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Washington, D.C. 20549
Delaware | 7389 | 52-2091509 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
copies to: | ||||
Robert E. Spatt Sean D. Rodgers Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017 (212) 455-2000 | Richard J. Boyle, Jr. Chief Executive Officer and Chairman of the Board LoopNet, Inc. 185 Berry Street, Suite 4000 San Francisco, CA 94107 (415) 243-4200 | William M. Kelly Davis Polk & Wardwell LLP 1600 El Camino Real Menlo Park, CA 94025 (650) 752-2000 |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Exchange ActRule 13e-4(i) (Cross-Border Issuer Tender Offer) o | Exchange ActRule 14d-1(d) (Cross-Border Third-Party Tender Offer) o |
Title of Each Class of | Amount to be | Proposed Maximum | Proposed Maximum | Amount of | ||||||||||||||||||
Securities to be Registered | Registered(1) | Offering Price Per Unit | Aggregate Offering Price(2) | Registration Fee(3) | ||||||||||||||||||
Common Stock, $0.01 Par Value | 4,142,686 | N/A | $213,290,737.36 | $24,763.05 | ||||||||||||||||||
(1) | Represents the maximum number of shares of CoStar common stock currently estimated to be issuable upon consummation of the merger. | |
(2) | Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act and computed pursuant to Rule 457(f)(1), 457(f)(3) and 457(c) of the Securities Act. The proposed maximum aggregate offering price was calculated based upon the market value of shares of LoopNet common stock (the securities to be canceled in the merger) in accordance with Rule 457(c) under the Securities Act by multiplying (i) $18.68, the average of the high and low prices per share of LoopNet common stock on Nasdaq on May 10, 2011, by (ii) 50,925,578, the maximum possible number of shares of LoopNet common stock and preferred stock, on an as-converted basis, which may be canceled in the merger (which is the sum of (a) 32,519,233 shares of LoopNet common stock outstanding on April 27, 2011, plus (b) 7,440,476 shares of LoopNet common stock underlying its convertible preferred stock outstanding on April 27, 2011, plus (c) 1,458,125 shares of LoopNet common stock underlying LoopNet restricted stock units outstanding on April 27, 2011, plus (d) 9,507,744 shares of LoopNet common stock underlying LoopNet stock options (which includes 9,506,244 shares underlying options outstanding on May 12, 2011 and 1,500 additional shares pursuant to options issuable under the merger agreement). Pursuant to Rule 457(f)(3) of the Securities Act, the anticipated amount of cash that is to be paid by CoStar in the merger has been deducted from the proposed maximum aggregate offering price (computed as the sum of (A) the cash consideration of $16.50 per share of LoopNet common stock multiplied by 41,187,834 (which is the sum of the outstanding shares of LoopNet common stock and LoopNet common stock underlying LoopNet’s convertible preferred stock and restricted stock units outstanding on April 27, 2011(other than 230,000 performance-based restricted stock units)), plus (B) the product of (I) 9,026,244 (which is the number of shares of LoopNet common stock underlying LoopNet stock options outstanding on May 12, 2011 (other than 480,000 shares of LoopNet common stock underlying certain performance-based stock options)) multiplied by (II) an amount equal to the cash component of the per share cash consideration of $16.50 per share, minus $10.03, which is the average weighted exercise price of outstanding LoopNet stock options (other than certain performance-based stock options) as of May 12, 2011)). | |
(3) | Computed in accordance with Section 6(b) of the Securities Act of 1933 by multiplying 0.0001161 by the proposed maximum aggregate offering price. |
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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document shall not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. |
• | the holders of LoopNet common stock outstanding immediately prior to the effective time of the merger will receive a unit consisting of (i) $16.50 in cash, without interest and less applicable withholding tax, and (ii) 0.03702 shares of CoStar common stock, for each share of LoopNet common stock that they own immediately prior to the effective time of the merger, unless they exercise and perfect their appraisal rights under the General Corporation Law of the State of Delaware (the “DGCL”); and | |
• | the holders of the Series A Preferred Stock outstanding immediately prior to the effective time of the merger, if any, will receive a unit consisting of (i) $2,455.36 in cash, without interest and less applicable withholding tax, and (ii) 5.5089 shares of CoStar common stock, for each share of Series A Preferred Stock that they own immediately prior to the effective time of the merger, unless they exercise and perfect their appraisal rights under the DGCL. This per share consideration for Series A Preferred Stock represents the common stock equivalent consideration for each share of Series A Preferred Stock. As discussed in the accompanying proxy statement/prospectus under the heading “The Voting Agreement —Contingent Conversion of Series A Preferred Stock,” the holders of all outstanding shares of Series A Preferred Stock have delivered contingent conversion notices to LoopNet pursuant to which such shares will be converted into LoopNet common stock immediately prior to, and contingent upon, the completion of the merger. |
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Q: | What is the proposed transaction? |
A: | The proposed transaction is the acquisition of LoopNet, Inc. (“LoopNet”) by CoStar Group, Inc. (“CoStar”). CoStar has agreed to acquire LoopNet pursuant to an Agreement and Plan of Merger (the “merger agreement”), dated as of April 27, 2011, among CoStar, Lonestar Acquisition Sub, Inc. (“merger sub”) and LoopNet. Merger sub is a wholly-owned subsidiary of CoStar. Once the merger agreement has been adopted by LoopNet’s stockholders and the other closing conditions under the merger agreement have been satisfied or waived, merger sub will merge with and into LoopNet. LoopNet will be the surviving corporation in the merger and will become a wholly-owned subsidiary of CoStar. The merger agreement is attached as Annex A to this proxy statement/prospectus. |
Q: | What will LoopNet’s stockholders receive in the merger? |
A: | If the merger contemplated by the merger agreement is completed, the holders of LoopNet common stock outstanding immediately prior to the effective time of the merger will receive a unit consisting of (i) $16.50 in cash, without interest and less applicable withholding tax, and (ii) 0.03702 shares of CoStar common stock, for each share of common stock that they own immediately prior to the effective time of the merger, unless they exercise and perfect their appraisal rights under the DGCL. |
Q: | What happens if the merger is not completed? |
A: | If the merger agreement is not adopted by LoopNet stockholders or if the merger is not completed for any other reason, you will not receive any payment for your shares of LoopNet common stock or Series A Preferred Stock in connection with the merger. Instead, LoopNet will remain an independent public company and its common stock will continue to be listed and traded on Nasdaq. If the merger agreement is terminated under specified circumstances, LoopNet may be required to pay CoStar a termination fee of $25.8 million and if the merger is terminated under certain other circumstances, CoStar may be required |
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to pay LoopNet a termination fee of $51.6 million as described under “The Merger Agreement — Termination Fees and Expenses.” |
Q: | Where and when is the special meeting? |
A: | The special meeting will take place at , local time, on , 2011, at 185 Berry Street, San Francisco, CA 94017. |
Q: | Who is eligible to vote? |
A: | Holders of LoopNet common stock and Series A Preferred Stock as of the close of business on , 2011, the record date for the special meeting, are eligible to vote. |
Q: | How many votes do LoopNet’s stockholders have? |
A: | Holders of LoopNet common stock have one vote for each share of common stock that such holder owned at the close of business on , 2011, the record date for the special meeting. |
Q: | What vote of LoopNet’s stockholders is required to approve each proposal? |
A: | The following are the vote requirements for the proposals: |
• | Adoption of the merger agreement. In order to complete the merger, holders of a majority of the outstanding shares of LoopNet’s common stock and Series A Preferred Stock, voting together as a single class on an as-converted basis, must vote FOR the adoption of the merger agreement (the “Stockholder Approval”). | |
• | Advisory vote approving change in control severance payments. The affirmative vote of holders of a majority of the votes cast at the special meeting and entitled to vote thereon, will be required to approve, by an advisory vote, the change in control severance payments. | |
• | Adjournment (if necessary). The affirmative vote of holders of a majority of the votes cast at the special meeting and entitled to vote thereon will be required to approve adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies. |
Q: | What constitutes a quorum for the special meeting? |
A: | A majority of the outstanding shares of LoopNet’s common stock and Series A Preferred Stock, on an as-converted basis, entitled to vote being present in person or represented by proxy constitutes a quorum for the special meeting. If a quorum shall fail to attend the meeting, the chairman of the meeting may adjourn the meeting to another place, if any, date or time. |
Q: | How does LoopNet’s Board of Directors recommend that I vote? |
A: | LoopNet’s Board of Directors (the “Board”), by unanimous vote, has determined that it is advisable and in the best interests of LoopNet and its stockholders to consummate the merger and the other transactions contemplated by the merger agreement. The Board unanimously recommends that stockholders vote FOR the proposal to adopt the merger agreement, FOR the approval, by advisory vote, of the change in control severance payments and FOR the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies. The Board is soliciting stockholder votes consistent with the Board’s recommendation. You should read the section entitled “The Merger — The Recommendation of LoopNet’s |
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Board of Directors and LoopNet’s Reasons for the Merger” for a discussion of the factors that the Board considered in deciding to recommend voting FOR adoption of the merger agreement. |
Q: | Are any LoopNet stockholders already committed to vote in favor of the merger? |
A: | Yes. LoopNet’s directors and certain of LoopNet’s executive officers and significant stockholders entered into a voting and support agreement (the “voting agreement”) with CoStar and LoopNet and have agreed, in their capacities as LoopNet stockholders, to, among other things, vote all shares of LoopNet’s capital stock beneficially owned by them in favor of adoption of the merger agreement and any related proposal in furtherance thereof and against any proposal made in opposition to the merger, in each case, subject to the terms and conditions of the voting agreement. As of the record date, the directors, executive officers and significant stockholders who signed the voting agreement beneficially owned approximately 32% of the total outstanding shares of LoopNet’s common stock (including the shares underlying the Series A Preferred Stock). The voting agreement will terminate automatically upon termination of the merger agreement. As long as the voting agreement remains in effect, approximately 32% of the total outstanding shares of LoopNet’s common stock are committed to be voted in favor of the adoption of the merger agreement. See “The Voting Agreement.” |
Q: | What do I need to do now? |
A: | Please read this proxy statement/prospectus carefully, including its annexes, to consider how the merger affects you. After you read this proxy statement/prospectus, you should complete, sign and date your proxy card and mail it in the enclosed return envelope or submit your proxy over the telephone or over the Internet as soon as possible so that your shares can be voted at the special meeting of LoopNet’s stockholders. If you sign, date and mail your proxy card without indicating how you wish to vote, your vote will be cast FOR adoption of the merger agreement, FOR approval, by advisory vote, of the change in control severance payments, and FOR the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies. |
Q: | What happens if I do not return a proxy card or otherwise vote? |
A: | The failure to return your proxy card or to otherwise vote will have the same effect as voting against the merger. A vote to abstain will also have the same effect as voting against the merger. |
Q: | How do I vote? |
A: | If you are a stockholder of record, you may vote in person at the special meeting, vote by proxy using the enclosed proxy card, vote by proxy over the telephone, or vote by proxy on the Internet. If you vote by proxy, your shares will be voted as you specify on the proxy card, over the telephone or on the Internet. Whether or not you plan to attend the meeting, LoopNet urges you to vote by proxy to ensure your vote is counted. You may still attend the special meeting and vote in person if you have already voted by proxy. |
• | To vote in person, come to the special meeting and you will be given a ballot when you arrive. | |
• | To vote using the enclosed proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the enclosed return envelope. If you return your signed proxy card to LoopNet before the special meeting, LoopNet will vote your shares as you direct. | |
• | To submit your proxy over the telephone, dial toll-free using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the enclosed proxy card. Your proxy must be received by , Pacific Time, on , 2011 to be counted. | |
• | To submit your proxy on the Internet, go to to complete an electronic proxy card. You will be asked to provide the company number and control number from the enclosed proxy card. Your proxy must be received by , Pacific Time, on , 2011 to be counted. |
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Q: | What does it mean if I receive more than one set of materials? |
A: | This means you own shares of LoopNet stock that are registered under different names. For example, you may own some shares directly as a stockholder of record and other shares through a broker or you may own shares through more than one broker. In these situations, you will receive multiple sets of proxy materials. You must complete, sign, date and return each of the proxy cards that you receive, or grant a proxy for all of your shares over the telephone or over the Internet in accordance with the instructions above in order to grant a proxy for all of the shares you own. Each proxy card you receive comes with its own prepaid return envelope and control number(s); if you grant a proxy by mail, make sure you return each proxy card in the return envelope that accompanies that proxy card, and if you grant a proxy by telephone or via the Internet, use the control number(s) on each proxy card. |
Q: | May I vote in person? |
A: | If you are the stockholder of record of shares of LoopNet common stock or Series A Preferred Stock, you have the right to vote in person at the special meeting with respect to those shares. If you are the beneficial owner of shares of common stock, you are invited to attend the special meeting. However, since you are not the stockholder of record, you may not vote these shares in person at the special meeting, unless you obtain a legal proxy from your broker, bank or nominee giving you the right to vote the shares at the special meeting.Even if you plan to attend the special meeting as a stockholder of record, LoopNet recommends that you also submit your proxy card or voting instructions as described in the above Q&A entitled “How do I vote?” so that your vote will be counted if you later decide not to attend the special meeting. |
Q: | Am I entitled to appraisal rights? |
A: | Under Section 262 of the DGCL, LoopNet stockholders will be entitled to seek appraisal for their shares only if certain criteria are satisfied. See “Appraisal Rights” and Annex D of this proxy statement/prospectus. |
Q: | Is completion of the merger subject to any conditions? |
A: | Yes. CoStar and LoopNet are not required to complete the merger unless a number of conditions are satisfied or waived. These conditions include the adoption of the merger agreement by LoopNet’s stockholders and expiration of the waiting period under theHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). The merger is not subject to a financing condition. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the merger, see “The Merger Agreement — Conditions of the Merger.” |
Q: | Is the merger expected to be taxable to owners of LoopNet common stock? |
A: | The merger is expected to be a taxable transaction for U.S. federal income tax purposes. Accordingly, U.S. holders of LoopNet common stock would generally be subject to U.S. federal income tax as a result of the exchange of their LoopNet common stock for CoStar common stock and cash (including cash |
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received in lieu of a fractional share of CoStar common stock) in the merger. See “The Merger — Material U.S. Federal Income Tax Consequences of the Merger.” |
Q: | When do you expect the merger to be completed? |
A: | LoopNet and CoStar are working to complete the merger as quickly as possible after the special meeting, and anticipate that the merger will be completed by the end of 2011. In order to complete the merger, LoopNet must obtain the required Stockholder Approval, and a number of other closing conditions under the merger agreement must be satisfied or waived. See “The Merger Agreement — Conditions of the Merger.” |
Q: | Should I send in my stock certificates now? |
A: | No. At or about the date of completion of the merger, if you hold certificated shares, you will receive a letter of transmittal with instructions informing you how to send in your stock certificates to CoStar’s exchange agent in order to receive the merger consideration. You should use the letter of transmittal to exchange stock certificates for the merger consideration to which you are entitled as a result of the merger.DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR PROXY. |
Q: | Who can help answer my questions? |
A: | The information provided above in thequestion-and-answer format is for your convenience only and is merely a summary of some of the information in this proxy statement/prospectus. You should carefully read the entire proxy statement/prospectus, including its annexes. If you would like additional copies of this proxy statement/prospectus, without charge, or if you have questions about the merger, including the procedures for voting your shares, you should contact LoopNet’s proxy solicitation agent: |
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• | At the effective time of the merger, each LoopNet stock option, whether or not vested or exercisable, will be canceled and LoopNet will pay each holder of any such option an amount of cashand/or shares of CoStar common stock as described under “The Merger Agreement — Treatment of LoopNet Options and Restricted Stock Units.” | |
• | At the effective time of the merger, each LoopNet restricted stock unit, whether or not vested or exercisable, will be canceled and LoopNet will pay each holder of any such restricted stock unit an amount of cashand/or shares of CoStar common stock as described under “The Merger Agreement — Treatment of LoopNet Options and Restricted Stock Units.” | |
• | For one year after the merger, CoStar has agreed to provide the LoopNet employees who remain in the employment of the surviving corporation with base pay and benefits (excluding equity-based compensation) which are substantially comparable, in the aggregate, to that provided by LoopNet as of the effective time; | |
• | CoStar has agreed to provide LoopNet’s employees with credit for their service to LoopNet for purposes of any compensationand/or benefit program, policy or arrangement maintained by CoStar or any of its subsidiaries in which LoopNet’s employees become participants; and | |
• | CoStar has agreed to provide LoopNet’s employees with certain minimum severance benefits should they be terminated under certain circumstances. |
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• | Place, date and time. The special meeting will be held at local time, on , 2011, at 185 Berry Street, San Francisco, CA 94017. | |
• | LoopNet stockholders entitled to vote. You can vote at the special meeting all of the shares of LoopNet common stock and Series A Preferred Stock you own of record as of , 2011, which is the record date for the special meeting. If you own shares that are registered in the name of someone else, such as a broker, you need to direct that person to vote those shares or obtain an authorization from them and vote the shares yourself at the meeting. On the record date, there were shares of LoopNet common stock outstanding and 50,000 shares of Series A Preferred Stock outstanding, convertible into 7,440,476 shares of LoopNet common stock. | |
