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Exhibit 10.1
COSTAR GROUP, INC.
1998 STOCK INCENTIVE PLAN
(AS AMENDED ON JUNE 21, 2000)
PURPOSE CoStar Group, Inc., a Delaware corporation "CoStar" or the
"Company"), wishes to recruit, reward, and retain employees
and outside directors. To further these objectives, the
Company hereby sets forth the CoStar Group, Inc. 1998 Stock
Incentive Plan (the "Plan") to provide options ("Options")
or direct grants ("Stock Grants" and, together with the
Options, "Awards") to employees and outside directors with
respect to shares of the Company's common stock (the "Common
Stock"). The Plan is effective as of the effective date (the
"Effective Date") of the Company's registration under
Section 12 of the Securities Exchange Act of 1934 (the
"Exchange Act") with respect to its initial public offering
("IPO").
PARTICIPANTS All Employees of CoStar and any Eligible Subsidiaries are
eligible for Options and Stock Grants under this Plan, as
are the directors of CoStar and the Eligible Subsidiaries
who are not employees ("Eligible Directors"). Eligible
employees and directors become "optionees" when the
Administrator grants them an option under this Plan or
"recipients" when they receive a direct grant of Common
Stock. (Optionees and recipients are referred to
collectively as "participants." The term participant also
includes, where appropriate, a person authorized to exercise
an Award in place of the original optionee.) The
Administrator may also grant Options or make Stock Grants to
certain other service providers.
Employee means any person employed as a common law employee
of the Company or an Eligible Subsidiary.
ADMINISTRATOR The Administrator will be the Compensation Committee of the
Board of Directors of CoStar (the "Compensation Committee"),
unless the Board specifies another committee. The Board may
also act under the Plan as though it were the Compensation
Committee.
The Administrator is responsible for the general operation
and administration of the Plan and for carrying out its
provisions and has full discretion in interpreting and
administering the provisions of the Plan. Subject to the
express provisions of the Plan, the Administrator may
exercise such powers and authority of the Board as the
Administrator may find necessary or appropriate to carry out
its functions. The Administrator may delegate its
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1998 Stock Incentive Plan
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functions (other than those described in the GRANTING OF
AWARDS section) to officers or employees of CoStar.
The Administrator's powers will include, but not be limited
to, the power to amend, waive, or extend any provision or
limitation of any Award. The Administrator may act through
meetings of a majority of its members or by unanimous
consent.
GRANTING OF AWARDS Subject to the terms of the Plan, the Administrator will,
in its sole discretion, determine
the participants who receive Awards,
the terms of such Awards,
the schedule for exercisability or nonforfeitability
(including any requirements that the participant or the
Company satisfy performance criteria),
the time and conditions for expiration of the Award,
and
the form of payment due upon exercise, if any.
The Administrator's determinations under the Plan need not
be uniform and need not consider whether possible
participants are similarly situated.
Options granted to employees may be nonqualified stock
options ("NQSOs") or "incentive stock options" ("ISOs")
within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), or
the corresponding provision of any subsequently enacted tax
statute. Options granted to Eligible Directors must be
NQSOs. The Administrator will not grant ISOs unless the
stockholders have approved the Plan.
The Administrator may impose such conditions on or charge
such price for the Stock Grants as it deems appropriate.
SUBSTITUTIONS The Administrator may also grant Awards in substitution for
options or other equity interests held by individuals (i) as
a result of their employment by or services to CoStar Group,
L.P. or (ii) who become Employees of the Company or of an
Eligible Subsidiary as a result of the Company's acquiring
or merging with the individual's employer or acquiring its
assets. If necessary to conform the Awards to the interests
for which they are substitutes, the Administrator may grant
substitute Awards under terms and conditions that vary from
those the Plan otherwise requires.
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1998 Stock Incentive Plan
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DIRECTOR Each Eligible Director of the Company shall be entitled to
FORMULA receive at the first meeting of the Board of Directors
OPTIONS immediately following each of the Company's Annual Meeting
of Stockholders an Option to purchase 1,000 shares of the
Company's Common Stock at an exercise price equal to the
Fair Market Value (as defined below) on such date of grant.
Such Options shall vest in full on the first anniversary of
the date of grant, provided that such Director is still a
Director of the Company.
