
delivery thereof on the applicable vesting date for each Tranche.
Executed
as of:
Participant:
_________________
Print Name:
______________
Acknowledged:
TechTarget,
Inc.
By:
Its:
Date:
TechTarget,
Inc.
Restricted
Stock Unit Agreement
Granted Under 2007 Stock
Option and Incentive Plan
AGREEMENT
made as of this 18th day of December, 2007 between
TechTarget, Inc
., a
Delaware
corporation (the “
Company
”), and Don
Hawk
(the “
Participant
”).
For
valuable consideration, receipt of which is acknowledged, the parties hereto
agree as follows:
1.
Issuance of
RSUs
. In consideration of services rendered or to be rendered
to the Company by the Participant, the Company has granted to the Participant,
subject to the terms and conditions set forth in this Agreement and in the
Company’s 2007 Stock Option and Incentive Plan (the “
Plan
”), 27,500
restricted stock units (the “
RSUs
”), each
representing the right to receive one share of common stock, $0.001 par value,
of the Company (“
Common
Stock
”). The shares of Common Stock that are issuable with
respect to the RSUs are referred to in this Agreement as “
Shares
”. The
Participant agrees that the RSUs shall be subject to the forfeiture provisions
set forth in Section 2 of this Agreement, the restrictions on transfer set
forth in Section 3 of this Agreement, and the distribution provisions set
forth in Section 4 of this Agreement and
Appendix A
attached
hereto.
2.
Vesting
. The
RSUs shall vest in accordance with the provisions of this Section 2 of the
Agreement. Notwithstanding anything herein to the contrary, if the
RSUs do not vest as set forth in this Section 2 or as otherwise provided in any
other agreement with the Company or any parent or subsidiary of the Company, the
RSUs shall automatically be forfeited to the Company.
(a)
In the
event that the Participant ceases to be employed by the Company for any reason
or no reason, with or without cause, prior to December 18, 2011, any Unvested
RSUs (as defined below) shall be automatically forfeited to the
Company. “Unvested RSUs” means the total number of RSUs multiplied by
the Applicable Percentage at the time such RSUs are forfeited or such other
applicable measurement date. The “Applicable Percentage” shall be (i)
100% until December 18, 2008, (ii) less 25% for each year of employment
completed by the Participant with the Company from and after December 18, 2008,
and (iii) zero on or after December 18, 2011. The total number
of Unvested RSUs that become vested on each vesting date shall be referred to as
a “Vesting Tranche”.
(b)
Notwithstanding
the terms of Section 2(a) above, in the event:
(1)
of the
consummation a transaction resulting in a “change in control” of the Company
within the meaning of Section 409A of the Internal Revenue Code (“Section
409A”), all Unvested RSUs shall immediately and without further action be deemed
to be fully-vested; and
(2)
of
termination of the Participant’s employment with the Company pursuant to Section
6(b), (c), (d) or (e) of the Amended and Restated Employment Agreement, by and
between the Company and the Participant (the “Employment Agreement”), or the
failure of the Company to extend the Employment Agreement following the
expiration of the then-current Term, the Unvested RSUs shall vest in accordance
with the terms of the Section 7(b)(iv) of the Employment Agreement.
Any RSUs
that become vested pursuant to this Section 2(b) shall be treated as a Vesting
Tranche and shall be distributed in accordance with Section 4
hereof.
(c)
For
purposes of this Agreement, employment with the Company shall include employment
with a parent or subsidiary of the Company, or any successor to the
Company.
3.
Restrictions on
Transfer
.
(a)
The
Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise
dispose of, by operation of law or otherwise (collectively “
transfer
”) any RSUs,
or any interest therein, until such RSUs have vested and the Shares issuable
with respect thereto have been distributed in accordance with Section 4 of this
Agreement.
(b)
The
Company shall not be required (i) to transfer on its books any of the RSUs which
have been transferred in violation of any of the provisions set forth in this
Agreement or (ii) to treat as owner of such RSUs any transferee to whom such
RSUs have been transferred in violation of any of the provisions of this
Agreement.
4.
Distribution of
Shares.
(a)
Each
Vesting Tranche will be distributed by the Company to the Participant (or to the
Participant’s estate in the event that his death occurs after a vesting date but
before distribution of the corresponding Shares) on the earliest to occur of one
of the Permissible Events described in Section 4(b) below on which date (the
“Distribution Date”), the Participant (or his estate) shall become the owner of
the Shares for all purposes. Notwithstanding the foregoing, and
solely to the extent necessary to avoid the penalty provisions under Section
409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), if the
Distribution Date occurs because of the termination of the Participant’s
employment and the Participant is deemed to be a “specified employee” as defined
under Section 409A, then the Distribution Date shall be the date that is six
months plus one day after the date of termination.
(b)
For
purposes of this Agreement, “Permissible Event” shall be the occurrence of one
of the following: (i) the termination of the Participant’s employment
for any reason, (ii) the Participant becoming disabled within the meaning of
Section 409A, (iii) the death of the Participant, (iv) the occurrence of a
“change in control” of the Company within the meaning of Section 409A, and (v)
the date set forth on
Appendix A
attached
hereto for each such Vesting Tranche.
(c)
Neither
the Company nor the Participant shall have any right to accelerate or defer
distribution of the Shares, except to the extent expressly permitted or required
by Section 409A.
(d)
Notwithstanding
the foregoing, the Company shall not be obligated to issue to the Participant
the Shares upon the Distribution Date unless the issuance and delivery of such
Shares shall comply with all relevant provisions of law and other legal
requirements including, without limitation, any applicable federal or state
securities laws and the requirements of any stock exchange upon which shares of
Common Stock may then be listed.
5.
Provisions of the
Plan
.
This
Agreement is subject to the provisions of the Plan, a copy of which is furnished
to the Participant with this Agreement.
6.
Withholding
Taxes
.
(a)
The
Participant acknowledges and agrees that the Company has the right to deduct
from payments of any kind otherwise due to the Participant any federal, state,
local, provincial or other taxes of any kind required by law to be withheld with
respect to the issuance of the Shares to the Participant or the lapse of the
forfeiture provisions.
(b)
The
Participant has reviewed with the Participant’s own tax advisors the federal,
state, local, provincial and other tax consequences of this investment and the
transactions contemplated by this Agreement. The Participant is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. The Participant understands that
the Participant (and not the Company) shall be responsible for the Participant’s
own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.
7.
Miscellaneous
.
(a)
No Rights to
Employment
. The Participant acknowledges and agrees that the
vesting of the RSUs pursuant to Section 2 hereof is earned only by satisfaction
of the performance conditions and continuing service as an employee at the will
of the Company (not through the act of being hired or being granted the RSUs
hereunder). The Participant further acknowledges and agrees that the
transactions contemplated hereunder and the vesting schedule set forth herein do
not constitute an express or implied promise of continued engagement as an
employee for the vesting period, for any period, or at all.
(b)
Severability
. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
and each other provision of this Agreement shall be severable and enforceable to
the extent permitted by law.
(c)
Waiver
. Any
provision for the benefit of the Company contained in this Agreement may be
waived, either generally or in any particular instance, by the Board of
Directors of the Company.
(d)
Binding
Effect
. This Agreement shall be binding upon and inure to the
benefit of the Company and the Participant and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer set forth in Section 3 of this
Agreement.
(e)
Notice
. Each
notice relating to this Agreement shall be in writing and delivered in person or
by first class mail, postage prepaid, to the address as hereinafter
provided. Each notice shall be deemed to have been given on the date
it is received. Each notice to the Company shall be addressed to it
at its office at 117 Kendrick Street, Needham, MA 02494. Each notice
to the Participant shall be addressed to the Participant at the Participant’s
last known address.
(f)
Pronouns
. Whenever
the context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa.
(g)
Entire
Agreement
. This Agreement and the Plan constitute the entire
agreement between the parties, and supersede all prior agreements and
understandings, relating to the subject matter of this Agreement.
(h)
Amendment
. This
Agreement may be amended or modified only by a written instrument executed by
both the Company and the Participant.
(i)
Governing
Law
. This Agreement shall be construed, interpreted and
enforced in accordance with the internal laws of the State of Delaware without
regard to any applicable conflicts of laws.
(j)
Interpretation
. The
interpretation and construction of any terms or conditions of the Plan, or of
this Agreement or other matters related to the Plan by the Compensation
Committee of the Board of Directors of the Company shall be final and
conclusive.
(k)
Participant’s
Acknowledgments
. The Participant acknowledges that he or she:
(i) has read this Agreement; (ii) has been represented in the preparation,
negotiation, and execution of this Agreement by legal counsel of the
Participant’s own choice or has voluntarily declined to seek such counsel; (iii)
understands the terms and consequences of this Agreement; (iv) is fully aware of
the legal and binding effect of this Agreement; and (v) understands that the law
firm of Wilmer Cutler Pickering Hale and Dorr LLP is acting as counsel to the
Company in connection with the transactions contemplated by the Agreement, and
is not acting as counsel for the Participant.
(l)
Delivery of
Certificates
. Subject to Section 4, the Participant may
request that the Company deliver the Shares in certificated form with respect to
any Shares underlying RSUs that are delivered upon the Distribution
Date.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
TECHTARGET,
INC.
By: /s/
Eric Sockol
Name:
Eric Sockol
Title:
CFO
Participant:
/s/ Don Hawk
Don Hawk
Print
Name: Don Hawk
Appendix
A
Deferral
Schedule
Name
:
RSUs
:
Grant Date
:
Reference
is hereby made to that certain Restricted Stock Unit Agreement dated as of
_________ by and between TechTarget, Inc. and _________ (the “RSU Agreement”).
All capitalized terms used herein and not defined shall have the meanings
ascribed thereto in the RSU Agreement.
Please check the box for the
applicable election:
____ (1)
Pursuant to Section 4 of the Agreement, I hereby elect to have each Vesting
Tranche delivered pursuant to the following schedule:
Vesting
Tranche
|
Number
of RSUs Vesting
|
Vesting
Date
|
Delivery
Date
|
Vesting
Tranche 1
|
|
|
|
Vesting
Tranche 2
|
|
|
|
Vesting
Tranche 3
|
|
|
|
Vesting
Tranche 4
|
|
|
|
____ (2)
I elect to not defer the delivery of the shares underlying my RSUs and take
delivery thereof on the applicable vesting date for each Tranche.
Executed
as of:
Participant:
_________________
Print Name:
______________
Acknowledged:
TechTarget,
Inc.
By:
Its:
Date:
TechTarget,
Inc.
Restricted
Stock Unit Agreement
Granted Under 2007 Stock
Option and Incentive Plan
AGREEMENT
made as of this 18th day of December, 2007 between
TechTarget, Inc
., a
Delaware
corporation (the “
Company
”), and Rick
Olin
(the “
Participant
”).
For
valuable consideration, receipt of which is acknowledged, the parties hereto
agree as follows:
1.
Issuance of
RSUs
. In consideration of services rendered or to be rendered
to the Company by the Participant, the Company has granted to the Participant,
subject to the terms and conditions set forth in this Agreement and in the
Company’s 2007 Stock Option and Incentive Plan (the “
Plan
”), 12,500
restricted stock units (the “
RSUs
”), each
representing the right to receive one share of common stock, $0.001 par value,
of the Company (“
Common
Stock
”). The shares of Common Stock that are issuable with
respect to the RSUs are referred to in this Agreement as “
Shares
”. The
Participant agrees that the RSUs shall be subject to the forfeiture provisions
set forth in Section 2 of this Agreement, the restrictions on transfer set
forth in Section 3 of this Agreement, and the distribution provisions set
forth in Section 4 of this Agreement and
Appendix A
attached
hereto.
2.
Vesting
. The
RSUs shall vest in accordance with the provisions of this Section 2 of the
Agreement. Notwithstanding anything herein to the contrary, if the
RSUs do not vest as set forth in this Section 2 or as otherwise provided in any
other agreement with the Company or any parent or subsidiary of the Company, the
RSUs shall automatically be forfeited to the Company.
(a)
In the
event that the Participant ceases to be employed by the Company for any reason
or no reason, with or without cause, prior to December 18, 2011, any Unvested
RSUs (as defined below) shall be automatically forfeited to the
Company. “Unvested RSUs” means the total number of RSUs multiplied by
the Applicable Percentage at the time such RSUs are forfeited or such other
applicable measurement date. The “Applicable Percentage” shall be (i)
100% until December 18, 2008, (ii) less 25% for each year of employment
completed by the Participant with the Company from and after December 18, 2008,
and (iii) zero on or after December 18, 2011. The total number
of Unvested RSUs that become vested on each vesting date shall be referred to as
a “Vesting Tranche”.
(b)
Notwithstanding
the terms of Section 2(a) above, in the event:
(1)
of the
consummation a transaction resulting in a “change in control” of the Company
within the meaning of Section 409A of the Internal Revenue Code (“Section
409A”), all Unvested RSUs shall immediately and without further action be deemed
to be fully-vested; and
(2)
of
termination of the Participant’s employment with the Company pursuant to Section
6(b), (c), (d) or (e) of the Amended and Restated Employment Agreement, by and
between the Company and the Participant (the “Employment Agreement”), or the
failure of the Company to extend the Employment Agreement following the
expiration of the then-current Term, the Unvested RSUs shall vest in accordance
with the terms of the Section 7(b)(iv) of the Employment Agreement.
Any RSUs
that become vested pursuant to this Section 2(b) shall be treated as a Vesting
Tranche and shall be distributed in accordance with Section 4
hereof.
(c)
For
purposes of this Agreement, employment with the Company shall include employment
with a parent or subsidiary of the Company, or any successor to the
Company.
3.
Restrictions on
Transfer
.
(a)
The
Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise
dispose of, by operation of law or otherwise (collectively “
transfer
”) any RSUs,
or any interest therein, until such RSUs have vested and the Shares issuable
with respect thereto have been distributed in accordance with Section 4 of this
Agreement.
(b)
The
Company shall not be required (i) to transfer on its books any of the RSUs which
have been transferred in violation of any of the provisions set forth in this
Agreement or (ii) to treat as owner of such RSUs any transferee to whom such
RSUs have been transferred in violation of any of the provisions of this
Agreement.
4.
Distribution of
Shares.
(a)
Each
Vesting Tranche will be distributed by the Company to the Participant (or to the
Participant’s estate in the event that his death occurs after a vesting date but
before distribution of the corresponding Shares) on the earliest to occur of one
of the Permissible Events described in Section 4(b) below on which date (the
“Distribution Date”), the Participant (or his estate) shall become the owner of
the Shares for all purposes. Notwithstanding the foregoing, and
solely to the extent necessary to avoid the penalty provisions under Section
409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), if the
Distribution Date occurs because of the termination of the Participant’s
employment and the Participant is deemed to be a “specified employee” as defined
under Section 409A, then the Distribution Date shall be the date that is six
months plus one day after the date of termination.
(b)
For
purposes of this Agreement, “Permissible Event” shall be the occurrence of one
of the following: (i) the termination of the Participant’s employment
for any reason, (ii) the Participant becoming disabled within the meaning of
Section 409A, (iii) the death of the Participant, (iv) the occurrence of a
“change in control” of the Company within the meaning of Section 409A, and (v)
the date set forth on
Appendix A
attached
hereto for each such Vesting Tranche.
(c)
Neither
the Company nor the Participant shall have any right to accelerate or defer
distribution of the Shares, except to the extent expressly permitted or required
by Section 409A.
(d)
Notwithstanding
the foregoing, the Company shall not be obligated to issue to the Participant
the Shares upon the Distribution Date unless the issuance and delivery of such
Shares shall comply with all relevant provisions of law and other legal
requirements including, without limitation, any applicable federal or state
securities laws and the requirements of any stock exchange upon which shares of
Common Stock may then be listed.
5.
Provisions of the
Plan
.
This
Agreement is subject to the provisions of the Plan, a copy of which is furnished
to the Participant with this Agreement.
6.
Withholding
Taxes
.
(a)
The
Participant acknowledges and agrees that the Company has the right to deduct
from payments of any kind otherwise due to the Participant any federal, state,
local, provincial or other taxes of any kind required by law to be withheld with
respect to the issuance of the Shares to the Participant or the lapse of the
forfeiture provisions.
(b)
The
Participant has reviewed with the Participant’s own tax advisors the federal,
state, local, provincial and other tax consequences of this investment and the
transactions contemplated by this Agreement. The Participant is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. The Participant understands that
the Participant (and not the Company) shall be responsible for the Participant’s
own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.
7.
Miscellaneous
.
(a)
No Rights to
Employment
. The Participant acknowledges and agrees that the
vesting of the RSUs pursuant to Section 2 hereof is earned only by satisfaction
of the performance conditions and continuing service as an employee at the will
of the Company (not through the act of being hired or being granted the RSUs
hereunder). The Participant further acknowledges and agrees that the
transactions contemplated hereunder and the vesting schedule set forth herein do
not constitute an express or implied promise of continued engagement as an
employee for the vesting period, for any period, or at all.
(b)
Severability
. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
and each other provision of this Agreement shall be severable and enforceable to
the extent permitted by law.
(c)
Waiver
. Any
provision for the benefit of the Company contained in this Agreement may be
waived, either generally or in any particular instance, by the Board of
Directors of the Company.
(d)
Binding
Effect
. This Agreement shall be binding upon and inure to the
benefit of the Company and the Participant and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer set forth in Section 3 of this
Agreement.
(e)
Notice
. Each
notice relating to this Agreement shall be in writing and delivered in person or
by first class mail, postage prepaid, to the address as hereinafter
provided. Each notice shall be deemed to have been given on the date
it is received. Each notice to the Company shall be addressed to it
at its office at 117 Kendrick Street, Needham, MA 02494. Each notice
to the Participant shall be addressed to the Participant at the Participant’s
last known address.
(f)
Pronouns
. Whenever
the context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa.
(g)
Entire
Agreement
. This Agreement and the Plan constitute the entire
agreement between the parties, and supersede all prior agreements and
understandings, relating to the subject matter of this Agreement.
(h)
Amendment
. This
Agreement may be amended or modified only by a written instrument executed by
both the Company and the Participant.
(i)
Governing
Law
. This Agreement shall be construed, interpreted and
enforced in accordance with the internal laws of the State of Delaware without
regard to any applicable conflicts of laws.
(j)
Interpretation
. The
interpretation and construction of any terms or conditions of the Plan, or of
this Agreement or other matters related to the Plan by the Compensation
Committee of the Board of Directors of the Company shall be final and
conclusive.
(k)
Participant’s
Acknowledgments
. The Participant acknowledges that he or she:
(i) has read this Agreement; (ii) has been represented in the preparation,
negotiation, and execution of this Agreement by legal counsel of the
Participant’s own choice or has voluntarily declined to seek such counsel; (iii)
understands the terms and consequences of this Agreement; (iv) is fully aware of
the legal and binding effect of this Agreement; and (v) understands that the law
firm of Wilmer Cutler Pickering Hale and Dorr LLP is acting as counsel to the
Company in connection with the transactions contemplated by the Agreement, and
is not acting as counsel for the Participant.
(l)
Delivery of
Certificates
. Subject to Section 4, the Participant may
request that the Company deliver the Shares in certificated form with respect to
any Shares underlying RSUs that are delivered upon the Distribution
Date.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
TECHTARGET,
INC.
By: /s/
Eric Sockol
Name: Eric
Sockol
Title: CFO
Participant:
/s/ Rick Olin
Rick
Olin
Print
Name: Rick Olin
Appendix
A
Deferral
Schedule
Name
:
RSUs
:
Grant Date
:
Reference
is hereby made to that certain Restricted Stock Unit Agreement dated as of
_________ by and between TechTarget, Inc. and _________ (the “RSU Agreement”).
All capitalized terms used herein and not defined shall have the meanings
ascribed thereto in the RSU Agreement.
Please check the box for the
applicable election:
____ (1)
Pursuant to Section 4 of the Agreement, I hereby elect to have each Vesting
Tranche delivered pursuant to the following schedule:
Vesting
Tranche
|
Number
of RSUs Vesting
|
Vesting
Date
|
Delivery
Date
|
Vesting
Tranche 1
|
|
|
|
Vesting
Tranche 2
|
|
|
|
Vesting
Tranche 3
|
|
|
|
Vesting
Tranche 4
|
|
|
|
____ (2)
I elect to not defer the delivery of the shares underlying my RSUs and take
delivery thereof on the applicable vesting date for each Tranche.
Executed
as of:
Participant:
_________________
Print Name:
______________
Acknowledged:
TechTarget,
Inc.
By:
Its:
Date:
TechTarget,
Inc.
Restricted
Stock Unit Agreement
Granted Under 2007 Stock
Option and Incentive Plan
AGREEMENT
made as of this 18th day of December, 2007 between
TechTarget, Inc
., a
Delaware
corporation (the “
Company
”), and Eric
Sockol
(the “
Participant
”).
For
valuable consideration, receipt of which is acknowledged, the parties hereto
agree as follows:
1.
Issuance of
RSUs
. In consideration of services rendered or to be rendered
to the Company by the Participant, the Company has granted to the Participant,
subject to the terms and conditions set forth in this Agreement and in the
Company’s 2007 Stock Option and Incentive Plan (the “
Plan
”), 35,000
restricted stock units (the “
RSUs
”), each
representing the right to receive one share of common stock, $0.001 par value,
of the Company (“
Common
Stock
”). The shares of Common Stock that are issuable with
respect to the RSUs are referred to in this Agreement as “
Shares
”. The
Participant agrees that the RSUs shall be subject to the forfeiture provisions
set forth in Section 2 of this Agreement, the restrictions on transfer set
forth in Section 3 of this Agreement, and the distribution provisions set
forth in Section 4 of this Agreement and
Appendix A
attached
hereto.
2.
Vesting
. The
RSUs shall vest in accordance with the provisions of this Section 2 of the
Agreement. Notwithstanding anything herein to the contrary, if the
RSUs do not vest as set forth in this Section 2 or as otherwise provided in any
other agreement with the Company or any parent or subsidiary of the Company, the
RSUs shall automatically be forfeited to the Company.