• | Required vote. The adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of LoopNet’s common stock and Series A Preferred Stock at the close of business on the record date, voting together as a single class on an as-converted basis (i.e., the Stockholder Approval). A failure to vote or a vote to abstain has the same effect as a vote AGAINST adoption of the merger agreement. | |
• | Procedure for voting. You can vote shares you hold of record by attending the special meeting and voting in person, or you can grant a proxy for your shares by mailing the enclosed proxy card, or by telephone or over the Internet. If your shares of common stock are held in “street name” by your broker, you should instruct your broker on how to vote your shares using the instructions provided by your broker. If you do not instruct your broker to vote your shares, your shares will not be voted. | |
• | How to revoke your proxy. You may revoke your proxy at any time before the vote is taken at the meeting. To revoke your proxy, you must either advise LoopNet’s Secretary in writing, deliver a proxy dated after the date of the proxy you wish to revoke, or attend the meeting and vote your shares in person. Merely attending the special meeting will not constitute revocation of your proxy. If you have |
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instructed your broker to vote your shares, you must follow the directions provided by your broker to change those instructions. |
• | the merger consideration to be received by LoopNet’s common stockholders, including the fact that this price represented a premium of approximately 31% to the closing price of LoopNet common stock on April 26, 2011, the last day prior to the Board’s approval of the proposed merger, and premiums of approximately 32% and 39.5%, respectively, to the one-month and two-month trailing average closing prices of LoopNet common stock as of April 26, 2011; | |
• | the market and execution risks associated with LoopNet’s recently adopted four-year strategic plan and the Board’s judgment that the premium reflected in the merger consideration reflected fair compensation for the loss of the potential stockholder benefits that could be realized if that plan were successfully executed; | |
• | the fact that a large portion of the merger consideration will be paid in cash, giving LoopNet stockholders an opportunity to immediately realize certain value for a significant portion of their investment; | |
• | the opportunity, at least to a limited extent, for LoopNet stockholders to participate in any future earnings or growth of the combined company and future appreciation in the value of CoStar common stock following the merger should they decide to retain the CoStar common stock payable in the merger; | |
• | the Board’s judgment that CoStar was the most probable buyer and had the substantial resources needed for a potential merger to succeed, and the benefits that LoopNet and its advisors were able to obtain as a result of extensive negotiations with CoStar, including a significant increase in CoStar’s bid from the beginning of the process to the end of the negotiations; | |
• | Evercore’s opinion that, as of the date of the opinion and based on and subject to assumptions made, matters considered and limitations on the scope of review undertaken by Evercore as set forth therein, the merger consideration was fair, from a financial point of view, to the holders of the shares of LoopNet common stock entitled to receive such merger consideration. The Evercore opinion is more fully described in the subsection entitled “The Merger — Opinion of LoopNet’s Financial Advisor” The full text of the opinion is attached to this proxy statement/prospectus as Annex C; | |
• | the terms of the merger agreement, including the $51.6 million termination fee payable by CoStar in certain circumstances upon termination of the merger agreement if necessary antitrust approval is not obtained, and LoopNet’s ability to respond to a competing proposal that the Board determines is a superior proposal; and | |
• | the closing conditions included in the merger agreement, including the absence of any financing condition, and the likelihood that the merger would be completed. |
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• | the fact that LoopNet stockholders would not have the opportunity to continue participating in LoopNet’s potential upside as an independent company; | |
• | the fact that, because LoopNet’s stockholders will be receiving primarily cash for their stock, they will receive only limited compensation for any increase in the value of LoopNet or CoStar either during the pre-closing period or following the closing; | |
• | the fact that because the stock portion of the merger consideration is a fixed exchange ratio of shares of CoStar common stock to LoopNet common stock, LoopNet common and preferred stockholders could be adversely affected by a decrease in the trading price of CoStar common stock during the pendency of the merger, and the fact that the merger agreement does not provide LoopNet with a price-based termination right or other similar protection, such as a “collar,” with respect to CoStar’s stock price; | |
• | the possibility that the merger may not be completed and the potential adverse consequences to LoopNet if the merger is not completed; | |
• | the limitations imposed in the merger agreement on the conduct of LoopNet’s business during the pre-closing period, its ability to solicit and respond to competing proposals and the ability of the Board to change or withdraw its recommendation of the merger; | |
• | the fact that while the approval of the adoption of the merger agreement by LoopNet’s stockholders is required under the merger agreement and the DGCL, approximately 32% of the total outstanding shares of LoopNet’s common stock (including the shares underlying the Series A Preferred Stock), have committed to vote in favor of such adoption pursuant to the voting agreement; | |
• | the fact that the merger is expected to be a taxable transaction to LoopNet stockholders; | |
• | potential conflicts of interest of LoopNet’s directors and executive officers; and | |
• | the additional risks described in the section entitled “Risk Factors.” |
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• | the receipt of the Stockholder Approval; | |
• | the absence of any injunctions or other legal prohibitions preventing the consummation of the merger; | |
• | the expiration or termination of the waiting period under the HSR Act and the obtaining of any other approvals or clearances required to consummate the merger with respect to any other antitrust laws; and | |
• | the effectiveness of theForm S-4 in which this proxy statement/prospectus is included as a prospectus and the lack of any stop order suspending the effectiveness of theForm S-4 or pending or threatened SEC proceedings to effect a stop order. |
• | the absence of any pending suit, action or proceeding by a governmental authority which seeks to make illegal, prevent or otherwise restrain the consummation of the merger, or that, individually or in the aggregate, is reasonably expected to impose a substantial detriment (as defined in the section entitled “The Merger — Regulatory Matters”); | |
• | the absence of injunctions or other legal prohibitions making illegal or preventing or otherwise restraining the consummation of the merger or imposing, or that, individually or in the aggregate, are reasonably expected to impose a substantial detriment; | |
• | the accuracy of LoopNet’s representations and warranties in the merger agreement to varying standards depending on the representation and warranty; | |
• | LoopNet’s performance in all material respects of its obligations under the merger agreement; | |
• | the delivery to CoStar of an officer’s certificate from LoopNet confirming that the conditions described in the immediately preceding two bullets have been satisfied; and | |
• | the lack of general banking, stock market or credit market limitations, suspensions and moratoria. |
• | the accuracy of CoStar’s representations and warranties in the merger agreement, to varying standards depending on the representation and warranty; | |
• | CoStar’s and merger sub’s performance in all material respects of their obligations under the merger agreement; and | |
• | the delivery to LoopNet of an officer’s certificate from CoStar confirming that the conditions described in the immediately preceding two bullets have been satisfied. |
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• | by mutual written consent of LoopNet and CoStar; | |
• | by either CoStar or LoopNet, if: |
• | the merger has not been completed by January 31, 2012, or such later date as provided pursuant to the merger agreement (such date being the “end date”, as described in further detail in the section entitled “The Merger Agreement — Termination; Termination Fees; Expenses”), except that this right is not available to any party whose breach of the merger agreement primarily caused the failure to complete the merger by such date; | |
• | there is a final and nonappealable legal restraint or prohibition in effect that prevents the completion of the merger; or | |
• | the Stockholder Approval is not obtained at the special meeting or any postponement or adjournment thereof; |
• | by CoStar, if: |
• | the Board makes an adverse recommendation change (as defined in the section entitled “The Merger Agreement — Termination; Termination Fees; Expenses”); | |
• | after an alternative acquisition proposal has been received, the Board fails to publicly reaffirm its recommendation that the stockholders adopt the merger agreement within seven business days after a request to do so by CoStar; | |
• | the Board fails to publicly recommend against a publicly announced alternative acquisition proposal after a request to do so by CoStar by the later of five business days before the special stockholder meeting and five business days after CoStar’s request (or such shorter period as may exist between the date of the alternative acquisition proposal and the date of the special meeting); | |
• | LoopNet materially breaches its obligations under the merger agreement related to non-solicitation and other offers; | |
• | LoopNet breaches any of its representations or warranties or fails to perform any covenant or obligation in the merger agreement in such a way as to cause the failure of the closing conditions relating thereto, and such failure cannot be cured by the end date,providedthat, at the time of notice of termination, neither CoStar nor merger sub is in material breach of its or their obligations under the merger agreement; |
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• | LoopNet willfully fails to perform any of its covenants or agreements set forth in the merger agreement following an alternative acquisition proposal; or | |
• | there is a final and nonappealable legal restraint or prohibition imposing a substantial detriment. |
• | by LoopNet, if: |
• | prior to obtaining the Stockholder Approval, the requirements of a superior proposal termination as described in the section “The Merger Agreement — No Solicitation; Changes in Recommendations” have been fully satisfied and LoopNet pays to CoStar the $25.8 million termination fee described below; or | |
• | if CoStar breaches any of its representations or warranties or fails to perform any covenant or obligation in the merger agreement in such a way as to cause the failure of the closing conditions relating thereto, and such failure cannot be cured by the end date,providedthat, at the time the termination notice is delivered, LoopNet is not in material breach of its obligations under the merger agreement. |
• | by CoStar, if (i) the Board makes an adverse recommendation change, (ii) after an alternative acquisition proposal has been received, the Board fails to publicly reaffirm its recommendation that stockholders adopt the merger agreement within seven business days after a request to do so by Costar, (iii) the Board fails to publicly recommend against a publicly announced alternative acquisition proposal after a request to do so by CoStar by the later of five business day before the special stockholder meeting and five business days after CoStar’s request (or such shorter period as may exist between the date of the alternative acquisition proposal and the date of the special meeting), or (iv) LoopNet materially breaches its obligations under the merger agreement related to non-solicitation and other offers; | |
• | by CoStar, if LoopNet, following an alternative acquisition proposal, willfully fails to perform any covenant or agreement set forth in the merger agreement; | |
• | by LoopNet, when CoStar could have terminated the merger agreement for any reason described above, unless LoopNet has the right to terminate the merger agreement as described in the next bullet; | |
• | by LoopNet, in connection with a superior proposal termination; | |
• | by CoStar or LoopNet if the merger has not been consummated by the end date and prior to such termination, an acquisition proposal was publicly announced or otherwise communicated to the Board or its stockholders and within 12 months following the date of such termination, LoopNet enters into a definitive agreement with respect to, or consummates, an alternative acquisition proposal; or | |
• | by CoStar or LoopNet if the special meeting has concluded (including any adjournment or postponement thereof) and the Stockholder Approval has not been obtained and (A) prior to such termination, an alternative acquisition proposal was publicly announced or otherwise communicated to the Board or its stockholders or (B) within 12 months following the date of such termination, LoopNet has entered into a definitive agreement with respect to an alternative acquisition proposal that provides for consideration to LoopNet stockholders (whether cash or otherwise) having an aggregate value that is greater than the merger consideration to be received by LoopNet stockholders under the merger agreement or (C) within 12 months following the date of such termination a tender offer or other alternative acquisition proposal is consummated as a result of which LoopNet stockholders are entitled to receive consideration (whether cash or otherwise) having an aggregate value that is greater than the merger consideration to be received by LoopNet stockholders under the merger agreement. |
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Year Ended December 31, | Three Months Ended March 31, | |||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||||
Consolidated Statement of Operations Data: | ||||||||||||||||||||||||||||
Revenues | $ | 158,889 | $ | 192,805 | $ | 212,428 | $ | 209,659 | $ | 226,260 | $ | 55,093 | $ | 59,618 | ||||||||||||||
Cost of revenues | 56,136 | 76,704 | 73,408 | 73,714 | 83,599 | 21,200 | 22,566 | |||||||||||||||||||||
Gross margin | 102,753 | 116,101 | 139,020 | 135,945 | 142,661 | 33,893 | 37,052 | |||||||||||||||||||||
Operating expenses | 88,672 | 98,249 | 99,232 | 104,110 | 119,886 | 28,791 | 29,956 | |||||||||||||||||||||
Income from operations | 14,081 | 17,852 | 39,788 | 31,835 | 22,775 | 5,102 | 7,096 | |||||||||||||||||||||
Interest and other income, net | 6,845 | 8,045 | 4,914 | 1,253 | 735 | 238 | 202 | |||||||||||||||||||||
Income before income taxes | 20,926 | 25,897 | 44,702 | 33,088 | 23,510 | 5,340 | 7,298 | |||||||||||||||||||||
Income tax expense, net | 8,516 | 9,946 | 20,079 | 14,395 | 10,221 | 2,451 | 2,766 | |||||||||||||||||||||
Net income | $ | 12,410 | $ | 15,951 | $ | 24,623 | $ | 18,693 | $ | 13,289 | $ | 2,889 | $ | 4,532 | ||||||||||||||
Net income per share — basic | $ | 0.66 | $ | 0.84 | $ | 1.27 | $ | 0.95 | $ | 0.65 | $ | 0.14 | $ | 0.22 | ||||||||||||||
Net income per share — diluted | $ | 0.65 | $ | 0.82 | $ | 1.26 | $ | 0.94 | $ | 0.64 | $ | 0.14 | $ | 0.22 | ||||||||||||||
Weighted average shares outstanding — basic | 18,751 | 19,044 | 19,372 | 19,780 | 20,330 | 20,249 | 20,531 | |||||||||||||||||||||
Weighted average shares outstanding — diluted | 19,165 | 19,404 | 19,550 | 19,925 | 20,707 | 20,602 | 20,965 | |||||||||||||||||||||
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As of December 31, | As of March 31, | |||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||||||||||
Cash, cash equivalents, short-term and long-term investments | $ | 158,148 | $ | 187,426 | $ | 224,590 | $ | 255,698 | $ | 239,316 | $ | 218,455 | $ | 325,023 | ||||||||||||||
Working capital | 154,606 | 167,441 | 183,347 | 203,660 | 188,279 | 168,920 | 261,919 | |||||||||||||||||||||
Total assets | 275,437 | 321,843 | 334,384 | 404,579 | 439,648 | 407,864 | 506,479 | |||||||||||||||||||||
Total liabilities | 25,327 | 40,038 | 30,963 | 45,573 | 58,146 | 45,505 | 117,081 | |||||||||||||||||||||
Stockholders’ equity | 250,110 | 281,805 | 303,421 | 359,006 | 381,502 | 362,359 | 389,398 |
As of December 31, | As of March 31, | |||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||||||||
Other Operating Data (unaudited): | ||||||||||||||||||||||||||||
Number of subscription client sites | 13,257 | 14,467 | 15,920 | 16,020 | 16,781 | 15,995 | 17,267 | |||||||||||||||||||||
Millions of properties in database | 2.1 | 2.7 | 3.2 | 3.6 | 4.0 | 3.7 | 4.0 |
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Year Ended December 31, | Three Months Ended March 31, | |||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||||
Consolidated Statements of Operations Data: | ||||||||||||||||||||||||||||
Revenues | $ | 48,411 | $ | 70,729 | $ | 86,074 | $ | 76,487 | $ | 78,002 | $ | 18,822 | $ | 20,713 | ||||||||||||||
Cost of revenue(1) | 5,599 | 8,033 | 10,858 | 11,060 | 12,562 | 2,846 | 3,157 | |||||||||||||||||||||
Gross profit | 42,812 | 62,696 | 75,216 | 65,427 | 65,440 | 15,976 | 17,556 | |||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Sales and marketing(1) | 9,506 | 14,667 | 18,825 | 15,064 | 16,785 | 4,290 | 5,134 | |||||||||||||||||||||
Technology and product development(1) | 4,341 | 6,427 | 9,075 | 10,707 | 12,231 | 2,949 | 3,659 | |||||||||||||||||||||
General and administrative(1) | 7,697 | 11,997 | 17,773 | 20,677 | 15,693 | 4,371 | 4,924 | |||||||||||||||||||||
Amortization of acquired intangible assets | 106 | 256 | 966 | 1,191 | 2,083 | 445 | 641 | |||||||||||||||||||||
Total operating expenses | 21,650 | 33,347 | 46,639 | 47,639 | 46,792 | 12,055 | 14,358 | |||||||||||||||||||||
Income from operations | 21,162 | 29,349 | 28,577 | 17,788 | 18,648 | 3,921 | 3,198 | |||||||||||||||||||||
Interest and other (expense) income, net | 2,883 | 5,046 | 1,998 | 211 | (2,461 | ) | (104 | ) | (317 | ) | ||||||||||||||||||
Income before tax | 24,045 | 34,395 | 30,575 | 17,999 | 16,187 | 3,817 | 2,881 | |||||||||||||||||||||
Income tax expense | 8,550 | 13,268 | 12,297 | 6,246 | 461 | 1,417 | 1,038 | |||||||||||||||||||||
Net income | 15,495 | 21,127 | 18,278 | 11,753 | 15,726 | 2,400 | 1,843 | |||||||||||||||||||||
Convertible preferred stock accretion of discount | — | — | — | (240 | ) | (339 | ) | (85 | ) | (85 | ) | |||||||||||||||||
Net income applicable to common stockholders | $ | 15,495 | $ | 21,127 | $ | 18,278 | $ | 11,513 | $ | 15,387 | $ | 2,315 | $ | 1,758 | ||||||||||||||
Net income per share applicable to common stockholders | ||||||||||||||||||||||||||||
Basic | $ | 0.42 | $ | 0.55 | $ | 0.51 | $ | 0.28 | $ | 0.38 | $ | 0.06 | $ | 0.04 | ||||||||||||||
Diluted | $ | 0.40 | $ | 0.52 | $ | 0.49 | $ | 0.27 | $ | 0.36 | $ | 0.05 | $ | 0.04 | ||||||||||||||
(1) | Stock-based compensation is allocated as follows: |
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Year Ended December 31, | Three Months Ended March 31, | |||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Cost of revenue | $ | 151 | $ | 357 | $ | 570 | $ | 495 | $ | 546 | $ | 128 | $ | 130 | ||||||||||||||
Sales and marketing | 686 | 1,358 | 2,198 | 894 | 1,786 | 485 | 585 | |||||||||||||||||||||
Technology and product development | 195 | 600 | 1,311 | 2,298 | 2,680 | 682 | 801 | |||||||||||||||||||||
General and administrative | 421 | 1,180 | 1,855 | 3,140 | 3,220 | 827 | 994 | |||||||||||||||||||||
Total | $ | 1,453 | $ | 3,495 | $ | 5,934 | $ | 6,827 | $ | 8,232 | $ | 2,122 | $ | 2,510 | ||||||||||||||
Year Ended December 31, | As of March 31, | |||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||||||||||
Cash, cash equivalents and short-term investments | $ | 89,028 | $ | 107,889 | $ | 64,587 | $ | 129,011 | $ | 92,285 | $ | 118,527 | $ | 97,335 | ||||||||||||||
Working capital | 81,884 | 94,667 | 52,529 | 117,210 | 79,917 | 108,267 | 85,544 | |||||||||||||||||||||
Total assets | 100,205 | 137,359 | 108,210 | 174,249 | 171,990 | 176,743 | 176,825 | |||||||||||||||||||||
Total liabilities | 10,202 | 15,506 | 15,759 | 14,747 | 18,765 | 15,581 | 18,605 | |||||||||||||||||||||
Redeemable convertible preferred stock | — | — | — | 48,207 | 48,546 | 48,291 | 48,631 | |||||||||||||||||||||
Total shareholders’ equity | 90,003 | 121,853 | 92,451 | 111,295 | 104,679 | 112,871 | 109,589 |