DATE OF GRANT The Date of Grant will be the date as of which this Plan or
the Administrator grants an Award to a participant, as
specified in the Plan or in the Administrator's minutes.
EXERCISE PRICE The Exercise Price is the value of the consideration that
a participant must provide in exchange for one share of
Common Stock. The Administrator will determine the
Exercise Price under each Award and may set the Exercise
Price without regard to the Exercise Price of any other
Awards granted at the same or any other time. The Company
may use the consideration it receives from the participant
for general corporate purposes.
The Exercise Price per share for NQSOs may not be less
than 100% of the Fair Market Value of a share on the Date
of Grant. If an Option is intended to be an ISO, the
Exercise Price per share may not be less than 100% of the
Fair Market Value (on the Date of Grant) of a share of
Common Stock covered by the Option; provided, however,
that if the Administrator decides to grant an ISO to
someone covered by Sections 422(b)(6) and 424(d) (as a
more-than-10%-stock-owner), the Exercise Price of the
Option must be at least 110% of the Fair Market Value (on
the Date of Grant).
The Administrator may satisfy any state law requirements
regarding adequate consideration for Stock Grants by (i)
issuing Common Stock held as treasury stock or (ii)
charging the recipients at least the par value for the
shares covered by the Stock Grant. The Administrator may
designate that a recipient may satisfy (ii) either by
direct payments or by the Administrator's withholding from
other payments due to the recipient.
FAIR MARKET Fair Market Value of a share of Common Stock for purposes
VALUE of the Plan will be determined as follows:
if the Common Stock is traded on a national securities
exchange, the closing sale price on that date;
if the Common Stock is not traded on any such
exchange, the closing sale price as reported by the
National Association of Securities Dealers, Inc.
Automated Quotation System ("Nasdaq") for such date;
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if no such closing sale price information is
available, the average of the closing bid and asked
prices as reported by Nasdaq for such date; or
if there are no such closing bid and asked prices, the
average of the closing bid and asked prices as
reported by any other commercial service for such
date.
For any date that is not a trading day, the Fair Market
Value of a share of Common Stock for such date shall be
determined by using the closing sale price or the average
of the closing bid and asked prices, as appropriate, for
the immediately preceding trading day.
The Fair Market Value will be deemed equal to the IPO
price for any Options granted as of the date on which the
IPO's underwriters price the IPO.
EXERCISABILITY The Administrator will determine the times and conditions
for exercise of or purchase under each Award but may not
extend the period for exercise beyond the tenth
anniversary of its Date of Grant (or five years for ISOs
granted to 10% owners covered by Code Sections 422(b)(6)
and 424(d)).
Awards will become exercisable at such times and in such
manner as the Administrator determines and the Award
Agreement, if any, indicates; provided, however, that the
Administrator may, on such terms and conditions as it
determines appropriate, accelerate the time at which the
participant may exercise any portion of an Award or at
which restrictions on Stock Grants lapse. For Stock
Grants, "exercise" refers to acceptance of the Award or
lapse of restrictions, as appropriate in context.
If the Administrator does not specify otherwise, Options
will become exercisable and restrictions on Stock Grants
(other than the Director Formula Grants) will lapse as to
one-third of the covered shares on each of the first,
second, and third anniversaries of the Date of Grant.
No portion of an Award that is unexercisable at a
participant's termination of employment will thereafter
become exercisable, unless the Award Agreement provides
otherwise, either initially or by amendment.
CHANGE OF Upon a Change of Control (as defined below), all Options
CONTROL held by current Employees and directors will become fully
exercisable and all restrictions on Stock Grants will
lapse. A Change of Control for this purpose means the
occurrence, after the Company's IPO, of any one or more of
the following events:
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a person, entity, or group (other than the Company, any
Company subsidiary, any Company benefit plan, or any
underwriter temporarily holding securities for an
offering of such securities) acquires ownership of more
than 80% of the undiluted total voting power of the
Company's then-outstanding securities eligible to vote
to elect members of the Board ("Company Voting
Securities");
consummation of a merger or consolidation of the
Company into any other entity -- unless the holders of
the Company Voting Securities outstanding immediately
before such consummation, together with any trustee or
other fiduciary holding securities under a Company
benefit plan, hold securities that represent
immediately after such merger or consolidation at least
20% of the combined voting power of the then
outstanding voting securities of either the Company or
the other surviving entity or its parent; or
the stockholders of the Company approve (i) a plan of
complete liquidation or dissolution of the Company or
(ii) an agreement for the Company's sale or disposition
of all or substantially all the Company's assets, and
such liquidation, dissolution, sale, or disposition is
consummated.