(a)
In the
event that the Participant ceases to be employed by the Company for any reason
or no reason, with or without cause, prior to December 18, 2011, any Unvested
RSUs (as defined below) shall be automatically forfeited to the
Company. “Unvested RSUs” means the total number of RSUs multiplied by
the Applicable Percentage at the time such RSUs are forfeited or such other
applicable measurement date. The “Applicable Percentage” shall be (i)
100% until December 18, 2008, (ii) less 25% for each year of employment
completed by the Participant with the Company from and after December 18, 2008,
and (iii) zero on or after December 18, 2011. The total number
of Unvested RSUs that become vested on each vesting date shall be referred to as
a “Vesting Tranche”.
(b)
Notwithstanding
the terms of Section 2(a) above, in the event:
(1)
of the
consummation a transaction resulting in a “change in control” of the Company
within the meaning of Section 409A of the Internal Revenue Code (“Section
409A”), all Unvested RSUs shall immediately and without further action be deemed
to be fully-vested; and
(2)
of
termination of the Participant’s employment with the Company pursuant to Section
6(b), (c), (d) or (e) of the Amended and Restated Employment Agreement, by and
between the Company and the Participant (the “Employment Agreement”), or the
failure of the Company to extend the Employment Agreement following the
expiration of the then-current Term, the Unvested RSUs shall vest in accordance
with the terms of the Section 7(b)(iv) of the Employment Agreement.
Any RSUs
that become vested pursuant to this Section 2(b) shall be treated as a Vesting
Tranche and shall be distributed in accordance with Section 4
hereof.
(c)
For
purposes of this Agreement, employment with the Company shall include employment
with a parent or subsidiary of the Company, or any successor to the
Company.
3.
Restrictions on
Transfer
.
(a)
The
Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise
dispose of, by operation of law or otherwise (collectively “
transfer
”) any RSUs,
or any interest therein, until such RSUs have vested and the Shares issuable
with respect thereto have been distributed in accordance with Section 4 of this
Agreement.
(b)
The
Company shall not be required (i) to transfer on its books any of the RSUs which
have been transferred in violation of any of the provisions set forth in this
Agreement or (ii) to treat as owner of such RSUs any transferee to whom such
RSUs have been transferred in violation of any of the provisions of this
Agreement.
4.
Distribution of
Shares.
(a)
Each
Vesting Tranche will be distributed by the Company to the Participant (or to the
Participant’s estate in the event that his death occurs after a vesting date but
before distribution of the corresponding Shares) on the earliest to occur of one
of the Permissible Events described in Section 4(b) below on which date (the
“Distribution Date”), the Participant (or his estate) shall become the owner of
the Shares for all purposes. Notwithstanding the foregoing, and
solely to the extent necessary to avoid the penalty provisions under Section
409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), if the
Distribution Date occurs because of the termination of the Participant’s
employment and the Participant is deemed to be a “specified employee” as defined
under Section 409A, then the Distribution Date shall be the date that is six
months plus one day after the date of termination.
(b)
For
purposes of this Agreement, “Permissible Event” shall be the occurrence of one
of the following: (i) the termination of the Participant’s employment
for any reason, (ii) the Participant becoming disabled within the meaning of
Section 409A, (iii) the death of the Participant, (iv) the occurrence of a
“change in control” of the Company within the meaning of Section 409A, and (v)
the date set forth on
Appendix A
attached
hereto for each such Vesting Tranche.
(c)
Neither
the Company nor the Participant shall have any right to accelerate or defer
distribution of the Shares, except to the extent expressly permitted or required
by Section 409A.
(d)
Notwithstanding
the foregoing, the Company shall not be obligated to issue to the Participant
the Shares upon the Distribution Date unless the issuance and delivery of such
Shares shall comply with all relevant provisions of law and other legal
requirements including, without limitation, any applicable federal or state
securities laws and the requirements of any stock exchange upon which shares of
Common Stock may then be listed.
5.
Provisions of the
Plan
.
This
Agreement is subject to the provisions of the Plan, a copy of which is furnished
to the Participant with this Agreement.
6.
Withholding
Taxes
.
(a)
The
Participant acknowledges and agrees that the Company has the right to deduct
from payments of any kind otherwise due to the Participant any federal, state,
local, provincial or other taxes of any kind required by law to be withheld with
respect to the issuance of the Shares to the Participant or the lapse of the
forfeiture provisions.
(b)
The
Participant has reviewed with the Participant’s own tax advisors the federal,
state, local, provincial and other tax consequences of this investment and the
transactions contemplated by this Agreement. The Participant is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. The Participant understands that
the Participant (and not the Company) shall be responsible for the Participant’s
own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.
7.
Miscellaneous
.
(a)
No Rights to
Employment
. The Participant acknowledges and agrees that the
vesting of the RSUs pursuant to Section 2 hereof is earned only by satisfaction
of the performance conditions and continuing service as an employee at the will
of the Company (not through the act of being hired or being granted the RSUs
hereunder). The Participant further acknowledges and agrees that the
transactions contemplated hereunder and the vesting schedule set forth herein do
not constitute an express or implied promise of continued engagement as an
employee for the vesting period, for any period, or at all.
(b)
Severability
. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
and each other provision of this Agreement shall be severable and enforceable to
the extent permitted by law.
(c)
Waiver
. Any
provision for the benefit of the Company contained in this Agreement may be
waived, either generally or in any particular instance, by the Board of
Directors of the Company.
(d)
Binding
Effect
. This Agreement shall be binding upon and inure to the
benefit of the Company and the Participant and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer set forth in Section 3 of this
Agreement.
(e)
Notice
. Each
notice relating to this Agreement shall be in writing and delivered in person or
by first class mail, postage prepaid, to the address as hereinafter
provided. Each notice shall be deemed to have been given on the date
it is received. Each notice to the Company shall be addressed to it
at its office at 117 Kendrick Street, Needham, MA 02494. Each notice
to the Participant shall be addressed to the Participant at the Participant’s
last known address.
(f)
Pronouns
. Whenever
the context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa.
(g)
Entire
Agreement
. This Agreement and the Plan constitute the entire
agreement between the parties, and supersede all prior agreements and
understandings, relating to the subject matter of this Agreement.
(h)
Amendment
. This
Agreement may be amended or modified only by a written instrument executed by
both the Company and the Participant.
(i)
Governing
Law
. This Agreement shall be construed, interpreted and
enforced in accordance with the internal laws of the State of Delaware without
regard to any applicable conflicts of laws.
(j)
Interpretation
. The
interpretation and construction of any terms or conditions of the Plan, or of
this Agreement or other matters related to the Plan by the Compensation
Committee of the Board of Directors of the Company shall be final and
conclusive.
(k)
Participant’s
Acknowledgments
. The Participant acknowledges that he or she:
(i) has read this Agreement; (ii) has been represented in the preparation,
negotiation, and execution of this Agreement by legal counsel of the
Participant’s own choice or has voluntarily declined to seek such counsel; (iii)
understands the terms and consequences of this Agreement; (iv) is fully aware of
the legal and binding effect of this Agreement; and (v) understands that the law
firm of Wilmer Cutler Pickering Hale and Dorr LLP is acting as counsel to the
Company in connection with the transactions contemplated by the Agreement, and
is not acting as counsel for the Participant.
(l)
Delivery of
Certificates
. Subject to Section 4, the Participant may
request that the Company deliver the Shares in certificated form with respect to
any Shares underlying RSUs that are delivered upon the Distribution
Date.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
TECHTARGET,
INC.
By: /s/
Rick Olin
Name: Rick
Olin
Title:
V.P. General Counsel
Participant:
/s/ Eric Sockol
Eric
Sockol
Print
Name: Eric Sockol
Appendix
A
Deferral
Schedule
Name
:
RSUs
:
Grant Date
:
Reference
is hereby made to that certain Restricted Stock Unit Agreement dated as of
_________ by and between TechTarget, Inc. and _________ (the “RSU Agreement”).
All capitalized terms used herein and not defined shall have the meanings
ascribed thereto in the RSU Agreement.
Please check the box for the
applicable election:
____ (1)
Pursuant to Section 4 of the Agreement, I hereby elect to have each Vesting
Tranche delivered pursuant to the following schedule:
Vesting
Tranche
|
Number
of RSUs Vesting
|
Vesting
Date
|
Delivery
Date
|
Vesting
Tranche 1
|
|
|
|
Vesting
Tranche 2
|
|
|
|
Vesting
Tranche 3
|
|
|
|
Vesting
Tranche 4
|
|
|
|
____ (2)
I elect to not defer the delivery of the shares underlying my RSUs and take
delivery thereof on the applicable vesting date for each Tranche.
Executed
as of:
Participant:
_________________
Print Name:
______________
Acknowledged:
TechTarget,
Inc.
By:
Its:
Date:
TechTarget,
Inc.
Restricted
Stock Unit Agreement
Granted Under 2007 Stock
Option and Incentive Plan
AGREEMENT
made as of this 18th day of December, 2007 between
TechTarget, Inc
., a
Delaware
corporation (the “
Company
”), and Greg
Strakosch (the
Participant
”).
For
valuable consideration, receipt of which is acknowledged, the parties hereto
agree as follows:
1.
Issuance of
RSUs
. In consideration of services rendered or to be rendered
to the Company by the Participant, the Company has granted to the Participant,
subject to the terms and conditions set forth in this Agreement and in the
Company’s 2007 Stock Option and Incentive Plan (the “
Plan
”), 35,500
restricted stock units (the “
RSUs
”), each
representing the right to receive one share of common stock, $0.001 par value,
of the Company (“
Common
Stock
”). The shares of Common Stock that are issuable with
respect to the RSUs are referred to in this Agreement as “
Shares
”. The
Participant agrees that the RSUs shall be subject to the forfeiture provisions
set forth in Section 2 of this Agreement, the restrictions on transfer set
forth in Section 3 of this Agreement, and the distribution provisions set
forth in Section 4 of this Agreement and
Appendix A
attached
hereto.
2.
Vesting
. The
RSUs shall vest in accordance with the provisions of this Section 2 of the
Agreement. Notwithstanding anything herein to the contrary, if the
RSUs do not vest as set forth in this Section 2 or as otherwise provided in any
other agreement with the Company or any parent or subsidiary of the Company, the
RSUs shall automatically be forfeited to the Company.
(a)
In the
event that the Participant ceases to be employed by the Company for any reason
or no reason, with or without cause, prior to December 18, 2011, any Unvested
RSUs (as defined below) shall be automatically forfeited to the
Company. “Unvested RSUs” means the total number of RSUs multiplied by
the Applicable Percentage at the time such RSUs are forfeited or such other
applicable measurement date. The “Applicable Percentage” shall be (i)
100% until December 18, 2008, (ii) less 25% for each year of employment
completed by the Participant with the Company from and after December 18, 2008,
and (iii) zero on or after December 18, 2011. The total number
of Unvested RSUs that become vested on each vesting date shall be referred to as
a “Vesting Tranche”.
(b)
Notwithstanding
the terms of Section 2(a) above, in the event:
(1)
of the
consummation a transaction resulting in a “change in control” of the Company
within the meaning of Section 409A of the Internal Revenue Code (“Section
409A”), all Unvested RSUs shall immediately and without further action be deemed
to be fully-vested; and
(2)
of
termination of the Participant’s employment with the Company pursuant to Section
6(b), (c), (d) or (e) of the Amended and Restated Employment Agreement, by and
between the Company and the Participant (the “Employment Agreement”), or the
failure of the Company to extend the Employment Agreement following the
expiration of the then-current Term, the Unvested RSUs shall vest in accordance
with the terms of the Section 7(b)(iv) of the Employment Agreement.
Any RSUs
that become vested pursuant to this Section 2(b) shall be treated as a Vesting
Tranche and shall be distributed in accordance with Section 4
hereof.
(c)
For
purposes of this Agreement, employment with the Company shall include employment
with a parent or subsidiary of the Company, or any successor to the
Company.
3.
Restrictions on
Transfer
.
(a)
The
Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise
dispose of, by operation of law or otherwise (collectively “
transfer
”) any RSUs,
or any interest therein, until such RSUs have vested and the Shares issuable
with respect thereto have been distributed in accordance with Section 4 of this
Agreement.
(b)
The
Company shall not be required (i) to transfer on its books any of the RSUs which
have been transferred in violation of any of the provisions set forth in this
Agreement or (ii) to treat as owner of such RSUs any transferee to whom such
RSUs have been transferred in violation of any of the provisions of this
Agreement.
4.
Distribution of
Shares.
(a)
Each
Vesting Tranche will be distributed by the Company to the Participant (or to the
Participant’s estate in the event that his death occurs after a vesting date but
before distribution of the corresponding Shares) on the earliest to occur of one
of the Permissible Events described in Section 4(b) below on which date (the
“Distribution Date”), the Participant (or his estate) shall become the owner of
the Shares for all purposes. Notwithstanding the foregoing, and
solely to the extent necessary to avoid the penalty provisions under Section
409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), if the
Distribution Date occurs because of the termination of the Participant’s
employment and the Participant is deemed to be a “specified employee” as defined
under Section 409A, then the Distribution Date shall be the date that is six
months plus one day after the date of termination.
(b)
For
purposes of this Agreement, “Permissible Event” shall be the occurrence of one
of the following: (i) the termination of the Participant’s employment
for any reason, (ii) the Participant becoming disabled within the meaning of
Section 409A, (iii) the death of the Participant, (iv) the occurrence of a
“change in control” of the Company within the meaning of Section 409A, and (v)
the date set forth on
Appendix A
attached
hereto for each such Vesting Tranche.
(c)
Neither
the Company nor the Participant shall have any right to accelerate or defer
distribution of the Shares, except to the extent expressly permitted or required
by Section 409A.
(d)
Notwithstanding
the foregoing, the Company shall not be obligated to issue to the Participant
the Shares upon the Distribution Date unless the issuance and delivery of such
Shares shall comply with all relevant provisions of law and other legal
requirements including, without limitation, any applicable federal or state
securities laws and the requirements of any stock exchange upon which shares of
Common Stock may then be listed.
5.
Provisions of the
Plan
.
This
Agreement is subject to the provisions of the Plan, a copy of which is furnished
to the Participant with this Agreement.
6.
Withholding
Taxes
.
(a)
The
Participant acknowledges and agrees that the Company has the right to deduct
from payments of any kind otherwise due to the Participant any federal, state,
local, provincial or other taxes of any kind required by law to be withheld with
respect to the issuance of the Shares to the Participant or the lapse of the
forfeiture provisions.
(b)
The
Participant has reviewed with the Participant’s own tax advisors the federal,
state, local, provincial and other tax consequences of this investment and the
transactions contemplated by this Agreement. The Participant is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. The Participant understands that
the Participant (and not the Company) shall be responsible for the Participant’s
own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.
7.
Miscellaneous
.
(a)
No Rights to
Employment
. The Participant acknowledges and agrees that the
vesting of the RSUs pursuant to Section 2 hereof is earned only by satisfaction
of the performance conditions and continuing service as an employee at the will
of the Company (not through the act of being hired or being granted the RSUs
hereunder). The Participant further acknowledges and agrees that the
transactions contemplated hereunder and the vesting schedule set forth herein do
not constitute an express or implied promise of continued engagement as an
employee for the vesting period, for any period, or at all.
(b)
Severability
. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
and each other provision of this Agreement shall be severable and enforceable to
the extent permitted by law.
(c)
Waiver
. Any
provision for the benefit of the Company contained in this Agreement may be
waived, either generally or in any particular instance, by the Board of
Directors of the Company.
(d)
Binding
Effect
. This Agreement shall be binding upon and inure to the
benefit of the Company and the Participant and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer set forth in Section 3 of this
Agreement.
(e)
Notice
. Each
notice relating to this Agreement shall be in writing and delivered in person or
by first class mail, postage prepaid, to the address as hereinafter
provided. Each notice shall be deemed to have been given on the date
it is received. Each notice to the Company shall be addressed to it
at its office at 117 Kendrick Street, Needham, MA 02494. Each notice
to the Participant shall be addressed to the Participant at the Participant’s
last known address.
(f)
Pronouns
. Whenever
the context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa.
(g)
Entire
Agreement
. This Agreement and the Plan constitute the entire
agreement between the parties, and supersede all prior agreements and
understandings, relating to the subject matter of this Agreement.
(h)
Amendment
. This
Agreement may be amended or modified only by a written instrument executed by
both the Company and the Participant.
(i)
Governing
Law
. This Agreement shall be construed, interpreted and
enforced in accordance with the internal laws of the State of Delaware without
regard to any applicable conflicts of laws.
(j)
Interpretation
. The
interpretation and construction of any terms or conditions of the Plan, or of
this Agreement or other matters related to the Plan by the Compensation
Committee of the Board of Directors of the Company shall be final and
conclusive.
(k)
Participant’s
Acknowledgments
. The Participant acknowledges that he or she:
(i) has read this Agreement; (ii) has been represented in the preparation,
negotiation, and execution of this Agreement by legal counsel of the
Participant’s own choice or has voluntarily declined to seek such counsel; (iii)
understands the terms and consequences of this Agreement; (iv) is fully aware of
the legal and binding effect of this Agreement; and (v) understands that the law
firm of Wilmer Cutler Pickering Hale and Dorr LLP is acting as counsel to the
Company in connection with the transactions contemplated by the Agreement, and
is not acting as counsel for the Participant.
(l)
Delivery of
Certificates
. Subject to Section 4, the Participant may
request that the Company deliver the Shares in certificated form with respect to
any Shares underlying RSUs that are delivered upon the Distribution
Date.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
TECHTARGET,
INC.
By: /s/
Eric Sockol
Name: Eric
Sockol
Title:
CFO
Participant:
/s/ Greg Strakosch
Greg
Strakosch
Print
Name: Greg Strakosch
Appendix
A
Deferral
Schedule
Name
:
RSUs
:
Grant Date
:
Reference
is hereby made to that certain Restricted Stock Unit Agreement dated as of
_________ by and between TechTarget, Inc. and _________ (the “RSU Agreement”).
All capitalized terms used herein and not defined shall have the meanings
ascribed thereto in the RSU Agreement.
Please check the box for the
applicable election:
____ (1)
Pursuant to Section 4 of the Agreement, I hereby elect to have each Vesting
Tranche delivered pursuant to the following schedule:
Vesting
Tranche
|
Number
of RSUs Vesting
|
Vesting
Date
|
Delivery
Date
|
Vesting
Tranche 1
|
|
|
|
Vesting
Tranche 2
|
|
|
|
Vesting
Tranche 3
|
|
|
|
Vesting
Tranche 4
|
|
|
|
____ (2)
I elect to not defer the delivery of the shares underlying my RSUs and take
delivery thereof on the applicable vesting date for each Tranche.
Executed
as of:
Participant:
_________________
Print Name:
______________
Acknowledged:
TechTarget,
Inc.
By:
Its:
Date:
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made as of
January 17, 2008 (the “Effective Date”) and amends and restated that certain
Employment Agreement dated as of January 1, 2007 (the “Original Effective Date”)
by and between
TechTarget,
Inc
., a Delaware corporation with a principal place of
business at 117 Kendrick Street, Needham, MA 02494 (the “Employer”), and
Greg Strakosch
(the
“Executive”). In consideration of the mutual covenants contained in
this Agreement, the Employer and the Executive agree as follows.
1.
Employment
. The
Employer agrees to employ the Executive and the Executive agrees to be employed
by the Employer upon the terms and subject to the conditions set forth in this
Agreement.
2.
Capacity
. The
Executive shall initially serve the Employer as Chief Executive Officer. The
Executive shall also serve the Employer in such other or additional offices as
the Executive may be requested to serve by the Board of Directors of the Company
(the “Board of Directors”). In such capacity or capacities, the
Executive shall perform such services and duties in connection with the
business, affairs and operations of the Employer as may be assigned or delegated
to the Executive from time to time, consistent with the Executive’s education
and experience, by or under the authority of the Board of Directors
3.
Term
. Subject
to the provisions of Section 6, the term of employment pursuant to this
Agreement (the “Term”) shall be one (1) year from the Original Effective Date
and shall be renewed automatically for periods of one (1) year commencing at the
first anniversary of the Original Effective Date and on each subsequent
anniversary thereafter unless either the Executive or the Employer gives written
notice to the other not less than sixty (60) days prior to the date of any such
anniversary of such party’s election not to extend the Term. In the event that
the Employer elects to not extend this Agreement on such an anniversary date,
the Executive shall be entitled to the benefits described in Section 7(b)
below.
4.
Compensation and
Benefits
. The regular compensation and benefits payable to the
Executive under this Agreement shall be as follows:
(a)
Salary
. For
all services rendered by the Executive under this Agreement, the Employer shall
pay the Executive a salary (the “Salary”) at the annual rate of Four Hundred
Forty Thousand Dollars ($440,000), subject to increase from time to time in the
discretion of the Board of Directors or the Compensation Committee of the Board
of Directors (the “Compensation Committee”). The Salary shall be
payable in periodic installments in accordance with the Employer’s usual
practice for its senior executives.
(b)
Bonus
. Beginning
with the fiscal year ending December 31, 2007, the Executive shall be entitled
to participate in an annual incentive program established by the Board of
Directors or the Compensation Committee for the executive management team with
such terms as may be established in the sole discretion of the Board of
Directors or Compensation Committee. For fiscal year 2007, the Executive’s
annual target bonus amount shall equal $ 270,000. For all subsequent years, the
amount of the Executive’s annual target bonus amount shall be established by the
Board of Directors or the Compensation Committee. The specific terms of the
bonus plan, including bonus targets, methods of payment and performance goals
will be documented by the Board of Directors or the Compensation
Committee.
(c)
Regular
Benefits
. The Executive shall also be entitled to participate
in any qualified retirement plans, deferred compensation plans, stock option and
incentive plans, stock purchase plans, medical insurance plans, life insurance
plans, disability income plans, retirement plans, vacation plans, expense
reimbursement plans and other benefit plans which the Employer may from time to
time have in effect for its senior executives. Such participation
shall be subject to the terms of the applicable plan documents, generally
applicable policies of the Employer, applicable law and the discretion of the
Board of Directors, the Compensation Committee or any administrative or other
committee provided for in, or contemplated by, any such plan. Nothing
contained in this Agreement shall be construed to create any obligation on the
part of the Employer to establish any such plan or to maintain the effectiveness
of any such plan which may be in effect from time to time.