Year Ended December 31, | Three Months Ended March 31, | |||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Consolidated Statement of Cash Flows Data: | ||||||||||||||||||||||||||||
Cash flow provided by operating activities | $ | 23,205 | $ | 30,301 | $ | 25,105 | $ | 18,632 | $ | 21,262 | $ | 4,001 | $ | 5,796 | ||||||||||||||
Depreciation and amortization | 611 | 1,154 | 2,199 | 2,601 | 3,480 | 817 | 995 | |||||||||||||||||||||
Capital expenditures | (665 | ) | (1,797 | ) | (1,319 | ) | (1,437 | ) | (1,197 | ) | (153 | ) | (900 | ) |
Year Ended December 31, | Three Months Ended March | |||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||||||||
Other Operating Data (unaudited): | ||||||||||||||||||||||||||||
LoopNet registered members at end of period | 1,766,508 | 2,567,729 | 3,251,260 | 3,925,534 | 4,626,973 | 4,121,906 | 4,833,200 | |||||||||||||||||||||
LoopNet premium members at end of period | 78,952 | 88,340 | 77,283 | 68,378 | 68,608 | 68,809 | 70,692 |
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Three | ||||||||
Months Ended | ||||||||
Year Ended December 31, 2010 | March 31, 2011 | |||||||
(In thousands, except per share data) | ||||||||
Consolidated Statement of Operations Data: | ||||||||
Revenues | $ | 304,262 | $ | 80,331 | ||||
Cost of revenues | 96,161 | 25,723 | ||||||
Gross margin | 208,101 | 54,608 | ||||||
Operating expenses | 203,094 | 53,298 | ||||||
Income from operations | 5,007 | 1,310 | ||||||
Interest and other income (expense), net | (25,423 | ) | (6,012 | ) | ||||
Income (loss) before income taxes | (20,416 | ) | (4,702 | ) | ||||
Income tax benefit, net | (13,363 | ) | (2,149 | ) | ||||
Net income (loss) | $ | (7,053 | ) | $ | (2,553 | ) | ||
Net income (loss) per share — basic | $ | (0.32 | ) | $ | (0.11 | ) | ||
Net income (loss) per share — diluted | $ | (0.32 | ) | $ | (0.11 | ) | ||
Weighted average shares outstanding — basic | 22,301 | 22,502 | ||||||
Weighted average shares outstanding — diluted | 22,301 | 22,502 | ||||||
As of March 31, 2011 | ||||
(In thousands) | ||||
Consolidated Balance Sheet Data: | ||||
Cash, cash equivalents, short-term and long-term investments | $ | 58,777 | ||
Working capital (deficit) | (13,711 | ) | ||
Total assets | 1,101,383 | |||
Total liabilities | 598,560 | |||
Stockholders’ equity | 502,823 |
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As of and for the | ||||||||
Year Ended | Three Months Ended | |||||||
December 31, 2010 | March 31, 2011 | |||||||
CoStar Historical | ||||||||
Per common share data: | ||||||||
Income from continuing operations — basic | $ | 0.65 | $ | 0.22 | ||||
Income from continuing operations — diluted | 0.64 | 0.22 | ||||||
Book value | 18.37 | 18.70 |
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As of and for the | ||||||||
Year Ended | Three Months Ended | |||||||
December 31, 2010 | March 31, 2011 | |||||||
LoopNet Historical | ||||||||
Per common share data: | ||||||||
Income from continuing operations — basic | $ | 0.38 | $ | 0.04 | ||||
Income from continuing operations — diluted | 0.36 | 0.04 | ||||||
Book value | 3.25 | 3.37 | ||||||
Unaudited CoStar Pro Forma Combined | ||||||||
Per common share data: | ||||||||
Loss from continuing operations — basic | $ | (0.32 | ) | $ | (0.11 | ) | ||
Loss from continuing operations — diluted | (0.32 | ) | (0.11 | ) | ||||
Book value | N/A | 22.06 | ||||||
Unaudited Pro Forma Combined LoopNet Equivalent | ||||||||
Per common share data: | ||||||||
Loss from continuing operations — basic | $ | (0.01 | ) | $ | (0.00 | ) | ||
Loss from continuing operations — diluted | (0.01 | ) | (0.00 | ) | ||||
Book value | N/A | 0.82 |
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CoStar | LoopNet | |||||||||||||||
High | Low | High | Low | |||||||||||||
For the Calendar Quarter Ended: | ||||||||||||||||
2009 | ||||||||||||||||
March 31, 2009 | 35.93 | 24.23 | 7.59 | 5.04 | ||||||||||||
June 30, 2009 | 40.09 | 31.10 | 9.20 | 5.93 | ||||||||||||
September 30, 2009 | 41.57 | 33.97 | 9.27 | 7.27 | ||||||||||||
December 31, 2009 | 44.43 | 38.35 | 11.47 | 8.29 | ||||||||||||
2010 | ||||||||||||||||
March 31, 2010 | 42.97 | 38.22 | 11.86 | 8.86 | ||||||||||||
June 30, 2010 | 45.95 | 38.80 | 12.72 | 8.50 | ||||||||||||
September 30, 2010 | 49.53 | 37.66 | 12.95 | 9.73 | ||||||||||||
December 31, 2010 | 57.75 | 48.86 | 13.08 | 10.38 | ||||||||||||
2011 | ||||||||||||||||
March 31, 2011 | 62.89 | 55.58 | 14.81 | 9.94 | ||||||||||||
June 30, 2011 (through , 2011) |
Implied Value Per | ||||||||||||
Share of LoopNet | ||||||||||||
LoopNet Common Stock | CoStar Common Stock | Common Stock | ||||||||||
April 27, 2011 | $ | 14.37 | $ | 61.38 | $ | 18.77 | ||||||
, 2011 | $ | $ | $ | |||||||||
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• | incur liens or additional indebtedness (including guarantees or contingent obligations); | |
• | engage in mergers and other fundamental changes; | |
• | sell or otherwise dispose of property or assets or make acquisitions; | |
• | pay dividends and other distributions; and | |
• | change the nature of its business. |
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• | LoopNet may be required, under certain circumstances, to pay CoStar a termination fee of $25.8 million under the merger agreement; | |
• | LoopNet will be required to pay certain costs relating to the merger, whether or not the merger is completed, such as legal, accounting, financial advisor and printing fees; | |
• | under the merger agreement, LoopNet is subject to certain restrictions on the conduct of its business prior to completing the merger which may adversely affect its ability to execute certain of its business strategies; and | |
• | matters relating to the merger may require substantial commitments of time and resources by LoopNet management, which could otherwise have been devoted to other opportunities that may have been beneficial to LoopNet as an independent company. |
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• | the financial performance of each of LoopNet and CoStar through the completion of the merger; | |
• | volatility in the stock markets; | |
• | the timing of, and regulatory and other conditions associated with, the completion of the merger; | |
• | the possibility that the merger does not close, including, but not limited to, due to the failure to obtain approval of LoopNet’s stockholders, or the failure to obtain governmental approval; | |
• | the possibility that the expected synergies from the proposed merger will not be realized, or will not be realized within the anticipated time period or that the businesses will not be integrated successfully; | |
• | the risk that the businesses of CoStar and LoopNet may not be combined successfully or in a timely and cost-efficient manner; | |
• | the risk that business disruption relating to the merger may be greater than expected; | |
• | failure to obtain any required financing on favorable terms; | |
• | competitive pressures in the markets in which LoopNet or CoStar operates; | |
• | the loss of key employees; | |
• | general economic and political conditions, natural disasters, health concerns, and technological developments; | |
• | risks related to litigation related to the merger in which LoopNet or CoStar may become involved; and | |
• | other factors that are described from time to time in CoStar’s and LoopNet’s periodic filings with the Securities and Exchange Commission. |
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• | consider and adopt the merger agreement; | |
• | approve, by an advisory vote, the change in control severance payments; and | |
• | approve the adjournment of the special meeting, if necessary or appropriate, for, among other reasons, the solicitation of additional proxies in the event that there are not sufficient votes at the time of the special meeting to adopt the merger agreement. |
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• | Merger Consideration. The Board concluded that the merger consideration to be received by LoopNet common stockholders, including the implied merger consideration as of April 26, 2011 of $18.73 per share, represented an attractive valuation for LoopNet. This price represented a premium of approximately 31% to the closing price per shares of $14.31 on the last day prior to the Board’s approval of the proposed merger, and premiums of approximately 32% and 39.5%, respectively, to the one-month and two-month trailing average closing prices of LoopNet common stock as of April 26, 2011. The Board believed that this price was the highest price that CoStar would be willing to pay. | |
• | Market and Execution Risks. While the Board remained supportive of LoopNet’s recently adopted four-year strategic plan and optimistic about LoopNet’s prospects on a standalone basis, it also considered the risks associated with going forward as an independent company. The Board considered the potential market and execution risks associated with the plan and the attendant risk that, if LoopNet did not enter into the merger agreement with CoStar, the price that might be received by LoopNet’s stockholders selling shares in the open market, both from a short-term and long-term perspective, could be less than the merger consideration. The Board concluded that the merger consideration enabled |
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LoopNet stockholders to realize a substantial portion of LoopNet’s potential future value without the market or execution risks associated with continued independence. |
• | Significant Portion of Merger Consideration in Cash. The Board considered that a large portion of the merger consideration will be paid in cash, giving LoopNet stockholders an opportunity to realize certain value for a significant portion of their investment. | |
• | Participation in Potential Upside. The Board considered the benefits to the combined company that could result from the merger, including an enhanced financial position, increased diversity and depth in its product lines and the potential to realize significant cost savings and revenue synergies, and the fact that, since a portion of the merger consideration will be paid in CoStar common stock, LoopNet stockholders would have the opportunity, at least to a limited extent, to participate in any future earnings or growth of the combined company and future appreciation in the value of CoStar common stock following the merger should they decide to retain the CoStar common stock payable in the merger. | |
• | Extensive Negotiations with CoStar. The Board considered that CoStar was the most probable buyer and that CoStar had the substantial resources needed to finance a transaction at this value and to make the potential merger successful. The Board also considered the benefits that LoopNet and its advisors were able to obtain as a result of extensive negotiations with CoStar, including a significant increase in CoStar’s bid from the beginning of the process to the end of the negotiations. The Board concluded that the consideration reflected in the merger agreement was the highest value that was available to LoopNet at the time, and that there was no assurance that a more favorable opportunity to sell LoopNet would arise later, especially since CoStar had earlier been identified by LoopNet’s management and financial advisor as the most probable buyer. | |
• | Opinion of LoopNet’s Financial Advisor. The Board considered Evercore’s opinion that, as of the date of the opinion and based on and subject to assumptions made, matters considered and limitations on the scope of review undertaken by Evercore as set forth therein, the merger consideration was fair, from a financial point of view, to the holders of the shares of LoopNet common stock entitled to receive such merger consideration. The Evercore opinion is more fully described in the subsection entitled “— Opinion of LoopNet’s Financial Advisor”. The full text of the opinion is attached to this proxy statement/prospectus as Annex C. | |
• | Terms of the Merger Agreement. The Board considered the terms of the merger agreement, including the parties’ respective representations, warranties and covenants, the conditions to their respective obligations to complete the merger and their ability to terminate the agreement. The Board noted that the termination or“break-up” fee provisions of the merger agreement could have the effect of discouraging competing third party proposals, but that such provisions are customary for transactions of this size and type. The Board considered that the $25.8 million termination fee, representing approximately 3.0% of the equity value of the proposed transaction, was reasonable. The Board noted the merger agreement permits LoopNet and the Board to respond to a competing proposal that the Board determines is a superior proposal, subject to certain restrictions imposed by the merger agreement and the requirement that LoopNet pay CoStar the termination fee in the event that LoopNet terminates the merger agreement to accept a superior proposal. The Board also noted the $51.6 million termination fee payable by CoStar in certain circumstances upon termination of the merger agreement if necessary antitrust approval is not obtained. | |
• | Likelihood of Closing. The Board considered the relatively limited nature of the closing conditions included in the merger agreement, including the absence of any financing condition and the likelihood that the merger will be approved by requisite regulatory authorities and LoopNet’s stockholders. |
• | Lack of Ongoing Participation in LoopNet’s Potential Upside. The Board considered that LoopNet stockholders would not have the opportunity to continue participating in LoopNet’s potentially |
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significant upside as an independent company. The Board was optimistic about LoopNet’s prospects on a standalone basis and its recently adopted four-year strategic plan, but the Board’s judgment was that the premium reflected in the merger consideration reflected fair compensation for the loss of the potential stockholder benefits that could be realized if that plan were executed successfully; |
• | Smaller Ongoing Equity Participation in the Combined Company by LoopNet Stockholders. The Board understood that, because LoopNet’s stockholders will be receiving primarily cash for their stock, they will receive only limited compensation for any increase in the value of LoopNet or CoStar either during the pre-closing period or following the closing. | |
• | Fixed Stock Portion of Merger Consideration. The Board considered that because the stock portion of the merger consideration is a fixed exchange ratio of shares of CoStar common stock to LoopNet common stock, LoopNet common and preferred stockholders could be adversely affected by a decrease in the trading price of CoStar common stock during the pendency of the merger, and the fact that the merger agreement does not provide LoopNet with a price-based termination right or other similar protection, such as a “collar,” with respect to CoStar’s stock price. The Board determined that this structure was appropriate and the risk acceptable given that a substantial portion of the merger consideration will be paid in a fixed cash amount, reducing the impact of any decline in the trading price of CoStar common stock on the value of the merger consideration. | |
• | Potential Inability to Complete the Merger. The Board considered the possibility that the merger may not be completed and the potential adverse consequences to LoopNet if the merger is not completed, including the potential loss of customers, partners and employees, reduction of value offered by others to LoopNet in a future business combination, and erosion of customer, partner and employee confidence in LoopNet. | |
• | Interim Operating Covenants. The Board considered the limitations imposed in the merger agreement on the conduct of LoopNet’s business during the pre-closing period, its ability to solicit and respond to competing proposals and the ability of the Board to change or withdraw its recommendation of the merger. | |
• | Effect of Voting Agreement. The Board considered the fact that while the approval of the adoption of the merger agreement by LoopNet’s stockholders is required under the merger agreement and the DGCL, approximately 32% of the total outstanding shares of LoopNet’s common stock (including the shares underlying the Series A Preferred Stock) have committed to vote in favor of such adoption pursuant to the voting agreement. As a result, approximately 32% of the total outstanding shares of LoopNet’s common stock will vote to adopt the merger agreement unless the merger agreement is terminated in accordance with its terms. See “The Merger Agreement — No Solicitation; Changes in Recommendations” and “The Voting Agreement” beginning on pages 74 and 85 of this proxy statement/prospectus, respectively. | |
• | Taxability. The merger is expected to be a taxable transaction for U.S. federal income tax purposes, and the receipt of CoStar common stock and cash in exchange for LoopNet common stock in the merger will therefore generally be taxable to LoopNet common stockholders for U.S. federal income tax purposes. See “The Merger — Material U.S. Federal Income Tax Consequences of the Merger”. | |
• | Interests of LoopNet’s Directors and Executive Officers. The Board considered the potential conflicts of interest of LoopNet’s directors and executive officers, as described in the section entitled “— Interests of Executive Officers and Directors of LoopNet in the Merger; Change in Control Severance Payments”. | |
• | Other Risks. The additional risks described in the section entitled “Risk Factors”. |
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• | reviewed certain publicly available business and financial information relating to LoopNet and CoStar that Evercore deemed to be relevant, including publicly available research analysts’ estimates; | |
• | reviewed or discussed certain non-public historical financial statements and other non-public historical financial and operating data relating to LoopNet and CoStar prepared and furnished to Evercore by the respective managements of LoopNet and CoStar; | |
• | reviewed certain non-public projected operating and financial data relating to LoopNet prepared and furnished to Evercore by management of LoopNet; | |
• | discussed the past and current operations, financial projections and current financial condition of LoopNet with management of LoopNet (including their views on the risks and uncertainties of achieving such projections); | |
• | reviewed the reported prices and the historical trading activity of shares of LoopNet common stock and CoStar common stock; |
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• | compared the financial performance of LoopNet and CoStar and their respective stock market trading multiples with those of certain other publicly traded companies that Evercore deemed relevant; | |
• | compared the financial performance of LoopNet and the valuation multiples relating to the merger with those of certain other transactions that Evercore deemed relevant; | |
• | reviewed the merger agreement; and | |
• | performed such other analyses and examinations and considered such other factors that Evercore deemed appropriate. |
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Historical Average | Premium/(Discount) | Historical Closing | Premium/(Discount) | |||||||||||||
Closing Prices of | Based on Implied | Prices of | Based on Implied | |||||||||||||
LoopNet | Per Share Merger | LoopNet | Per Share Merger | |||||||||||||
Common Stock | Consideration | Common Stock | Consideration | |||||||||||||
Current Price (4/26/11) | $ | 14.31 | 30.9 | % | $ | 14.31 | 30.9 | % | ||||||||
One Month | 14.19 | 32.0 | % | 14.00 | 33.8 | % | ||||||||||
Two Month | 13.43 | 39.4 | % | 11.94 | 56.9 | % | ||||||||||
Three Month | 12.70 | 47.5 | % | 10.57 | 77.2 | % | ||||||||||
Six Month | 11.84 | 58.2 | % | 10.97 | 70.7 | % | ||||||||||
One Year | 11.64 | 61.0 | % | 11.82 | 58.5 | % | ||||||||||
Two Year | 10.47 | 78.9 | % | 9.06 | 106.7 | % | ||||||||||
52-Week High (04/08/11) | 15.10 | 24.0 | % | |||||||||||||
52-Week Low (05/06/10) | 8.50 | 120.4 | % | |||||||||||||
High Since IPO (07/12/07) | 26.37 | (29.0 | )% | |||||||||||||
IPO Price (06/06/06) | 12.00 | 56.1 | % |
Historical Average | Premium/ | Historical Closing | Premium/ | |||||||||||||
Closing Prices of | (Discount) | Prices of | (Discount) | |||||||||||||
CoStar | Based on Current | CoStar | Based on Current | |||||||||||||
Common Stock | Share Price | Common Stock | Share Price | |||||||||||||
Current Price (4/26/11) | $ | 60.25 | $ | 60.25 | ||||||||||||
One Month | 61.38 | (1.8 | )% | 60.35 | (0.2 | )% | ||||||||||
Two Month | 59.43 | 1.4 | % | 57.23 | 5.3 | % | ||||||||||
Three Month | 59.15 | 1.9 | % | 58.25 | 3.4 | % | ||||||||||
Six Month | 57.03 | 5.6 | % | 50.25 | 19.9 | % | ||||||||||
One Year | 50.26 | 19.9 | % | 44.90 | 34.2 | % | ||||||||||
Two Year | 45.02 | 33.8 | % | 35.75 | 68.5 | % | ||||||||||
52-Week High (04/04/11) | 64.06 | (5.9 | )% | |||||||||||||
52-Week Low (07/06/10) | 37.50 | 60.7 | % |
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2H | ||||||||||||||||||||||||