Even if other tests are met, a Change of Control has
not occurred under any circumstance in which the
Company files for bankruptcy protection or is
reorganized following a bankruptcy filing.
The ADJUSTMENT UPON CHANGES IN CAPITAL STOCK provisions
will also apply if the Change of Control is a SUBSTANTIAL
CORPORATE CHANGE (as defined in those provisions).
LIMITATION ON An Option granted to an employee will be an ISO only to the
ISOS extent that the aggregate Fair Market Value (determined at
the Date of Grant) of the stock with respect to which ISOs
are exercisable for the first time by the optionee during
any calendar year (under the Plan and all other plans of
the Company and its subsidiary corporations, within the
meaning of Code Section 422(d)), does not exceed $100,000.
This limitation will be applied by taking Options into
account in the order in which such Options were granted.
If, by design or operation, the Option exceeds this limit,
the excess will be treated as an NQSO.
METHOD OF To exercise any exercisable portion of an Award, the
EXERCISE participant must:
Deliver a written notice of exercise to the Secretary
of the Company (or to whomever the Administrator
designates), in a form complying with any rules the
Administrator may issue, signed by the participant, and
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1998 Stock Incentive Plan
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specifying the number of shares of Common Stock
underlying the portion of the Award the participant is
exercising;
Pay the full Exercise Price, if any, by cashier's or
certified check for the shares of Common Stock with
respect to which the Award is being exercised, unless
the Administrator consents to another form of payment
(which could include the use of Common Stock); and
Deliver to the Administrator such representations and
documents as the Administrator, in its sole discretion,
may consider necessary or advisable.
Payment in full of the Exercise Price need not accompany
the written notice of exercise provided the notice directs
that the stock certificates for the shares issued upon the
exercise be delivered to a licensed broker acceptable to
the Company as the agent for the individual exercising the
option and at the time of closing of the sale of the Common
Stock issued upon exercise of the Option, the broker will
tender to the Company cash or cash equivalents acceptable
to the Company and equal to the Exercise Price.
If the Administrator agrees to payment through the tender
to the Company of shares of Common Stock, the individual
must have held the stock being tendered for at least six
months at the time of surrender. Shares of stock offered as
payment will be valued, for purposes of determining the
extent to which the participant has paid the Exercise
Price, at their Fair Market Value on the date of exercise.
The Administrator may also, in its discretion, accept
attestation of ownership of Common Stock and issue a net
number of shares upon Option exercise.
AWARD No one may exercise an Award more than ten years after its
EXPIRATION Date of Grant (or five years, for an ISO granted to a
more-than-10% shareholder). Unless the Award Agreement
provides otherwise, either initially or by amendment, no
one may exercise an Award after the first to occur of:
EMPLOYMENT The 90th day after the date of termination of
TERMINATION employment (other than for death or Disability), where
termination of employment means the time when the
employer-employee or other service-providing
relationship between the employee and the Company ends
for any reason, including retirement. Unless the Award
Agreement provides otherwise, termination of employment
does not include instances in which the Company
immediately rehires a common law employee as an
independent contractor. The Administrator, in its sole
discretion, will determine all questions of whether
particular terminations or leaves of absence are
terminations of employment;
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DISABILITY For disability, the earlier of (i) the first anniversary
of the participant's termination of employment for
disability and (ii) thirty (30) days after the
participant no longer has a disability, where
"disability" means the inability to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be
expected to result in death or that has lasted or can be
expected to last for a continuous period of not less
than twelve months; or
DEATH The date twelve months after the participant's death.
If exercise is permitted after termination of employment,
the Award will nevertheless expire as of the date that the
former service provider violates any covenant not to
compete in effect between the Company and the former
employee. In addition, an optionee who exercises an Option
more than 90 days after termination of employment with the
Company and/or the Eligible Subsidiaries will only receive
ISO treatment to the extent permitted by law, and becoming
or remaining an employee of another related company (that
is not an Eligible Subsidiary) or an independent contractor
to the Company will not prevent loss of ISO status as a
result of the formal termination of employment.