(d)
Equity
Grants.
The Executive shall be provided equity awards as
determined by the Board of Directors or the Compensation Committee, with such
terms as may be established in the sole discretion of the Board of Directors or
Compensation Committee. In connection with any grants of stock
options, restricted stock units, or other equity instruments granted by the
Employer to the Executive, including all grants the dates of which precede the
Original Effective Date of this Agreement, the Employer and the Executive hereby
acknowledge and agree that in the event of a Change of Control ((1) with respect
to any stock grants or stock option grants, as defined in the Executive’s
Incentive Stock Option Grant Agreement under the Employer’s 1999 Stock Option
Plan (each an “Option Agreement”) and (2) with respect to any restricted stock
units, within the meaning of Section 409A of the Internal Revenue Code of 1986,
as amended), all unvested shares shall thereupon become fully-vested and all
such stock options may thereafter be immediately exercised and such restricted
stock units shall be delivered in accordance with the Restricted Stock Unit
Agreement between the Executive and the Employer.
(e)
Reimbursement of Business
Expenses
. The Employer shall reimburse the Executive for all
reasonable expenses incurred by him in performing services during the Term, in
accordance with the Employer’s policies and procedures for its senior executive
officers, as in effect from time to time.
(f)
Taxation of Payments and
Benefits
. The Employer shall undertake to make deductions,
withholdings and tax reports with respect to payments and benefits under this
Agreement to the extent that it reasonably and in good faith believes that it is
required to make such deductions, withholdings and tax
reports. Payments under this Agreement shall be in amounts net of any
such deductions or withholdings. Nothing in this Agreement shall be
construed to require the Employer to make any payments to compensate the
Executive for any adverse tax effect associated with any payments or benefits or
for any deduction or withholding from any payment or benefit.
(g)
Exclusivity of Salary and
Benefits
. The Executive shall not be entitled to any payments
or benefits other than those provided under this Agreement. During
the Term, the Employer is obligated to document any changes in compensation
terms applicable to the Agreement.
5.
Extent of
Service
. During the Executive’s employment under this
Agreement, the Executive shall, devote the Executive’s best efforts and business
judgment, skill and knowledge to the advancement of the Employer’s interests and
to the discharge of the Executive’s duties and responsibilities under this
Agreement. Notwithstanding anything contained herein to the contrary,
this Agreement shall not be construed as preventing the Executive
from:
(a)
investing
the Executive’s assets in any company or other entity in a manner not prohibited
by Section 8(d) and in such form or manner as shall not require any material
activities on the Executive’s part in connection with the operations or affairs
of the companies or other entities in which such investments are
made;
(b)
serving
on the Board of another company;
provided
, that, such
service does not impair or compromise the Executive’s ability to fulfill the
Executive’s duties and responsibilities under this Agreement; or
(c)
engaging
in religious, charitable or other community or non-profit activities that do not
impair the Executive’s ability to fulfill the Executive’s duties and
responsibilities under this Agreement.
6.
Termination
. Notwithstanding
the provisions of Section 3, the Executive’s employment under this Agreement
shall terminate under the following circumstances set forth in this Section
6.
(a)
Termination by the Employer
for Cause
. The Executive’s employment under this Agreement may
be terminated for Cause (as defined below) on the part of the Employer effective
upon a vote of the Board of Directors, prior to which the Employer shall have
given the Executive ten (10) days prior written notice and the opportunity to be
heard on such matter at a meeting of the Board. Only the following
shall constitute “Cause” for such termination:
(i)
any act,
whether or not involving the Employer or any affiliate of the Employer, of fraud
or gross misconduct;
(ii)
the
commission by the Executive of (A) a felony or (B) any misdemeanor involving
moral turpitude, deceit, dishonesty or fraud; or
(iii)
gross
negligence or willful misconduct of the Executive with respect to the Employer
or any affiliate of the Employer.
(b)
Termination by the Employer
Without Cause
. Subject to the payment of Termination Benefits
pursuant to Section 7(b), the Executive’s employment under this Agreement may be
terminated by the Employer without Cause upon no less than sixty (60) days prior
written notice to the Executive.
(c)
Termination by the Executive
for Good Reason
. Subject to the payment of Termination
Benefits pursuant to Section 7(b), the Executive’s employment under this
Agreement may be terminated by the Executive for Good Reason by written notice
to the Board of Directors at least sixty (60) days prior to such
termination. Only the following shall constitute “Good Reason” for
such termination:
(i)
a
material reduction of the Executive’s annual base salary and/or annual target
bonus other than a such reduction that is similar to a reduction made to such
salary and/or target bonus of all other senior executives of the
Employer;
(ii)
a change
in the Executive’s responsibilities and/or duties which constitutes a demotion
or is inconsistent with the terms of Section 2 hereof;
(iii)
a failure
of the Company to pay any amounts due hereunder;
(iv)
the
failure of any successor in interest to the business of the Employer to assume
the Employer’s obligations under this Agreement; or
(v)
the
relocation of the offices at which the Executive is principally employed to a
location more than 50 miles from such offices, which relocation is not approved
by the Executive.
(d)
Death
. The
Executive’s employment with the Employer shall terminate upon his
death.
(e)
Disability
. If
the Executive shall be disabled so as to be unable to perform the essential
functions of the Executive’s then-existing position or positions under this
Agreement, with or without reasonable accommodation, the Board of Directors may
remove the Executive from any responsibilities and/or reassign the Executive to
another position with the Employer for the remainder of the Term or during the
period of such disability. Notwithstanding any such removal or
reassignment, the Executive shall continue to receive the Executive’s full
Salary (less any disability pay or sick pay benefits to which the Executive may
be entitled under the Employer’s policies) and benefits under Section 4 of this
Agreement (except to the extent that the Executive may be ineligible for one or
more such benefits under applicable plan terms) for a period of time equal to
the period set forth in Section 7(b)(i) below. If any question shall
arise as to whether during any period the Executive is disabled so as to be
unable to perform the essential functions of the Executive’s then existing
position or positions with or without reasonable accommodation, the Executive
may, and at the request of the Employer shall, submit to the Employer a
certification in reasonable detail by a physician selected by the Employer (to
whom the Executive or the Executive’s guardian has no reasonable objection) as
to whether the Executive is so disabled or how long such disability is expected
to continue, and such certification shall for the purposes of this Agreement be
conclusive of the issue. The Executive shall cooperate with any
reasonable request of the physician in connection with such
certification. If such question shall arise and the Executive shall
fail to submit such certification, the Employer’s determination of such issue
shall be binding on the Executive. Nothing in this Section 6(e) shall
be construed to waive the Executive’s rights, if any, under existing law
including, without limitation, the Family and Medical Leave Act of 1993, 29
U.S.C. §2601
et seq
.
and the Americans with Disabilities Act, 42 U.S.C. §12101
et seq.
(f)
Termination by the Executive
without Good Reason.
The Executive may terminate this Agreement at any
time on no less than sixty (60) days prior written notice. If the Executive
terminates this Agreement without Good Reason, the Executive is not entitled to
any additional compensation or benefits other than his Accrued Benefit (as
defined in Section 7(a) below).
7.
Compensation Upon
Termination
.
(a)
Termination
Generally
. If the Executive’s employment with the Employer is
terminated for any reason during the Term, the Employer shall pay or provide to
the Executive (or to his authorized representative or estate) any earned but
unpaid base salary, incentive compensation earned but not yet paid, unpaid
expense reimbursements, accrued but unused vacation and any vested benefits the
Executive may have under any employee benefit plan of the Employer (the “Accrued
Benefit”).
(b)
Termination by the Employer
Without Cause or upon Executive Disability or Death, or by the Executive for
Good Reason
. In the event of termination of the Executive’s
employment with the Employer pursuant to Section 6(b), (c), (d) or (e) above, or
the failure of the Company to extend this Agreement following the expiration of
the then-current Term, the Employer shall provide to the Executive the following
termination benefits (“Termination Benefits”):
(i)
payments
that provide for the continuation of the Executive’s Salary at the rate then in
effect pursuant to Section 4(a) for a period of 12 months;
(ii)
continuation
of group health plan benefits to the extent authorized by and consistent with 29
U.S.C. § 1161 et seq. (commonly known as “COBRA”), payment of premiums of which
shall continue to be made by the Employer at the active employee’s
rate for the period set forth in clause 7(b)(i) above;
(iii)
payments
(pro rated over the period described in Section 7(b)(i) above) equal in the
aggregate to the greater of (x) fifty percent (50%) of the targeted bonus amount
that was established by the Board of Directors or Compensation Committee for the
Executive for the then-current fiscal year (the “Target Bonus Amount”) or (y)
the product of (I) the Target Bonus Amount multiplied by (II) a fraction, the
numerator for which equals the number of months in the then-current fiscal year
that have elapsed, and the denominator of which equals 12; and
(iv)
for each
year that the Executive has been employed by the Employer in any capacity, an
additional ten percent (10%) of (x) all then unvested options to purchase shares
of the Employer’s stock that have been granted to the Executive shall become
immediately, and without further action, exercisable by the Executive and (y)
all then unvested restricted stock units that have been granted to the Executive
shall become immediately, and without further action, vested and shall be
delivered to the Executive in accordance with the Restricted Stock Unit
Agreement(s) by and between the Company and the Executive.
(c)
Termination by the Employer
with Cause or the Executive without Good Reason
. If the
Executive’s employment is terminated by the Employer with Cause under Section
6(a) or by the Executive without Good Reason under Section 6(f), the Employer
shall have no further obligation to the Executive other than payment of his
Accrued Benefit.
(d)
Certain Tax
Matters
.
(i)
The
Company and the Executive agree to cooperate and negotiate with each other in
good faith to minimize the impact of Sections 280G and 4999 of the Code on the
Company and the Executive, respectively.
(ii)
Distributions
. The
following rules shall apply with respect to distribution of the payments and
benefits, if any, to be provided to Executive under Section 7
(1) It
is intended that each installment of the payments and benefits provided under
Section 7 shall be treated as a separate “payment” for purposes of Section 409A
of the U.S. Internal Revenue Code of 1986, as amended, and the guidance issued
thereunder (“Section 409A”). Neither Employer nor Executive shall
have the right to accelerate or defer the delivery of any such payments or
benefits except to the extent specifically permitted or required by Section
409A;
(2) If,
as of the date of the Executive’s “separation from service” (as defined below)
from Employer, Executive is not a “specified employee” (within the meaning of
Section 409A), then each installment of the payments and benefits shall be made
on the dates and terms set forth in Section 7; and
(3) If,
as of the date of the Executive’s “separation from service” from Employer,
Executive is a “specified employee” (within the meaning of Section 409A),
then:
(A) Each
installment of the payments and benefits due under Section 7 that, in accordance
with the dates and terms set forth herein, will in all circumstances, regardless
of when the separation from service occurs, be paid within the Short-Term
Deferral Period (as hereinafter defined) shall be treated as a short-term
deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the
maximum extent permissible under Section 409A. For purposes of this
Agreement, the “Short-Term Deferral Period” means the period ending on the later
of the 15
th
day of
the third month following the end of Executive’s tax year in which the
separation from service occurs and the 15
th
day of
the third month following the end of Employer’s tax year in which the separation
from service occurs; and
(B) Each
installment of the payments and benefits due under Section 7 that is not paid
within the Short-Term Deferral Period and that would, absent this subsection, be
paid within the six-month period following the “separation from service” of
Executive from Employer shall not be paid until the date that is six months and
one day after such separation from service (or, if earlier, the Executive’s
death), with any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that
is six months and one day following Executive’s separation from service and any
subsequent installments, if any, being paid in accordance with the dates and
terms set forth herein;
provided
,
however
, that the
preceding provisions of this sentence shall not apply to any installment of
payments and benefits if and to the maximum extent that that such installment is
deemed to be paid under a separation pay plan that does not provide for a
deferral of compensation by reason of the application of Treasury
Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an
involuntary separation from service). Any installments that qualify
for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii)
must be paid no later than the last day of Executive’s second taxable year
following the taxable year of yours in which the separation from service
occurs.
(4) For
purposes of this Agreement, the determination of whether and when a separation
from service has occurred shall be made in accordance with this subparagraph and
in a manner consistent with Treasury Regulation Section
1.409A-1(h). Solely for purposes of this Section 7, “Employer” shall
include all persons with whom the Employer would be considered a single employer
under Sections 414(b) and 414(c) of the Internal Revenue Code of 1986, as
amended.
8.
Confidential Information,
Noncompetition and Cooperation
.
(a)
Confidential
Information
. As used in this Agreement, “Confidential
Information” means information belonging to the Employer which is of value to
the Employer in the course of conducting its business and the disclosure of
which could result in a competitive or other disadvantage to the
Employer. Confidential Information includes, without limitation,
financial information, reports, and forecasts; inventions, improvements and
other intellectual property; trade secrets; know-how; designs, processes or
formulae; software; market or sales information or plans; customer lists; and
business plans, prospects and opportunities (such as possible acquisitions or
dispositions of businesses or facilities) which have been discussed or
considered by the management of the Employer. Confidential
Information includes information developed by the Executive in the course of the
Executive’s employment by the Employer, as well as other information to which
the Executive may have access in connection with the Executive’s
employment. Confidential Information also includes the confidential
information of others with which the Employer has a business
relationship. Notwithstanding the foregoing, Confidential Information
does not include information in the public domain, unless due to breach of the
Executive’s duties under Section 8(b).
(b)
Confidentiality
. The
Executive understands and agrees that the Executive’s employment creates a
relationship of confidence and trust between the Executive and the Employer with
respect to all Confidential Information. At all times, both during
the Executive’s employment with the Employer and after its termination, the
Executive will keep in confidence and trust all such Confidential Information,
and will not use or disclose any such Confidential Information without the
written consent of the Employer, except as may be necessary in the ordinary
course of performing the Executive’s duties to the Employer.
(c)
Documents, Records,
etc
. All documents, records, data, apparatus, equipment and
other physical property, whether or not pertaining to Confidential Information,
which are furnished to the Executive by the Employer or are produced by the
Executive in connection with the Executive’s employment will be and remain the
sole property of the Employer. The Executive will return to the
Employer all such materials and property as and when requested by the
Employer. In any event, the Executive will return all such materials
and property immediately upon termination of the Executive’s employment for any
reason. The Executive will not retain with the Executive any such
material or property or any copies thereof after such termination.
(d)
Noncompetition and
Nonsolicitation
. During the Term and for a period of one year
thereafter , the Executive (i) will not, directly or indirectly, whether as
owner, partner, shareholder, consultant, agent, employee, co-venturer or
otherwise, engage, participate, assist or invest in any Competing Business (as
hereinafter defined); (ii) will refrain from directly or indirectly employing,
attempting to employ, recruiting or otherwise soliciting, inducing or
influencing any person to leave employment with the Employer (other than
terminations of employment of subordinate employees undertaken in the course of
the Executive’s employment with the Employer); and (iii) will refrain from
soliciting or encouraging any customer or supplier to terminate or otherwise
modify adversely its business relationship with the Employer. The
Executive understands that the restrictions set forth in this Section 8(d) are
intended to protect the Employer’s interest in its Confidential Information and
established employee, customer and supplier relationships and goodwill, and
agrees that such restrictions are reasonable and appropriate for this
purpose. For purposes of this Agreement, the term “Competing
Business” shall mean any of the following: a media company that publishes
technology-related content or operates technology-related events and, in any
case, derives its revenue from selling products and services similar to products
and services offered by the Employer to customers and prospects similar to
Employer’s own customers and prospects. The Executive acknowledges that the
following specific companies are considered competitors of Employer; CNET, IDG,
Accela Communications, CMP, Ziff Davis, PennWell, JupiterMedia, 101
Communications, Penton Media, IT Toolbox CRMGuru, NewsFactor, Sys-Con, Fawcete,
Digital Consulting, Byte & Switch, Haymarket Media/West Coast Publishing,
SANS Institute, Computer Security Institute, Reed Expo and MIS Training
Institute. The Executive further acknowledges that the specific
companies mentioned as competitors create only a limited list of potential
competitors and that other companies or entities maybe deemed to be competitors
based on the nature of their products and services and how they compete in the
marketplace against Employer’s customers and prospects. At the Executive’s
request, Employer will update the listing of specific companies mentioned
above. Notwithstanding the foregoing, the Executive may own up to one
percent (1%) of the outstanding stock of a publicly held corporation which
constitutes or is affiliated with a Competing Business.
(e)
Third-Party Agreements and
Rights
. The Executive hereby confirms that the Executive is
not bound by the terms of any agreement with any previous employer or other
party which restricts in any way the Executive’s use or disclosure of
information or the Executive’s engagement in any business. The
Executive represents to the Employer that the Executive’s execution of this
Agreement, the Executive’s employment with the Employer and the performance of
the Executive’s proposed duties for the Employer will not violate any
obligations the Executive may have to any such previous employer or other
party. In the Executive’s work for the Employer, the Executive will
not disclose or make use of any information in violation of any agreements with
or rights of any such previous employer or other party, and the Executive will
not bring to the premises of the Employer any copies or other tangible
embodiments of non-public information belonging to or obtained from any such
previous employment or other party.
(f)
Litigation and Regulatory
Cooperation
. During and after the Executive’s employment, the
Executive shall cooperate fully with the Employer in the defense or prosecution
of any claims or actions now in existence or which may be brought in the future
against or on behalf of the Employer which relate to events or occurrences that
transpired while the Executive was employed by the Employer. The
Executive’s full cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to prepare
for discovery or trial and to act as a witness on behalf of the Employer at
mutually convenient times. During and after the Executive’s
employment, the Executive also shall cooperate fully with the Employer in
connection with any investigation or review of any federal, state or local
regulatory authority as any such investigation or review relates to events or
occurrences that transpired while the Executive was employed by the
Employer. The Employer shall reimburse the Executive for any
reasonable out-of-pocket expenses incurred in connection with the Executive’s
performance of obligations pursuant to this Section 8(f).
(g)
Injunction
. The
Executive agrees that it would be difficult to measure any damages caused to the
Employer which might result from any breach by the Executive of the promises set
forth in this Section 8, and that in any event money damages would be an
inadequate remedy for any such breach. Accordingly, subject to
Section 9 of this Agreement, the Executive agrees that if the Executive
breaches, or proposes to breach, any portion of this Agreement, the Employer
shall be entitled, in addition to all other remedies that it may have, to an
injunction or other appropriate equitable relief to restrain any such breach
without showing or proving any actual damage to the Employer.
9.
Arbitration of
Disputes
. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive’s employment or the termination of that employment (including, without
limitation, any claims of unlawful employment discrimination whether based on
age or otherwise) shall, to the fullest extent permitted by law, be settled by
arbitration in any forum and form agreed upon by the parties or, in the absence
of such an agreement, under the auspices of the American Arbitration Association
(“AAA”) in Boston, Massachusetts in accordance with the Employment Dispute
Resolution Rules of the AAA, including, but not limited to, the rules and
procedures applicable to the selection of arbitrators. In the event
that any person or entity other than the Executive or the Employer may be a
party with regard to any such controversy or claim, such controversy or claim
shall be submitted to arbitration subject to such other person or entity’s
agreement. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. This Section 9
shall be specifically enforceable. Notwithstanding the foregoing, this Section 9
shall not preclude either party from pursuing a court action for the sole
purpose of obtaining a temporary restraining order or a preliminary injunction
in circumstances in which such relief is appropriate; provided that any other
relief shall be pursued through an arbitration proceeding pursuant to this
Section 9.
10.
Consent to
Jurisdiction
. To the extent that any court action is permitted
consistent with or to enforce Section 9 of this Agreement, the parties hereby
consent to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts. Accordingly, with respect to any such court action,
the Executive (a) submits to the personal jurisdiction of such courts; (b)
consents to service of process; and (c) waives any other requirement (whether
imposed by statute, rule of court, or otherwise) with respect to personal
jurisdiction or service of process.
11.
Integration
. This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements between the
parties with respect to any related subject matter;
provided
,
however,
that the
parties acknowledge and agree that:
(i)
the
terms of Section 2 of that certain Relationship Agreement by and between the
Executive and Employer (the “Relationship Agreement”) shall survive the
execution of this Agreement, and shall govern the terms of any and all
Inventions, Works and Work Product (as defined therein) conceived, made,
authored or developed by Executive during the term of his employment, both prior
to and following the execution of this Agreement;
provided
,
that
, in the event of
any inconsistency or conflict between the terms of the Relationship Agreement
and the terms of this Agreement, the terms of this Agreement shall take
precedence and govern with respect to the applicable subject matter;
and
(ii)
the terms
of each Option Agreement shall survive the execution of this Agreement and shall
remain in full force and effect in accordance with its terms.
12.
Assignment; Successors and
Assigns, etc
. Neither the Employer nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party; provided that
the Employer may assign its rights under this Agreement without the consent of
the Executive in the event that the Employer shall effect a reorganization,
consolidate with, or merge into, any other corporation, partnership,
organization or other entity, or transfer all or substantially all of its
properties or assets to any other corporation, partnership, organization or
other entity. This Agreement shall inure to the benefit of and be
binding upon the Employer and the Executive, their respective successors,
executors, administrators, heirs and permitted assigns.
13.
Enforceability
. If
any portion or provision of this Agreement (including, without limitation, any
portion or provision of any section of this Agreement) shall to any extent be
declared illegal or unenforceable by a court of competent jurisdiction, then the
remainder of this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
14.
Waiver
. No
waiver of any provision hereof shall be effective unless made in writing and
signed by the waiving party. The failure of any party to require the
performance of any term or obligation of this Agreement, or the waiver by any
party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.
15.