Projected Unlevered Free Cash Flow | 2011E | 2012E | 2013E | 2014E | 2015E | 2016E | ||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Existing Business | $ | 7.5 | $ | 19.2 | $ | 24.6 | $ | 31.1 | $ | 39.9 | $ | 47.8 | ||||||||||||
New Products | $ | (1.2 | ) | $ | (0.6 | ) | $ | 1.1 | $ | 4.2 | $ | 7.1 | $ | 9.6 | ||||||||||
Consolidated Business | $ | 6.3 | $ | 18.6 | $ | 25.7 | $ | 35.3 | $ | 46.9 | $ | 57.5 |
Implied Per Share | Implied Per Share | |||
Equity Reference | Equity Reference | |||
Range for Consolidated | Range for Existing | Implied Per Share | ||
LoopNet Business | LoopNet Business | Merger Consideration | ||
$13.26 - $20.50 | $11.85 - $17.88 | $18.73 |
Implied Per Share | ||||||||||||
Equity Reference | Implied Per Share | |||||||||||
Range for | Equity Reference | Implied Per Share | ||||||||||
Consolidated | Range for Existing | Merger | ||||||||||
LoopNet Business | LoopNet Business | Consideration | ||||||||||
2016E Forward Adjusted EBITDA | $14.81 - $21.52 | $13.11 - $18.91 | $ | 18.73 |
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Online Real Estate Information Interval Leisure Group, Inc. Stewart Information Services Corporation Move, Inc. Reis, Inc. REA Group | Network Model The Corporate Executive Board Company DealerTrack Holdings, Inc. The Advisory Board Company Verisk Analytics, Inc. | |
Online Search/Marketplace/Lead Generation Google Inc. Amazon.com, Inc. eBay Inc. Yahoo! Inc. IAC/InterActive Corp. MercadoLibre, Inc. Marchex, Inc. | Online Vertical Media Monster Worldwide, Inc. SEEK Limited Dice Holdings, Inc. The Knot Inc. TechTarget, Inc. QuinStreet, Inc. Ancestry.com Inc. WebMD Health Corp. | |
Real Estate Brokerages/Agents CB Richard Ellis Group, Inc. Jones Lang LaSalle Incorporated Grubb & Ellis Company ZipRealty, Inc. |
LoopNet | ||||||||||||||||||||||||||||||||||||||||||||||||
(Based on | Online | |||||||||||||||||||||||||||||||||||||||||||||||
Implied | LoopNet | Search/ | ||||||||||||||||||||||||||||||||||||||||||||||
Per Share | (Based on | Online | Marketplace/ | Online | Real Estate | |||||||||||||||||||||||||||||||||||||||||||
Merger | Current | Real Estate | Network | Lead | Vertical | Brokerages/ | ||||||||||||||||||||||||||||||||||||||||||
Metric | Consideration) | Share Price) | Information | Model | Generation | Media | Agents | |||||||||||||||||||||||||||||||||||||||||
Mean | Med. | Mean | Med. | Mean | Med. | Mean | Med. | Mean | Med. | |||||||||||||||||||||||||||||||||||||||
TEV/2011E Revenue | 9.0 | x | 6.4 | x | 3.0 | x | 2.7 | x | 3.1 | x | 2.4 | x | 4.4 | x | 3.5 | x | 4.1 | x | 3.6 | x | 1.1 | x | 1.1 | x | ||||||||||||||||||||||||
TEV/2011E Adjusted EBITDA | 27.6 | x | 19.6 | x | 13.0 | x | 12.8 | x | 11.9 | x | 11.8 | x | 16.0 | x | 10.3 | x | 13.1 | x | 12.2 | x | 12.6 | x | 12.6 | x |
Implied Per Share | ||||||||
Equity Reference | Implied Per Share | |||||||
Ranges for LoopNet | Merger Consideration | |||||||
2011E Revenue | $ | 8.81 - $14.72 | $ | 18.73 | ||||
2011E Adjusted EBITDA | $ | 10.33 - $14.72 |
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1 Day Prior | 1 Week Prior | 1 Month Prior | ||||||||||
Mean | 30.2 | % | 31.4 | % | 34.9 | % | ||||||
Median | 26.6 | % | 28.6 | % | 29.7 | % |
1 Day Prior | 1 Week Prior | 1 Month Prior | ||||||||||
Mean | 36.6 | % | 36.3 | % | 41.5 | % | ||||||
Median | 30.0 | % | 30.0 | % | 31.1 | % |
Implied Per Share | ||||||||
Equity Reference Range | Implied Per Share | |||||||
for LoopNet | Merger Consideration | |||||||
25.0% to 40.0% Premium | $ | 17.89 - $20.03 | $ | 18.73 |
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Targets in the | Targets in the | |||||||
Online Media/Information | Information/Database | |||||||
Industry | Industry | |||||||
TEV/LTM Revenue | ||||||||
High | 7.0x | 6.5x | ||||||
Mean | 4.0x | 3.5x | ||||||
Median | 4.2x | 3.2x | ||||||
Low | 1.2x | 1.2x | ||||||
TEV/LTM Adjusted EBITDA | ||||||||
High | 34.4x | 24.4x | ||||||
Mean | 21.1x | 14.5x | ||||||
Median | 19.4x | 13.5x | ||||||
Low | 12.0x | 9.3x |
Implied Per Share | ||||||||
Equity Reference Ranges | Implied Per Share | |||||||
for LoopNet | Merger Consideration | |||||||
LTM Revenue | $10.19 - $16.64 | $ | 18.73 | |||||
LTM Adjusted EBITDA | $11.96 - $17.45 |
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(in millions)
Revenue | 2011E | 2012E | 2013E | 2014E | 2015E | 2016E | ||||||||||||||||||
Core Business | $ | 83.8 | $ | 102.6 | $ | 123.4 | $ | 147.5 | $ | 174.4 | $ | 204.0 | ||||||||||||
New Products | $ | 1.8 | $ | 6.0 | $ | 11.8 | $ | 20.0 | $ | 29.4 | $ | 39.2 | ||||||||||||
Combined Business | $ | 85.6 | $ | 108.6 | $ | 135.2 | $ | 167.4 | $ | 203.8 | $ | 243.3 | ||||||||||||
Adjusted EBITDA(1) | 2011E | 2012E | 2013E | 2014E | 2015E | 2016E | ||||||||||||||||||
Core Business | $ | 31.8 | $ | 40.1 | $ | 50.6 | $ | 62.2 | $ | 75.2 | $ | 89.0 | ||||||||||||
New Products | $ | (4.0 | ) | $ | (1.3 | ) | $ | 1.4 | $ | 6.2 | $ | 10.6 | $ | 14.5 | ||||||||||
Combined Business | $ | 27.8 | $ | 38.8 | $ | 52.0 | $ | 68.5 | $ | 85.8 | $ | 103.5 |
(1) | The estimate of Adjusted EBITDA represents an estimate of net income plus provision for income tax expense, interest and other (expense) income, net, depreciation and amortization and non-cash stock compensation. |
Projected Unlevered Free Cash Flow (In millions) | 2011E | 2012E | 2013E | 2014E | 2015E | 2016E | ||||||||||||||||||
Core Business | $ | 23.9 | $ | 28.8 | $ | 34.8 | $ | 41.9 | $ | 51.5 | $ | 60.3 | ||||||||||||
New Products | $ | (2.3 | ) | $ | (0.6 | ) | $ | 1.1 | $ | 4.2 | $ | 7.1 | $ | 9.6 | ||||||||||
Combined Business | $ | 21.6 | $ | 28.2 | $ | 35.9 | $ | 46.1 | $ | 58.6 | $ | 69.9 |
• | increase scale, offer complementary services capabilities and diversify CoStar’s client and geographic footprint; | |
• | double the size of CoStar’s paid subscriber base; | |
• | unite CoStar’s strength in researching and analyzing commercial real estate with LoopNet’s complementary strength in marketing commercial real estate properties; | |
• | offer widespread market coverage for customers ranging from large, national brokerage and institutional market players to small, local brokers and owners; | |
• | provide CoStar’s clients with expanded access to active database listings; and | |
• | increase CoStar’s stockholder value through enhanced revenue opportunities and cost saving strategies. |
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Pension/ | Tax | |||||||||||||||||||||||||||||||
Cash | Equity | NQDC | Perquisites/ | Reimbursement | Other | Total | ||||||||||||||||||||||||||
Name | ($)(1) | ($)(10) | ($) | Benefits($)(19) | ($) | ($) | ($) | |||||||||||||||||||||||||
Richard J. Boyle, Jr. | 542,500 | (2) | 8,183,016 | (11) | — | 26,763 | — | — | 8,752,279 | |||||||||||||||||||||||
Brent Stumme | 417,500 | (3) | 5,048,037 | (12) | — | 26,763 | — | — | 5,492,300 | |||||||||||||||||||||||
Thomas P. Byrne | 472,500 | (4) | 8,831,717 | (13) | — | 26,763 | — | — | 9,330,980 | |||||||||||||||||||||||
Jason Greenman | 362,500 | (5) | 4,724,052 | (14) | — | 26,763 | — | — | 5,113,315 | |||||||||||||||||||||||
Wayne Warthen | 350,500 | (6) | 4,724,052 | (15) | — | 26,763 | — | — | 5,101,315 | |||||||||||||||||||||||
Michael J. Handelsman | 272,500 | (7) | 4,231,421 | (16) | — | 11,599 | — | — | 4,515,520 | |||||||||||||||||||||||
Frederick G. Saint | 304,750 | (8) | 4,448,454 | (17) | — | 19,418 | — | — | 4,772,622 | |||||||||||||||||||||||
Bryan D. Smith | 266,250 | (9) | 4,348,748 | (18) | — | 17,984 | — | — | 4,632,982 |
(1) | The payments set forth in this column would be received upon the executive’s “double-trigger” termination without cause or resignation for good reason that occurs during the period beginning two months prior to the closing of the merger and ending twelve months following the closing of the merger. These payments are equal to (x) the executive officer’s annual base salary in effect as of May 6, 2011 plus (y) the average of the annual bonuses paid to such executive over LoopNet’s last two fiscal years that ended prior to May 6, 2011. | |
(2) | Represents Mr. Boyle’s annual base salary of $350,000 plus the average of the annual bonuses paid to Mr. Boyle over LoopNet’s last two fiscal years of $192,500. | |
(3) | Represents Mr. Stumme’s annual base salary of $270,000 plus the average of the annual bonuses paid to Mr. Stumme over LoopNet’s last two fiscal years of $147,500. | |
(4) | Represents Mr. Byrne’s annual base salary of $285,000 plus the average of the annual bonuses paid to Mr. Byrne over LoopNet’s last two fiscal years of $187,500. | |
(5) | Represents Mr. Greenman’s annual base salary of $245,000 plus the average of the annual bonuses paid to Mr. Greenman over LoopNet’s last two fiscal years of $117,500. | |
(6) | Represents Mr. Warthen’s annual base salary of $240,000 plus the average of the annual bonuses paid to Mr. Warthen over LoopNet’s last two fiscal years of $110,500. | |
(7) | Represents Mr. Handelsman’s annual base salary of $205,000 plus the average of the annual bonuses paid to Mr. Handelsman over LoopNet’s last two fiscal years of $67,500. | |
(8) | Represents Mr. Saint’s annual base salary of $231,000 plus the average of the annual bonuses paid to Mr. Saint over LoopNet’s last two fiscal years of $73,750. | |
(9) | Represents Mr. Smith’s annual base salary of $215,000 plus the average of the annual bonuses paid to Mr. Smith over LoopNet’s last two fiscal years of $51,250. | |
(10) | The payments set forth in this column would be received upon a closing of the merger (i.e., they are “single-trigger” benefits). The value of the portion of outstanding stock options and restricted stock units, or RSUs, that would receive accelerated vesting based on a closing date of May 6, 2011 is based on a per share value of the merger consideration of $19.00, equal to the sum of $16.50 plus $2.50, which is the value of 0.03702 shares of CoStar common stock based on the $67.46 average closing price of CoStar common stock on Nasdaq for the five days ending on May 4, 2011, less the applicable per share exercise price in the case of accelerated stock options. | |
(11) | Represents $5,333,016 attributable to the value of accelerated stock options and $2,850,000 attributable to the value of accelerated RSUs held by Mr. Boyle. | |
(12) | Represents $2,981,787 attributable to the value of accelerated stock options and $2,066,250 attributable to the value of accelerated RSUs held by Mr. Stumme. |
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(13) | Represents $5,102,967 attributable to the value of accelerated stock options and $3,728,750 attributable to the value of accelerated RSUs held by Mr. Byrne. | |
(14) | Represents $2,705,302 attributable to the value of accelerated stock options and $2,018,750 attributable to the value of accelerated RSUs held by Mr. Greenman. | |
(15) | Represents $2,705,302 attributable to the value of accelerated stock options and $2,018,750 attributable to the value of accelerated RSUs held by Mr. Warthen. | |
(16) | Represents $1,761,421 attributable to the value of accelerated stock options and $2,470,000 attributable to the value of accelerated RSUs held by Mr. Handelsman. | |
(17) | Represents $1,800,329 attributable to the value of accelerated stock options and $2,648,125 attributable to the value of accelerated RSUs held by Mr. Saint. | |
(18) | Represents $1,783,748 attributable to the value of accelerated stock options and $2,565,000 attributable to the value of accelerated RSUs held by Mr. Smith. | |
(19) | The benefits set forth in this column would be received upon the executive’s “double-trigger” termination without cause or resignation for good reason that occurs during the period beginning two months prior to the closing of the merger and ending twelve months following the closing of the merger. The value of these benefits is equal to the estimated twelve month continuation of health benefits for the executive officer and his dependents following May 6, 2011. |
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Value of | ||||||||||||||||||||||||||||
Accelerated | Value of | |||||||||||||||||||||||||||
Value of | Vesting of | Accelerated | ||||||||||||||||||||||||||
Accelerated | Value of | Unvested | Vesting of | Value of | Value of | |||||||||||||||||||||||
Vesting of | Accelerated | Performance | Unvested | Vested | Other | |||||||||||||||||||||||
Unvested Stock | Vesting of | Stock | Performance | Stock | Shares | Total | ||||||||||||||||||||||
Options | Unvested RSUs | Options | RSUs | Options | Owned | Value | ||||||||||||||||||||||
Name | $(1) | $(1) | $(1) | $(1) | $(1) | $(1) | $ | |||||||||||||||||||||
Richard J. Boyle, Jr. | 2,759,466 | 570,000 | 2,573,550 | 2,280,000 | 7,195,784 | 16,687,586 | 32,066,386 | |||||||||||||||||||||
Brent Stumme | 1,627,287 | 641,250 | 1,354,500 | 1,425,000 | 2,886,330 | 3,544,982 | 11,479,349 | |||||||||||||||||||||
Thomas P. Byrne | 2,800,317 | 1,448,750 | 2,302,650 | 2,280,000 | 5,810,264 | 3,392,260 | 18,034,242 | |||||||||||||||||||||
Jason Greenman | 1,350,802 | 593,750 | 1,354,500 | 1,425,000 | 2,495,161 | 6,376,172 | 13,595,385 | |||||||||||||||||||||
Wayne Warthen | 1,350,802 | 593,750 | 1,354,500 | 1,425,000 | 2,394,878 | 6,038,105 | 13,157,035 | |||||||||||||||||||||
Michael J. Handelsman | 580,921 | 1,045,000 | 1,180,500 | 1,425,000 | 929,849 | 219,583 | 5,380,853 | |||||||||||||||||||||
Frederick G. Saint | 619,829 | 1,223,125 | 1,180,500 | 1,425,000 | 643,221 | 416,233 | 5,507,908 | |||||||||||||||||||||
Bryan D. Smith | 603,248 | 1,140,000 | 1,180,500 | 1,425,000 | 1,311,951 | 227,829 | 5,888,528 |
(1) | Based on a per share value of the merger consideration of $19.00, equal to the sum of $16.50 plus $2.50, which is the value of 0.03702 shares of CoStar common stock based on the $67.46 average closing price of CoStar common stock on Nasdaq for the five days ending on May 4, 2011, less the applicable per share exercise price for stock options. |
Value of | ||||||||||||||||
Accelerated | ||||||||||||||||
Vesting | Value of | Value of | ||||||||||||||
of Unvested | Vested | Other | Total | |||||||||||||
Options | Stock Options | Shares Owned | Value | |||||||||||||
Name | $(1) | $(1) | $(1) | $ | ||||||||||||
William Byrnes | 86,940 | 296,583 | 285,000 | 668,523 | ||||||||||||
Dennis Chookaszian | 86,940 | 296,583 | — | 383,523 | ||||||||||||
James T. Farrell(2)(3) | 180,684 | 187,488 | — | 368,172 | ||||||||||||
Noel Fenton(3) | 86,940 | 175,875 | 781,831 | 1,044,646 | ||||||||||||
Scott Ingraham | 86,940 | 296,583 | 167,200 | 550,723 | ||||||||||||
Thomas Unterman(3) | 86,940 | 175,875 | — | 262,815 |
(1) | Based on a per share value of the merger consideration of $19.00, equal to the sum of $16.50 plus $2.50, which is the value of 0.03702 shares of CoStar common stock based on the $67.46 average closing price of CoStar common stock on Nasdaq for the five days ending on May 4, 2011, less the applicable per share exercise price for stock options. Stock options with an exercise price higher than the total per share value of the merger consideration (“underwater” stock options) will be canceled at the effective time of the merger for no consideration. These individuals would have the following underwater stock options (vested and unvested) that would be canceled for no payment: |
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Name | Number of Shares Subject to Underwater Stock Options | |||
William Byrnes | 10,500 | |||
Dennis Chookaszian | 10,500 | |||
Noel Fenton | 10,500 | |||
Scott Ingraham | 10,500 | |||
Thomas Unterman | 10,500 |
(2) | Pursuant to an agreement between Mr. Farrell and Calera Capital Advisors, L.P., Mr. Farrell has ceded all beneficial ownership over options granted to him as a director of LoopNet to Calera Capital Advisors, L.P. | |
(3) | Does not include shares held by entities with which Messrs. Farrell, Fenton and Unterman are associated. See the section titled “Common Stock Ownership of Certain Beneficial Owners and Management” of LoopNet’s proxy statement on Schedule 14A regarding its 2011 annual meeting filed with the SEC on April 4, 2011 for information regarding such shares. |
• | convertible at the election of the holder at any time into a number of shares of LoopNet common stock equal to the quotient of $1,000 divided by the conversion price then in effect (which equals a conversion ratio of 148.80952 based on the $6.72 conversion price of the Series A Preferred Stock); |
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• | entitled to vote generally with LoopNet common stock on an as-converted basis on all matters (including the merger) other than those matters on which the Series A Preferred Stock are entitled to vote as a separate class by law; | |
• | entitled to a consent right on certain actions of LoopNet, including mergers, consolidations or other transactions that would impair certain rights of the holder, which the holders of the Series A Preferred Stock waived in the voting agreement; | |
• | senior to LoopNet common stock upon a liquidation of LoopNet, as described in greater detail below under “— Liquidation Preference”; | |
• | if LoopNet common stock closes at $16.80 or greater for twenty consecutive trading or reporting days, redeemable in cash at the option of LoopNet for 101% of the sum of $1,000 and any declared but unpaid dividends, but only if LoopNet redeems all of the outstanding Series A Preferred Stock; | |
• | subject to certain conditions, entitled at the option of its holder to the mandatory repurchase by LoopNet for 101% of the sum of $1,000 and any declared but unpaid dividends upon qualifying mergers (such as the proposed merger with CoStar), consolidation, acquisitions or other business combinations, as described in greater detail below under ‘” — Mandatory Offer to Repurchase.” |
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• | an individual citizen or resident of the United States; | |
• | a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia; | |
• | an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. |
• | certain financial institutions; | |
• | insurance companies; | |
• | dealers or brokers in securities; | |
• | tax-exempt organizations; | |
• | former citizens or former long-term residents of the United States; | |
• | persons whose shares of LoopNet or CoStar common stock are not held as capital assets for tax purposes; | |
• | persons whose functional currency is not the U.S. dollar; | |
• | persons who at the time of the merger already own, actually or constructively, shares of CoStar common stock; | |
• | persons who hold LoopNet common stock or CoStar common stock as part of a hedge, straddle or conversion transaction; or | |
• | persons who acquired LoopNet common stock pursuant to the exercise of compensatory options or otherwise as compensation. |
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• | For stock options (other than company performance stock options, as defined below) with an applicable exercise price less than the per share value of the merger consideration, the payment received will be the product of (x) the difference between the common stock merger consideration and the exercise price of the applicable option (the “excess”) and (y) the number of shares of LoopNet common stock the holder could have purchased (assuming full vesting of stock options) had the holder exercised the stock options in full immediately prior to the effective time of the merger. The amount of excess shall be determined by first reducing the cash component of the common stock merger consideration (i.e., $16.50) by the exercise price of the applicable option and then, if the exercise price of the applicable option exceeds the cash component of the common stock merger consideration (the amount of such excess, the “exercise excess”), by then reducing the stock component of the common stock merger consideration (i.e., 0.03702 shares of CoStar common stock) by the number of shares of CoStar common stock equal to the exercise excess divided by the volume weighted average price per share of CoStar common stock on Nasdaq for the ten consecutive trading days ending two days prior to closing. | |
• | For stock options with an applicable exercise price greater than the per share value of the merger consideration, no payment will be received. |
• | For such company performance stock options with an applicable exercise price less than the per share value of the merger consideration, the payment received will be equal in value to the payment determined as described above with respect to stock options, except that any payments that would have been paid in cash will be paid in CoStar common stock. |
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• | For such company performance stock options with an applicable exercise price greater than the per share value of the merger consideration, no payment will be received. | |
• | For such company performance RSUs, the payment received will be equal in value to the payment determined as described above with respect to restricted stock units, except that any payments that would have been paid in cash will be paid in CoStar common stock. |
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• | due incorporation, valid existence and good standing, and corporate authorization and power to enter into the merger agreement and consummate the transactions contemplated thereby; | |
• | required regulatory filings, consent and approval of governmental entities in connection with the merger agreement and the merger; | |