Nothing in this Plan extends the term of an Award beyond
the tenth anniversary of its Date of Grant, nor does
anything in this AWARD EXPIRATION section make an Award
exercisable that has not otherwise become exercisable.
AWARD Option Agreements will set forth the terms of each Option
AGREEMENT and will include such terms and conditions, consistent with
the Plan, as the Administrator may determine are necessary
or advisable. To the extent the agreement is inconsistent
with the Plan, the Plan will govern. The Option Agreements
may contain special rules. The Administrator may, but is
not required to, issue agreements for Stock Grants.
STOCK SUBJECT Except as adjusted below under CORPORATE CHANGES, the
TO PLAN aggregate number of shares of Common Stock that may be
issued under the Awards (whether ISOs, NQSOs, or Stock
Grants) may not exceed 3,000,000 shares and the maximum
number of shares that may be granted under Awards for a
single individual in a calendar year may not exceed 400,000
shares. (The individual maximum applies only to Awards
first made under this Plan and not to Awards made in
substitution of a prior employer's options or other
incentives, except as Code Section 162(m) otherwise
requires.) The Common Stock will come from either
authorized but unissued shares or from previously issued
shares that the Company reacquires, including shares it
purchases on the open market. If any Award expires, is
canceled, or terminates for any other reason, the shares of
Common Stock available under that Award will
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1998 Stock Incentive Plan
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again be available for the granting of new Awards (but will
be counted against that calendar year's limit for a given
individual).
No adjustment will be made for a dividend or other right
for which the record date precedes the date of exercise.
The participant will have no rights of a stockholder with
respect to the shares of stock subject to an Award except
to the extent that the Company has issued certificates for,
or otherwise confirmed ownership of, such shares upon the
exercise of the Award.
The Company will not issue fractional shares pursuant to
the exercise of an Award, but the Administrator may, in its
discretion, direct the Company to make a cash payment in
lieu of fractional shares.
PERSON WHO During the participant's lifetime, only the participant or
MAY EXERCISE his duly appointed guardian or personal representative may
exercise the Awards. After his death, his personal
representative or any other person authorized under a will
or under the laws of descent and distribution may exercise
any then exercisable portion of an Award. If someone other
than the original recipient seeks to exercise any portion
of an Award, the Administrator may request such proof as it
may consider necessary or appropriate of the person's right
to exercise the Award.
ADJUSTMENTS Subject to any required action by the Company (which it
UPON CHANGES shall promptly take) or its stockholders, and subject to
IN CAPITAL STOCK the provisions of applicable corporate law, if, after the
Date of Grant of an Award,
the outstanding shares of Common Stock increase or
decrease or change into or are exchanged for a different
number or kind of security by reason of any
recapitalization, reclassification, stock split, reverse
stock split, combination of shares, exchange of shares,
stock dividend, or other distribution payable in capital
stock, or
some other increase or decrease in such Common Stock
occurs without the Company's receiving consideration,
the Administrator may make a proportionate and appropriate
adjustment in the number of shares of Common Stock
underlying each Award, so that the proportionate interest
of the participant immediately following such event will,
to the extent practicable, be the same as immediately
before such event. (This adjustment does not apply to
Common Stock that the optionee has already purchased nor to
Stock Grants that are already nonforfeitable, except to the
extent of similar treatment for all stockholders.) Unless
the Administrator determines another method would be
appropriate, any such
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adjustment to an Award will not change the total price with
respect to shares of Common Stock underlying the
unexercised portion of the Award but will include a
corresponding proportionate adjustment in the Award's
Exercise Price.
The Administrator will make a commensurate change to the
maximum number and kind of shares provided in the STOCK
SUBJECT TO PLAN section.
Any issue by the Company of any class of preferred stock,
or securities convertible into shares of common or
preferred stock of any class, will not affect, and no
adjustment by reason thereof will be made with respect to,
the number of shares of Common Stock subject to any Award
or the Exercise Price except as this ADJUSTMENTS section
specifically provides. The grant of an Award under the Plan
will not affect in any way the right or power of the
Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business
structure, or to merge or to consolidate, or to dissolve,
liquidate, sell, or transfer all or any part of its
business or assets.
