COSTAR GROUP, INC. NONQUALIFIED STOCK OPTION AGREEMENT
Exhibit
10.12
¨ Grantee’s Copy
¨ Company's Copy
COSTAR
GROUP, INC.
2007
STOCK INCENTIVE PLAN
To Xxxxxx
X. Xxxxxxxx:
CoStar
Group, Inc. (the "Company") has granted you a
nonqualified stock option (the "Option") under the CoStar
Group, Inc. 2007 Stock Incentive Plan, as amended from time to time (the "Plan"), to purchase
«NoShares» shares (the "Shares") of common stock of
the Company (the "Common
Stock"), at «Price» per share (the "Exercise
Price"). The date of grant is «DateofGrant».
This
Option is subject in all respects to the applicable provisions of the Plan, a
copy of which is attached, except as otherwise noted. By signing this
agreement (the "Agreement"), you acknowledge
that you have received and read the Plan. This Agreement incorporates
the Plan by reference and specifies other applicable terms and
conditions. All capitalized terms not defined by this Agreement have
the meanings given in the Plan. The Compensation Committee of the
Company's Board of Directors (or other administrator of the Plan, the "Administrator") may adjust
the number of Shares and the Exercise Price with respect to your Option from
time to time in accordance with the Plan.
This
Option is not intended to be an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended, and will be interpreted
accordingly.
In
addition to the terms, conditions, and restrictions set forth in the Plan, the
following terms, conditions, and restrictions apply to the Option:
|
(1)
|
Vesting. The
schedule for exercising the Option is as follows, subject to the
expiration provisions set forth in Section 3
below:
|
|
a.
|
You
may exercise the Option on the following
schedule:
|
[Set
forth vesting schedule.]
Except as
specifically provided otherwise herein, no portion of the Option that is
unexercisable at your termination of employment will thereafter become
exercisable, unless the Administrator determines otherwise.
|
b.
|
The
Option will become immediately exercisable in full upon the occurrence of
a Change in Control.
|
“Change in Control” means the
occurrence of any one or more of the following events:
|
A.
|
a
Person (as the term person is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended) (other than the
Company, any Company subsidiary, any Company benefit plan, or any
underwriter temporarily holding securities for an offering of such
securities) acquires ownership of more than 80% of the undiluted total
voting power of the Company’s then outstanding securities eligible to vote
to elect members of the Board (the “Company Voting
Securities”);
|
|
B.
|
consummation
of a merger, consolidation or reorganization of the Company with or into
any other entity, unless the holders of the Company Voting Securities
outstanding immediately before such consummation, together with any
trustee or other fiduciary holding securities under a Company benefit
plan, hold securities that represent immediately after such merger or
consolidation at least 20% of the combined voting power of the then
outstanding voting securities of either the Company or the other surviving
entity or its parent; or
|
|
C.
|
the
stockholders of the Company approve (A) a plan of complete liquidation or
dissolution of the Company or (B) an agreement for the Company’s sale or
disposition of all or substantially all of the Company’s assets, and such liquidation,
dissolution, sale or disposition is
consummated.
|
Even if
other tests are met, a Change in Control has not occurred under any
circumstances in which the Company files for bankruptcy protection or is
reorganized following a bankruptcy filing.
2
The
provisions of Section 4 will also apply if the Change in Control is a
Substantial Corporate Change (as defined in those provisions).
|
c.
|
Subject
to, and as permitted by, the Plan that portion of the Option that is not
otherwise exercisable will become immediately exercisable in full
upon:
|
|
i.
|
the
termination of your employment by the Company without Cause (as defined in
the Employment Agreement between Xxxxxx X. Xxxxxxxx and the Company
effective as of January 1, 1998, as amended (the “Employment Agreement”))
pursuant to Section 7(a) of the Employment Agreement;
or
|
|
ii.
|
the
termination of your employment by you for Good Reason (as defined in the
Employment Agreement) pursuant to Section 7(c) of the Employment
Agreement.
|
|
d.
|
Upon
the termination of your employment on account of your Disability (as
defined in the Employment Agreement) pursuant to Section 9 of the
Employment Agreement or in the event of your death, a pro rata portion of
your unvested Options that would have become otherwise exercisable during
the calendar year of your termination will become exercisable
immediately. Such pro rata amount shall be determined by
multiplying the number of unvested options that would have vested in the
calendar year of termination by a fraction, the numerator of which is the
number of complete weeks you were employed during the year of termination
and the denominator of which is
fifty-two.