Notices
. Any
notices, requests, demands and other communications provided for by this
Agreement shall be sufficient if in writing and delivered in person or sent by a
nationally recognized overnight courier service or by registered or certified
mail, postage prepaid, return receipt requested, to the Executive at the last
address the Executive has filed in writing with the Employer or, in the case of
the Employer, at its main offices, attention of the Chief Executive Officer, and
shall be effective on the date of delivery in person or by courier or three (3)
days after the date mailed.
16.
Amendment
. This
Agreement may be amended or modified only by a written instrument signed by the
Executive and by a duly authorized representative of the Employer.
17.
Governing
Law
. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the law of the Commonwealth of
Massachusetts, without giving effect to the conflict of laws principles of such
Commonwealth. With respect to any disputes concerning federal law,
such disputes shall be determined in accordance with the law as it would be
interpreted and applied by the United States Court of Appeals for the First
Circuit.
18.
Counterparts
. This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be taken to be an original; but such counterparts
shall together constitute one and the same document.
IN
WITNESS WHEREOF, this Amended and Restated Agreement has been executed as a
sealed instrument by the Employer, by its duly authorized officer, and by the
Executive, as of the Effective Date.
TechTarget,
Inc.
By: /s/
Eric
Sockol
Title: CFO
/s/ Greg
Strakosch
Executive: Greg Strakosch
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made as of
January 17, 2008 (the “Effective Date”) and amends and restates that certain
Employment Agreement dated as of January 1, 2007 (the “Original Effective Date”)
by and between
TechTarget,
Inc
., a Delaware corporation with a principal place of business at 117
Kendrick Street, Needham, MA 02494 (the “Employer”), and
Don Hawk
(the
“Executive”). In consideration of the mutual covenants contained in
this Agreement, the Employer and the Executive agree as follows.
1.
Employment
. The
Employer agrees to employ the Executive and the Executive agrees to be employed
by the Employer upon the terms and subject to the conditions set forth in this
Agreement.
2.
Capacity
. The
Executive shall initially serve the Employer as President. The Executive shall
also serve the Employer in such other or additional offices as the Executive may
be requested to serve by the Chief Executive Officer. In such
capacity or capacities, the Executive shall perform such services and duties in
connection with the business, affairs and operations of the Employer as may be
assigned or delegated to the Executive from time to time, consistent with the
Executive’s education and experience, by or under the authority of the Chief
Executive Officer. The Executive shall report directly to the Chief Executive
Officer.
3.
Term
. Subject
to the provisions of Section 6, the term of employment pursuant to this
Agreement (the “Term”) shall be one (1) year from the Original Effective Date
and shall be renewed automatically for periods of one (1) year commencing at the
first anniversary of the Original Effective Date and on each subsequent
anniversary thereafter unless either the Executive or the Employer gives written
notice to the other not less than sixty (60) days prior to the date of any such
anniversary of such party’s election not to extend the Term. In the event that
the Employer elects to not extend this Agreement on such an anniversary date,
the Executive shall be entitled to the benefits described in Section 7(b)
below.
4.
Compensation and
Benefits
. The regular compensation and benefits payable to the
Executive under this Agreement shall be as follows:
(a)
Salary
. For
all services rendered by the Executive under this Agreement, the Employer shall
pay the Executive a salary (the “Salary”) at the annual rate of Three Hundred
Fifty Thousand Dollars ($350,000), subject to increase from time to time in the
discretion of the Board of Directors or the Compensation Committee of the Board
of Directors (the “Compensation Committee”). The Salary shall be
payable in periodic installments in accordance with the Employer’s usual
practice for its senior executives.
(b)
Bonus
. Beginning
with the fiscal year ending December 31, 2007, the Executive shall be entitled
to participate in an annual incentive program established by the Board of
Directors or the Compensation Committee for the executive management team with
such terms as may be established in the sole discretion of the Board of
Directors or Compensation Committee. For fiscal year 2007, the Executive’s
annual target bonus amount shall equal $ 225,000. For all subsequent years, the
amount of the Executive’s annual target bonus amount shall be established by the
Board of Directors or the Compensation Committee. The specific terms of the
bonus plan, including bonus targets, methods of payment and performance goals
will be documented by the Board of Directors or the Compensation
Committee.
(c)
Regular
Benefits
. The Executive shall also be entitled to participate
in any qualified retirement plans, deferred compensation plans, stock option and
incentive plans, stock purchase plans, medical insurance plans, life insurance
plans, disability income plans, retirement plans, vacation plans, expense
reimbursement plans and other benefit plans which the Employer may from time to
time have in effect for its senior executives. Such participation
shall be subject to the terms of the applicable plan documents, generally
applicable policies of the Employer, applicable law and the discretion of the
Board of Directors, the Compensation Committee or any administrative or other
committee provided for in, or contemplated by, any such plan. Nothing
contained in this Agreement shall be construed to create any obligation on the
part of the Employer to establish any such plan or to maintain the effectiveness
of any such plan which may be in effect from time to time.
(d)
Equity
Grants.
The Executive shall be provided equity awards as
determined by the Board of Directors or the Compensation Committee, with such
terms as may be established in the sole discretion of the Board of Directors or
Compensation Committee. In connection with any grants of stock
options, restricted stock units, or other equity instruments granted by the
Employer to the Executive, including all grants the dates of which precede the
Original Effective Date of this Agreement, the Employer and the Executive hereby
acknowledge and agree that in the event of a Change of Control ((1) with respect
to any stock grants or stock option grants, as defined in the Executive’s
Incentive Stock Option Grant Agreement under the Employer’s 1999 Stock Option
Plan (each an “Option Agreement”) and (2) with respect to any restricted stock
units, within the meaning of Section 409A of the Internal Revenue Code of 1986,
as amended), all unvested shares shall thereupon become fully-vested and all
such stock options may thereafter be immediately exercised and such restricted
stock units shall be delivered in accordance with the Restricted Stock Unit
Agreement between the Executive and the Employer.
(e)
Reimbursement of Business
Expenses
. The Employer shall reimburse the Executive for all
reasonable expenses incurred by him in performing services during the Term, in
accordance with the Employer’s policies and procedures for its senior executive
officers, as in effect from time to time.
(f)
Taxation of Payments and
Benefits
. The Employer shall undertake to make deductions,
withholdings and tax reports with respect to payments and benefits under this
Agreement to the extent that it reasonably and in good faith believes that it is
required to make such deductions, withholdings and tax
reports. Payments under this Agreement shall be in amounts net of any
such deductions or withholdings. Nothing in this Agreement shall be
construed to require the Employer to make any payments to compensate the
Executive for any adverse tax effect associated with any payments or benefits or
for any deduction or withholding from any payment or benefit.
(g)
Exclusivity of Salary and
Benefits
. The Executive shall not be entitled to any payments
or benefits other than those provided under this Agreement. During
the Term, the Employer is obligated to document any changes in compensation
terms applicable to the Agreement.
5.
Extent of
Service
. During the Executive’s employment under this
Agreement, the Executive shall, devote the Executive’s best efforts and business
judgment, skill and knowledge to the advancement of the Employer’s interests and
to the discharge of the Executive’s duties and responsibilities under this
Agreement. Notwithstanding anything contained herein to the contrary,
this Agreement shall not be construed as preventing the Executive
from:
(a)
investing
the Executive’s assets in any company or other entity in a manner not prohibited
by Section 8(d) and in such form or manner as shall not require any material
activities on the Executive’s part in connection with the operations or affairs
of the companies or other entities in which such investments are
made;
(b)
serving
on the Board of another company;
provided
, that, such
service does not impair or compromise the Executive’s ability to fulfill the
Executive’s duties and responsibilities under this Agreement; or
(c)
engaging
in religious, charitable or other community or non-profit activities that do not
impair the Executive’s ability to fulfill the Executive’s duties and
responsibilities under this Agreement.
6.
Termination
. Notwithstanding
the provisions of Section 3, the Executive’s employment under this Agreement
shall terminate under the following circumstances set forth in this Section
6.
(a)
Termination by the Employer
for Cause
. The Executive’s employment under this Agreement may
be terminated for Cause (as defined below) on the part of the Employer effective
upon a vote of the Board of Directors, prior to which the Employer shall have
given the Executive ten (10) days prior written notice and the opportunity to be
heard on such matter at a meeting of the Board. Only the following
shall constitute “Cause” for such termination:
(i)
any act,
whether or not involving the Employer or any affiliate of the Employer, of fraud
or gross misconduct;
(ii)
the
commission by the Executive of (A) a felony or (B) any misdemeanor involving
moral turpitude, deceit, dishonesty or fraud; or
(iii)
gross
negligence or willful misconduct of the Executive with respect to the Employer
or any affiliate of the Employer.
(b)
Termination by the Employer
Without Cause
. Subject to the payment of Termination Benefits
pursuant to Section 7(b), the Executive’s employment under this Agreement may be
terminated by the Employer without Cause upon no less than sixty (60) days prior
written notice to the Executive.
(c)
Termination by the Executive
for Good Reason
. Subject to the payment of Termination
Benefits pursuant to Section 7(b), the Executive’s employment under this
Agreement may be terminated by the Executive for Good Reason by written notice
to the Board of Directors at least sixty (60) days prior to such
termination. Only the following shall constitute “Good Reason” for
such termination:
(i)
a
material reduction of the Executive’s annual base salary and/or annual target
bonus other than a such reduction that is similar to a reduction made to such
salary and/or target bonus of all other senior executives of the
Employer;
(ii)
a change
in the Executive’s responsibilities and/or duties which constitutes a demotion
or is inconsistent with the terms of Section 2 hereof;
(iii)
a failure
of the Company to pay any amounts due hereunder;
(iv)
the
failure of any successor in interest to the business of the Employer to assume
the Employer’s obligations under this Agreement; or
(v)
the
relocation of the offices at which the Executive is principally employed to a
location more than 50 miles from such offices, which relocation is not approved
by the Executive.
(d)
Death
. The
Executive’s employment with the Employer shall terminate upon his
death.
(e)
Disability
. If
the Executive shall be disabled so as to be unable to perform the essential
functions of the Executive’s then-existing position or positions under this
Agreement, with or without reasonable accommodation, the Chief Executive Officer
may remove the Executive from any responsibilities and/or reassign the Executive
to another position with the Employer for the remainder of the Term or during
the period of such disability. Notwithstanding any such removal or
reassignment, the Executive shall continue to receive the Executive’s full
Salary (less any disability pay or sick pay benefits to which the Executive may
be entitled under the Employer’s policies) and benefits under Section 4 of this
Agreement (except to the extent that the Executive may be ineligible for one or
more such benefits under applicable plan terms) for a period of time equal to
the period set forth in Section 7(b)(i) below. If any question shall
arise as to whether during any period the Executive is disabled so as to be
unable to perform the essential functions of the Executive’s then existing
position or positions with or without reasonable accommodation, the Executive
may, and at the request of the Employer shall, submit to the Employer a
certification in reasonable detail by a physician selected by the Employer (to
whom the Executive or the Executive’s guardian has no reasonable objection) as
to whether the Executive is so disabled or how long such disability is expected
to continue, and such certification shall for the purposes of this Agreement be
conclusive of the issue. The Executive shall cooperate with any
reasonable request of the physician in connection with such
certification. If such question shall arise and the Executive shall
fail to submit such certification, the Employer’s determination of such issue
shall be binding on the Executive. Nothing in this Section 6(e) shall
be construed to waive the Executive’s rights, if any, under existing law
including, without limitation, the Family and Medical Leave Act of 1993, 29
U.S.C. §2601
et seq
.
and the Americans with Disabilities Act, 42 U.S.C. §12101
et seq.
(f)
Termination by the Executive
without Good Reason.
The Executive may terminate this Agreement at any
time on no less than sixty (60) days prior written notice. If the Executive
terminates this Agreement without Good Reason, the Executive is not entitled to
any additional compensation or benefits other than his Accrued Benefit (as
defined in Section 7(a) below).
7.
Compensation Upon
Termination
.
(a)
Termination
Generally
. If the Executive’s employment with the Employer is
terminated for any reason during the Term, the Employer shall pay or provide to
the Executive (or to his authorized representative or estate) any earned but
unpaid base salary, incentive compensation earned but not yet paid, unpaid
expense reimbursements, accrued but unused vacation and any vested benefits the
Executive may have under any employee benefit plan of the Employer (the “Accrued
Benefit”).
(b)
Termination by the Employer
Without Cause or upon Executive Disability or Death, or by the Executive for
Good Reason
. In the event of termination of the Executive’s
employment with the Employer pursuant to Section 6(b), (c), (d) or (e) above, or
the failure of the Company to extend this Agreement following the expiration of
the then-current Term, the Employer shall provide to the Executive the following
termination benefits (“Termination Benefits”):
(i)
payments
that provide for the continuation of the Executive’s Salary at the rate then in
effect pursuant to Section 4(a) for a period of 9 months;
(ii)
continuation
of group health plan benefits to the extent authorized by and consistent with 29
U.S.C. § 1161 et seq. (commonly known as “COBRA”), payment of premiums of which
shall continue to be made by the Employer at the active employee’s
rate for the period set forth in clause 7(b)(i) above;
(iii)
payments
(pro rated over the period described in Section 7(b)(i) above) equal in the
aggregate to the greater of (x) fifty percent (50%) of the targeted bonus amount
that was established by the Board of Directors or Compensation Committee for the
Executive for the then-current fiscal year (the “Target Bonus Amount”) or (y)
the product of (I) the Target Bonus Amount multiplied by (II) a fraction, the
numerator for which equals the number of months in the then-current fiscal year
that have elapsed, and the denominator of which equals 12; and
(iv)
for each
year that the Executive has been employed by the Employer in any capacity, an
additional ten percent (10%) of (x) all then unvested options to purchase shares
of the Employer’s stock that have been granted to the Executive shall become
immediately, and without further action, exercisable by the Executive and (y)
all then unvested restricted stock units that have been granted to the Executive
shall become immediately, and without further action, vested and shall be
delivered to the Executive in accordance with the Restricted Stock Unit
Agreement(s) by and between the Company and the Executive.
(c)
Termination by the Employer
with Cause or the Executive without Good Reason
. If the
Executive’s employment is terminated by the Employer with Cause under Section
6(a) or by the Executive without Good Reason under Section 6(f), the Employer
shall have no further obligation to the Executive other than payment of his
Accrued Benefit.
(d)
Certain Tax
Matters
.
(i)
The
Company and the Executive agree to cooperate and negotiate with each other in
good faith to minimize the impact of Sections 280G and 4999 of the Code on the
Company and the Executive, respectively.
(ii)
Distributions
. The
following rules shall apply with respect to distribution of the payments and
benefits, if any, to be provided to Executive under Section 7
(1) It
is intended that each installment of the payments and benefits provided under
Section 7 shall be treated as a separate “payment” for purposes of Section 409A
of the U.S. Internal Revenue Code of 1986, as amended, and the guidance issued
thereunder (“Section 409A”). Neither Employer nor Executive shall
have the right to accelerate or defer the delivery of any such payments or
benefits except to the extent specifically permitted or required by Section
409A;
(2) If,
as of the date of the Executive’s “separation from service” (as defined below)
from Employer, Executive is not a “specified employee” (within the meaning of
Section 409A), then each installment of the payments and benefits shall be made
on the dates and terms set forth in Section 7; and
(3) If,
as of the date of the Executive’s “separation from service” from Employer,
Executive is a “specified employee” (within the meaning of Section 409A),
then:
(A) Each
installment of the payments and benefits due under Section 7 that, in accordance
with the dates and terms set forth herein, will in all circumstances, regardless
of when the separation from service occurs, be paid within the Short-Term
Deferral Period (as hereinafter defined) shall be treated as a short-term
deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the
maximum extent permissible under Section 409A. For purposes of this
Agreement, the “Short-Term Deferral Period” means the period ending on the later
of the 15
th
day of
the third month following the end of Executive’s tax year in which the
separation from service occurs and the 15
th
day of
the third month following the end of Employer’s tax year in which the separation
from service occurs; and
(B) Each
installment of the payments and benefits due under Section 7 that is not paid
within the Short-Term Deferral Period and that would, absent this subsection, be
paid within the six-month period following the “separation from service” of
Executive from Employer shall not be paid until the date that is six months and
one day after such separation from service (or, if earlier, the Executive’s
death), with any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that
is six months and one day following Executive’s separation from service and any
subsequent installments, if any, being paid in accordance with the dates and
terms set forth herein;
provided
,
however
, that the
preceding provisions of this sentence shall not apply to any installment of
payments and benefits if and to the maximum extent that that such installment is
deemed to be paid under a separation pay plan that does not provide for a
deferral of compensation by reason of the application of Treasury
Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an
involuntary separation from service). Any installments that qualify
for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii)
must be paid no later than the last day of Executive’s second taxable year
following the taxable year of yours in which the separation from service
occurs.
(4) For
purposes of this Agreement, the determination of whether and when a separation
from service has occurred shall be made in accordance with this subparagraph and
in a manner consistent with Treasury Regulation Section
1.409A-1(h). Solely for purposes of this Section 7, “Employer” shall
include all persons with whom the Employer would be considered a single employer
under Sections 414(b) and 414(c) of the Internal Revenue Code of 1986, as
amended.
8.
Confidential Information,
Noncompetition and Cooperation
.
(a)
Confidential
Information
. As used in this Agreement, “Confidential
Information” means information belonging to the Employer which is of value to
the Employer in the course of conducting its business and the disclosure of
which could result in a competitive or other disadvantage to the
Employer. Confidential Information includes, without limitation,
financial information, reports, and forecasts; inventions, improvements and
other intellectual property; trade secrets; know-how; designs, processes or
formulae; software; market or sales information or plans; customer lists; and
business plans, prospects and opportunities (such as possible acquisitions or
dispositions of businesses or facilities) which have been discussed or
considered by the management of the Employer. Confidential
Information includes information developed by the Executive in the course of the
Executive’s employment by the Employer, as well as other information to which
the Executive may have access in connection with the Executive’s
employment. Confidential Information also includes the confidential
information of others with which the Employer has a business
relationship. Notwithstanding the foregoing, Confidential Information
does not include information in the public domain, unless due to breach of the
Executive’s duties under Section 8(b).
(b)
Confidentiality
. The
Executive understands and agrees that the Executive’s employment creates a
relationship of confidence and trust between the Executive and the Employer with
respect to all Confidential Information. At all times, both during
the Executive’s employment with the Employer and after its termination, the
Executive will keep in confidence and trust all such Confidential Information,
and will not use or disclose any such Confidential Information without the
written consent of the Employer, except as may be necessary in the ordinary
course of performing the Executive’s duties to the Employer.
(c)
Documents, Records,
etc
. All documents, records, data, apparatus, equipment and
other physical property, whether or not pertaining to Confidential Information,
which are furnished to the Executive by the Employer or are produced by the
Executive in connection with the Executive’s employment will be and remain the
sole property of the Employer. The Executive will return to the
Employer all such materials and property as and when requested by the
Employer. In any event, the Executive will return all such materials
and property immediately upon termination of the Executive’s employment for any
reason. The Executive will not retain with the Executive any such
material or property or any copies thereof after such termination.
(d)
Noncompetition and
Nonsolicitation
. During the Term and for a period of 9 months
thereafter , the Executive (i) will not, directly or indirectly, whether as
owner, partner, shareholder, consultant, agent, employee, co-venturer or
otherwise, engage, participate, assist or invest in any Competing Business (as
hereinafter defined); (ii) will refrain from directly or indirectly employing,
attempting to employ, recruiting or otherwise soliciting, inducing or
influencing any person to leave employment with the Employer (other than
terminations of employment of subordinate employees undertaken in the course of
the Executive’s employment with the Employer); and (iii) will refrain from
soliciting or encouraging any customer or supplier to terminate or otherwise
modify adversely its business relationship with the Employer. The
Executive understands that the restrictions set forth in this Section 8(d) are
intended to protect the Employer’s interest in its Confidential Information and
established employee, customer and supplier relationships and goodwill, and
agrees that such restrictions are reasonable and appropriate for this
purpose. For purposes of this Agreement, the term “Competing
Business” shall mean any of the following: a media company that publishes
technology-related content or operates technology-related events and, in any
case, derives its revenue from selling products and services similar to products
and services offered by the Employer to customers and prospects similar to
Employer’s own customers and prospects. The Executive acknowledges that the
following specific companies are considered competitors of Employer; CNET, IDG,
Accela Communications, CMP, Ziff Davis, PennWell, JupiterMedia, 101
Communications, Penton Media, IT Toolbox CRMGuru, NewsFactor, Sys-Con, Fawcete,
Digital Consulting, Byte & Switch, Haymarket Media/West Coast Publishing,
SANS Institute, Computer Security Institute, Reed Expo and MIS Training
Institute. The Executive further acknowledges that the specific
companies mentioned as competitors create only a limited list of potential
competitors and that other companies or entities maybe deemed to be competitors
based on the nature of their products and services and how they compete in the
marketplace against Employer’s customers and prospects. At the Executive’s
request, Employer will update the listing of specific companies mentioned
above. Notwithstanding the foregoing, the Executive may own up to one
percent (1%) of the outstanding stock of a publicly held corporation which
constitutes or is affiliated with a Competing Business.
(e)
Third-Party Agreements and
Rights
. The Executive hereby confirms that the Executive is
not bound by the terms of any agreement with any previous employer or other
party which restricts in any way the Executive’s use or disclosure of
information or the Executive’s engagement in any business. The
Executive represents to the Employer that the Executive’s execution of this
Agreement, the Executive’s employment with the Employer and the performance of
the Executive’s proposed duties for the Employer will not violate any
obligations the Executive may have to any such previous employer or other
party. In the Executive’s work for the Employer, the Executive will
not disclose or make use of any information in violation of any agreements with
or rights of any such previous employer or other party, and the Executive will
not bring to the premises of the Employer any copies or other tangible
embodiments of non-public information belonging to or obtained from any such
previous employment or other party.