SUBSTANTIAL Upon a Substantial Corporate Change, the Plan and any
CORPORATE unexercised Awards will terminate unless provision is made
CHANGE in writing in connection with such transaction for
the assumption or continuation of outstanding Awards,
or
the substitution for such options or grants of any
options or grants covering the stock or securities of
a successor employer corporation, or a parent or
subsidiary of such successor, with appropriate
adjustments as to the number and kind of shares of
stock and prices, in which event the Awards will
continue in the manner and under the terms so
provided.
Unless the Board determines otherwise, if an Award would
otherwise terminate pursuant to the preceding sentence,
participants who are then Employees or directors of the
Company will have the right, at such time before the
consummation of the transaction causing such termination as
the Board reasonably designates, to exercise any
unexercised portions of the Award, whether or not they had
previously become exercisable. However, unless the Board
determines otherwise, the acceleration will not occur if it
would render unavailable "pooling of interest" accounting
for any reorganization, merger, or consolidation of the
Company.
A Substantial Corporate Change means the
dissolution or liquidation of the Company,
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merger, consolidation, or reorganization of the
Company with one or more corporations in which the
Company is not the surviving corporation,
the sale of substantially all of the assets of the
Company to another corporation, or
any transaction (including a merger or reorganization
in which the Company survives) approved by the Board
that results in any person or entity (other than any
affiliate of the Company as defined in Rule 144(a)(1)
under the Securities Act) owning 100% of the combined
voting power of all classes of stock of the Company.
SUBSIDIARY Employees of Company Subsidiaries will be entitled to
EMPLOYEES participate in the Plan, except as otherwise designated by
the Board of Directors or the Committee.
Eligible Subsidiary means each of the Company's
Subsidiaries, except as the Board otherwise specifies. For
ISO grants, Subsidiary means any corporation (other than
the Company) in an unbroken chain of corporations beginning
with the Company if, at the time an ISO is granted to a
Participant under the Plan, each of the corporations (other
than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in
such chain. For NQSOs, the Board or the Committee can use a
different definition of Subsidiary in its discretion.
LEGAL The Company will not issue any shares of Common Stock under
COMPLIANCE an Award until all applicable requirements imposed by
Federal and state securities and other laws, rules, and
regulations, and by any applicable regulatory agencies or
stock exchanges, have been fully met. To that end, the
Company may require the participant to take any reasonable
action to comply with such requirements before issuing such
shares. No provision in the Plan or action taken under it
authorizes any action that is otherwise prohibited by
Federal or state laws.
The Plan is intended to conform to the extent necessary
with all provisions of the Securities Act of 1933
("Securities Act") and the Exchange Act and all regulations
and rules the Securities and Exchange Commission issues
under those laws. Notwithstanding anything in the Plan to
the contrary, the Administrator must administer the Plan,
and Awards may be granted and exercised, only in a way that
conforms to such laws, rules, and regulations. To the
extent permitted by applicable law, the Plan and any Awards
will be deemed amended to the extent necessary to conform
to such laws, rules, and regulations.
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PURCHASE FOR Unless a registration statement under the Securities Act
INVESTMENT covers the shares of Common Stock a participant receives
AND OTHER upon exercise of his Award, the Administrator may require,
RESTRICTIONS at the time of such exercise or receipt of a grant, that
the participant agree in writing to acquire such shares for
investment and not for public resale or distribution,
unless and until the shares subject to the Award are
registered under the Securities Act. Unless the shares are
registered under the Securities Act, the participant must
acknowledge:
that the shares purchased on exercise of the Award are
not so registered,
that the participant may not sell or otherwise
transfer the shares unless
the shares have been registered under the
Securities Act in connection with the sale or
transfer thereof, or
counsel satisfactory to the Company has issued
an opinion satisfactory to the Company that the
sale or other transfer of such shares is exempt
from registration under the Securities Act, and
such sale or transfer complies with all other
applicable laws, rules, and regulations,
including all applicable Federal and state
securities laws, rules, and regulations.