• | the absence of any violation of or conflict with such party’s organizational documents or applicable laws as a result of entering into the merger agreement and consummating the merger; | |
• | the proxy statement/prospectus to be filed with the SEC under the Exchange Act and the accuracy of information contained in such document as provided by such party; | |
• | capitalization and capital structure; | |
• | documents filed by LoopNet with the SEC since January 1, 2008 and by CoStar with the SEC since January 1, 2010, the accuracy of information contained in those documents and CoStar and LoopNet’s compliance with provisions of the Sarbanes-Oxley Act and the listing rules of Nasdaq; | |
• | financial statements; |
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• | litigation and legal proceedings; and | |
• | the absence of undisclosed finders’ fees. |
• | the Stockholder Approval required to consummate the merger; | |
• | the good standing and corporate power and authority of LoopNet’s subsidiaries; | |
• | the absence of certain changes or events, and the absence of a material adverse effect on LoopNet, in each case since December 31, 2010; | |
• | the absence of undisclosed liabilities; | |
• | compliance with applicable legal requirements and possession of permits; | |
• | properties; | |
• | intellectual property; | |
• | filing of tax returns, payment of taxes and other tax matters; | |
• | employee benefit plans; | |
• | environmental matters; | |
• | certain material contracts; | |
• | receipt by LoopNet of a fairness opinion from Evercore; | |
• | the inapplicability of certain state takeover statutes, the lack of any antitakeover provisions in any organizational documents of any of LoopNet’s subsidiaries and LoopNet’s lack of any rights agreement, “poison pill” or similar agreement or plan; | |
• | affiliate transactions; | |
• | employment matters; and | |
• | insurance. |
• | amend or propose to amend its certificate of incorporation, bylaws or other similar organizational documents; |
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• | split, combine, subdivide or reclassify any shares of its capital stock or authorize the issuance of any other securities in lieu of or in substitution for shares of its capital stock; | |
• | declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, except for dividends by any of its wholly-owned subsidiaries to LoopNet or another wholly-owned subsidiary of LoopNet; | |
• | redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any LoopNet securities or any securities of LoopNet’s subsidiaries or any options, warrants or rights to acquire any LoopNet securities or any of LoopNet’s subsidiaries’ securities; | |
• | issue, deliver, grant, pledge, redeem, accelerate rights under, dispose of, transfer or sell, or authorize the issuance, delivery, grant, pledge, redemption, acceleration of rights under, disposition, transfer or sale of, any shares of any LoopNet securities or any securities of LoopNet’s subsidiaries or any options, warrants, calls, commitments or rights or any other agreements to acquire any LoopNet securities or any securities of LoopNet’s subsidiaries, or any securities convertible into or exchangeable for any shares of, or grant to any entity any right the value of which is based on the value of, any LoopNet securities or any securities of LoopNet’s subsidiaries, other than the issuance of (i) shares of LoopNet common stock upon the exercise of LoopNet stock options that are outstanding on the date of the merger agreement in accordance with the terms of those stock options on the date of the merger agreement, (ii) shares of LoopNet common stock upon the vesting and scheduled settlement of LoopNet restricted stock units that are outstanding on the date of the merger agreement in accordance with the terms of those LoopNet restricted stock units on the date of the merger agreement, or (iii) securities of LoopNet’s subsidiaries issued to LoopNet or any other wholly-owned subsidiary of LoopNet; | |
• | amend any term of any security of LoopNet or its subsidiaries; | |
• | acquire (by merger, consolidation, acquisition of stock or assets or otherwise), in one transaction or any series of related transactions, directly or indirectly, any assets, securities, properties, interests or businesses that are in excess of $1 million individually or $3 million in the aggregate; | |
• | enter into any new line of business outside of its existing business segments or enter into any agreement, arrangement or commitment that limits or otherwise restricts LoopNet or any subsidiary of LoopNet, or upon completion of the transactions contemplated by the merger agreement, CoStar, merger sub or any of their respective subsidiaries, from engaging or competing in any line of business or in any geographic area or otherwise enter into any agreements, arrangements or commitments imposing material changes or restrictions on its assets, operations or business; | |
• | make or commit to make any capital expenditures in excess of $2 million, or, if the merger shall not have been consummated before December 31, 2011, $2.5 million, for LoopNet and its subsidiaries taken as a whole; | |
• | sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon, create or incur any lien on, allow to expire or lapse or otherwise transfer or dispose of any of its assets, rights, securities, properties, interests or businesses that individually or in the aggregate are in excess of $1 million; | |
• | other than in connection with acquisitions permitted by the interim operating covenants, make any loans, advances or capital contributions to, or investments in, any other entity, other than in the ordinary course of business or in connection with agreements with strategic partners and not in excess of $1 million individually or in the aggregate; | |
• | incur or assume any indebtedness for borrowed money or guarantees thereof or otherwise become responsible (whether directly, contingently or otherwise) for the obligations of any entity (other than letters of credit, guarantees or similar arrangements issued to or for the benefit of suppliers and manufacturers in the ordinary course of business consistent with past practice or indebtedness incurred between LoopNet and any of LoopNet’s wholly-owned subsidiaries or between any such subsidiaries), or enter into a “make well” or similar agreement or issue or sell any debt securities or options, |
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warrants, calls or other rights to acquire any debt securities of LoopNet or any of LoopNet’s subsidiaries; |
• | with respect to any director or employee of LoopNet or any of LoopNet’s subsidiaries, (i) grant (except as specifically required by LoopNet’s employee plans as in effect on the date of the merger agreement) or increase any severance or termination pay (or amend any existing severance pay or termination arrangement) or (ii) enter into any employment, deferred compensation or other similar agreement (or amend any such existing agreement) other than (x) at will offer letters for non-executive employees of LoopNet with base salary of $150,000 or less or (y) agreements for hires made in connection with acquisitions permitted by the interim operating covenants, which, in the case of each (x) and (y), do not provide for any equity grants; | |
• | increase benefits payable under any existing severance or termination pay policies; | |
• | establish, adopt or materially amend (except as required by applicable law) any collective bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred compensation, stock option, restricted stock or other benefit plan or arrangement; | |
• | increase compensation, bonus or other benefits payable to any employee of LoopNet or any of LoopNet’s subsidiaries, except with respect to any nonexecutive employee of LoopNet or any of LoopNet’s subsidiaries, for increases in base salary in the ordinary course of business; | |
• | change LoopNet’s methods of accounting, except as required by concurrent changes in GAAP or inRegulation S-X of the Exchange Act, as agreed to by its independent public accountants; | |
• | settle, or offer or propose to settle (i) any material litigation, investigation, arbitration, proceeding or other claim involving or against LoopNet or any of its subsidiaries, (ii) any stockholder litigation or dispute against LoopNet or any of its officers or directors or (iii) any litigation, arbitration, proceeding or dispute that relates to the transactions contemplated by the merger agreement; | |
• | make or change any material tax election, change any material annual tax accounting period, adopt or materially change any material method of tax accounting, enter into any material closing agreement or settle any material tax claim or audit; | |
• | announce, implement or effect any material reduction in labor force, lay-off, early retirement program, severance program or other program or effort concerning the termination of employment of employees of LoopNet (including, but not limited to, any “plant closing” or “mass layoff” as those terms are defined in the Worker Adjustment and Retraining Notification Act or any similar action under a similar law), other than routine employee terminations; | |
• | adopt or implement a rights plan or similar arrangement; | |
• | adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of LoopNet or any subsidiary, other than the merger or as expressly provided in the merger agreement; | |
• | except as required by applicable law or the transactions contemplated in the merger agreement, amend, modify or terminate any material contract or lease, or knowingly waive, release or assign any material rights, claims or benefits under any material contract or lease or with respect to any investment in any entity (including without limitation, the right to designate one or more members to the board of directors or similar governing body of any entity (or its affiliates) or other governance rights), or enter into (i) any lease (whether as lessor, sublessor, lessee or sublessee) or (ii) any new contract that, if entered into prior to the date of the merger agreement, would constitute a material contract under the merger agreement; or | |
• | agree, resolve or commit to do any of the foregoing. |
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• | solicit, initiate, induce, explore or knowingly take any action to facilitate or encourage the submission or announcement of any acquisition proposal, or any inquiries, proposals or offers that may reasonably be expected to lead to an acquisition proposal, including through the furnishing of any information; | |
• | enter into or participate in any discussions or negotiations with, furnish any information relating to LoopNet or any of its subsidiaries or afford access to the business, properties, assets, books or records of LoopNet or any of its subsidiaries to or otherwise cooperate in any way with, assist or facilitate any third party that is seeking to make, or has made, an acquisition proposal; | |
• | fail to make, withdraw or modify in a manner adverse to CoStar (or publicly propose to withdraw or modify in a manner adverse to CoStar) the Board’s recommendation that LoopNet’s stockholders adopt the merger agreement, or approve, recommend or declare advisable an acquisition proposal (an “adverse recommendation change”); or | |
• | approve, recommend, declare advisable or enter into any agreement in principle, letter of intent, term sheet, merger agreement, acquisition agreement, option agreement or other similar instrument relating to an acquisition proposal or requiring LoopNet to abandon, terminate or fail to consummate the transactions contemplated by the merger agreement. |
• | in response to abona fidewritten acquisition proposal that the Board determines in good faith after consultation with outside legal and financial advisors would reasonably be expected to constitute or result in a superior proposal, (i) engage in negotiations or discussions with such third party and its representatives and financing sources and (ii) furnish information relating to LoopNet to the person making such proposal, its representatives or financing sources pursuant to a confidentiality agreement with terms no less favorable to LoopNet than LoopNet’s confidentiality agreement with CoStar (before taking into account LoopNet’s acknowledgment that theForm S-4 in which this proxy statement/prospectus is included will require the disclosure of certain information that may be confidential under the terms of its confidentiality agreement between CoStar and LoopNet and LoopNet’s waiver of the restrictions under the confidentiality agreement with CoStar in respect of such disclosure, such acknowledgement and waiver being contained in the merger agreement); | |
• | subject to compliance with the applicable terms of the merger agreement, make an adverse recommendation change (i) in connection with abona fidewritten unsolicited acquisition proposal (that did not arise out of a breach of LoopNet’s non-solicitation obligations under the merger agreement) that the Board concludes in good faith constitutes a superior proposal, or (ii) in connection with an “intervening event” (a material event or circumstance that was not known to, or reasonably foreseeable by, the Board on or prior to the date of the merger agreement and does not relate to (x) any acquisition proposal, (y) clearance of the merger under the HSR Act or (z) any circumstances relating to CoStar); or | |
• | subject to compliance with the applicable terms of the merger agreement, terminate the merger agreement to enter into a definitive agreement with respect to abona fidewritten unsolicited acquisition proposal (that did not arise out of a breach of LoopNet’s non-solicitation obligations under the merger agreement) that the Board concludes in good faith constitutes a superior proposal (a “superior proposal termination”);providedthat any such termination shall be void and of no force or effect, unless concurrently with such termination LoopNet pays CoStar the $25.8 million termination fee payable |
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pursuant to the merger agreement, enters into such definitive agreement and otherwise complies with its non-solicitation obligations. |
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• | participation in meetings, due diligence sessions, presentations, “road shows” and sessions with rating agencies; | |
• | assisting with the preparation of materials for rating agency presentations, offering documents, private placement memoranda, bank information memoranda, prospectuses and similar documents required in connection with the debt financing; | |
• | furnishing CoStar and its financing sources with all financial and other pertinent information regarding LoopNet and its subsidiaries as may be reasonably requested by CoStar to assist in the preparation of customary offering or information documents, including information with respect to the collateral, financial statements, pro forma financial information, financial data, audit reports and certain other information required and of the type and form customarily included in private placements of debt securities; | |
• | using reasonable best efforts to obtain accountants’ comfort letters, legal opinions, surveys and title insurance; | |
• | furnishing CoStar and its financing sources with information and documentation required under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the PATRIOT Act; and | |
• | executing and delivering any commitment letters, underwriting or placement agreements, registration statements, pledge and security documents, perfection certificates, other definitive financing documents or other requested certificates or documents, including a customary solvency certificate by LoopNet’s chief financial officer. |
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• | obtaining the Stockholder Approval; | |
• | the absence of any injunctions or other legal prohibitions preventing the consummation of the merger; | |
• | the expiration or termination of the waiting period under the HSR Act and the obtaining of any other approvals or clearances required to consummate the merger with respect to any other antitrust laws; and | |
• | the effectiveness of theForm S-4 in which this proxy statement/prospectus is included as a prospectus and the lack of any stop order suspending the effectiveness of the FormS-4 or pending or threatened SEC proceedings to effect a stop order. |
• | the absence of any pending suit, action or proceeding by a governmental authority which seeks to make illegal, prevent or otherwise restrain the consummation of the merger, or that, individually or in the aggregate, is reasonably expected to impose a substantial detriment; | |
• | the absence of any injunctions or other legal prohibitions making illegal or preventing or otherwise restraining the consummation of the merger or imposing or, individually or in the aggregate, reasonably expected to impose a substantial detriment; | |
• | in the case of certain of LoopNet’s representations and warranties relating to corporate existence and power, corporate authorization, and no material adverse effect, the accuracy of such representations and warranties in all respects; in the case of LoopNet’s representations and warranties relating to capitalization, the accuracy of such representations and warranties in all but de minimis respects; in the case of certain of LoopNet’s representations and warranties relating to corporate authorization, subsidiaries and antitakeover matters, the accuracy of such representations and warranties in all material respects; and in the case of LoopNet’s other representations and warranties, the accuracy (disregarding any materiality or material adverse effect qualifications contained in such representations and warranties) of such representations and warranties except for such inaccuracies as would not, individually or in the aggregate, have a material adverse effect on LoopNet; |
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• | LoopNet’s performance in all material respects of its obligations under the merger agreement; | |
• | the delivery to CoStar of an officers’ certificate from LoopNet confirming that the conditions described in the immediately preceding two bullets have been satisfied; and | |
• | the lack of general banking, stock market or credit market limitations, suspensions and moratoria. |
• | in the case of certain of CoStar’s representations and warranties relating to corporate existence and power, corporate authorization and capitalization, the accuracy of such representations and warranties in all material respects; and in the case of CoStar’s other representations and warranties, the accuracy (disregarding all materiality and material adverse effect qualifications contained in such representations and warranties) of such representations and warranties except for such inaccuracies as would not, individually or in the aggregate, have a material adverse effect on CoStar; | |
• | CoStar and merger sub’s performance in all material respects of their obligations under the merger agreement; and | |
• | the delivery to LoopNet of an officers’ certificate from CoStar confirming that the conditions described in the immediately preceding two bullets have been satisfied. |
• | changes in generally accepted accounting principles or changes in the regulatory accounting requirements applicable to any industry in which an entity and its subsidiaries operate that are proposed, approved or enacted on or after the date of the merger agreement; | |
• | changes in the financial or securities markets or general economic or political conditions in the United States; | |
• | changes (including changes of applicable laws) or conditions generally affecting the industry in which an entity and its subsidiaries operate and not specifically relating to such entity and its subsidiaries, taken as a whole; | |
• | acts of war, sabotage or terrorism or natural disasters occurring after the date of the merger agreement; | |
• | any loss of or adverse change in the relationship of an entity or any of its subsidiaries with its employees, customers, partners or suppliers arising out of the announcement, pendency or consummation of the transactions contemplated by the merger agreement; | |
• | in and of itself, any failure by an entity or any of its subsidiaries to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period ending after the date of the merger agreement (it being agreed that the underlying facts and circumstances giving rise to such failure may be taken into account in determining whether a “material adverse effect” has occurred); | |
• | any action taken by an entity or any of its subsidiaries that is specifically required pursuant to the merger agreement; or |
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• | any action, suit, investigation or proceeding made, brought or threatened by any holder of securities of an entity, on the holder’s own behalf or on behalf of the entity on a derivative basis (other than any actions, suits, investigations or proceedings made, brought or threatened by any of the entity’s officers or directors), arising out of or related to the merger agreement or any of the transactions contemplated by the merger agreement, including the merger. |