(f)
Litigation and Regulatory
Cooperation
. During and after the Executive’s employment, the
Executive shall cooperate fully with the Employer in the defense or prosecution
of any claims or actions now in existence or which may be brought in the future
against or on behalf of the Employer which relate to events or occurrences that
transpired while the Executive was employed by the Employer. The
Executive’s full cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to prepare
for discovery or trial and to act as a witness on behalf of the Employer at
mutually convenient times. During and after the Executive’s
employment, the Executive also shall cooperate fully with the Employer in
connection with any investigation or review of any federal, state or local
regulatory authority as any such investigation or review relates to events or
occurrences that transpired while the Executive was employed by the
Employer. The Employer shall reimburse the Executive for any
reasonable out-of-pocket expenses incurred in connection with the Executive’s
performance of obligations pursuant to this Section 8(f).
(g)
Injunction
. The
Executive agrees that it would be difficult to measure any damages caused to the
Employer which might result from any breach by the Executive of the promises set
forth in this Section 8, and that in any event money damages would be an
inadequate remedy for any such breach. Accordingly, subject to
Section 9 of this Agreement, the Executive agrees that if the Executive
breaches, or proposes to breach, any portion of this Agreement, the Employer
shall be entitled, in addition to all other remedies that it may have, to an
injunction or other appropriate equitable relief to restrain any such breach
without showing or proving any actual damage to the Employer.
9.
Arbitration of
Disputes
. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive’s employment or the termination of that employment (including, without
limitation, any claims of unlawful employment discrimination whether based on
age or otherwise) shall, to the fullest extent permitted by law, be settled by
arbitration in any forum and form agreed upon by the parties or, in the absence
of such an agreement, under the auspices of the American Arbitration Association
(“AAA”) in Boston, Massachusetts in accordance with the Employment Dispute
Resolution Rules of the AAA, including, but not limited to, the rules and
procedures applicable to the selection of arbitrators. In the event
that any person or entity other than the Executive or the Employer may be a
party with regard to any such controversy or claim, such controversy or claim
shall be submitted to arbitration subject to such other person or entity’s
agreement. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. This Section 9
shall be specifically enforceable. Notwithstanding the foregoing, this Section 9
shall not preclude either party from pursuing a court action for the sole
purpose of obtaining a temporary restraining order or a preliminary injunction
in circumstances in which such relief is appropriate; provided that any other
relief shall be pursued through an arbitration proceeding pursuant to this
Section 9.
10.
Consent to
Jurisdiction
. To the extent that any court action is permitted
consistent with or to enforce Section 9 of this Agreement, the parties hereby
consent to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts. Accordingly, with respect to any such court action,
the Executive (a) submits to the personal jurisdiction of such courts; (b)
consents to service of process; and (c) waives any other requirement (whether
imposed by statute, rule of court, or otherwise) with respect to personal
jurisdiction or service of process.
11.
Integration
. This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements between the
parties with respect to any related subject matter;
provided
,
however,
that the
parties acknowledge and agree that:
(i)
the
terms of Section 2 of that certain Relationship Agreement by and between the
Executive and Employer (the “Relationship Agreement”) shall survive the
execution of this Agreement, and shall govern the terms of any and all
Inventions, Works and Work Product (as defined therein) conceived, made,
authored or developed by Executive during the term of his employment, both prior
to and following the execution of this Agreement;
provided
,
that
, in the event of
any inconsistency or conflict between the terms of the Relationship Agreement
and the terms of this Agreement, the terms of this Agreement shall take
precedence and govern with respect to the applicable subject matter;
and
(ii)
the terms
of each Option Agreement shall survive the execution of this Agreement and shall
remain in full force and effect in accordance with its terms.
12.
Assignment; Successors and
Assigns, etc
. Neither the Employer nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party; provided that
the Employer may assign its rights under this Agreement without the consent of
the Executive in the event that the Employer shall effect a reorganization,
consolidate with, or merge into, any other corporation, partnership,
organization or other entity, or transfer all or substantially all of its
properties or assets to any other corporation, partnership, organization or
other entity. This Agreement shall inure to the benefit of and be
binding upon the Employer and the Executive, their respective successors,
executors, administrators, heirs and permitted assigns.
13.
Enforceability
. If
any portion or provision of this Agreement (including, without limitation, any
portion or provision of any section of this Agreement) shall to any extent be
declared illegal or unenforceable by a court of competent jurisdiction, then the
remainder of this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
14.
Waiver
. No
waiver of any provision hereof shall be effective unless made in writing and
signed by the waiving party. The failure of any party to require the
performance of any term or obligation of this Agreement, or the waiver by any
party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.
15.
Notices
. Any
notices, requests, demands and other communications provided for by this
Agreement shall be sufficient if in writing and delivered in person or sent by a
nationally recognized overnight courier service or by registered or certified
mail, postage prepaid, return receipt requested, to the Executive at the last
address the Executive has filed in writing with the Employer or, in the case of
the Employer, at its main offices, attention of the Chief Executive Officer, and
shall be effective on the date of delivery in person or by courier or three (3)
days after the date mailed.
16.
Amendment
. This
Agreement may be amended or modified only by a written instrument signed by the
Executive and by a duly authorized representative of the Employer.
17.
Governing
Law
. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the law of the Commonwealth of
Massachusetts, without giving effect to the conflict of laws principles of such
Commonwealth. With respect to any disputes concerning federal law,
such disputes shall be determined in accordance with the law as it would be
interpreted and applied by the United States Court of Appeals for the First
Circuit.
18.
Counterparts
. This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be taken to be an original; but such counterparts
shall together constitute one and the same document.
IN
WITNESS WHEREOF, this Amended and Restated Agreement has been executed as a
sealed instrument by the Employer, by its duly authorized officer, and by the
Executive, as of the Effective Date.
TechTarget,
Inc.
By: /s/
Greg
Strakosch
Title: CEO
/s/ Don
Hawk
Executive
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made as of
January 17, 2008 (the “Effective Date”) and amends and restated that certain
Employment Agreement dated as of January 1, 2007 (the “Original Effective Date”)
by and between
TechTarget,
Inc
., a Delaware corporation with a principal place of
business at 117 Kendrick Street, Needham, MA 02494 (the “Employer”), and
Eric Sockol
(the
“Executive”). In consideration of the mutual covenants contained in
this Agreement, the Employer and the Executive agree as follows.
1.
Employment
. The
Employer agrees to employ the Executive and the Executive agrees to be employed
by the Employer upon the terms and subject to the conditions set forth in this
Agreement.
2.
Capacity
. The
Executive shall initially serve the Employer as Chief Financial Officer. The
Executive shall also serve the Employer in such other or additional offices as
the Executive may be requested to serve by the Chief Executive
Officer. In such capacity or capacities, the Executive shall perform
such services and duties in connection with the business, affairs and operations
of the Employer as may be assigned or delegated to the Executive from time to
time, consistent with the Executive’s education and experience, by or under the
authority of the Chief Executive Officer. The Executive shall report directly to
the Chief Executive Officer.
3.
Term
. Subject
to the provisions of Section 6, the term of employment pursuant to this
Agreement (the “Term”) shall be one (1) year from the Original Effective Date
and shall be renewed automatically for periods of one (1) year commencing at the
first anniversary of the Original Effective Date and on each subsequent
anniversary thereafter unless either the Executive or the Employer gives written
notice to the other not less than sixty (60) days prior to the date of any such
anniversary of such party’s election not to extend the Term. In the event that
the Employer elects to not extend this Agreement on such an anniversary date,
the Executive shall be entitled to the benefits described in Section 7(b)
below.
4.
Compensation and
Benefits
. The regular compensation and benefits payable to the
Executive under this Agreement shall be as follows:
(a)
Salary
. For
all services rendered by the Executive under this Agreement, the Employer shall
pay the Executive a salary (the “Salary”) at the annual rate of Two Hundred
Seventy Five Thousand Dollars ($275,000), subject to increase from time to time
in the discretion of the Board of Directors or the Compensation Committee of the
Board of Directors (the “Compensation Committee”). The Salary shall
be payable in periodic installments in accordance with the Employer’s usual
practice for its senior executives.
(b)
Bonus
. Beginning
with the fiscal year ending December 31, 2007, the Executive shall be entitled
to participate in an annual incentive program established by the Board of
Directors or the Compensation Committee for the executive management team with
such terms as may be established in the sole discretion of the Board of
Directors or Compensation Committee. For fiscal year 2007, the Executive’s
annual target bonus amount shall equal $75,000. For all subsequent years, the
amount of the Executive’s annual target bonus amount shall be established by the
Board of Directors or the Compensation Committee. The specific terms of the
bonus plan, including bonus targets, methods of payment and performance goals
will be documented by the Board of Directors or the Compensation
Committee.
(c)
Regular
Benefits
. The Executive shall also be entitled to participate
in any qualified retirement plans, deferred compensation plans, stock option and
incentive plans, stock purchase plans, medical insurance plans, life insurance
plans, disability income plans, retirement plans, vacation plans, expense
reimbursement plans and other benefit plans which the Employer may from time to
time have in effect for its senior executives. Such participation
shall be subject to the terms of the applicable plan documents, generally
applicable policies of the Employer, applicable law and the discretion of the
Board of Directors, the Compensation Committee or any administrative or other
committee provided for in, or contemplated by, any such plan. Nothing
contained in this Agreement shall be construed to create any obligation on the
part of the Employer to establish any such plan or to maintain the effectiveness
of any such plan which may be in effect from time to time.
(d)
Equity
Grants.
The Executive shall be provided equity awards as
determined by the Board of Directors or the Compensation Committee, with such
terms as may be established in the sole discretion of the Board of Directors or
Compensation Committee. In connection with any grants of stock
options, restricted stock units, or other equity instruments granted by the
Employer to the Executive, including all grants the dates of which precede the
Original Effective Date of this Agreement, the Employer and the Executive hereby
acknowledge and agree that in the event of a Change of Control ((1) with respect
to any stock grants or stock option grants, as defined in the Executive’s
Incentive Stock Option Grant Agreement under the Employer’s 1999 Stock Option
Plan (each an “Option Agreement”) and (2) with respect to any restricted stock
units, within the meaning of Section 409A of the Internal Revenue Code of 1986,
as amended ), all unvested shares shall thereupon become fully-vested and all
such stock options may thereafter be immediately exercised and such restricted
stock units shall be delivered in accordance with the Restricted Stock Unit
Agreement between the Executive and the Employer.
(e)
Reimbursement of Business
Expenses
. The Employer shall reimburse the Executive for all
reasonable expenses incurred by him in performing services during the Term, in
accordance with the Employer’s policies and procedures for its senior executive
officers, as in effect from time to time.
(f)
Taxation of Payments and
Benefits
. The Employer shall undertake to make deductions,
withholdings and tax reports with respect to payments and benefits under this
Agreement to the extent that it reasonably and in good faith believes that it is
required to make such deductions, withholdings and tax
reports. Payments under this Agreement shall be in amounts net of any
such deductions or withholdings. Nothing in this Agreement shall be
construed to require the Employer to make any payments to compensate the
Executive for any adverse tax effect associated with any payments or benefits or
for any deduction or withholding from any payment or benefit.
(g)
Exclusivity of Salary and
Benefits
. The Executive shall not be entitled to any payments
or benefits other than those provided under this Agreement. During
the Term, the Employer is obligated to document any changes in compensation
terms applicable to the Agreement.
5.
Extent of
Service
. During the Executive’s employment under this
Agreement, the Executive shall, devote the Executive’s best efforts and business
judgment, skill and knowledge to the advancement of the Employer’s interests and
to the discharge of the Executive’s duties and responsibilities under this
Agreement. Notwithstanding anything contained herein to the contrary,
this Agreement shall not be construed as preventing the Executive
from:
(a)
investing
the Executive’s assets in any company or other entity in a manner not prohibited
by Section 8(d) and in such form or manner as shall not require any material
activities on the Executive’s part in connection with the operations or affairs
of the companies or other entities in which such investments are
made;
(b)
serving
on the Board of another company;
provided
, that, such
service does not impair or compromise the Executive’s ability to fulfill the
Executive’s duties and responsibilities under this Agreement; or
(c)
engaging
in religious, charitable or other community or non-profit activities that do not
impair the Executive’s ability to fulfill the Executive’s duties and
responsibilities under this Agreement.
6.
Termination
. Notwithstanding
the provisions of Section 3, the Executive’s employment under this Agreement
shall terminate under the following circumstances set forth in this Section
6.
(a)
Termination by the Employer
for Cause
. The Executive’s employment under this Agreement may
be terminated for Cause (as defined below) on the part of the Employer effective
upon a vote of the Board of Directors, prior to which the Employer shall have
given the Executive ten (10) days prior written notice and the opportunity to be
heard on such matter at a meeting of the Board. Only the following
shall constitute “Cause” for such termination:
(i)
any act,
whether or not involving the Employer or any affiliate of the Employer, of fraud
or gross misconduct;
(ii)
the
commission by the Executive of (A) a felony or (B) any misdemeanor involving
moral turpitude, deceit, dishonesty or fraud; or
(iii)
gross
negligence or willful misconduct of the Executive with respect to the Employer
or any affiliate of the Employer.
(b)
Termination by the Employer
Without Cause
. Subject to the payment of Termination Benefits
pursuant to Section 7(b), the Executive’s employment under this Agreement may be
terminated by the Employer without Cause upon no less than sixty (60) days prior
written notice to the Executive.
(c)
Termination by the Executive
for Good Reason
. Subject to the payment of Termination
Benefits pursuant to Section 7(b), the Executive’s employment under this
Agreement may be terminated by the Executive for Good Reason by written notice
to the Board of Directors at least sixty (60) days prior to such
termination. Only the following shall constitute “Good Reason” for
such termination:
(i)
a
material reduction of the Executive’s annual base salary and/or annual target
bonus other than a such reduction that is similar to a reduction made to such
salary and/or target bonus of all other senior executives of the
Employer;
(ii)
a change
in the Executive’s responsibilities and/or duties which constitutes a demotion
or is inconsistent with the terms of Section 2 hereof;
(iii)
a failure
of the Company to pay any amounts due hereunder;
(iv)
the
failure of any successor in interest to the business of the Employer to assume
the Employer’s obligations under this Agreement; or
(v)
the
relocation of the offices at which the Executive is principally employed to a
location more than 50 miles from such offices, which relocation is not approved
by the Executive; or
(vi)
a change
in the Chief Executive Officer of the Company.
(d)
Death
. The
Executive’s employment with the Employer shall terminate upon his
death.
(e)
Disability
. If
the Executive shall be disabled so as to be unable to perform the essential
functions of the Executive’s then-existing position or positions under this
Agreement, with or without reasonable accommodation, the Chief Executive Officer
may remove the Executive from any responsibilities and/or reassign the Executive
to another position with the Employer for the remainder of the Term or during
the period of such disability. Notwithstanding any such removal or
reassignment, the Executive shall continue to receive the Executive’s full
Salary (less any disability pay or sick pay benefits to which the Executive may
be entitled under the Employer’s policies) and benefits under Section 4 of this
Agreement (except to the extent that the Executive may be ineligible for one or
more such benefits under applicable plan terms) for a period of time equal to
the period set forth in Section 7(b)(i) below. If any question shall
arise as to whether during any period the Executive is disabled so as to be
unable to perform the essential functions of the Executive’s then existing
position or positions with or without reasonable accommodation, the Executive
may, and at the request of the Employer shall, submit to the Employer a
certification in reasonable detail by a physician selected by the Employer (to
whom the Executive or the Executive’s guardian has no reasonable objection) as
to whether the Executive is so disabled or how long such disability is expected
to continue, and such certification shall for the purposes of this Agreement be
conclusive of the issue. The Executive shall cooperate with any
reasonable request of the physician in connection with such
certification. If such question shall arise and the Executive shall
fail to submit such certification, the Employer’s determination of such issue
shall be binding on the Executive. Nothing in this Section 6(e) shall
be construed to waive the Executive’s rights, if any, under existing law
including, without limitation, the Family and Medical Leave Act of 1993, 29
U.S.C. §2601
et seq
.
and the Americans with Disabilities Act, 42 U.S.C. §12101
et seq.
(f)
Termination by the Executive
without Good Reason.
The Executive may terminate this Agreement at any
time on no less than sixty (60) days prior written notice. If the Executive
terminates this Agreement without Good Reason, the Executive is not entitled to
any additional compensation or benefits other than his Accrued Benefit (as
defined in Section 7(a) below).
7.
Compensation Upon
Termination
.
(a)
Termination
Generally
. If the Executive’s employment with the Employer is
terminated for any reason during the Term, the Employer shall pay or provide to
the Executive (or to his authorized representative or estate) any earned but
unpaid base salary, incentive compensation earned but not yet paid, unpaid
expense reimbursements, accrued but unused vacation and any vested benefits the
Executive may have under any employee benefit plan of the Employer (the “Accrued
Benefit”).
(b)
Termination by the Employer
Without Cause or upon Executive Disability or Death, or by the Executive for
Good Reason
. In the event of termination of the Executive’s
employment with the Employer pursuant to Section 6(b), (c), (d) or (e) above, or
the failure of the Company to extend this Agreement following the expiration of
the then-current Term, the Employer shall provide to the Executive the following
termination benefits (“Termination Benefits”):
(i)
payments
that provide for the continuation of the Executive’s Salary at the rate then in
effect pursuant to Section 4(a) for a period of 9 months;
(ii)
continuation
of group health plan benefits to the extent authorized by and consistent with 29
U.S.C. § 1161 et seq. (commonly known as “COBRA”), payment of premiums of which
shall continue to be made by the Employer at the active employee’s
rate for the period set forth in clause 7(b)(i) above;
(iii)
payments
(pro rated over the period described in Section 7(b)(i) above) equal in the
aggregate to the greater of (x) fifty percent (50%) of the targeted bonus amount
that was established by the Board of Directors or Compensation Committee for the
Executive for the then-current fiscal year (the “Target Bonus Amount”) or (y)
the product of (I) the Target Bonus Amount multiplied by (II) a fraction, the
numerator for which equals the number of months in the then-current fiscal year
that have elapsed, and the denominator of which equals 12; and
(iv)
for each
year that the Executive has been employed by the Employer in any capacity, an
additional ten percent (10%) of (x) all then unvested options to purchase shares
of the Employer’s stock that have been granted to the Executive shall become
immediately, and without further action, exercisable by the Executive and (y)
all then unvested restricted stock units that have been granted to the Executive
shall become immediately, and without further action, vested and shall be
delivered to the Executive in accordance with the Restricted Stock Unit
Agreement(s) by and between the Company and the Executive.
(c)
Termination by the Employer
with Cause or the Executive without Good Reason
. If the
Executive’s employment is terminated by the Employer with Cause under Section
6(a) or by the Executive without Good Reason under Section 6(f), the Employer
shall have no further obligation to the Executive other than payment of his
Accrued Benefit.
(d)
Certain Tax
Matters
.
(i)
The
Company and the Executive agree to cooperate and negotiate with each other in
good faith to minimize the impact of Sections 280G and 4999 of the Code on the
Company and the Executive, respectively.
(ii)
Distributions
. The
following rules shall apply with respect to distribution of the payments and
benefits, if any, to be provided to Executive under Section 7
(1) It
is intended that each installment of the payments and benefits provided under
Section 7 shall be treated as a separate “payment” for purposes of Section 409A
of the U.S. Internal Revenue Code of 1986, as amended, and the guidance issued
thereunder (“Section 409A”). Neither Employer nor Executive shall
have the right to accelerate or defer the delivery of any such payments or
benefits except to the extent specifically permitted or required by Section
409A;
(2) If,
as of the date of the Executive’s “separation from service” (as defined below)
from Employer, Executive is not a “specified employee” (within the meaning of
Section 409A), then each installment of the payments and benefits shall be made
on the dates and terms set forth in Section 7; and
(3) If,
as of the date of the Executive’s “separation from service” from Employer,
Executive is a “specified employee” (within the meaning of Section 409A),
then:
(A) Each
installment of the payments and benefits due under Section 7 that, in accordance
with the dates and terms set forth herein, will in all circumstances, regardless
of when the separation from service occurs, be paid within the Short-Term
Deferral Period (as hereinafter defined) shall be treated as a short-term
deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the
maximum extent permissible under Section 409A. For purposes of this
Agreement, the “Short-Term Deferral Period” means the period ending on the later
of the 15
th
day of
the third month following the end of Executive’s tax year in which the
separation from service occurs and the 15
th
day of
the third month following the end of Employer’s tax year in which the separation
from service occurs; and
(B) Each
installment of the payments and benefits due under Section 7 that is not paid
within the Short-Term Deferral Period and that would, absent this subsection, be
paid within the six-month period following the “separation from service” of
Executive from Employer shall not be paid until the date that is six months and
one day after such separation from service (or, if earlier, the Executive’s
death), with any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that
is six months and one day following Executive’s separation from service and any
subsequent installments, if any, being paid in accordance with the dates and
terms set forth herein;
provided
,
however
, that the
preceding provisions of this sentence shall not apply to any installment of
payments and benefits if and to the maximum extent that that such installment is
deemed to be paid under a separation pay plan that does not provide for a
deferral of compensation by reason of the application of Treasury
Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an
involuntary separation from service). Any installments that qualify
for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii)
must be paid no later than the last day of Executive’s second taxable year
following the taxable year of yours in which the separation from service
occurs.
(4) For
purposes of this Agreement, the determination of whether and when a separation
from service has occurred shall be made in accordance with this subparagraph and
in a manner consistent with Treasury Regulation Section
1.409A-1(h). Solely for purposes of this Section 7, “Employer” shall
include all persons with whom the Employer would be considered a single employer
under Sections 414(b) and 414(c) of the Internal Revenue Code of 1986, as
amended.
8.
Confidential Information,
Noncompetition and Cooperation
.
(a)
Confidential
Information
. As used in this Agreement, “Confidential
Information” means information belonging to the Employer which is of value to
the Employer in the course of conducting its business and the disclosure of
which could result in a competitive or other disadvantage to the
Employer. Confidential Information includes, without limitation,
financial information, reports, and forecasts; inventions, improvements and
other intellectual property; trade secrets; know-how; designs, processes or
formulae; software; market or sales information or plans; customer lists; and
business plans, prospects and opportunities (such as possible acquisitions or
dispositions of businesses or facilities) which have been discussed or
considered by the management of the Employer. Confidential
Information includes information developed by the Executive in the course of the
Executive’s employment by the Employer, as well as other information to which
the Executive may have access in connection with the Executive’s
employment. Confidential Information also includes the confidential
information of others with which the Employer has a business
relationship. Notwithstanding the foregoing, Confidential Information
does not include information in the public domain, unless due to breach of the
Executive’s duties under Section 8(b).