Additionally, the Common Stock, when issued upon the
exercise of an Award, will be subject to any other
transfer restrictions, rights of first refusal, and rights
of repurchase set forth in or incorporated by reference
into other applicable documents, including the Company's
articles or certificate of incorporation, by-laws, or
generally applicable stockholders' agreements.
The Administrator may, in its sole discretion, take
whatever additional actions it deems appropriate to comply
with such restrictions and applicable laws, including
placing legends on certificates and issuing stop-transfer
orders to transfer agents and registrars.
TAX WITHHOLDING The participant must satisfy all applicable Federal,
state, and local income and employment tax withholding
requirements before the Company will deliver stock
certificates upon the exercise of an Award. The Company
may decide to satisfy the withholding obligations through
additional withholding on salary or wages. If the Company
does not or cannot withhold from other compensation, the
participant must pay the Company, with a cashier's check
or certified check, the full amounts required by
withholding. Payment of withholding obligations is due
before the Company issues shares with respect to the
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Award. If the Committee so determines, the participant may
instead satisfy the withholding obligations by directing
the Company to retain shares from the Award exercise, by
tendering previously owned shares, or by attesting to his
ownership of shares (with the distribution of net shares).
TRANSFERS, Unless the Administrator otherwise approves in advance in
ASSIGNMENTS, writing, an Award may not be assigned, pledged, or
AND PLEDGES otherwise transferred in any way, whether by operation of
law or otherwise or through any legal or equitable
proceedings (including bankruptcy), by the participant to
any person, except by will or by operation of applicable
laws of descent and distribution. If Rule 16b-3 then
applies to an Award, the participant may not transfer or
pledge shares of Common Stock acquired under a Stock Grant
or upon exercise of an Option until at least six (6)
months have elapsed from (but excluding) the Date of
Grant, unless the Administrator approves otherwise in
advance in writing.
AMENDMENT OR The Board may amend, suspend, or terminate the Plan at any
TERMINATION time, without the consent of the participants or their
OF PLAN AND beneficiaries; provided, however, that no amendment will
OPTIONS deprive any participant or beneficiary of any previously
declared Award. Except as required by law or by the
CORPORATE CHANGES section, the Administrator may not,
without the participant's or beneficiary's consent, modify
the terms and conditions of an Award so as to adversely
affect the participant. No amendment, suspension, or
termination of the Plan will, without the participant's or
beneficiary's consent, terminate or adversely affect any
right or obligations under any outstanding Awards.
PRIVILEGES OF No participant and no beneficiary or other person claiming
STOCK OWNERSHIP under or through such participant will have any right,
title, or interest in or to any shares of Common Stock
allocated or reserved under the Plan or subject to any
Award except as to such shares of Common Stock, if any,
that have been issued to such participant.
EFFECT ON Whether exercising or receiving an Award causes the
OTHER PLANS participant to accrue or receive additional benefits under
any pension or other plan is governed solely by the terms
of such other plan.
LIMITATIONS ON Notwithstanding any other provisions of the Plan, no
LIABILITY individual acting as a director, employee, or agent of the
Company shall be liable to any participant, former
participant, spouse, beneficiary, or any other person for
any claim, loss, liability, or expense incurred in
connection with the Plan, nor shall such individual be
personally liable because of any contract or other
instrument he executes in such other capacity. The
Company will indemnify and hold harmless each director,
employee, or agent of the Company to whom any duty or
power relating to the administration or interpretation of
the Plan
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has been or will be delegated, against any cost or expense
(including attorneys' fees) or liability (including any
sum paid in settlement of a claim with the Board's
approval) arising out of any act or omission to act
concerning this Plan unless arising out of such person's
own fraud or bad faith.
NO EMPLOYMENT Nothing contained in this Plan constitutes an employment
CONTRACT contract between the Company and the participants. The
Plan does not give any participant any right to be
retained in the Company's employ, nor does it enlarge or
diminish the Company's right to terminate the
participant's employment.
APPLICABLE LAW The laws of the State of Delaware (other than its
choice of law provisions) govern this Plan and its
interpretation.
DURATION OF PLAN Unless the Board extends the Plan's term, the
Administrator may not grant Awards after May 8, 2008. The
Plan will then terminate but will continue to govern
unexercised and unexpired Awards.
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1998 Stock Incentive Plan