• | by mutual written consent of LoopNet and CoStar; | |
• | by either CoStar or LoopNet, if: |
• | the merger has not been completed by January 31, 2012;providedthat this date can be extended by either CoStar or LoopNet to April 30, 2012 if any required antitrust approvals have not been received but all other mutual conditions to the closing of the merger have been satisfied or waived; andprovidedfurther that this date will be automatically extended until the second business day after the final day of the marketing period if CoStar’s marketing period has commenced but not ended (as discussed in more detail above under “The Merger — Closing and Effectiveness of the Merger”); except that this right is not available to any party whose breach of the merger agreement primarily caused the failure to complete the merger by this date (January 31, 2012 or any later date resulting from an extension as described in this bullet, the “end date”); | |
• | there is a final and nonappealable legal restraint or prohibition in effect that prevents the completion of the merger; or | |
• | the Stockholder Approval is not obtained at the special meeting or any postponement or adjournment thereof; |
• | by CoStar, if: |
• | the Board makes an adverse recommendation change; | |
• | after an alternative acquisition proposal has been received, the Board fails to publicly reaffirm its recommendation that the stockholders adopt the merger agreement within seven business days after a request to do so by CoStar; | |
• | the Board fails to publicly recommend against a publicly announced alternative acquisition proposal after a request to do so by CoStar by the later of five business days before the special stockholder meeting and five business days after CoStar’s request (or such shorter period as may exist between the date of the alternative acquisition proposal and the date of the special meeting); | |
• | LoopNet materially breaches its obligations under the merger agreement related to non-solicitation and other offers; | |
• | LoopNet breaches any of its representations or warranties or fails to perform any covenant or obligation in the merger agreement in such a way as to cause the failure of the closing conditions relating thereto, and such failure cannot be cured by the end date;providedthat, at the time of notice of termination, neither CoStar nor merger sub is in material breach of its or their obligations under the merger agreement; | |
• | LoopNet willfully fails to perform any of its covenants or agreements set forth in the merger agreement following an alternative acquisition proposal; or |
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• | there is a final and nonappealable legal restraint or prohibition imposing a substantial detriment. |
• | by LoopNet, if: |
• | prior to obtaining the Stockholder Approval, the requirements of a superior proposal termination as described in the section “No Solicitation; Changes in Recommendations” have been fully satisfied and LoopNet pays to CoStar the $25.8 million termination fee described below; or | |
• | if CoStar breaches any of its representations or warranties or fails to perform any covenant or obligation in the merger agreement in such a way as to cause the failure of the closing conditions relating thereto, and such failure cannot be cured by the end date;providedthat, at the time of notice of termination, LoopNet is not in material breach of any of its obligations under the merger agreement. |
• | each party will remain liable for any willful and material breach of the merger agreement, and | |
• | certain provisions of the merger agreement, including the provisions relating to the allocation of fees and expenses (including, if applicable, the termination fees described above) and the confidentiality agreement dated March 10, 2011 between LoopNet and CoStar will survive termination. |
• | by CoStar, if (i) the Board makes an adverse recommendation change, (ii) after an alternative acquisition proposal has been received, the Board fails to publicly reaffirm its recommendation that stockholders adopt the merger agreement within seven business days after a request to do so by Costar, (iii) the Board fails to publicly recommend against a publicly announced alternative acquisition proposal after a request to do so by CoStar by the later of five business day before the special stockholder meeting and five business days after CoStar’s request (or such shorter period as may exist between the date of the alternative acquisition proposal and the date of the special meeting), or (iv) LoopNet materially breaches its obligations under the merger agreement related to non-solicitation and other offers; | |
• | by CoStar, if LoopNet, following an alternative acquisition proposal, willfully fails to perform any covenant or agreement set forth in the merger agreement; | |
• | by LoopNet, when CoStar could have terminated the merger agreement for any reason described above, unless LoopNet has the right to terminate the merger agreement as described in the next bullet; | |
• | by LoopNet, in connection with a superior proposal termination; | |
• | by CoStar or LoopNet if the merger has not been consummated by the end date and prior to such termination, an acquisition proposal was publicly announced or otherwise communicated to the Board or the stockholders and (A) within 12 months following the date of such termination, LoopNet enters into a definitive agreement with respect to an acquisition proposal or (B) within 12 months following the date of such termination a tender offer or other acquisition proposal is consummated (providedthat for purposes of the foregoing clauses (A) and (B), each reference to “20%” in the definition of acquisition proposal shall be deemed to be a reference to “50%”); or | |
• | by CoStar or LoopNet if the special meeting has concluded (including any adjournment or postponement thereof) and the Stockholder Approval has not been obtained and (A) prior to such termination, an acquisition proposal was publicly announced or otherwise communicated to the Board or the stockholders or (B) within 12 months following the date of such termination, LoopNet has entered into a definitive agreement with respect to an acquisition proposal that provides for consideration to LoopNet stockholders (whether cash or otherwise) having an aggregate value that is greater than the |
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merger consideration to be received by LoopNet stockholders under the merger agreement or (C) within 12 months following the date of such termination a tender offer or other acquisition proposal is consummated as a result of which LoopNet stockholders are entitled to receive consideration (whether cash or otherwise) having an aggregate value that is greater than the merger consideration to be received by LoopNet stockholders under the merger agreement (providedthat for purposes of the foregoing clauses (B) and (C), each reference to “20%” in the definition of acquisition proposal shall be deemed to be a reference to “50%”). |
• | by either party, when the merger has not been consummated by the end date due to a suit, action or proceeding or restraining order, preliminary or permanent injunction or other order issued by a court of competent jurisdiction or other legal restraint or prohibition, in each case, under antitrust laws, while all other mutual conditions to closing and conditions to CoStar’s obligations have been satisfied other than the specified antitrust conditions and conditions that by their terms are to be satisfied at the closing of the merger (but which conditions would reasonably be expected to be satisfied if the closing of the merger were the date of termination); or | |
• | by either party, when the merger has not been consummated by the end date because the waiting period under the HSR Act has not expired or been terminated or some other required approval or clearance applicable to the consummation of the merger under other antitrust laws has not been obtained, while all other mutual conditions to closing and conditions to CoStar’s obligations have been satisfied other than the specified antitrust conditions and conditions that by their terms are to be satisfied at the closing of the merger (but which conditions would reasonably be expected to be satisfied if the closing of the merger were the date of termination); or | |
• | by either party, when there is a final nonappealable order, injunction, judgment, ruling, decree or law issued by a governmental authority of competent jurisdiction, or other final, nonappealable legal restraint or prohibition, in each case, preventing the consummation of the merger under an antitrust law, while all other mutual conditions to closing and conditions to CoStar’s obligations have been satisfied other than the specified antitrust conditions and conditions that by their terms are to be satisfied at the closing of the merger (but which conditions would reasonably be expected to be satisfied if the closing of the merger were the date of termination); or | |
• | by CoStar, when there is a final, nonappealable order, injunction, judgment, ruling, decree or law issued by a governmental authority of competent jurisdiction, or other final, nonappealable legal restraint or prohibition, in each case, under any antitrust law, imposing a substantial detriment, while all other mutual conditions to closing and conditions to CoStar’s obligations have been satisfied other than the specified antitrust conditions and conditions that by their terms are to be satisfied at the closing of the merger (but which conditions would reasonably be expected to be satisfied if the closing of the merger were the date of termination). |
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CONDENSED COMBINED FINANCIAL DATA
• | separate historical financial statements of CoStar as of and for the year ended December 31, 2010 and for the quarterly period ended March 31, 2011 and the related notes included in CoStar’s Annual Report onForm 10-K for the year ended December 31, 2010 and CoStar’s Quarterly Report onForm 10-Q for the quarterly period ended March 31, 2011, respectively, each of which is incorporated by reference into this proxy statement/prospectus, and | |
• | separate historical financial statements of LoopNet as of and for the year ended December 31, 2010 and for the quarterly period ended March 31, 2011 and the related notes included in LoopNet’s Annual Report onForm 10-K for the year ended December 31, 2010 and LoopNet’s Quarterly Report onForm 10-Q for the quarterly period ended March 31, 2011, respectively, each of which is incorporated by reference into this proxy statement/prospectus. |
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As of March 31, 2011
Historical | Historical | |||||||||||||||
CoStar | LoopNet, | Pro Forma | Pro Forma | |||||||||||||
Group, Inc. | Inc. | Adjustments | Combined | |||||||||||||
(in thousands) | ||||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 292,252 | $ | 93,805 | $ | (356,394 | )(a) | $ | 29,663 | |||||||
Short-term investments | 3,657 | 3,530 | (7,187 | )(a) | — | |||||||||||
Accounts receivable, net | 16,240 | 1,744 | — | 17,984 | ||||||||||||
Deferred income taxes, net | 5,494 | 1,315 | — | 6,809 | ||||||||||||
Income tax receivable | 4,940 | — | — | 4,940 | ||||||||||||
Prepaid expenses and other current assets | 4,179 | 1,111 | — | 5,290 | ||||||||||||
Total current assets | 326,762 | 101,505 | (363,581 | ) | 64,686 | |||||||||||
Long-term investments | 29,114 | — | — | 29,114 | ||||||||||||
Deferred income taxes, net | 12,652 | 16,432 | (29,084 | )(e) | — | |||||||||||
Property and equipment, net | 36,886 | 2,556 | — | 39,442 | ||||||||||||
Goodwill | 80,488 | 41,507 | 604,074 | (b) | 726,069 | |||||||||||
Intangibles and other assets, net | 17,898 | 8,299 | 193,933 | (c) | 220,130 | |||||||||||
Deposits and other assets | 2,679 | 6,526 | 12,737 | (d) | 21,942 | |||||||||||
Total assets | $ | 506,479 | $ | 176,825 | $ | 418,079 | $ | 1,101,383 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 3,351 | $ | 820 | $ | — | $ | 4,171 | ||||||||
Accrued wages and commissions | 7,581 | 2,531 | — | 10,112 | ||||||||||||
Accrued expenses | 17,712 | 3,167 | — | 20,879 | ||||||||||||
Deferred gain on the sale of building | 2,523 | — | — | 2,523 | ||||||||||||
Income taxes payable | 14,831 | — | — | 14,831 | ||||||||||||
Deferred revenue | 18,845 | 9,443 | (6,557 | )(f) | 21,731 | |||||||||||
Current portion of long-term debt | — | — | 4,150 | (d) | 4,150 | |||||||||||
Total current liabilities | 64,843 | 15,961 | (2,407 | ) | 78,397 | |||||||||||
Long-term debt | — | — | 410,850 | (d) | 410,850 | |||||||||||
Deferred gain on the sale of building | 33,225 | — | — | 33,225 | ||||||||||||
Deferred rent and other long-term liabilities | 17,216 | 2,644 | — | 19,860 | ||||||||||||
Deferred income taxes, net | — | — | 54,431 | (e) | 54,431 | |||||||||||
Income taxes payable | 1,797 | — | — | 1,797 | ||||||||||||
Series A convertible preferred stock | — | 48,631 | (48,631 | )(g) | — | |||||||||||
Stockholders’ equity: | ||||||||||||||||
Common stock | 208 | 40 | (20 | )(h) | 228 | |||||||||||
Additional paid in capital | 377,320 | 135,172 | 4,233 | (h) | 516,725 | |||||||||||
Other comprehensive loss | (7,681 | ) | (383 | ) | 383 | (h) | (7,681 | ) | ||||||||
Treasury stock | — | (86,227 | ) | 86,227 | (h) | — | ||||||||||
Retained earnings (accumulated deficit) | 19,551 | 60,987 | (86,987 | )(h) | (6,449 | ) | ||||||||||
Total stockholders’ equity | 389,398 | 109,589 | 3,836 | 502,823 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 506,479 | $ | 176,825 | $ | 418,079 | $ | 1,101,383 | ||||||||
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For Year Ended December 31, 2010
Historical | ||||||||||||||||
CoStar | Historical | Pro Forma | Pro Forma | |||||||||||||
Group, Inc. | LoopNet, Inc. | Adjustments | Combined | |||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Revenues | $ | 226,260 | $ | 78,002 | $ | — | $ | 304,262 | ||||||||
Cost of revenues | 83,599 | 12,562 | — | 96,161 | ||||||||||||
Gross margin | 142,661 | 65,440 | — | 208,101 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing | 52,455 | 16,785 | — | 69,240 | ||||||||||||
Software development | 17,350 | 12,231 | — | 29,581 | ||||||||||||
General and administrative | 47,776 | 15,693 | — | 63,469 | ||||||||||||
Purchase amortization | 2,305 | 2,083 | 36,416 | (c) | 40,804 | |||||||||||
119,886 | 46,792 | 36,416 | 203,094 | |||||||||||||
Income (loss) from operations | 22,775 | 18,648 | (36,416 | ) | 5,007 | |||||||||||
Interest and other income (expense), net | 735 | (2,461 | ) | (23,697 | )(d) | (25,423 | ) | |||||||||
Income (loss) before income taxes | 23,510 | 16,187 | (60,113 | ) | (20,416 | ) | ||||||||||
Income tax expense (benefit), net | 10,221 | 461 | (24,045 | )(e) | (13,363 | ) | ||||||||||
Net income (loss) | 13,289 | 15,726 | (36,068 | ) | (7,053 | ) | ||||||||||
Convertible preferred stock accretion of discount | — | (339 | ) | 339 | (g) | — | ||||||||||
Net income (loss) applicable to common stockholders | $ | 13,289 | $ | 15,387 | $ | (35,729 | ) | $ | (7,053 | ) | ||||||
Net income (loss) per share — basic | $ | 0.65 | $ | (0.32 | ) | |||||||||||
Net income (loss) per share — diluted | $ | 0.64 | $ | (0.32 | ) | |||||||||||
Weighted average outstanding shares — basic | 20,330 | 1,971 | (h) | 22,301 | ||||||||||||
Weighted average outstanding shares — diluted | 20,707 | 1,594 | (h) | 22,301 | ||||||||||||
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For the Three Months Ended March 31, 2011
Historical | ||||||||||||||||
CoStar | Historical | Pro Forma | Pro Forma | |||||||||||||
Group, Inc. | LoopNet, Inc. | Adjustments | Combined | |||||||||||||
(in thousands, except per share amount) | ||||||||||||||||
Revenues | $ | 59,618 | $ | 20,713 | $ | — | $ | 80,331 | ||||||||
Cost of revenues | 22,566 | 3,157 | — | 25,723 | ||||||||||||
Gross margin | 37,052 | 17,556 | — | 54,608 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing | 13,246 | 5,134 | — | 18,380 | ||||||||||||
Software development | 5,268 | 3,659 | — | 8,927 | ||||||||||||
General and administrative | 10,899 | 4,924 | — | 15,823 | ||||||||||||
Purchase amortization | 543 | 641 | 8,984 | (c) | 10,168 | |||||||||||
29,956 | 14,358 | 8,984 | 53,298 | |||||||||||||
Income (loss) from operations | 7,096 | 3,198 | (8,984 | ) | 1,310 | |||||||||||
Interest and other income (expense), net | 202 | (317 | ) | (5,897 | )(d) | (6,012 | ) | |||||||||
Income (loss) before income taxes | 7,298 | 2,881 | (14,881 | ) | (4,702 | ) | ||||||||||
Income tax expense (benefit), net | 2,766 | 1,038 | (5,953 | )(e) | (2,149 | ) | ||||||||||
Net income (loss) | 4,532 | 1,843 | (8,928 | ) | (2,553 | ) | ||||||||||
Convertible preferred stock accretion of discount | — | (85 | ) | 85 | (g) | — | ||||||||||
Net income (loss) applicable to common stockholders | $ | 4,532 | $ | 1,758 | $ | (8,843 | ) | $ | (2,553 | ) | ||||||
Net income (loss) per share — basic | $ | 0.22 | $ | (0.11 | ) | |||||||||||
Net income (loss) per share — diluted | $ | 0.22 | $ | (0.11 | ) | |||||||||||
Weighted average outstanding shares — basic | 20,531 | 1,971 | (h) | 22,502 | ||||||||||||
Weighted average outstanding shares — diluted | 20,965 | 1,537 | (h) | 22,502 | ||||||||||||
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COMBINED FINANCIAL STATEMENTS
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Estimated Fair Value | ||||||||||||||||
Estimated CoStar | ||||||||||||||||
Conversion | CoStar | Shares to be Issued | ||||||||||||||
Calculation | Cash | Common Stock | @ $70.75 | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Number of shares of LoopNet common stock outstanding as of April 27, 2011 | 32,519.2 | |||||||||||||||
Multiplied by CoStar’s stock price as of May 10, 2011 multiplied by the exchange ratio of 0.03702 ($70.75x0.03702) | $ | 2.62 | $ | 85,173 | 1,204 | |||||||||||
Number of shares of LoopNet common stock outstanding as of April 27, 2011 | 32,519.2 | |||||||||||||||
Multiplied by cash consideration per common share outstanding | $ | 16.50 | $ | 536,567 | ||||||||||||
Number of shares of LoopNet common stock into which LoopNet Series A Convertible Preferred Stock outstanding at April 27, 2011 is convertible (50,000 actual shares x 148.81) | 7,440.5 | |||||||||||||||
Multiplied by CoStar’s stock price as of May 10, 2011 multiplied by the exchange ratio of 0.03702 ($70.75x0.03702) | $ | 2.62 | $ | 19,488 | 275 | |||||||||||
Number of shares of LoopNet common stock into which LoopNet Series A Convertible Preferred Stock outstanding at April 27, 2011 is convertible (50,000 actual shares x 148.81) | 7,440.5 | |||||||||||||||
Multiplied by cash consideration per common share outstanding | $ | 16.50 | $ | 122,768 | ||||||||||||
Number of shares of LoopNet stock options vested and unvested, including performance options, as of April 27, 2011 expected to be canceled and exchanged for purchase consideration | 9,487.7 | |||||||||||||||
Multiplied by the difference between the per share value of the merger consideration as of May 10, 2011 and the weighted-average option exercise price ofin-the-money options | $ | 9.21 | $ | 60,244 | $ | 27,150 | 384 | |||||||||
Number of outstanding restricted stock units, including performance share unit awards, as of April 27, 2011, expected to be canceled | 1,458.1 | |||||||||||||||
Multiplied by the per share value of the merger consideration as of May 10, 2011 | $ | 19.12 | $ | 20,264 | $ | 7,614 | 108 | |||||||||
$ | 739,843 | $ | 139,425 | 1,971 | ||||||||||||
Estimate of consideration expected to be transferred | $ | 879,268 | ||||||||||||||
Common stock, par value $0.01 | $ | 20 | ||||||||||||||
Additional paid-in capital | 139,405 | |||||||||||||||
Total stock consideration | $ | 139,425 | ||||||||||||||
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Book value of net assets acquired as of March 31, 2011 | $ | 158,220 | ||
Adjusted for: | ||||
Elimination of existing goodwill and intangible assets | (49,806 | ) | ||
Adjusted book value of net assets acquired | 108,414 | |||
Adjustments to: | ||||
Identifiable intangible assets(i) | 202,232 | |||
Deferred revenue(ii) | 6,557 | |||
Taxes(iii) | (83,516 | ) | ||
Goodwill(iv) | 645,581 | |||
Total estimated consideration | $ | 879,268 | ||
(i) | As of the effective time of the merger, identifiable intangible assets are required to be measured at fair value and these acquired assets could include assets that are not intended to be used or sold or that are intended to be used in a manner other than their highest and best use. For purposes of these unaudited pro forma condensed combined financial statements, it is assumed that all assets will be used and that all assets will be used in a manner that represents the highest and best use of those assets, but it is not assumed that any market participant synergies will be achieved. The consideration of synergies has been excluded because they are not considered to be factually supportable, which is a required condition for these pro forma adjustments. |
Estimated Fair | ||||||||||||
Value | Estimated Useful Life | |||||||||||