(b)
Confidentiality
. The
Executive understands and agrees that the Executive’s employment creates a
relationship of confidence and trust between the Executive and the Employer with
respect to all Confidential Information. At all times, both during
the Executive’s employment with the Employer and after its termination, the
Executive will keep in confidence and trust all such Confidential Information,
and will not use or disclose any such Confidential Information without the
written consent of the Employer, except as may be necessary in the ordinary
course of performing the Executive’s duties to the Employer.
(c)
Documents, Records,
etc
. All documents, records, data, apparatus, equipment and
other physical property, whether or not pertaining to Confidential Information,
which are furnished to the Executive by the Employer or are produced by the
Executive in connection with the Executive’s employment will be and remain the
sole property of the Employer. The Executive will return to the
Employer all such materials and property as and when requested by the
Employer. In any event, the Executive will return all such materials
and property immediately upon termination of the Executive’s employment for any
reason. The Executive will not retain with the Executive any such
material or property or any copies thereof after such termination.
(d)
Noncompetition and
Nonsolicitation
. During the Term and for a period of 9 months
thereafter, the Executive (i) will not, directly or indirectly, whether as
owner, partner, shareholder, consultant, agent, employee, co-venturer or
otherwise, engage, participate, assist or invest in any Competing Business (as
hereinafter defined); (ii) will refrain from directly or indirectly employing,
attempting to employ, recruiting or otherwise soliciting, inducing or
influencing any person to leave employment with the Employer (other than
terminations of employment of subordinate employees undertaken in the course of
the Executive’s employment with the Employer); and (iii) will refrain from
soliciting or encouraging any customer or supplier to terminate or otherwise
modify adversely its business relationship with the Employer. The
Executive understands that the restrictions set forth in this Section 8(d) are
intended to protect the Employer’s interest in its Confidential Information and
established employee, customer and supplier relationships and goodwill, and
agrees that such restrictions are reasonable and appropriate for this
purpose. For purposes of this Agreement, the term “Competing
Business” shall mean any of the following: a media company that publishes
technology-related content or operates technology-related events and, in any
case, derives its revenue from selling products and services similar to products
and services offered by the Employer to customers and prospects similar to
Employer’s own customers and prospects. The Executive acknowledges that the
following specific companies are considered competitors of Employer; CNET, IDG,
Accela Communications, CMP, Ziff Davis, PennWell, JupiterMedia, 101
Communications, Penton Media, IT Toolbox, CRMGuru, NewsFactor, Sys-Con, Fawcete,
Digital Consulting, Byte & Switch, Haymarket Media/West Coast Publishing,
SANS Institute, Computer Security Institute, Reed Expo and MIS Training
Institute. The Executive further acknowledges that the specific
companies mentioned as competitors create only a limited list of potential
competitors and that other companies or entities maybe deemed to be competitors
based on the nature of their products and services and how they compete in the
marketplace against Employer’s customers and prospects. At the Executive’s
request, Employer will update the listing of specific companies mentioned
above. Notwithstanding the foregoing, the Executive may own up to one
percent (1%) of the outstanding stock of a publicly held corporation which
constitutes or is affiliated with a Competing Business.
(e)
Third-Party Agreements and
Rights
. The Executive hereby confirms that the Executive is
not bound by the terms of any agreement with any previous employer or other
party which restricts in any way the Executive’s use or disclosure of
information or the Executive’s engagement in any business. The
Executive represents to the Employer that the Executive’s execution of this
Agreement, the Executive’s employment with the Employer and the performance of
the Executive’s proposed duties for the Employer will not violate any
obligations the Executive may have to any such previous employer or other
party. In the Executive’s work for the Employer, the Executive will
not disclose or make use of any information in violation of any agreements with
or rights of any such previous employer or other party, and the Executive will
not bring to the premises of the Employer any copies or other tangible
embodiments of non-public information belonging to or obtained from any such
previous employment or other party.
(f)
Litigation and Regulatory
Cooperation
. During and after the Executive’s employment, the
Executive shall cooperate fully with the Employer in the defense or prosecution
of any claims or actions now in existence or which may be brought in the future
against or on behalf of the Employer which relate to events or occurrences that
transpired while the Executive was employed by the Employer. The
Executive’s full cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to prepare
for discovery or trial and to act as a witness on behalf of the Employer at
mutually convenient times. During and after the Executive’s
employment, the Executive also shall cooperate fully with the Employer in
connection with any investigation or review of any federal, state or local
regulatory authority as any such investigation or review relates to events or
occurrences that transpired while the Executive was employed by the
Employer. The Employer shall reimburse the Executive for any
reasonable out-of-pocket expenses incurred in connection with the Executive’s
performance of obligations pursuant to this Section 8(f).
(g)
Injunction
. The
Executive agrees that it would be difficult to measure any damages caused to the
Employer which might result from any breach by the Executive of the promises set
forth in this Section 8, and that in any event money damages would be an
inadequate remedy for any such breach. Accordingly, subject to
Section 9 of this Agreement, the Executive agrees that if the Executive
breaches, or proposes to breach, any portion of this Agreement, the Employer
shall be entitled, in addition to all other remedies that it may have, to an
injunction or other appropriate equitable relief to restrain any such breach
without showing or proving any actual damage to the Employer.
9.
Arbitration of
Disputes
. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive’s employment or the termination of that employment (including, without
limitation, any claims of unlawful employment discrimination whether based on
age or otherwise) shall, to the fullest extent permitted by law, be settled by
arbitration in any forum and form agreed upon by the parties or, in the absence
of such an agreement, under the auspices of the American Arbitration Association
(“AAA”) in Boston, Massachusetts in accordance with the Employment Dispute
Resolution Rules of the AAA, including, but not limited to, the rules and
procedures applicable to the selection of arbitrators. In the event
that any person or entity other than the Executive or the Employer may be a
party with regard to any such controversy or claim, such controversy or claim
shall be submitted to arbitration subject to such other person or entity’s
agreement. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. This Section 9
shall be specifically enforceable. Notwithstanding the foregoing, this Section 9
shall not preclude either party from pursuing a court action for the sole
purpose of obtaining a temporary restraining order or a preliminary injunction
in circumstances in which such relief is appropriate; provided that any other
relief shall be pursued through an arbitration proceeding pursuant to this
Section 9.
10.
Consent to
Jurisdiction
. To the extent that any court action is permitted
consistent with or to enforce Section 9 of this Agreement, the parties hereby
consent to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts. Accordingly, with respect to any such court action,
the Executive (a) submits to the personal jurisdiction of such courts; (b)
consents to service of process; and (c) waives any other requirement (whether
imposed by statute, rule of court, or otherwise) with respect to personal
jurisdiction or service of process.
11.
Integration
. This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements between the
parties with respect to any related subject matter;
provided
,
however,
that the
parties acknowledge and agree that:
(i)
the
terms of Section 2 of that certain Relationship Agreement by and between the
Executive and Employer (the “Relationship Agreement”) shall survive the
execution of this Agreement, and shall govern the terms of any and all
Inventions, Works and Work Product (as defined therein) conceived, made,
authored or developed by Executive during the term of his employment, both prior
to and following the execution of this Agreement;
provided
,
that
, in the event of
any inconsistency or conflict between the terms of the Relationship Agreement
and the terms of this Agreement, the terms of this Agreement shall take
precedence and govern with respect to the applicable subject matter;
and
(ii)
the terms
of each Option Agreement shall survive the execution of this Agreement and shall
remain in full force and effect in accordance with its terms.
12.
Assignment; Successors and
Assigns, etc
. Neither the Employer nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party; provided that
the Employer may assign its rights under this Agreement without the consent of
the Executive in the event that the Employer shall effect a reorganization,
consolidate with, or merge into, any other corporation, partnership,
organization or other entity, or transfer all or substantially all of its
properties or assets to any other corporation, partnership, organization or
other entity. This Agreement shall inure to the benefit of and be
binding upon the Employer and the Executive, their respective successors,
executors, administrators, heirs and permitted assigns.
13.
Enforceability
. If
any portion or provision of this Agreement (including, without limitation, any
portion or provision of any section of this Agreement) shall to any extent be
declared illegal or unenforceable by a court of competent jurisdiction, then the
remainder of this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
14.
Waiver
. No
waiver of any provision hereof shall be effective unless made in writing and
signed by the waiving party. The failure of any party to require the
performance of any term or obligation of this Agreement, or the waiver by any
party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.
15.
Notices
. Any
notices, requests, demands and other communications provided for by this
Agreement shall be sufficient if in writing and delivered in person or sent by a
nationally recognized overnight courier service or by registered or certified
mail, postage prepaid, return receipt requested, to the Executive at the last
address the Executive has filed in writing with the Employer or, in the case of
the Employer, at its main offices, attention of the Chief Executive Officer, and
shall be effective on the date of delivery in person or by courier or three (3)
days after the date mailed.
16.
Amendment
. This
Agreement may be amended or modified only by a written instrument signed by the
Executive and by a duly authorized representative of the Employer.
17.
Governing
Law
. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the law of the Commonwealth of
Massachusetts, without giving effect to the conflict of laws principles of such
Commonwealth. With respect to any disputes concerning federal law,
such disputes shall be determined in accordance with the law as it would be
interpreted and applied by the United States Court of Appeals for the First
Circuit.
18.
Counterparts
. This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be taken to be an original; but such counterparts
shall together constitute one and the same document.
IN
WITNESS WHEREOF, this Amended and Restated Agreement has been executed as a
sealed instrument by the Employer, by its duly authorized officer, and by the
Executive, as of the Effective Date.
TechTarget,
Inc.
By: /s/
Greg
Strakosch
Title: CEO
/s/ Eric
Sockol
Executive: Eric Sockol
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made as of
January 17, 2008 (the “Effective Date”) and amends and restates that certain
Employment Agreement dated as of January 1, 2007 (the “Original Effective Date”)
by and between
TechTarget,
Inc
., a Delaware corporation with a principal place of
business at 117 Kendrick Street, Needham, MA 02494 (the “Employer”), and
Kevin Beam
(the
“Executive”). In consideration of the mutual covenants contained in
this Agreement, the Employer and the Executive agree as follows.
1.
Employment
. The
Employer agrees to employ the Executive and the Executive agrees to be employed
by the Employer upon the terms and subject to the conditions set forth in this
Agreement.
2.
Capacity
. The
Executive shall initially serve the Employer as Executive Vice President. The
Executive shall also serve the Employer in such other or additional offices as
the Executive may be requested to serve by the Chief Executive
Officer. In such capacity or capacities, the Executive shall perform
such services and duties in connection with the business, affairs and operations
of the Employer as may be assigned or delegated to the Executive from time to
time, consistent with the Executive’s education and experience, by or under the
authority of the Chief Executive Officer. The Executive shall report directly to
the Chief Executive Officer.
3.
Term
. Subject
to the provisions of Section 6, the term of employment pursuant to this
Agreement (the “Term”) shall be one (1) year from the Original Effective Date
and shall be renewed automatically for periods of one (1) year commencing at the
first anniversary of the Original Effective Date and on each subsequent
anniversary thereafter unless either the Executive or the Employer gives written
notice to the other not less than sixty (60) days prior to the date of any such
anniversary of such party’s election not to extend the Term. In the event that
the Employer elects to not extend this Agreement on such an anniversary date,
the Executive shall be entitled to the benefits described in Section 7(b)
below.
4.
Compensation and
Benefits
. The regular compensation and benefits payable to the
Executive under this Agreement shall be as follows:
(a)
Salary
. For
all services rendered by the Executive under this Agreement, the Employer shall
pay the Executive a salary (the “Salary”) at the annual rate of Three Hundred
Fifty Thousand Dollars ($350,000), subject to increase from time to time in the
discretion of the Board of Directors or the Compensation Committee of the Board
of Directors (the “Compensation Committee”). The Salary shall be
payable in periodic installments in accordance with the Employer’s usual
practice for its senior executives.
(b)
Bonus
. Beginning
with the fiscal year ending December 31, 2007, the Executive shall be entitled
to participate in an annual incentive program established by the Board of
Directors or the Compensation Committee for the executive management team with
such terms as may be established in the sole discretion of the Board of
Directors or Compensation Committee. For fiscal year 2007, the Executive’s
annual target bonus amount shall equal $175,000. For all subsequent years, the
amount of the Executive’s annual target bonus amount shall be established by the
Board of Directors or the Compensation Committee. The specific terms of the
bonus plan, including bonus targets, methods of payment and performance goals
will be documented by the Board of Directors or the Compensation
Committee.
(c)
Regular
Benefits
. The Executive shall also be entitled to participate
in any qualified retirement plans, deferred compensation plans, stock option and
incentive plans, stock purchase plans, medical insurance plans, life insurance
plans, disability income plans, retirement plans, vacation plans, expense
reimbursement plans and other benefit plans which the Employer may from time to
time have in effect for its senior executives. Such participation
shall be subject to the terms of the applicable plan documents, generally
applicable policies of the Employer, applicable law and the discretion of the
Board of Directors, the Compensation Committee or any administrative or other
committee provided for in, or contemplated by, any such plan. Nothing
contained in this Agreement shall be construed to create any obligation on the
part of the Employer to establish any such plan or to maintain the effectiveness
of any such plan which may be in effect from time to time.
(d)
Equity
Grants.
The Executive shall be provided equity awards as
determined by the Board of Directors or the Compensation Committee, with such
terms as may be established in the sole discretion of the Board of Directors or
Compensation Committee. In connection with any grants of stock
options, restricted stock units, or other equity instruments granted by the
Employer to the Executive, including all grants the dates of which precede the
Original Effective Date of this Agreement, the Employer and the Executive hereby
acknowledge and agree that in the event of a Change of Control ((1) with respect
to any stock grants or stock option grants, as defined in the Executive’s
Incentive Stock Option Grant Agreement under the Employer’s 1999 Stock Option
Plan (each an “Option Agreement”) and (2) with respect to any restricted stock
units, with the meaning of Section 409A of the Internal Revenue Code of 1986, as
amended), all unvested shares shall thereupon become fully-vested and all such
stock options may thereafter be immediately exercised and such restricted stock
units shall be delivered in accordance with the Restricted Stock Unit Agreement
between the Executive and the Employer.
(e)
Reimbursement of Business
Expenses
. The Employer shall reimburse the Executive for all
reasonable expenses incurred by him in performing services during the Term, in
accordance with the Employer’s policies and procedures for its senior executive
officers, as in effect from time to time.
(f)
Taxation of Payments and
Benefits
. The Employer shall undertake to make deductions,
withholdings and tax reports with respect to payments and benefits under this
Agreement to the extent that it reasonably and in good faith believes that it is
required to make such deductions, withholdings and tax
reports. Payments under this Agreement shall be in amounts net of any
such deductions or withholdings. Nothing in this Agreement shall be
construed to require the Employer to make any payments to compensate the
Executive for any adverse tax effect associated with any payments or benefits or
for any deduction or withholding from any payment or benefit.
(g)
Exclusivity of Salary and
Benefits
. The Executive shall not be entitled to any payments
or benefits other than those provided under this Agreement. During
the Term, the Employer is obligated to document any changes in compensation
terms applicable to the Agreement.
5.
Extent of
Service
. During the Executive’s employment under this
Agreement, the Executive shall, devote the Executive’s best efforts and business
judgment, skill and knowledge to the advancement of the Employer’s interests and
to the discharge of the Executive’s duties and responsibilities under this
Agreement. Notwithstanding anything contained herein to the contrary,
this Agreement shall not be construed as preventing the Executive
from:
(a)
investing
the Executive’s assets in any company or other entity in a manner not prohibited
by Section 8(d) and in such form or manner as shall not require any material
activities on the Executive’s part in connection with the operations or affairs
of the companies or other entities in which such investments are
made;
(b)
serving
on the Board of another company;
provided
, that, such
service does not impair or compromise the Executive’s ability to fulfill the
Executive’s duties and responsibilities under this Agreement; or
(c)
engaging
in religious, charitable or other community or non-profit activities that do not
impair the Executive’s ability to fulfill the Executive’s duties and
responsibilities under this Agreement.
6.
Termination
. Notwithstanding
the provisions of Section 3, the Executive’s employment under this Agreement
shall terminate under the following circumstances set forth in this Section
6.
(a)
Termination by the Employer
for Cause
. The Executive’s employment under this Agreement may
be terminated for Cause (as defined below) on the part of the Employer effective
upon a vote of the Board of Directors, prior to which the Employer shall have
given the Executive ten (10) days prior written notice and the opportunity to be
heard on such matter at a meeting of the Board. Only the following
shall constitute “Cause” for such termination:
(i)
any act,
whether or not involving the Employer or any affiliate of the Employer, of fraud
or gross misconduct;
(ii)
the
commission by the Executive of (A) a felony or (B) any misdemeanor involving
moral turpitude, deceit, dishonesty or fraud; or
(iii)
gross
negligence or willful misconduct of the Executive with respect to the Employer
or any affiliate of the Employer.
(b)
Termination by the Employer
Without Cause
. Subject to the payment of Termination Benefits
pursuant to Section 7(b), the Executive’s employment under this Agreement may be
terminated by the Employer without Cause upon no less than sixty (60) days prior
written notice to the Executive.
(c)
Termination by the Executive
for Good Reason
. Subject to the payment of Termination
Benefits pursuant to Section 7(b), the Executive’s employment under this
Agreement may be terminated by the Executive for Good Reason by written notice
to the Board of Directors at least sixty (60) days prior to such
termination. Only the following shall constitute “Good Reason” for
such termination:
(i)
a
material reduction of the Executive’s annual base salary and/or annual target
bonus other than a such reduction that is similar to a reduction made to such
salary and/or target bonus of all other senior executives of the
Employer;
(ii)
a change
in the Executive’s responsibilities and/or duties which constitutes a demotion
or is inconsistent with the terms of Section 2 hereof;
(iii)
a failure
of the Company to pay any amounts due hereunder;
(iv)
the
failure of any successor in interest to the business of the Employer to assume
the Employer’s obligations under this Agreement; or
(v)
the
relocation of the offices at which the Executive is principally employed to a
location more than 50 miles from such offices, which relocation is not approved
by the Executive.
(d)
Death
. The
Executive’s employment with the Employer shall terminate upon his
death.
(e)
Disability
. If
the Executive shall be disabled so as to be unable to perform the essential
functions of the Executive’s then-existing position or positions under this
Agreement, with or without reasonable accommodation, the Chief Executive Officer
may remove the Executive from any responsibilities and/or reassign the Executive
to another position with the Employer for the remainder of the Term or during
the period of such disability. Notwithstanding any such removal or
reassignment, the Executive shall continue to receive the Executive’s full
Salary (less any disability pay or sick pay benefits to which the Executive may
be entitled under the Employer’s policies) and benefits under Section 4 of this
Agreement (except to the extent that the Executive may be ineligible for one or
more such benefits under applicable plan terms) for a period of time equal to
the period set forth in Section 7(b)(i) below. If any question shall
arise as to whether during any period the Executive is disabled so as to be
unable to perform the essential functions of the Executive’s then existing
position or positions with or without reasonable accommodation, the Executive
may, and at the request of the Employer shall, submit to the Employer a
certification in reasonable detail by a physician selected by the Employer (to
whom the Executive or the Executive’s guardian has no reasonable objection) as
to whether the Executive is so disabled or how long such disability is expected
to continue, and such certification shall for the purposes of this Agreement be
conclusive of the issue. The Executive shall cooperate with any
reasonable request of the physician in connection with such
certification. If such question shall arise and the Executive shall
fail to submit such certification, the Employer’s determination of such issue
shall be binding on the Executive. Nothing in this Section 6(e) shall
be construed to waive the Executive’s rights, if any, under existing law
including, without limitation, the Family and Medical Leave Act of 1993, 29
U.S.C. §2601
et seq
.
and the Americans with Disabilities Act, 42 U.S.C. §12101
et seq.
(f)
Termination by the Executive
without Good Reason.
The Executive may terminate this Agreement at any
time on no less than sixty (60) days prior written notice. If the Executive
terminates this Agreement without Good Reason, the Executive is not entitled to
any additional compensation or benefits other than his Accrued Benefit (as
defined in Section 7(a) below).
7.
Compensation Upon
Termination
.
(a)
Termination
Generally
. If the Executive’s employment with the Employer is
terminated for any reason during the Term, the Employer shall pay or provide to
the Executive (or to his authorized representative or estate) any earned but
unpaid base salary, incentive compensation earned but not yet paid, unpaid
expense reimbursements, accrued but unused vacation and any vested benefits the
Executive may have under any employee benefit plan of the Employer (the “Accrued
Benefit”).
(b)
Termination by the Employer
Without Cause or upon Executive Disability or Death, or by the Executive for
Good Reason
. In the event of termination of the Executive’s
employment with the Employer pursuant to Section 6(b), (c), (d) or (e) above, or
the failure of the Company to extend this Agreement following the expiration of
the then-current Term, the Employer shall provide to the Executive the following
termination benefits (“Termination Benefits”):
(i)
payments
that provide for the continuation of the Executive’s Salary at the rate then in
effect pursuant to Section 4(a) for a period of 9 months;
(ii)
continuation
of group health plan benefits to the extent authorized by and consistent with 29
U.S.C. § 1161 et seq. (commonly known as “COBRA”), payment of premiums of which
shall continue to be made by the Employer at the active employee’s
rate for the period set forth in clause 7(b)(i) above;
(iii)
payments
(pro rated over the period described in Section 7(b)(i) above) equal in the
aggregate to the greater of (x) fifty percent (50%) of the targeted bonus amount
that was established by the Board of Directors or Compensation Committee for the
Executive for the then-current fiscal year (the “Target Bonus Amount”) or (y)
the product of (I) the Target Bonus Amount multiplied by (II) a fraction, the
numerator for which equals the number of months in the then-current fiscal year
that have elapsed, and the denominator of which equals 12; and
(iv)
for each
year that the Executive has been employed by the Employer in any capacity, an
additional ten percent (10%) of (x) all then unvested options to purchase shares
of the Employer’s stock that have been granted to the Executive shall become
immediately, and without further action, exercisable by the Executive and (y)
all then unvested restricted stock units that have been granted to the Executive
shall become immediately, and without further action, vested and shall be
delivered to the Executive in accordance with the Restricted Stock Unit
Agreements(s) by and between the Company and the Executive.