|
|
e.
|
The
Administrator may, in its sole discretion (subject to, and as permitted
by, the Plan), accelerate the time at which you may exercise part or all
of the Option.
|
|
f.
|
The
vesting period and/or exercisability of the Option may be adjusted by the
Administrator to reflect the decreased level of employment during any
period in which you are on an approved leave of absence or employed on a
less than full time basis, provided, that the Administrator may take into
consideration any accounting consequences to the
Company.
|
|
(2)
|
Exercise. Subject
to this Agreement and the Plan, unless the Administrator determines
otherwise, you may exercise the Option only by a written “Notice of
Exercise” to the Company or its designee on a form specified by the
Company on or before the date the Option expires. Unless the
Administrator determines otherwise, each such Notice
must:
|
3
|
a.
|
state
your election to exercise the Option and the number of Shares with respect
to which you are exercising the
Option;
|
|
b.
|
be
signed by you or, if you have died or become disabled, by the party
entitled to exercise the Option;
|
|
|
c.
|
contain
such representations as the Company reasonably requires;
and
|
|
|
d.
|
be
accompanied by payment of the Exercise Price in full through one, or a
combination, of the following payment methods, which method(s) shall be
indicated in the Notice of
Exercise:
|
|
i.
|
cashier's
or certified check in the amount of the Exercise Price payable to the
order of the Company;
|
|
ii.
|
direction
to the Company through your Notice of Exercise to send the share
certificates to be issued under this Option to a licensed broker
acceptable to the Company as your agent in exchange for the broker's
tendering to the Company cash (or acceptable cash equivalents) equal to
the Exercise Price, for the Shares with respect to which the Option is
being exercised, as part of a cashless
exercise;
|
|
iii.
|
unless
the Administrator determines otherwise, by surrender to the Company of
shares of Common Stock with a Fair Market Value on the date of exercise
equal to all or part of the Exercise Price (with any balance paid by cash
or check or, unless the Administrator determines otherwise, deducted from
salary or other amounts payable to you), for the Shares with respect to
which the Option is being exercised; provided, however, that
you may not surrender (turn in) previously held or owned Common Stock of
the Company as payment unless you have held such stock for more than six
months before the surrender. For purposes hereof, the date of
exercise shall be the date of delivery of (A) the duly executed Notice of
Exercise and (B) the
shares tendered for payment of the Exercise
Price;
|
|
iv.
|
unless
the Administrator determines otherwise, attestation of ownership of Common
Stock and issuance of a net number of shares upon Option exercise;
or
|
4
|
v.
|
unless
the Administrator determines otherwise, by the Company withholding from
the shares of Common Stock otherwise issuable to you upon the exercise of
the Option (or portion thereof) the whole number of shares with a Fair
Market Value on the date of exercise equal to all or part of the Exercise
Price (rounded down, with any balance paid by cash or check or, unless the
Administrator determines otherwise, deducted from salary or other amounts
payable to you on such date of exercise). For purposes hereof,
the date of exercise shall be the date of delivery of the duly executed
Notice of Exercise.
|
The
Company shall not be obligated to issue any shares of Common Stock until you
have paid the total Exercise Price for that number of shares of Common Stock you
have elected to purchase. Shares of Common Stock will be issued as
soon as is practical after exercise.
|
(3)
|
Expiration. The
Option will expire no later than the close of business on «ExpirationDate»
(ten years from the date of grant).
|
The
exercise period for the Options shall be until the first to occur
of:
|
a.
|
the
Option's expiration under the preceding
sentence,
|
|
b.
|
the
60th
day after the cessation of your employment as a result of the termination
of your employment by you without Good Reason pursuant to Section 7(d) of
the Employment Agreement;
|
|
c.
|
the
60th
day after the cessation of your employment as a result of the termination
of your employment by the Company for Cause pursuant to Section 7(b) of
the Employment Agreement;
|
|
d.