Customer relationships | $ | 52,756 | 5 years | |||||||||
Database technology | 61,549 | 4 years | ||||||||||
Trade names | 87,927 | 7 years | ||||||||||
Total | $ | 202,232 | ||||||||||
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(ii) | Reflects the preliminary fair value adjustment to deferred revenues acquired from LoopNet. The preliminary fair value represents an amount equivalent to the estimated cost plus an appropriate profit margin to perform services based on deferred revenue balances of LoopNet as of March 31, 2011. The preliminary estimate of the cost and appropriate margin may be different from the final acquisition accounting and the difference could have a material impact on the accompanying unaudited pro forma condensed combined financial statements. |
(iii) | Reflects CoStar’s estimated income tax rate of 40% applied to the estimated fair value of identifiable intangible assets to be acquired of $202.2 million and the estimated deferred revenue adjustment of $6.6 million. |
(iv) | Goodwill is calculated as the difference between the acquisition date fair value of the consideration expected to be transferred and the values assigned to the assets acquired and liabilities assumed. Goodwill is not amortized. |
6. | Pro Forma Adjustments |
Eliminate LoopNet, Inc. historical goodwill | $ | (41,507 | ) | |
Estimated transaction goodwill | 645,581 | |||
Total | $ | 604,074 | ||
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Eliminate LoopNet, Inc. historical intangible assets | $ | (8,299 | ) | |
Estimated fair value of intangible assets acquired | 202,232 | |||
Total | $ | 193,933 | ||
For the Year | For the Three | |||||||
Ended | Months Ended | |||||||
December 31, 2010 | March 31, 2011 | |||||||
Eliminate LoopNet, Inc. amortization of intangible assets | $ | (2,083 | ) | $ | (641 | ) | ||
Estimated amortization of acquired intangible assets | 38,499 | 9,625 | ||||||
Total | $ | 36,416 | $ | 8,984 | ||||
For the Year | For the Three Months | |||||||
Ended | Ended | |||||||
December 31, 2010 | March 31, 2011 | |||||||
Eliminate CoStar Group, Inc. interest income to reflect change in cash and investment balances | $ | (735 | ) | $ | (202 | ) | ||
Estimated interest expense on acquisition financing | (22,962 | ) | (5,695 | ) | ||||
$ | (23,697 | ) | $ | (5,897 | ) | |||
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(e) | The pro forma adjustment to the deferred income tax liability is as follows (in thousands): |
As of | ||||
March 31, 2011 | ||||
Estimated fair value of intangible assets to be acquired | $ | 202,232 | ||
Estimated fair value of adjustment to deferred revenue | 6,557 | |||
208,789 | ||||
Tax rate | 40 | % | ||
Deferred tax liability, gross | 83,515 | |||
Reclass CoStar and LoopNet historical net deferred tax assets | (29,084 | ) | ||
Deferred tax liability, net | $ | 54,431 | ||
Additional | Other | |||||||||||||||||||
Common | Paid In | Comprehensive | Treasury | Retained | ||||||||||||||||
Stock | Capital | Loss | Stock | Earnings | ||||||||||||||||
Eliminate LoopNet, Inc. stockholders’ equity | $ | (40 | ) | $ | (135,172 | ) | $ | 383 | $ | 86,227 | $ | (60,987 | ) | |||||||
Estimated deal costs | — | — | — | — | (26,000 | ) | ||||||||||||||
Estimated CoStar Group, Inc. common shares issued | 20 | 139,405 | — | — | — | |||||||||||||||
$ | (20 | ) | $ | 4,233 | $ | 383 | $ | 86,227 | $ | (86,987 | ) | |||||||||
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LoopNet | CoStar | |||
Authorized Capital Stock | The authorized capital stock of LoopNet consists of (i) 125,000,000 shares of common stock, par value $0.001 per share and (ii) 10,000,000 shares of preferred stock, par value $0.001 per share. | The authorized capital stock of CoStar consists of (i) 30,000,000 shares of common stock, par value $0.01 and (ii) 2,000,000 shares of preferred stock, par value $0.01. | ||
Number of Directors | The LoopNet certificate of incorporation provides that, subject to the rights of the holders of any series of preferred stock to elect additional directors under specified circumstances, the number of directors on the Board will be fixed from time to time by a majority of the total number of authorized directors. The Board currently consists of seven members. | The CoStar certificate of incorporation provides that the number of directors on CoStar’s board will be fixed from time to time by a majority of the total number of authorized directors. The CoStar certificate of incorporation sets the minimum number of directors at two and the CoStar bylaws further provide that the number of members of the board will not exceed ten. The board currently consists of seven members. | ||
Election of Directors | The LoopNet bylaws provide that directors will be elected by a plurality of votes cast. | The CoStar bylaws provide that directors will be elected by a plurality of votes cast. | ||
Cumulative Voting | The LoopNet certificate of incorporation does not provide for cumulative voting and accordingly, LoopNet stockholders do not have cumulative voting rights in connection with the election of directors. | The CoStar certificate of incorporation does not provide for cumulative voting and accordingly, CoStar stockholders do not have cumulative voting rights in connection with the election of directors. |
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LoopNet | CoStar | |||
Classification of Board of Directors | The LoopNet certificate of incorporation provides that the Board, other than those who may be elected by the holders of any series of preferred stock under specified circumstances, is divided into three staggered classes, with each class as nearly equal in number as possible. The directors are assigned to a class by a resolution of the Board. LoopNet’s directors are elected for a term of three years, with the term of each class staggered to expire in successive years. | CoStar does not have a classified board. The certificate of incorporation provides that the directors are elected at each annual meeting of stockholders to hold office until their successors have been duly elected and qualified, or until they sooner resign, are removed or become disqualified. | ||
Removal of Directors | The LoopNet bylaws provide that any director or the entire Board may be removed, but only for cause, by the holders of a majority of the shares then entitled to vote at an election of directors, voting together as a single class. | The CoStar bylaws provide that stockholders may, at any special meeting the notice of which shall state that it is called for that purpose, remove, with or without cause, any director. | ||
Vacancies on the Board of Directors | Any vacancies on the Board, other than a vacancy with respect to a director who must be elected by the holders of any class or series of stock, will be filled by either (i) the holders of a majority in voting power of the then-outstanding shares of voting stock entitled to vote generally in the election of directors (the “Voting Stock”), voting as a single class; or (ii) a majority vote of the remaining directors then in office. Subject to the rights of any class or series of stock then outstanding, newly created directorships will, unless the Board determines by resolution that any such newly created directorship will be filled by the stockholders, be filled only by a majority vote of the directors then in office. | Any vacancy on the CoStar board which occurs between annual meetings will be filled only by a majority vote of the remaining directors then in office, even if less than a quorum. However, whenever the holders of one or more classes or series of preferred stock have the right, voting separately, to elect directors, the election, term of office, filling of vacancies, removal and other features of such directorships will be governed by the terms of resolutions adopted by the CoStar board. | ||
Stockholder Action by Written Consent | The LoopNet certificate of incorporation provides that action by LoopNet stockholders may only be taken at an annual or special stockholders’ meeting. Stockholder action may not be taken by written consent. | The CoStar certificate of incorporation provides that action by CoStar stockholders may only be taken at an annual or special stockholders’ meeting. Stockholder action may not be taken by written consent. | ||
Amendment of Certificate of Incorporation | LoopNet can generally amend or repeal any provision contained in the certificate of incorporation in the manner prescribed by the DGCL, but, the affirmative vote of the holders of at least 662/3% of the Voting Stock, voting as a single class, is required to amend or repeal, directly or effectively, the provisions in the certificate of incorporation related to the amendment of the bylaws and certificate of incorporation. | CoStar can amend, alter, change or repeal any provision of its certificate of incorporation in the manner prescribed by the DGCL. | ||
Amendment of Bylaws | The Board can adopt, amend or repeal the bylaws. In addition to any vote of the holders of any class or series of stock required by law or by the certificate of incorporation to amend or repeal the bylaws, the affirmative vote of the holders of at least 662/3% of the Voting Stock, voting as a single class, is required to adopt, amend or repeal any provision of the bylaws. | The CoStar board is authorized to make, alter or repeal CoStar bylaws. In addition to any vote of the holders of any class or series of stock required by law or by the certificate of incorporation to amend or repeal the bylaws, the affirmative vote of the holders of at least 662/3% of CoStar’s voting stock, voting as a single class, is required to adopt, amend or repeal any provision of the bylaws inconsistent with certain provisions related to special meetings, stockholder proposals, indemnification and bylaws amendment. |
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LoopNet | CoStar | |||
Special Meeting of Stockholders | The LoopNet bylaws provide that special meetings of the stockholders, other than those required by statute, may be called at any time by the Board acting pursuant to a resolution adopted by a majority of the total number of authorized directors last fixed by directors in accordance with the bylaws. If fewer than all the number of directors have been so elected (by the stockholders or the Board), then a majority of the greatest number of directors so elected to hold office at any one time pursuant to such authorization will suffice. | Except as otherwise provided in the CoStar certificate of incorporation or by the DGCL, the CoStar bylaws provide that special meetings of CoStar’s stockholders may be called at any time by the Chairman of CoStar’s board or CoStar’s President and will be called by CoStar’s President or CoStar’s Secretary at the request in writing of a majority of the CoStar board. Any special meeting of the stockholders shall be held on such date, and at such time as the CoStar board or the officer calling the meeting may designate. | ||
Notice of Stockholder Meetings | Notice of the place, if any, date and time of all meetings of stockholders, and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting. | Written notice of the place, date and time of each meeting of the stockholders must be given during the same window of time before a meeting of stockholders. | ||
Delivery and Notice Requirements of Stockholder Nominations and Proposals for Annual Meetings | The certificate of incorporation requires that advance notice be given to LoopNet of stockholder nominations and proposals. The bylaws specify that, to be timely, a stockholder’s notice must be delivered to the Secretary at the principal executive offices of LoopNet not less than 120 or more than 150 days before the first anniversary of the date of the preceding year’s annual meeting of stockholders. However, if the date of the annual meeting is advanced more than 30 days before or delayed by more than 30 days after the anniversary of the preceding year’s annual meeting, notice by the stockholder must be delivered not later than the close of business on the later of the 90th day before such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. A LoopNet stockholder’s written notice must set forth the information required by the bylaws. | The CoStar bylaws provide that for nominations or other business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice in writing to the Secretary of CoStar and such business must be a proper subject for stockholder action. To be timely, a stockholder’s notice must be delivered to the Secretary of CoStar at CoStar’s principal executive offices not later than the close of business on the seventy-fifth day nor earlier than the close of business on the one hundred fifth day prior to the first anniversary of the preceding year’s annual meeting. However, in the event that the date of the annual meeting is more than thirty days before or more than seventy days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the one hundred fifth day prior to such annual meeting and not later than the close of business on the later of the seventy-fifth day prior to such annual meeting or the tenth day following the date on which public announcement of the date of such meeting is first made by CoStar. A CoStar stockholder’s written notice must set forth the information required by the bylaws. | ||
Proxy | The LoopNet bylaws provide that each LoopNet stockholder entitled to vote at a meeting of LoopNet stockholders will be entitled to vote in person or by proxy. | The CoStar bylaws provide that each CoStar stockholder entitled to vote at a meeting of CoStar stockholders will be entitled to vote in person or by proxy. | ||
Preemptive Rights | The LoopNet certificate of incorporation does not grant any preemptive rights. | The CoStar certificate of incorporation does not grant any preemptive rights. |
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LoopNet | CoStar | |||
Limitation of Personal Liability of Directors | The LoopNet certificate of incorporation provides that, to the fullest extent permitted by the DGCL, a LoopNet director will not be personally liable to LoopNet or its stockholders for monetary damages for breach of fiduciary duty as a director. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of LoopNet will be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. | No CoStar director will be liable to CoStar or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability of a director (i) for any breach of the director’s duty of loyalty to CoStar or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for payment of a dividend or approval of a stock repurchase or redemption in violation of Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit. | ||
Indemnification of Officers and Directors | The LoopNet certificate of incorporation provides that, to the fullest extent permitted by applicable law, LoopNet is authorized to provide indemnification of (and advancement of expenses to) directors and officers (and any other persons to which Delaware law permits LoopNet to provide indemnification) through bylaw provisions, agreements with such directors and officers or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the DGCL, subject only to limits created by applicable Delaware law (statutory or non-statutory), with respect to actions for breach of duty to a corporation, its stockholders, and others. | To the fullest extent permitted by Section 145 of the DGCL, CoStar shall indemnify each of its directors and officers from and against any and all of the expenses, liabilities or other matters referred to in or covered by said section. This indemnification is not exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of stockholders, vote of disinterested directors or otherwise, and shall continue as to a person who has ceased to be a director or officer, inure to the benefit of the heirs, executors and administrators of such persons and apply to individuals who have agreed to become directors or officers. CoStar may purchase and maintain insurance on behalf of any director or officer to the extent permitted by Section 145 of the DGCL. Advancement of expenses to a director or officer will be contingent on an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified. Notwithstanding the foregoing, except with respect to a proceeding to enforce rights of indemnification or advance payment of expenses under the indemnification provision of the amended and restated bylaws, CoStar is required to indemnify a director or officer in connection with any proceeding initiated by such person only if such proceeding was authorized by the board of directors of CoStar. |
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LoopNet | CoStar | |||
Certain Business Combination Restrictions | Section 203 of the DGCL prohibits certain “business combinations.” A corporation shall not engage in any business combination with any “interested stockholder” (a holder of 15% of the corporation’s voting power) for a period of three years following the time that such stockholder became an interested stockholder, unless: (1) Prior to such time the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; (2) Upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85 percent of the voting stock of the corporation outstanding at the time the transaction commenced (excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned by (i) persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer); or (3) At or subsequent to such time the business combination was approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 662/3 percent of the outstanding voting stock which is not owned by the interested stockholder. A corporation may elect not to be governed by Section 203 of the DGCL. Neither the LoopNet certificate of incorporation nor the LoopNet bylaws contains the election not to be governed by Section 203 of the DGCL. Therefore, LoopNet is governed by Section 203 of the DGCL. However, the Board approved the merger for purposes of Section 203 of the DGCL; therefore, this provision does not apply to LoopNet in the merger. | Neither the CoStar certificate of incorporation nor the CoStar bylaws contains the election not to be governed by Section 203 of the DGCL. | ||
Rights Agreement | LoopNet does not have a rights agreement. | CoStar does not have a rights agreement. |
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• | You must deliver to LoopNet a written demand for appraisal of your shares before the vote with respect to the merger is taken. This written demand for appraisal must be in addition to and separate from any proxy or vote abstaining from or voting against the adoption of the merger agreement. Voting against or failing to vote for the adoption of the merger agreement by itself does not constitute a demand for appraisal within the meaning of Section 262. | |
• | You must not vote in favor of, or consent in writing to, the adoption of the merger agreement. A vote in favor of the adoption of the merger agreement will constitute a waiver of your appraisal rights in respect of the shares so voted and will nullify any previously filed written demands for appraisal. A proxy which does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement. Therefore, a stockholder who submits a proxy and who wishes to exercise appraisal rights must submit a proxy containing instructions to vote against the adoption of the merger agreement or abstain from voting on the adoption of the merger agreement. | |
• | You must continue to hold your shares of LoopNet stock through the effective time of the merger. Therefore, a stockholder who is the record holder of shares of LoopNet stock on the date the written demand for appraisal is made but who thereafter transfers the shares prior to the effective time of the merger will lose any right to appraisal with respect to such shares. |
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CoStar SEC Filings (SEC File Number 000-24531): | Period or Date Filed | |
Annual Report onForm 10-K | Year ended December 31, 2010 | |
Quarterly Report onForm 10-Q | Quarterly period ended March 31, 2011 | |
Definitive Proxy Statement on Schedule 14A | Filed April 27, 2011 | |
Current Reports onForm 8-K | Filed February 3, 2011, February 24, 2011, April 6, 2011, April 27, 2011 and April 28, 2011 | |
The description of CoStar common stock contained in its registration statement onForm S-1 filed with the SEC on March 13, 1998 and any amendment or report filed with the SEC for the purpose of updating the description. |
LoopNet SEC Filings (SEC File Number 000-52026): | Period or Date Filed | |
Annual Report onForm 10-K | Year ended December 31, 2010 | |
Quarterly Report onForm 10-Q | Quarterly period ended March 31, 2011 | |
Definitive Proxy Statement on Schedule 14A | Filed April 4, 2011 | |
Current Reports onForm 8-K | Filed February 4, 2011 and April 28, 2011 | |
The description of LoopNet common stock contained in its registration statement onForm S-1 filed with the SEC on March 1, 2006 and any amendment or report filed with the SEC for the purpose of updating the description. |
109
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110
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dated as of
April 27, 2011
among
LOOPNET, INC.,
COSTAR GROUP, INC.
and
LONESTAR ACQUISITION SUB, INC.
