1
Exhibit 10.1
COSTAR GROUP, INC.
1998 STOCK INCENTIVE PLAN
(AS AMENDED ON JULY 13, 1999)
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.
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1998 Stock Incentive Plan
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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 Subject to the terms of the Plan, the Administrator will, in
AWARDS 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.
DIRECTOR Each Eligible Director of the Company shall be entitled to
FORMULA receive at the first meeting of the Board of Directors
immediately following each
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OPTIONS 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;
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
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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 held by
CONTROL 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:
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
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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 participant
EXERCISE 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 specifying the number of
shares of Common Stock underlying the portion of
the Award the participant is exercising;
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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 Date
EXPIRATION 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;
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
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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 and
AGREEMENT 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 aggregate
TO PLAN number of shares of Common Stock that may be issued under
the Awards (whether ISOs, NQSOs, or Stock Grants) may not exceed
2,050,000 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 again be available for the granting of new Awards (but will
be counted against that calendar year's limit for a given
individual).
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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 shall
UPON CHANGES promptly take) or its stockholders, and subject to the provisions
IN CAPITAL of applicable corporate law, if, after the Date of Grant of an
STOCK 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 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
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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 unexercised
CORPORATE Awards will terminate unless provision is made in writing in
CHANGE 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,
merger, consolidation, or reorganization of the
Company with one or more corporations in which the
Company is not the surviving corporation,
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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 participate
EMPLOYEES 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 an
COMPLIANCE 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.
PURCHASE FOR Unless a registration statement under the Securities Act
INVESTMENT covers the shares of Common Stock a participant receives upon
exercise of his
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AND OTHER Award, the Administrator may require, at the time of such
RESTRICTIONS 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 The participant must satisfy all applicable Federal, state, and
WITHHOLDING 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 Award. If the Committee so
determines, the participant may instead satisfy the withholding
obligations by directing the Company to retain shares from the
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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 otherwise
AND PLEDGES 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 deprive
OPTIONS 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 under or through such participant will have any right, title, or
OWNERSHIP 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 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
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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 Unless the Board extends the Plan's term, the Administrator may
OF PLAN 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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CoStar Group, Inc.
1998 Stock Incentive Plan