|
the
180th
day after the cessation of your employment as a result of the termination
of your employment (a) by the Company without Cause pursuant to Section
7(a) of the Employment Agreement or (b) by you for Good Reason pursuant to
Section 7(c) of the Employment
Agreement;
|
|
e.
|
one
year after the cessation of your employment as a result of the termination
of your employment for Disability;
|
|
f.
|
the
first anniversary of your date of death;
and
|
|
g.
|
after
the termination of your employment, the date you violate any covenant not
to compete, nonsolicitation covenant or similar covenant in effect between
you and the Company.
|
5
Pursuant
to Section 4(c) of the Employment Agreement, if you do not exercise the Option
on or prior to the date the Option expires or is no longer exercisable, you
shall be deemed to have made a “cashless exercise” of the unexercised,
exercisable portion of the Option on the last day that the Option may be
exercised (the “Deemed Exercise Date”), and the Company shall pay to you within
thirty days of the Deemed Exercise Date a cash payment equal to the amount that
results from multiplying the total number of shares underlying the unexercised,
exercisable portion of the Option multiplied by a number equal to the difference
between the closing price of the Company’s common stock on the Deemed Exercise
Date (or if the Deemed Exercise Date is not a trading day, then on the trading
day immediately preceding the Deemed Exercise Date) and the exercise price of
the Option; provided, however, that the cashless exercise alternative shall not
be available if your employment has been terminated by the Company for Cause or
by you without Good Reason.
The
Administrator, in its sole discretion, will determine all questions of whether
particular terminations or leaves of absence are terminations of employment for
purposes of this Agreement.
|
(4)
|
Substantial Corporate
Change. Upon a Substantial Corporate Change, any portion
of this Option that is unexercised will terminate unless provision is made
in writing in connection with such transaction
for:
|
|
a.
|
assumption
or continuation of outstanding Options;
or
|
|
b.
|
the
substitution for such Options, with appropriate adjustments as to the
number and kind of shares of stock and prices, in which event the Option
will continue in the manner and under the terms so
provided.
|
Unless
the Board determines otherwise, if an Option would otherwise terminate pursuant
to the preceding sentence, you 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 Option, whether or not
previously exercisable.
A “Substantial Corporate Change”
means the occurrence of any one or more of the following events:
|
|
i.
|
a
Person (as the term person is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended) (other than the
Company, any Company subsidiary, any Company benefit plan, or any
underwriter temporarily holding securities for an offering of such
securities) acquires ownership of 100% of the combined voting power of all
classes of stock of the Company;
|
6
|
ii.
|
merger,
consolidation or reorganization of the Company with or into one or more
entities in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly owned subsidiary, a
reincorporation of the Company in a different jurisdiction or other
transaction in which there is no substantial change in the stockholders of
the Company or their relative stock
holdings);
|
|
iii.
|
merger,
consolidation or reorganization of the Company in which the Company is the
surviving corporation, but after which the stockholders of the Company
immediately prior to such merger (other than any stockholder that merges,
or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or other equity interest
in the Company;
|
|
iv.
|
the
liquidation or dissolution of the Company;
or
|
|
v.
|
the
sale or disposition of all or substantially all of the Company’s
assets.
|
|
(5)
|
Taxes.
|
|
a.
|
You
understand and agree that the Company has not advised you regarding your
income tax liability in connection with the Option. To the
extent required by applicable federal, state, local or foreign law, you
shall make arrangements satisfactory to the Company in its sole discretion
for the satisfaction of any withholding tax obligations that arise by
reason of an Option exercise or disposition of shares issued as a result
of an Option exercise. The Company shall not be required to
issue shares or to recognize the disposition of such shares until such
obligations are satisfied.
|
|
b.
|
By
accepting the Option, you agree that, unless and to the extent you have
otherwise satisfied any U.S. federal income and other taxes, including
state, local or non-U.S. income or employment tax obligations, related to
the exercise of the Option that are required to be withheld and paid over
to the applicable tax authorities (the “Tax Withholding
Obligations”) in a manner permitted or required by the
Administrator pursuant to the Plan, the Company is authorized (but not
required) to deduct and retain without notice from the shares of Common
Stock issuable to you in respect of the exercised portion of the Option
the whole number of shares (rounding down) having a Fair Market Value on
the exercise date or, if not a trading day, the first trading day before
the exercise date (as determined by the Company consistent with any
applicable tax requirements) sufficient to satisfy the applicable Tax
Withholding Obligation. If the withheld shares are not sufficient to
satisfy your Tax Withholding Obligation, you agree to pay to the Company
as soon as practicable, by cash or check or, unless otherwise determined
by the Administrator, deducted from salary or other amounts payable to
you, any amount of the Tax Withholding Obligation that is not satisfied by
the withholding of shares of Common Stock described
above.