(c)
Termination by the Employer
with Cause or the Executive without Good Reason
. If the
Executive’s employment is terminated by the Employer with Cause under Section
6(a) or by the Executive without Good Reason under Section 6(f), the Employer
shall have no further obligation to the Executive other than payment of his
Accrued Benefit.
(d)
Certain Tax
Matters
.
(i)
The
Company and the Executive agree to cooperate and negotiate with each other in
good faith to minimize the impact of Sections 280G and 4999 of the Code on the
Company and the Executive, respectively.
(ii)
Distributions
. The
following rules shall apply with respect to distribution of the payments and
benefits, if any, to be provided to Executive under Section 7
(1) It
is intended that each installment of the payments and benefits provided under
Section 7 shall be treated as a separate “payment” for purposes of Section 409A
of the U.S. Internal Revenue Code of 1986, as amended, and the guidance issued
thereunder (“Section 409A”). Neither Employer nor Executive shall
have the right to accelerate or defer the delivery of any such payments or
benefits except to the extent specifically permitted or required by Section
409A;
(2) If,
as of the date of the Executive’s “separation from service” (as defined below)
from Employer, Executive is not a “specified employee” (within the meaning of
Section 409A), then each installment of the payments and benefits shall be made
on the dates and terms set forth in Section 7; and
(3) If,
as of the date of the Executive’s “separation from service” from Employer,
Executive is a “specified employee” (within the meaning of Section 409A),
then:
(A) Each
installment of the payments and benefits due under Section 7 that, in accordance
with the dates and terms set forth herein, will in all circumstances, regardless
of when the separation from service occurs, be paid within the Short-Term
Deferral Period (as hereinafter defined) shall be treated as a short-term
deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the
maximum extent permissible under Section 409A. For purposes of this
Agreement, the “Short-Term Deferral Period” means the period ending on the later
of the 15
th
day of
the third month following the end of Executive’s tax year in which the
separation from service occurs and the 15
th
day of
the third month following the end of Employer’s tax year in which the separation
from service occurs; and
(B) Each
installment of the payments and benefits due under Section 7 that is not paid
within the Short-Term Deferral Period and that would, absent this subsection, be
paid within the six-month period following the “separation from service” of
Executive from Employer shall not be paid until the date that is six months and
one day after such separation from service (or, if earlier, the Executive’s
death), with any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that
is six months and one day following Executive’s separation from service and any
subsequent installments, if any, being paid in accordance with the dates and
terms set forth herein;
provided
,
however
, that the
preceding provisions of this sentence shall not apply to any installment of
payments and benefits if and to the maximum extent that that such installment is
deemed to be paid under a separation pay plan that does not provide for a
deferral of compensation by reason of the application of Treasury
Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an
involuntary separation from service). Any installments that qualify
for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii)
must be paid no later than the last day of Executive’s second taxable year
following the taxable year of yours in which the separation from service
occurs.
(4) For
purposes of this Agreement, the determination of whether and when a separation
from service has occurred shall be made in accordance with this subparagraph and
in a manner consistent with Treasury Regulation Section
1.409A-1(h). Solely for purposes of this Section 7, “Employer” shall
include all persons with whom the Employer would be considered a single employer
under Sections 414(b) and 414(c) of the Internal Revenue Code of 1986, as
amended.
8.
Confidential Information,
Noncompetition and Cooperation
.
(a)
Confidential
Information
. As used in this Agreement, “Confidential
Information” means information belonging to the Employer which is of value to
the Employer in the course of conducting its business and the disclosure of
which could result in a competitive or other disadvantage to the
Employer. Confidential Information includes, without limitation,
financial information, reports, and forecasts; inventions, improvements and
other intellectual property; trade secrets; know-how; designs, processes or
formulae; software; market or sales information or plans; customer lists; and
business plans, prospects and opportunities (such as possible acquisitions or
dispositions of businesses or facilities) which have been discussed or
considered by the management of the Employer. Confidential
Information includes information developed by the Executive in the course of the
Executive’s employment by the Employer, as well as other information to which
the Executive may have access in connection with the Executive’s
employment. Confidential Information also includes the confidential
information of others with which the Employer has a business
relationship. Notwithstanding the foregoing, Confidential Information
does not include information in the public domain, unless due to breach of the
Executive’s duties under Section 8(b).
(b)
Confidentiality
. The
Executive understands and agrees that the Executive’s employment creates a
relationship of confidence and trust between the Executive and the Employer with
respect to all Confidential Information. At all times, both during
the Executive’s employment with the Employer and after its termination, the
Executive will keep in confidence and trust all such Confidential Information,
and will not use or disclose any such Confidential Information without the
written consent of the Employer, except as may be necessary in the ordinary
course of performing the Executive’s duties to the Employer.
(c)
Documents, Records,
etc
. All documents, records, data, apparatus, equipment and
other physical property, whether or not pertaining to Confidential Information,
which are furnished to the Executive by the Employer or are produced by the
Executive in connection with the Executive’s employment will be and remain the
sole property of the Employer. The Executive will return to the
Employer all such materials and property as and when requested by the
Employer. In any event, the Executive will return all such materials
and property immediately upon termination of the Executive’s employment for any
reason. The Executive will not retain with the Executive any such
material or property or any copies thereof after such termination.
(d)
Noncompetition and
Nonsolicitation
. During the Term and for a period of 9 months
thereafter , the Executive (i) will not, directly or indirectly, whether as
owner, partner, shareholder, consultant, agent, employee, co-venturer or
otherwise, engage, participate, assist or invest in any Competing Business (as
hereinafter defined); (ii) will refrain from directly or indirectly employing,
attempting to employ, recruiting or otherwise soliciting, inducing or
influencing any person to leave employment with the Employer (other than
terminations of employment of subordinate employees undertaken in the course of
the Executive’s employment with the Employer); and (iii) will refrain from
soliciting or encouraging any customer or supplier to terminate or otherwise
modify adversely its business relationship with the Employer. The
Executive understands that the restrictions set forth in this Section 8(d) are
intended to protect the Employer’s interest in its Confidential Information and
established employee, customer and supplier relationships and goodwill, and
agrees that such restrictions are reasonable and appropriate for this
purpose. For purposes of this Agreement, the term “Competing
Business” shall mean any of the following: a media company that publishes
technology-related content or operates technology-related events and, in any
case, derives its revenue from selling products and services similar to products
and services offered by the Employer to customers and prospects similar to
Employer’s own customers and prospects. The Executive acknowledges that the
following specific companies are considered competitors of Employer; CNET, IDG,
Accela Communications, CMP, Ziff Davis, PennWell, JupiterMedia, 101
Communications, Penton Media, IT Toolbox, CRMGuru, NewsFactor, Sys-Con, Fawcete,
Digital Consulting, Byte & Switch, Haymarket Media/West Coast Publishing,
SANS Institute, Computer Security Institute, Reed Expo and MIS Training
Institute. The Executive further acknowledges that the specific
companies mentioned as competitors create only a limited list of potential
competitors and that other companies or entities maybe deemed to be competitors
based on the nature of their products and services and how they compete in the
marketplace against Employer’s customers and prospects. At the Executive’s
request, Employer will update the listing of specific companies mentioned
above. Notwithstanding the foregoing, the Executive may own up to one
percent (1%) of the outstanding stock of a publicly held corporation which
constitutes or is affiliated with a Competing Business.
(e)
Third-Party Agreements and
Rights
. The Executive hereby confirms that the Executive is
not bound by the terms of any agreement with any previous employer or other
party which restricts in any way the Executive’s use or disclosure of
information or the Executive’s engagement in any business. The
Executive represents to the Employer that the Executive’s execution of this
Agreement, the Executive’s employment with the Employer and the performance of
the Executive’s proposed duties for the Employer will not violate any
obligations the Executive may have to any such previous employer or other
party. In the Executive’s work for the Employer, the Executive will
not disclose or make use of any information in violation of any agreements with
or rights of any such previous employer or other party, and the Executive will
not bring to the premises of the Employer any copies or other tangible
embodiments of non-public information belonging to or obtained from any such
previous employment or other party.
(f)
Litigation and Regulatory
Cooperation
. During and after the Executive’s employment, the
Executive shall cooperate fully with the Employer in the defense or prosecution
of any claims or actions now in existence or which may be brought in the future
against or on behalf of the Employer which relate to events or occurrences that
transpired while the Executive was employed by the Employer. The
Executive’s full cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to prepare
for discovery or trial and to act as a witness on behalf of the Employer at
mutually convenient times. During and after the Executive’s
employment, the Executive also shall cooperate fully with the Employer in
connection with any investigation or review of any federal, state or local
regulatory authority as any such investigation or review relates to events or
occurrences that transpired while the Executive was employed by the
Employer. The Employer shall reimburse the Executive for any
reasonable out-of-pocket expenses incurred in connection with the Executive’s
performance of obligations pursuant to this Section 8(f).
(g)
Injunction
. The
Executive agrees that it would be difficult to measure any damages caused to the
Employer which might result from any breach by the Executive of the promises set
forth in this Section 8, and that in any event money damages would be an
inadequate remedy for any such breach. Accordingly, subject to
Section 9 of this Agreement, the Executive agrees that if the Executive
breaches, or proposes to breach, any portion of this Agreement, the Employer
shall be entitled, in addition to all other remedies that it may have, to an
injunction or other appropriate equitable relief to restrain any such breach
without showing or proving any actual damage to the Employer.
9.
Arbitration of
Disputes
. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive’s employment or the termination of that employment (including, without
limitation, any claims of unlawful employment discrimination whether based on
age or otherwise) shall, to the fullest extent permitted by law, be settled by
arbitration in any forum and form agreed upon by the parties or, in the absence
of such an agreement, under the auspices of the American Arbitration Association
(“AAA”) in Boston, Massachusetts in accordance with the Employment Dispute
Resolution Rules of the AAA, including, but not limited to, the rules and
procedures applicable to the selection of arbitrators. In the event
that any person or entity other than the Executive or the Employer may be a
party with regard to any such controversy or claim, such controversy or claim
shall be submitted to arbitration subject to such other person or entity’s
agreement. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. This Section 9
shall be specifically enforceable. Notwithstanding the foregoing, this Section 9
shall not preclude either party from pursuing a court action for the sole
purpose of obtaining a temporary restraining order or a preliminary injunction
in circumstances in which such relief is appropriate; provided that any other
relief shall be pursued through an arbitration proceeding pursuant to this
Section 9.
10.
Consent to
Jurisdiction
. To the extent that any court action is permitted
consistent with or to enforce Section 9 of this Agreement, the parties hereby
consent to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts. Accordingly, with respect to any such court action,
the Executive (a) submits to the personal jurisdiction of such courts; (b)
consents to service of process; and (c) waives any other requirement (whether
imposed by statute, rule of court, or otherwise) with respect to personal
jurisdiction or service of process.
11.
Integration
. This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements between the
parties with respect to any related subject matter;
provided
,
however,
that the
parties acknowledge and agree that:
(i)
the
terms of Section 2 of that certain Relationship Agreement by and between the
Executive and Employer (the “Relationship Agreement”) shall survive the
execution of this Agreement, and shall govern the terms of any and all
Inventions, Works and Work Product (as defined therein) conceived, made,
authored or developed by Executive during the term of his employment, both prior
to and following the execution of this Agreement;
provided
,
that
, in the event of
any inconsistency or conflict between the terms of the Relationship Agreement
and the terms of this Agreement, the terms of this Agreement shall take
precedence and govern with respect to the applicable subject matter;
and
(ii)
the terms
of each Option Agreement shall survive the execution of this Agreement and shall
remain in full force and effect in accordance with its terms.
12.
Assignment; Successors and
Assigns, etc
. Neither the Employer nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party; provided that
the Employer may assign its rights under this Agreement without the consent of
the Executive in the event that the Employer shall effect a reorganization,
consolidate with, or merge into, any other corporation, partnership,
organization or other entity, or transfer all or substantially all of its
properties or assets to any other corporation, partnership, organization or
other entity. This Agreement shall inure to the benefit of and be
binding upon the Employer and the Executive, their respective successors,
executors, administrators, heirs and permitted assigns.
13.
Enforceability
. If
any portion or provision of this Agreement (including, without limitation, any
portion or provision of any section of this Agreement) shall to any extent be
declared illegal or unenforceable by a court of competent jurisdiction, then the
remainder of this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
14.
Waiver
. No
waiver of any provision hereof shall be effective unless made in writing and
signed by the waiving party. The failure of any party to require the
performance of any term or obligation of this Agreement, or the waiver by any
party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.
15.
Notices
. Any
notices, requests, demands and other communications provided for by this
Agreement shall be sufficient if in writing and delivered in person or sent by a
nationally recognized overnight courier service or by registered or certified
mail, postage prepaid, return receipt requested, to the Executive at the last
address the Executive has filed in writing with the Employer or, in the case of
the Employer, at its main offices, attention of the Chief Executive Officer, and
shall be effective on the date of delivery in person or by courier or three (3)
days after the date mailed.
16.
Amendment
. This
Agreement may be amended or modified only by a written instrument signed by the
Executive and by a duly authorized representative of the Employer.
17.
Governing
Law
. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the law of the Commonwealth of
Massachusetts, without giving effect to the conflict of laws principles of such
Commonwealth. With respect to any disputes concerning federal law,
such disputes shall be determined in accordance with the law as it would be
interpreted and applied by the United States Court of Appeals for the First
Circuit.
18.
Counterparts
. This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be taken to be an original; but such counterparts
shall together constitute one and the same document.
IN
WITNESS WHEREOF, this Amended and Restated Agreement has been executed as a
sealed instrument by the Employer, by its duly authorized officer, and by the
Executive, as of the Effective Date.
TechTarget,
Inc.
By: /s/
Greg
Strakosch
Title: CEO
/s/ Kevin
Beam
Executive: Kevin Beam
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made as of
January 17, 2008 (the “Effective Date”) and amends and restated that certain
Employment Agreement dated as of January 1, 2007 (the “Original Effective Date”)
by and between
TechTarget,
Inc
., a Delaware corporation with a principal place of
business at 117 Kendrick Street, Needham, MA 02494 (the “Employer”), and
Rick Olin
(the
“Executive”). In consideration of the mutual covenants contained in
this Agreement, the Employer and the Executive agree as follows.
1.
Employment
. The
Employer agrees to employ the Executive and the Executive agrees to be employed
by the Employer upon the terms and subject to the conditions set forth in this
Agreement.
2.
Capacity
. The
Executive shall initially serve the Employer as Vice President, General Counsel.
The Executive shall also serve the Employer in such other or additional offices
as the Executive may be requested to serve by the Chief Executive
Officer. In such capacity or capacities, the Executive shall perform
such services and duties in connection with the business, affairs and operations
of the Employer as may be assigned or delegated to the Executive from time to
time, consistent with the Executive’s education and experience, by or under the
authority of the Chief Executive Officer. The Executive shall report directly to
the Chief Executive Officer.
3.
Term
. Subject
to the provisions of Section 6, the term of employment pursuant to this
Agreement (the “Term”) shall be one (1) year from the Original Effective Date
and shall be renewed automatically for periods of one (1) year commencing at the
first anniversary of the Original Effective Date and on each subsequent
anniversary thereafter unless either the Executive or the Employer gives written
notice to the other not less than sixty (60) days prior to the date of any such
anniversary of such party’s election not to extend the Term. In the event that
the Employer elects to not extend this Agreement on such an anniversary date,
the Executive shall be entitled to the benefits described in Section 7(b)
below.
4.
Compensation and
Benefits
. The regular compensation and benefits payable to the
Executive under this Agreement shall be as follows:
(a)
Salary
. For
all services rendered by the Executive under this Agreement, the Employer shall
pay the Executive a salary (the “Salary”) at the annual rate of Two Hundred
Thousand Dollars ($200,000),
subject to increase from
time to time in the discretion of the Board of Directors or the Compensation
Committee of the Board of Directors (the “Compensation
Committee”). The Salary shall be payable in periodic installments in
accordance with the Employer’s usual practice for its senior
executives.
(b)
Bonus
. Beginning
with the fiscal year ending December 31, 2007, the Executive shall be entitled
to participate in an annual incentive program established by the Board of
Directors or the Compensation Committee for the executive management team with
such terms as may be established in the sole discretion of the Board of
Directors or Compensation Committee. For fiscal year 2007, the Executive’s
annual target bonus amount shall equal $50,000. For all subsequent years, the
amount of the Executive’s annual target bonus amount shall be established by the
Board of Directors or the Compensation Committee. The specific terms of the
bonus plan, including bonus targets, methods of payment and performance goals
will be documented by the Board of Directors or the Compensation
Committee.
(c)
Regular
Benefits
. The Executive shall also be entitled to participate
in any qualified retirement plans, deferred compensation plans, stock option and
incentive plans, stock purchase plans, medical insurance plans, life insurance
plans, disability income plans, retirement plans, vacation plans, expense
reimbursement plans and other benefit plans which the Employer may from time to
time have in effect for its senior executives. Such participation
shall be subject to the terms of the applicable plan documents, generally
applicable policies of the Employer, applicable law and the discretion of the
Board of Directors, the Compensation Committee or any administrative or other
committee provided for in, or contemplated by, any such plan. Nothing
contained in this Agreement shall be construed to create any obligation on the
part of the Employer to establish any such plan or to maintain the effectiveness
of any such plan which may be in effect from time to time.
(d)
Equity
Grants.
The Executive shall be provided equity awards as
determined by the Board of Directors or the Compensation Committee, with such
terms as may be established in the sole discretion of the Board of Directors or
Compensation Committee. In connection with any grants of stock
options, restricted stock units, or other equity instruments granted by the
Employer to the Executive, including all grants the dates of which precede the
Original Effective Date of this Agreement, the Employer and the Executive hereby
acknowledge and agree that in the event of a Change of Control ((1) with respect
to any stock grants or stock option grants, as defined in the Executive’s
Incentive Stock Option Grant Agreement under the Employer’s 1999 Stock Option
Plan (each an “Option Agreement”) and (2) with respect to any restricted stock
units, within the meaning of Section 409A of the Internal Revenue Code of 1986,
as amended), all unvested shares shall thereupon become fully-vested and all
such stock options may thereafter be immediately exercised and such restricted
stock units shall be delivered in accordance with the Restricted Stock Unit
Agreement between the Executive and the Employer.
(e)
Reimbursement of Business
Expenses
. The Employer shall reimburse the Executive for all
reasonable expenses incurred by him in performing services during the Term, in
accordance with the Employer’s policies and procedures for its senior executive
officers, as in effect from time to time.
(f)
Taxation of Payments and
Benefits
. The Employer shall undertake to make deductions,
withholdings and tax reports with respect to payments and benefits under this
Agreement to the extent that it reasonably and in good faith believes that it is
required to make such deductions, withholdings and tax
reports. Payments under this Agreement shall be in amounts net of any
such deductions or withholdings. Nothing in this Agreement shall be
construed to require the Employer to make any payments to compensate the
Executive for any adverse tax effect associated with any payments or benefits or
for any deduction or withholding from any payment or benefit.
(g)
Exclusivity of Salary and
Benefits
. The Executive shall not be entitled to any payments
or benefits other than those provided under this Agreement. During
the Term, the Employer is obligated to document any changes in compensation
terms applicable to the Agreement.
5.
Extent of
Service
. During the Executive’s employment under this
Agreement, the Executive shall, devote the Executive’s best efforts and business
judgment, skill and knowledge to the advancement of the Employer’s interests and
to the discharge of the Executive’s duties and responsibilities under this
Agreement. Notwithstanding anything contained herein to the contrary,
this Agreement shall not be construed as preventing the Executive
from:
(a)
investing
the Executive’s assets in any company or other entity in a manner not prohibited
by Section 8(d) and in such form or manner as shall not require any material
activities on the Executive’s part in connection with the operations or affairs
of the companies or other entities in which such investments are
made;
(b)
serving
on the Board of another company;
provided
, that, such
service does not impair or compromise the Executive’s ability to fulfill the
Executive’s duties and responsibilities under this Agreement; or
(c)
engaging
in religious, charitable or other community or non-profit activities that do not
impair the Executive’s ability to fulfill the Executive’s duties and
responsibilities under this Agreement.
6.
Termination
. Notwithstanding
the provisions of Section 3, the Executive’s employment under this Agreement
shall terminate under the following circumstances set forth in this Section
6.
(a)
Termination by the Employer
for Cause
. The Executive’s employment under this Agreement may
be terminated for Cause (as defined below) on the part of the Employer effective
upon a vote of the Board of Directors, prior to which the Employer shall have
given the Executive ten (10) days prior written notice and the opportunity to be
heard on such matter at a meeting of the Board. Only the following
shall constitute “Cause” for such termination:
(i)
any act,
whether or not involving the Employer or any affiliate of the Employer, of fraud
or gross misconduct;
(ii)
the
commission by the Executive of (A) a felony or (B) any misdemeanor involving
moral turpitude, deceit, dishonesty or fraud; or
(iii)
gross
negligence or willful misconduct of the Executive with respect to the Employer
or any affiliate of the Employer.
(b)
Termination by the Employer
Without Cause
. Subject to the payment of Termination Benefits
pursuant to Section 7(b), the Executive’s employment under this Agreement may be
terminated by the Employer without Cause upon no less than sixty (60) days prior
written notice to the Executive.