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ARTICLE 1 Definitions | ||||||
Section 1.01. | Definitions | A-1 | ||||
Section 1.02. | Other Definitional and Interpretative Provisions | A-7 | ||||
ARTICLE 2 The Merger | ||||||
Section 2.01. | The Merger | A-7 | ||||
Section 2.02. | Conversion of Shares | A-8 | ||||
Section 2.03. | Surrender and Payment | A-8 | ||||
Section 2.04. | Dissenting Shares | A-10 | ||||
Section 2.05. | Stock Options; Restricted Stock Units | A-10 | ||||
Section 2.06. | Adjustments | A-12 | ||||
Section 2.07. | Withholding Rights | A-12 | ||||
Section 2.08. | Lost Certificates | A-12 | ||||
Section 2.09. | No Fractional Shares | A-12 | ||||
ARTICLE 3 The Surviving Corporation | ||||||
Section 3.01. | Certificate of Incorporation | A-13 | ||||
Section 3.02. | Bylaws | A-13 | ||||
Section 3.03. | Directors and Officers | A-13 | ||||
ARTICLE 4 Representations and Warranties of the Company | ||||||
Section 4.01. | Corporate Existence and Power | A-13 | ||||
Section 4.02. | Corporate Authorization | A-13 | ||||
Section 4.03. | Governmental Authorization | A-14 | ||||
Section 4.04. | Non-contravention | A-14 | ||||
Section 4.05. | Capitalization | A-15 | ||||
Section 4.06. | Subsidiaries | A-16 | ||||
Section 4.07. | SEC Filings and the Sarbanes-Oxley Act | A-16 | ||||
Section 4.08. | Financial Statements | A-17 | ||||
Section 4.09. | Disclosure Documents | A-18 | ||||
Section 4.10. | Absence of Certain Changes | A-18 | ||||
Section 4.11. | No Undisclosed Material Liabilities | A-18 | ||||
Section 4.12. | Compliance with Laws and Court Orders | A-18 | ||||
Section 4.13. | Litigation | A-18 | ||||
Section 4.14. | Properties | A-19 | ||||
Section 4.15. | Intellectual Property | A-19 | ||||
Section 4.16. | Taxes | A-20 | ||||
Section 4.17. | Employee Benefit Plans | A-21 | ||||
Section 4.18. | Environmental Matters | A-22 | ||||
Section 4.19. | Material Contracts | A-22 | ||||
Section 4.20. | Finders’ Fees | A-23 |
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Section 4.21. | Opinion of Financial Advisor | A-23 | ||||
Section 4.22. | Antitakeover Statutes | A-24 | ||||
Section 4.23. | Affiliate Transactions | A-24 | ||||
Section 4.24. | Employment Matters | A-24 | ||||
Section 4.25. | Insurance | A-24 | ||||
Section 4.26. | No Other Representations and Warranties | A-24 | ||||
ARTICLE 5 Representations and Warranties of Parent | ||||||
Section 5.01. | Corporate Existence and Power | A-25 | ||||
Section 5.02. | Corporate Authorization | A-25 | ||||
Section 5.03. | Governmental Authorization | A-25 | ||||
Section 5.04. | Non-contravention | A-26 | ||||
Section 5.05. | Disclosure Documents | A-26 | ||||
Section 5.06. | Finders’ Fees | A-26 | ||||
Section 5.07. | Financing | A-26 | ||||
Section 5.08. | Capitalization | A-27 | ||||
Section 5.09. | SEC Filings and the Sarbanes-Oxley Act | A-27 | ||||
Section 5.10. | Financial Statements | A-28 | ||||
Section 5.11. | Litigation | A-29 | ||||
Section 5.12. | No Other Representations and Warranties | A-29 | ||||
ARTICLE 6 Covenants of the Company | ||||||
Section 6.01. | Conduct of the Company | A-29 | ||||
Section 6.02. | Stockholder Meeting; Proxy Material | A-31 | ||||
Section 6.03. | Access to Information | A-32 | ||||
Section 6.04. | No Solicitation; Other Offers | A-32 | ||||
ARTICLE 7 Covenants of Parent | ||||||
Section 7.01. | Confidentiality | A-34 | ||||
Section 7.02. | Obligations of Merger Subsidiary | A-34 | ||||
Section 7.03. | Voting of Shares | A-34 | ||||
Section 7.04. | Director and Officer Liability | A-34 | ||||
Section 7.05. | Employee Matters | A-36 | ||||
Section 7.06. | Stock Exchange Listing | A-37 | ||||
ARTICLE 8 Covenants of Parent and the Company | ||||||
Section 8.01. | Reasonable Best Efforts | A-37 | ||||
Section 8.02. | HSR Clearance | A-37 | ||||
Section 8.03. | Cooperation | A-38 | ||||
Section 8.04. | Public Announcements | A-39 | ||||
Section 8.05. | Financing | A-39 | ||||
Section 8.06. | Further Assurances | A-40 | ||||
Section 8.07. | Preparation of theForm S-4 and Proxy Statement | A-40 |
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Section 8.08. | Section 16 Matters | A-40 | ||||
Section 8.09. | Notices of Certain Events | A-41 | ||||
Section 8.10. | Stock Exchange De-listing | A-41 | ||||
Section 8.11. | Takeover Statutes | A-41 | ||||
Section 8.12. | Shareholder Litigation | A-41 | ||||
ARTICLE 9 Conditions to the Merger | ||||||
Section 9.01. | Conditions to the Obligations of Each Party | A-41 | ||||
Section 9.02. | Conditions to the Obligations of Parent and Merger Subsidiary | A-42 | ||||
Section 9.03. | Conditions to the Obligations of the Company | A-42 | ||||
ARTICLE 10 Termination | ||||||
Section 10.01. | Termination | A-43 | ||||
Section 10.02. | Effect of Termination | A-44 | ||||
ARTICLE 11 Miscellaneous | ||||||
Section 11.01. | Notices | A-44 | ||||
Section 11.02. | Survival of Representations and Warranties | A-45 | ||||
Section 11.03. | Amendments and Waivers | A-45 | ||||
Section 11.04. | Expenses | A-45 | ||||
Section 11.05. | Disclosure Schedule and SEC Document References | A-47 | ||||
Section 11.06. | Binding Effect; Benefit; Assignment | A-47 | ||||
Section 11.07. | Governing Law | A-47 | ||||
Section 11.08. | Jurisdiction | A-47 | ||||
Section 11.09. | WAIVER OF JURY TRIAL | A-48 | ||||
Section 11.10. | Counterparts; Effectiveness | A-48 | ||||
Section 11.11. | Entire Agreement | A-48 | ||||
Section 11.12. | Severability | A-48 | ||||
Section 11.13. | Specific Performance | A-48 |
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Term | Section | |||
Adverse Recommendation Change | 6.04 | |||
Agreement | Recitals | |||
Closing | 2.01 | |||
Closing Date | 2.01 | |||
Company | Recitals | |||
Company Board Recommendation | 4.02 | |||
Company Compensatory Awards | 2.05 | |||
Company Proxy Statement/Prospectus | 4.09 | |||
Company RSUs | 2.05 | |||
Company SEC Documents | 4.07 | |||
Company Securities | 4.05 |
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Term | Section | |||
Company Share Certificates | 2.03 | |||
Company Share Cash Consideration | 2.02 | |||
Company Shares Merger Consideration | 2.02 | |||
Company Share Stock Consideration | 2.02 | |||
Company Stock Incentive Plan | 2.05 | |||
Company Stock Options | 2.05 | |||
Company Subsidiary Securities | 4.06 | |||
Company Stockholder Approval | 4.02 | |||
Company Stockholder Meeting | 6.02 | |||
Company Termination Fee | 11.04 | |||
Confidentiality Agreement | 6.03 | |||
Continuing Employees | 7.05 | |||
Debt Commitment Letter | 5.07 | |||
Debt Financing | 5.07 | |||
Delaware Chancery Court | 11.08 | |||
D&O Insurance | 7.04 | |||
Divestiture Action | 8.02 | |||
DOJ | 8.02 | |||
Effective Time | 2.01 | |||
Employer Plan | 4.17 | |||
Excess | 2.05 | |||
Excess Shares | 2.09 | |||
Exercise Excess | 2.05 | |||
Exchange Agent | 2.03 | |||
Form S-4 | 8.07 | |||
FTC | 8.02 | |||
Indemnified Person | 7.04 | |||
Internal Controls | 4.07 | |||
Lease | 4.14 | |||
Material Contract | 4.19 | |||
Merger | 2.01 | |||
Merger Subsidiary | Recitals | |||
Multiemployer Plan | 4.17 | |||
Notice Period | 7.04 | |||
Parent Preferred Stock | 5.08 | |||
Parent SEC Documents | 5.09 | |||
Parent Securities | 5.08 | |||
Parent Stock Incentive Plan | 5.08 | |||
Parent Stock Options | 5.08 | |||
Parent Termination Fee | 11.04 | |||
Preferred Share Cash Consideration | 2.02 | |||
Preferred Share Stock Consideration | 2.02 | |||
Proceeds | 2.09 | |||
Registered IPR | 4.15 |
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Term | Section | |||
Representatives | 6.04 | |||
Required Information | 8.05 | |||
Series A Preferred Share Certificates | 2.03 | |||
Series A Preferred Shares Merger Consideration | 2.02 | |||
Substantial Detriment | 8.02 | |||
Superior Proposal | 6.04 | |||
Superior Proposal Termination | 6.04 | |||
Surviving Corporation | 2.01 | |||
Uncertificated Company Shares | 2.03 | |||
Voting Agreement | Recitals |
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1331 L Street, NW
Washington, DC 20005
Attention: General Counsel
Facsimile No.: (202)346-6703
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Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 Attention: | Robert E. Spatt Sean Rodgers Facsimile No.:(212) 455-2502 |
185 Berry Street
San Francisco, CA 94107
Attention: Richard J. Boyle, Jr.
Facsimile No.:(415) 764-1622
1600 El Camino Real
Menlo Park, California 94025
Attention: William Kelly
Facsimile No.:(650) 752-2111
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By: | /s/ Richard J. Boyle, Jr. |
Title: | Chief Executive Officer and Chairman of the Board of Directors |
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By: | /s/ Andrew Florance |
Title: | CEO |
By: | /s/ Andrew Florance |
Title: | CEO |
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1331 L Street, N.W.
Washington, D.C. 20005
Attention: General Counsel
Facsimile No.:(202) 346-6703
Simpson Thacher & Bartlett LLP 425 Lexington Ave. New York, NY 10017 Attention: | Robert Spatt Sean Rodgers Facsimile No.:(212) 455-2502 |
185 Berry Street, Suite 4000
San Francisco, CA 94107
Attention: Richard J. Boyle, Jr.
Facsimile No.:(415) 764-1622
1600 El Camino Real
Menlo Park, CA 94025
Attention: William M. Kelly
Facsimile No.:(650) 752-2111
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By: | /s/ Andrew Florance |
Title: | CEO |
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By: | /s/ Richard J. Boyle, Jr. |
Title: | Chief Executive Officer and Chairman of the Board of Directors |
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By: | /s/ Kevin Baker |
Title: | Managing Director and General Counsel |
By: | /s/ Kevin Baker |
Title: | Managing Director and General Counsel |
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By: | /s/ Kathleen A. Murphy |
Title: | Member of Trinity TVL IX, |
By: | /s/ Kathleen A. Murphy |
Title: | Member of Trinity TVL IX, |
By: | /s/ Kathleen A. Murphy |
Title: | Member of Trinity TVL IX, L.L.C., General Partner of |
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By: | /s/ Thomas Unterman |
Title: | Managing Director |
By: | /s/ Thomas Unterman |
Title: | Managing Director |
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LELAND STANFORD JUNIOR
UNIVERSITY (SBST)
By: | /s/ Kristal Dehnad |
Title: | Associate Director, Charitable |
Company
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By: | /s/ Richard J. Boyle, Jr. |
By: | /s/ Thomas P. Byrne |
By: | /s/ Brent Stumme |
By: | /s/ Jason Greenman |
By: | /s/ Wayne Warthen |
By: | /s/ William Byrnes |
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By: | /s/ Dennis Chookaszian |
By: | /s/ James T. Farrell |
By: | /s/ Noel Fenton |
By: | /s/ Scott Ingraham |
By: | /s/ Thomas E. Unterman |
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By: | /s/ Jonathan A. Knee |
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Item 20. | Indemnification of Directors and Officers |
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Item 21. | Exhibits and Financial Statement Schedules |
Exhibit | ||||
Number | Exhibit Description | |||
2 | .1 | Agreement and Plan of Merger dated as of April 27, 2011, among CoStar Group, Inc., Lonestar Acquisition Sub, Inc. and LoopNet, Inc. (included as Annex A to the proxy statement/prospectus forming a part of this registration statement). | ||
3 | .1 | Restated Certificate of Incorporation of CoStar Group, Inc. (incorporated by reference to Exhibit 3.1 to CoStar’s Registration Statement onForm S-1 filed with the SEC on March 13, 1998). | ||
3 | .2 | Certificate of Amendment of Restated Certificate of Incorporation of Costar Group, Inc. (incorporated by reference to Exhibit 3.1 to CoStar’s Quarterly Report onForm 10-Q for the quarter ended June 30, 1999). | ||
3 | .3 | Amended and Restated By-Laws of CoStar Group, Inc. (incorporated by reference to Exhibit 3.1 to CoStar’s Current Report onForm 8-K filed with the SEC on April 6, 2011). | ||
4 | .1 | Specimen Common Stock Certificate of CoStar Group, Inc. (incorporated by reference to Exhibit 4.1 to CoStar’s Annual Report onForm 10-K for the year ended December 31, 1999). | ||
5 | .1 | Opinion of Simpson Thacher & Bartlett LLP regarding the legality of the securities being issued.* | ||
10 | .1 | Voting and Support Agreement dated as of April 27, 2011, by and among CoStar Group, Inc., LoopNet, Inc., the holders of Series A Preferred Stock of LoopNet, Inc. and certain executive officers and directors of LoopNet, Inc. (included as Annex B to the proxy statement/prospectus forming a part of this registration statement). | ||
23 | .1 | Consent of Ernst & Young LLP (related to its report relating to CoStar’s consolidated financial statements and internal control over financial reporting). | ||
23 | .2 | Consent of Ernst & Young LLP (related to its report relating to LoopNet’s consolidated financial statements and internal control over financial reporting). | ||
23 | .3 | Consent of Simpson Thacher & Bartlett LLP (included in Exhibit 5.1).* | ||
24 | .1 | Power of Attorney (included in Part II to this Registration Statement). | ||
99 | .1 | Consent of Evercore Group L.L.C. | ||
99 | .2 | Form of Proxy of LoopNet. |
* | To be filed by amendment. |
Item 22. | Undertakings |
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By: | /s/ Andrew C. Florance |
Title: | Chief Executive Officer |
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Signature | Title | |||
/s/ Andrew C. Florance Andrew C. Florance | Director, President and Chief Executive Officer (Principal Executive Officer) | |||
/s/ Brian J. Radecki Brian J. Radecki | Chief Financial Officer (Principal Financial and Accounting Officer) | |||
/s/ David Bonderman David Bonderman | Director | |||
/s/ Michael J. Glosserman Michael J. Glosserman | Director | |||
/s/ Warren H. Haber Warren H. Haber | Director | |||
/s/ Michael R. Klein Michael R. Klein | Chairman of the Board | |||
/s/ Josiah O. Low III Josiah O. Low III | Director | |||
/s/ Christopher J. Nassetta Christopher J. Nassetta | Director |
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Exhibit | ||||
Number | Exhibit Description | |||
2 | .1 | Agreement and Plan of Merger dated as of April 27, 2011, among CoStar Group, Inc., Lonestar Acquisition Sub, Inc. and LoopNet, Inc. (included as Annex A to the proxy statement/prospectus forming a part of this registration statement). | ||
3 | .1 | Restated Certificate of Incorporation of CoStar Group, Inc. (incorporated by reference to Exhibit 3.1 to CoStar’s Registration Statement onForm S-1 filed with the SEC on March 13, 1998). | ||
3 | .2 | Certificate of Amendment of Restated Certificate of Incorporation of Costar Group, Inc. (incorporated by reference to Exhibit 3.1 to CoStar’s Quarterly Report onForm 10-Q for the quarter ended June 30, 1999). | ||
3 | .3 | Amended and Restated By-Laws of CoStar Group, Inc. (incorporated by reference to Exhibit 3.1 to CoStar’s Current Report onForm 8-K filed with the SEC on April 6, 2011). | ||
4 | .1 | Specimen Common Stock Certificate of CoStar Group, Inc. (incorporated by reference to Exhibit 4.1 to CoStar’s Annual Report onForm 10-K for the year ended December 31, 1999). | ||
5 | .1 | Opinion of Simpson Thacher & Bartlett LLP regarding the legality of the securities being issued.* | ||
10 | .1 | Voting and Support Agreement dated as of April 27, 2011, by and among CoStar Group, Inc., LoopNet, Inc., the holders of Series A Preferred Stock of LoopNet, Inc. and certain executive officers and directors of LoopNet, Inc. (included as Annex B to the proxy statement/prospectus forming a part of this registration statement). | ||
23 | .1 | Consent of Ernst & Young LLP (related to its report relating to CoStar’s consolidated financial statements and internal control over financial reporting). | ||
23 | .2 | Consent of Ernst & Young LLP (related to its report relating to LoopNet’s consolidated financial statements and internal control over financial reporting). | ||
23 | .3 | Consent of Simpson Thacher & Bartlett LLP (included in Exhibit 5.1).* | ||
24 | .1 | Power of Attorney (included in Part II to this Registration Statement). | ||
99 | .1 | Consent of Evercore Group L.L.C. | ||
99 | .2 | Form of Proxy of LoopNet. |
* | To be filed by amendment. |
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