|
7
|
c.
|
You
are ultimately liable and responsible for all taxes owed by you in
connection with the Option, regardless of any action the Company takes or
any transaction pursuant to this Section 5 with respect to any tax
withholding obligations that arise in connection with the Option. The
Company makes no representation or undertaking regarding the treatment of
any tax withholding in connection with the grant, issuance, vesting or
exercise of the Option or the subsequent sale of any of the shares of
Common Stock acquired upon exercise of the Option. The Company does not
commit and is under no obligation to structure the Option to reduce or
eliminate your tax liability.
|
|
(6)
|
Company Postponement
of Delivery. The Company may postpone issuing and
delivering any Shares for so long as the Company determines to be
necessary or advisable to satisfy the
following:
|
|
a.
|
completing
or amending any registration or qualification of the Shares or satisfying
any exemption from registration under any federal or state law, rule, or
regulation;
|
|
b.
|
complying
with any requests for representations under the
Plan;
|
|
c.
|
receiving
proof satisfactory to the Company that a person seeking to exercise the
Option after your death or disability is authorized and entitled to
exercise the Option; and
|
|
d.
|
satisfying
any federal, state, or local tax withholding
obligations.
|
|
(7)
|
Compliance with
Securities Laws.
|
|
a.
|
If,
at the time the Company should issue you Shares because of your exercise
of the Option, no current registration statement under the Securities Act
of 1933 (the "Act") covers such
issuance, you must, before the Company will issue such Shares to
you:
|
8
|
i.
|
represent
to the Company, in form satisfactory to the Company's counsel, that you
are acquiring the Shares for your own account and not with a view to
reselling or distributing the Shares;
and
|
|
ii.
|
agree
that you may not sell, transfer, or otherwise dispose of the Shares issued
to you under the Option unless:
|
|
|
A.
|
a
registration statement under the Act is effective at the time of
disposition with respect to the Shares sold, transferred, or otherwise
disposed of; or
|
|
|
B.
|
the
Company has received an opinion of counsel or other information and
representations satisfactory to it to the effect that registration under
the Act is not required by reason of Rule 144 under the Act or
otherwise.
|
|
b.
|
Notwithstanding
anything herein to the contrary, you may not exercise the Option, and the
Company shall not be obligated to deliver any shares of Common Stock,
during any period when the Company determines that the exercisability of
the Option or the delivery of shares hereunder would violate any
applicable federal or state securities laws or other laws or
regulations.
|
|
(8)
|
Restrictions on
Resales. The Company may impose such restrictions,
conditions or limitations as it determines appropriate as to the timing
and manner of any resales by you or other subsequent transfers by you of
any shares of Common Stock issued as a result of the exercise of the
Option, including without limitation (a) restrictions under an xxxxxxx
xxxxxxx policy, (b) restrictions designed to delay and/or coordinate the
timing and manner of sales by you and other optionholders and
(c) restrictions as to the use of a specified brokerage firm for such
resales or other transfers.
|
|
(9)
|
Not an Employment
Contract. Nothing in this Agreement restricts the right
of the Company or any of its affiliates to terminate your employment at
any time, with or without cause. The termination of employment,
whether by the Company or any of its affiliates or otherwise, and
regardless of the reason therefore, has the consequences provided for
hereunder, under the Plan and under any applicable employment or severance
agreement.
|
9
|
(10)
|
Non-Transferability of
Option. You may not assign or transfer the Option to
anyone other than by will or the laws of descent and distribution and the
Option shall be exercisable only by you during your
lifetime. The Company may cancel the Option if you attempt to
assign or transfer it in a manner inconsistent with this Section
10.