(c)
Termination by the Executive
for Good Reason
. Subject to the payment of Termination
Benefits pursuant to Section 7(b), the Executive’s employment under this
Agreement may be terminated by the Executive for Good Reason by written notice
to the Board of Directors at least sixty (60) days prior to such
termination. Only the following shall constitute “Good Reason” for
such termination:
(i)
a
material reduction of the Executive’s annual base salary and/or annual target
bonus other than a such reduction that is similar to a reduction made to such
salary and/or target bonus of all other senior executives of the
Employer;
(ii)
a change
in the Executive’s responsibilities and/or duties which constitutes a demotion
or is inconsistent with the terms of Section 2 hereof;
(iii)
a failure
of the Company to pay any amounts due hereunder;
(iv)
the
failure of any successor in interest to the business of the Employer to assume
the Employer’s obligations under this Agreement; or
(v)
the
relocation of the offices at which the Executive is principally employed to a
location more than 50 miles from such offices, which relocation is not approved
by the Executive.
(d)
Death
. The
Executive’s employment with the Employer shall terminate upon his
death.
(e)
Disability
. If
the Executive shall be disabled so as to be unable to perform the essential
functions of the Executive’s then-existing position or positions under this
Agreement, with or without reasonable accommodation, the Chief Executive Officer
may remove the Executive from any responsibilities and/or reassign the Executive
to another position with the Employer for the remainder of the Term or during
the period of such disability. Notwithstanding any such removal or
reassignment, the Executive shall continue to receive the Executive’s full
Salary (less any disability pay or sick pay benefits to which the Executive may
be entitled under the Employer’s policies) and benefits under Section 4 of this
Agreement (except to the extent that the Executive may be ineligible for one or
more such benefits under applicable plan terms) for a period of time equal to
the period set forth in Section 7(b)(i) below. If any question shall
arise as to whether during any period the Executive is disabled so as to be
unable to perform the essential functions of the Executive’s then existing
position or positions with or without reasonable accommodation, the Executive
may, and at the request of the Employer shall, submit to the Employer a
certification in reasonable detail by a physician selected by the Employer (to
whom the Executive or the Executive’s guardian has no reasonable objection) as
to whether the Executive is so disabled or how long such disability is expected
to continue, and such certification shall for the purposes of this Agreement be
conclusive of the issue. The Executive shall cooperate with any
reasonable request of the physician in connection with such
certification. If such question shall arise and the Executive shall
fail to submit such certification, the Employer’s determination of such issue
shall be binding on the Executive. Nothing in this Section 6(e) shall
be construed to waive the Executive’s rights, if any, under existing law
including, without limitation, the Family and Medical Leave Act of 1993, 29
U.S.C. §2601
et seq
.
and the Americans with Disabilities Act, 42 U.S.C. §12101
et seq.
(f)
Termination by the Executive
without Good Reason.
The Executive may terminate this Agreement at any
time on no less than sixty (60) days prior written notice. If the Executive
terminates this Agreement without Good Reason, the Executive is not entitled to
any additional compensation or benefits other than his Accrued Benefit (as
defined in Section 7(a) below).
7.
Compensation Upon
Termination
.
(a)
Termination
Generally
. If the Executive’s employment with the Employer is
terminated for any reason during the Term, the Employer shall pay or provide to
the Executive (or to his authorized representative or estate) any earned but
unpaid base salary, incentive compensation earned but not yet paid, unpaid
expense reimbursements, accrued but unused vacation and any vested benefits the
Executive may have under any employee benefit plan of the Employer (the “Accrued
Benefit”).
(b)
Termination by the Employer
Without Cause or upon Executive Disability or Death, or by the Executive for
Good Reason
. In the event of termination of the Executive’s
employment with the Employer pursuant to Section 6(b), (c), (d) or (e) above, or
the failure of the Company to extend this Agreement following the expiration of
the then-current Term, the Employer shall provide to the Executive the following
termination benefits (“Termination Benefits”):
(i)
payments
that provide for the continuation of the Executive’s Salary at the rate then in
effect pursuant to Section 4(a) for a period of 6 months;
(ii)
continuation
of group health plan benefits to the extent authorized by and consistent with 29
U.S.C. § 1161 et seq. (commonly known as “COBRA”), payment of premiums of which
shall continue to be made by the Employer at the active employee’s
rate for the period set forth in clause 7(b)(i) above;
(iii)
payments
(pro rated over the period described in Section 7(b)(i) above) equal in the
aggregate to the greater of (x) fifty percent (50%) of the targeted bonus amount
that was established by the Board of Directors or Compensation Committee for the
Executive for the then-current fiscal year (the “Target Bonus Amount”) or (y)
the product of (I) the Target Bonus Amount multiplied by (II) a fraction, the
numerator for which equals the number of months in the then-current fiscal year
that have elapsed, and the denominator of which equals 12; and
(iv)
for each
year that the Executive has been employed by the Employer in any capacity, an
additional ten percent (10%) of (x) all then unvested options to purchase shares
of the Employer’s stock that have been granted to the Executive shall become
immediately, and without further action, exercisable by the Executive and (y)
all then unvested restricted stock units that have been granted to the Executive
shall become immediately, and without further action, vested and shall be
delivered to the Executive in accordance with the Restricted Stock Unit
Agreement(s) by and between the Company and the Executive;
provided
,
that,
in the event
that the foregoing calculation results in the acceleration of less than 50% of
Executive’s then unvested such options and restricted stock units, the number of
shares subject to such acceleration, shall be deemed to be increased to equal
fifty percent (50%) (utilizing restricted stock units first and then options for
any balance).
(c)
Termination by the Employer
with Cause or the Executive without Good Reason
. If the
Executive’s employment is terminated by the Employer with Cause under Section
6(a) or by the Executive without Good Reason under Section 6(f), the Employer
shall have no further obligation to the Executive other than payment of his
Accrued Benefit.
(d)
Certain Tax
Matters
.
(i)
The
Company and the Executive agree to cooperate and negotiate with each other in
good faith to minimize the impact of Sections 280G and 4999 of the Code on the
Company and the Executive, respectively.
(ii)
Distributions
. The
following rules shall apply with respect to distribution of the payments and
benefits, if any, to be provided to Executive under Section 7
(1) It
is intended that each installment of the payments and benefits provided under
Section 7 shall be treated as a separate “payment” for purposes of Section 409A
of the U.S. Internal Revenue Code of 1986, as amended, and the guidance issued
thereunder (“Section 409A”). Neither Employer nor Executive shall
have the right to accelerate or defer the delivery of any such payments or
benefits except to the extent specifically permitted or required by Section
409A;
(2) If,
as of the date of the Executive’s “separation from service” (as defined below)
from Employer, Executive is not a “specified employee” (within the meaning of
Section 409A), then each installment of the payments and benefits shall be made
on the dates and terms set forth in Section 7; and
(3) If,
as of the date of the Executive’s “separation from service” from Employer,
Executive is a “specified employee” (within the meaning of Section 409A),
then:
(A) Each
installment of the payments and benefits due under Section 7 that, in accordance
with the dates and terms set forth herein, will in all circumstances, regardless
of when the separation from service occurs, be paid within the Short-Term
Deferral Period (as hereinafter defined) shall be treated as a short-term
deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the
maximum extent permissible under Section 409A. For purposes of this
Agreement, the “Short-Term Deferral Period” means the period ending on the later
of the 15
th
day of
the third month following the end of Executive’s tax year in which the
separation from service occurs and the 15
th
day of
the third month following the end of Employer’s tax year in which the separation
from service occurs; and
(B) Each
installment of the payments and benefits due under Section 7 that is not paid
within the Short-Term Deferral Period and that would, absent this subsection, be
paid within the six-month period following the “separation from service” of
Executive from Employer shall not be paid until the date that is six months and
one day after such separation from service (or, if earlier, the Executive’s
death), with any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that
is six months and one day following Executive’s separation from service and any
subsequent installments, if any, being paid in accordance with the dates and
terms set forth herein;
provided
,
however
, that the
preceding provisions of this sentence shall not apply to any installment of
payments and benefits if and to the maximum extent that that such installment is
deemed to be paid under a separation pay plan that does not provide for a
deferral of compensation by reason of the application of Treasury
Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an
involuntary separation from service). Any installments that qualify
for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii)
must be paid no later than the last day of Executive’s second taxable year
following the taxable year of yours in which the separation from service
occurs.
(4) For
purposes of this Agreement, the determination of whether and when a separation
from service has occurred shall be made in accordance with this subparagraph and
in a manner consistent with Treasury Regulation Section
1.409A-1(h). Solely for purposes of this Section 7, “Employer” shall
include all persons with whom the Employer would be considered a single employer
under Sections 414(b) and 414(c) of the Internal Revenue Code of 1986, as
amended.
8.
Confidential Information,
Noncompetition and Cooperation
.
(a)
Confidential
Information
. As used in this Agreement, “Confidential
Information” means information belonging to the Employer which is of value to
the Employer in the course of conducting its business and the disclosure of
which could result in a competitive or other disadvantage to the
Employer. Confidential Information includes, without limitation,
financial information, reports, and forecasts; inventions, improvements and
other intellectual property; trade secrets; know-how; designs, processes or
formulae; software; market or sales information or plans; customer lists; and
business plans, prospects and opportunities (such as possible acquisitions or
dispositions of businesses or facilities) which have been discussed or
considered by the management of the Employer. Confidential
Information includes information developed by the Executive in the course of the
Executive’s employment by the Employer, as well as other information to which
the Executive may have access in connection with the Executive’s
employment. Confidential Information also includes the confidential
information of others with which the Employer has a business
relationship. Notwithstanding the foregoing, Confidential Information
does not include information in the public domain, unless due to breach of the
Executive’s duties under Section 8(b).
(b)
Confidentiality
. The
Executive understands and agrees that the Executive’s employment creates a
relationship of confidence and trust between the Executive and the Employer with
respect to all Confidential Information. At all times, both during
the Executive’s employment with the Employer and after its termination, the
Executive will keep in confidence and trust all such Confidential Information,
and will not use or disclose any such Confidential Information without the
written consent of the Employer, except as may be necessary in the ordinary
course of performing the Executive’s duties to the Employer.
(c)
Documents, Records,
etc
. All documents, records, data, apparatus, equipment and
other physical property, whether or not pertaining to Confidential Information,
which are furnished to the Executive by the Employer or are produced by the
Executive in connection with the Executive’s employment will be and remain the
sole property of the Employer. The Executive will return to the
Employer all such materials and property as and when requested by the
Employer. In any event, the Executive will return all such materials
and property immediately upon termination of the Executive’s employment for any
reason. The Executive will not retain with the Executive any such
material or property or any copies thereof after such termination.
(d)
Noncompetition and
Nonsolicitation
. During the Term and for a period of 6 months
thereafter , the Executive (i) will not, directly or indirectly, whether as
owner, partner, shareholder, consultant, agent, employee, co-venturer or
otherwise, engage, participate, assist or invest in any Competing Business (as
hereinafter defined); (ii) will refrain from directly or indirectly employing,
attempting to employ, recruiting or otherwise soliciting, inducing or
influencing any person to leave employment with the Employer (other than
terminations of employment of subordinate employees undertaken in the course of
the Executive’s employment with the Employer); and (iii) will refrain from
soliciting or encouraging any customer or supplier to terminate or otherwise
modify adversely its business relationship with the Employer. The
Executive understands that the restrictions set forth in this Section 8(d) are
intended to protect the Employer’s interest in its Confidential Information and
established employee, customer and supplier relationships and goodwill, and
agrees that such restrictions are reasonable and appropriate for this
purpose. For purposes of this Agreement, the term “Competing
Business” shall mean any of the following: a media company that publishes
technology-related content or operates technology-related events and, in any
case, derives its revenue from selling products and services similar to products
and services offered by the Employer to customers and prospects similar to
Employer’s own customers and prospects. The Executive acknowledges that the
following specific companies are considered competitors of Employer; CNET, IDG,
Accela Communications, CMP, Ziff Davis, PennWell, JupiterMedia, 101
Communications, Penton Media, IT Toolbox CRMGuru, NewsFactor, Sys-Con, Fawcete,
Digital Consulting, Byte & Switch, Haymarket Media/West Coast Publishing,
SANS Institute, Computer Security Institute, Reed Expo and MIS Training
Institute. The Executive further acknowledges that the specific
companies mentioned as competitors create only a limited list of potential
competitors and that other companies or entities maybe deemed to be competitors
based on the nature of their products and services and how they compete in the
marketplace against Employer’s customers and prospects. At the Executive’s
request, Employer will update the listing of specific companies mentioned
above. Notwithstanding the foregoing, the Executive may own up to one
percent (1%) of the outstanding stock of a publicly held corporation which
constitutes or is affiliated with a Competing Business.
(e)
Third-Party Agreements and
Rights
. The Executive hereby confirms that the Executive is
not bound by the terms of any agreement with any previous employer or other
party which restricts in any way the Executive’s use or disclosure of
information or the Executive’s engagement in any business. The
Executive represents to the Employer that the Executive’s execution of this
Agreement, the Executive’s employment with the Employer and the performance of
the Executive’s proposed duties for the Employer will not violate any
obligations the Executive may have to any such previous employer or other
party. In the Executive’s work for the Employer, the Executive will
not disclose or make use of any information in violation of any agreements with
or rights of any such previous employer or other party, and the Executive will
not bring to the premises of the Employer any copies or other tangible
embodiments of non-public information belonging to or obtained from any such
previous employment or other party.
(f)
Litigation and Regulatory
Cooperation
. During and after the Executive’s employment, the
Executive shall cooperate fully with the Employer in the defense or prosecution
of any claims or actions now in existence or which may be brought in the future
against or on behalf of the Employer which relate to events or occurrences that
transpired while the Executive was employed by the Employer. The
Executive’s full cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to prepare
for discovery or trial and to act as a witness on behalf of the Employer at
mutually convenient times. During and after the Executive’s
employment, the Executive also shall cooperate fully with the Employer in
connection with any investigation or review of any federal, state or local
regulatory authority as any such investigation or review relates to events or
occurrences that transpired while the Executive was employed by the
Employer. The Employer shall reimburse the Executive for any
reasonable out-of-pocket expenses incurred in connection with the Executive’s
performance of obligations pursuant to this Section 8(f).
(g)
Injunction
. The
Executive agrees that it would be difficult to measure any damages caused to the
Employer which might result from any breach by the Executive of the promises set
forth in this Section 8, and that in any event money damages would be an
inadequate remedy for any such breach. Accordingly, subject to
Section 9 of this Agreement, the Executive agrees that if the Executive
breaches, or proposes to breach, any portion of this Agreement, the Employer
shall be entitled, in addition to all other remedies that it may have, to an
injunction or other appropriate equitable relief to restrain any such breach
without showing or proving any actual damage to the Employer.
9.
Arbitration of
Disputes
. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive’s employment or the termination of that employment (including, without
limitation, any claims of unlawful employment discrimination whether based on
age or otherwise) shall, to the fullest extent permitted by law, be settled by
arbitration in any forum and form agreed upon by the parties or, in the absence
of such an agreement, under the auspices of the American Arbitration Association
(“AAA”) in Boston, Massachusetts in accordance with the Employment Dispute
Resolution Rules of the AAA, including, but not limited to, the rules and
procedures applicable to the selection of arbitrators. In the event
that any person or entity other than the Executive or the Employer may be a
party with regard to any such controversy or claim, such controversy or claim
shall be submitted to arbitration subject to such other person or entity’s
agreement. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. This Section 9
shall be specifically enforceable. Notwithstanding the foregoing, this Section 9
shall not preclude either party from pursuing a court action for the sole
purpose of obtaining a temporary restraining order or a preliminary injunction
in circumstances in which such relief is appropriate; provided that any other
relief shall be pursued through an arbitration proceeding pursuant to this
Section 9.
10.
Consent to
Jurisdiction
. To the extent that any court action is permitted
consistent with or to enforce Section 9 of this Agreement, the parties hereby
consent to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts. Accordingly, with respect to any such court action,
the Executive (a) submits to the personal jurisdiction of such courts; (b)
consents to service of process; and (c) waives any other requirement (whether
imposed by statute, rule of court, or otherwise) with respect to personal
jurisdiction or service of process.
11.
Integration
. This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements between the
parties with respect to any related subject matter;
provided
,
however,
that the
parties acknowledge and agree that:
(i)
the
terms of Section 2 of that certain Relationship Agreement by and between the
Executive and Employer (the “Relationship Agreement”) shall survive the
execution of this Agreement, and shall govern the terms of any and all
Inventions, Works and Work Product (as defined therein) conceived, made,
authored or developed by Executive during the term of his employment, both prior
to and following the execution of this Agreement;
provided
,
that
, in the event of
any inconsistency or conflict between the terms of the Relationship Agreement
and the terms of this Agreement, the terms of this Agreement shall take
precedence and govern with respect to the applicable subject matter;
and
(ii)
the terms
of each Option Agreement shall survive the execution of this Agreement and shall
remain in full force and effect in accordance with its terms.
12.
Assignment; Successors and
Assigns, etc
. Neither the Employer nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party; provided that
the Employer may assign its rights under this Agreement without the consent of
the Executive in the event that the Employer shall effect a reorganization,
consolidate with, or merge into, any other corporation, partnership,
organization or other entity, or transfer all or substantially all of its
properties or assets to any other corporation, partnership, organization or
other entity. This Agreement shall inure to the benefit of and be
binding upon the Employer and the Executive, their respective successors,
executors, administrators, heirs and permitted assigns.
13.
Enforceability
. If
any portion or provision of this Agreement (including, without limitation, any
portion or provision of any section of this Agreement) shall to any extent be
declared illegal or unenforceable by a court of competent jurisdiction, then the
remainder of this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
14.
Waiver
. No
waiver of any provision hereof shall be effective unless made in writing and
signed by the waiving party. The failure of any party to require the
performance of any term or obligation of this Agreement, or the waiver by any
party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.
15.
Notices
. Any
notices, requests, demands and other communications provided for by this
Agreement shall be sufficient if in writing and delivered in person or sent by a
nationally recognized overnight courier service or by registered or certified
mail, postage prepaid, return receipt requested, to the Executive at the last
address the Executive has filed in writing with the Employer or, in the case of
the Employer, at its main offices, attention of the Chief Executive Officer, and
shall be effective on the date of delivery in person or by courier or three (3)
days after the date mailed.
16.
Amendment
. This
Agreement may be amended or modified only by a written instrument signed by the
Executive and by a duly authorized representative of the Employer.
17.
Governing
Law
. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the law of the Commonwealth of
Massachusetts, without giving effect to the conflict of laws principles of such
Commonwealth. With respect to any disputes concerning federal law,
such disputes shall be determined in accordance with the law as it would be
interpreted and applied by the United States Court of Appeals for the First
Circuit.
18.
Counterparts
. This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be taken to be an original; but such counterparts
shall together constitute one and the same document.
IN
WITNESS WHEREOF, this Amended and Restated Agreement has been executed as a
sealed instrument by the Employer, by its duly authorized officer, and by the
Executive, as of the Effective Date.
TechTarget,
Inc.
By: /s/
Greg
Strakosch
Title: CEO
/s/ Rick
Olin
Executive: Rick Olin
TechTarget,
Inc.
List of
Subsidiaries
|
Employer
|
|
State/Country
|
Subsidiary
Legal Name
|
ID
Number
|
%
Owned
|
Incorporated
|
|
|
|
|
Bitpipe,
Inc.
|
04-3442108
|
100%
|
DE
|
BTPE
Acquisition Corp.
|
20-1933867
|
100%
|
DE
|
TechTarget
Securities Corporation
|
20-1921630
|
100%
|
MA
|
TechTarget
Limited
|
NA
|
100%
|
United
Kingdom
|
KnowledgeStorm,
Inc.
|
58-2512952
|
100%
|
GA
|
Consent
of Independent Registered Public Accounting Firm
We
consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-145785) pertaining to the 1999 Stock Option Plan and the 2007 Stock
Option and Incentive Plan of TechTarget, Inc. of our report dated March 21,
2008, with respect to the consolidated financial statements of TechTarget, Inc.
included in the Annual Report (Form 10-K) for the year ended December 31,
2007.
/s/
Ernst & Young LLP
Boston,
Massachusetts
March 26,
2008
CERTIFICATION
BY CHIEF EXECUTIVE OFFICER PURSUANT
TO
RULE 13A-14(A) AND 15D-14(A) OF
THE
SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
I, Greg
Strakosch, certify that:
1. I have
reviewed this Annual Report on Form 10-K of TechTarget, 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 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)) 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)
|
Paragraph
omitted pursuant to Rule 13a-14(a) under the Securities Exchange Act of
1934, as amended;
|
|
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 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:
March 31, 2008
|
|
|
Greg
Strakosch
Chief
Executive Officer
(Principal
Executive Officer)
|
CERTIFICATION
BY CHIEF FINANCIAL OFFICER PURSUANT
TO
RULE 13A-14(A) AND 15D-14(A) OF
THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Eric
Sockol, certify that:
1. I have
reviewed this Annual Report on Form 10-K of TechTarget, 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 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)) 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)
|
Paragraph
omitted pursuant to Rule 13a-14(a) under the Securities Exchange Act of
1934, as amended;
|
|
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 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:
March 31, 2008
|
|
|
Eric
Sockol
Chief
Financial Officer
(Principal
Financial and Accounting
Officer)
|
CERTIFICATION
PURSUANT
TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report on Form 10-K of TechTarget, Inc. (the
“Company”) for the period ended December 31, 2007 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), the
undersigned, Greg Strakosch, Chief Executive Officer of the Company, hereby
certifies, pursuant to 18 U.S.C. Section 1350, that:
|
(1)
|
the
Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended;
and
|
|
(2)
|
the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
|
|
Date:
March 31, 2008
|
|
|
Greg
Strakosch
Chief
Executive Officer
|
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report on Form 10-K of TechTarget, Inc. (the
“Company”) for the period ended December 31, 2007 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), the
undersigned, Eric Sockol, Chief Financial Officer of the Company, hereby
certifies, pursuant to 18 U.S.C. Section 1350, that:
|
(1)
|
the
Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended;
and
|
|
(2)
|
the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
|
|
Date:
March 31, 2008
|
|
|
Eric
Sockol
Chief
Financial Officer
|