|
|
(11)
|
Limitation of
Interest. You understand and agree that you will not be
deemed for any purpose to be a stockholder of the Company with respect to
any of the Shares unless and until they have been issued to you after your
exercise of this Option and payment for the Shares. Neither you
(individually or as a member of a group) nor any beneficiary or other
person claiming under or through you shall have any right, title,
interest, or privilege in or to any shares of Common Stock allocated or
reserved for the purpose of the Plan or subject to this Agreement except
as to such shares of Common Stock, if any, as shall have been issued to
such person upon exercise of the Option or any part of
it.
|
|
(12)
|
No Fractional
Shares. At the time of exercise, the Company will round
down any fractional Shares but will not make any cash or other payments in
settlement of fractional shares eliminated by rounding. If you
have not then exercised the Option in full, the Company will carry forward
the fractional Shares rather than eliminating
them.
|
|
(13)
|
No Limitation on
Company Actions. You understand and agree that the
existence of this Option will not affect in any way the right or power of
the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, or other changes in the
Company's capital structure or its business or any merger or consolidation
of the Company, or any issuance of bonds, debentures, preferred or other
stocks with preference ahead of or convertible into, or otherwise
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding, whether
of a similar character or
otherwise.
|
|
(14)
|
General.
|
|
a.
|
This
Agreement and the Plan constitute the entire understanding between you and
the Company regarding the Option. Any prior agreements,
commitments or negotiations concerning the Option are
superseded.
|
|
b.
|
The
laws of the State of Delaware will govern all matters relating to this
Agreement, without regard to the principles of conflict of
laws.
|
10
|
c.
|
Any
notice you give to the Company (including notice of exercise of all or
part of the Option) must be in writing and either hand-delivered or mailed
to the Corporate Secretary of the Company (or to the Chief Financial
Officer if either you would receive the notice or the position is
vacant). If mailed, it should be sent by certified mail and be
addressed to the foregoing executive at the Company's then corporate
headquarters. Any notice given to you will be addressed to you
at your address as reflected on the personnel records of the
Company. You may change the address for notice by like notice
to the Company. Notice will be deemed to have been duly
delivered when hand-delivered, or, if mailed, two business days after such
notice is postmarked.
|
|
d.
|
As
a condition of this Option, you, on behalf of yourself, your heirs,
successors and personal representatives ("you and your
successors"), agree that any dispute or disagreement which may
arise hereunder shall be decided by the Administrator. You and
your successors agree to accept as binding, conclusive and final all
decisions or interpretations of the Administrator concerning any questions
arising under the Plan with respect to the Option, and you and your
successors hereby explicitly waive any right to judicial
review.
|
|
e.
|
In
the event that any provision of this Agreement is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction,
such provision shall be reformed, if possible, to the extent necessary to
render it legal, valid and enforceable, or otherwise deleted, and the
remainder of the terms hereunder shall not be affected except to the
extent necessary to reform or delete such illegal, invalid or
unenforceable provision.
|
|
f.
|
This
Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective permitted heirs, beneficiaries, successors and
assigns.
|
|
g.
|
The
headings preceding the text of the sections hereof are inserted solely for
convenience of reference, and shall not constitute a part of this
Agreement, nor shall they affect its meaning, construction or
effect.
|
|
h.
|
All
questions arising under the Plan or under this Agreement shall be decided
by the Administrator in its total and absolute
discretion.
|
11
|
i.
|
Wherever
a conflict may arise between the terms of this Agreement and the terms of
the Plan, the terms of the Plan will
control.
|
COSTAR GROUP, INC.
By: ____________________________
Name: ___________________________
Title: ____________________________
12
ACKNOWLEDGMENT
I
acknowledge receipt of a copy of the attached Plan. I represent that
I have read and am familiar with the Plan's terms. I accept the
Option subject to all of the terms and provisions of this Agreement and of the
Plan under which it is granted, as the Plan may be amended in accordance with
its terms. I agree to accept as binding, conclusive, and final all
decisions or interpretations of the Administrator concerning any questions
arising under the Plan with respect to the Option.
Date: ____________________________________
Signature
of Grantee/Participant
No
one may sell, transfer, or distribute this Option or the securities that may be
purchased upon exercise of this Option without an effective registration
statement relating thereto or an opinion of counsel satisfactory to the Company
or other information and representations satisfactory to the Company that such
registration is not required.
13
