Document:

nqso2007agrmt_w-florance.htm

    Exhibit
10.12

    
      

      

    

    
 

    
                                                     
 ̈      Grantee’s Copy

                                                     
 ̈      Company's Copy

       

      COSTAR
GROUP, INC.

      2007
STOCK INCENTIVE PLAN

      NONQUALIFIED
STOCK OPTION AGREEMENT

      

      

      To Andrew
C. Florance:

      

      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 Andrew C. Florance 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 insider
      trading 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.

      

      

      
        
           

        

        
          13firstamd-florance_empagrmt.htm

    
      Exhibit
10.16

      
        

        

      

       

      FIRST
AMENDMENT

      TO
ANDREW C. FLORANCE EMPLOYMENT AGREEMENT

       

      

       

      THIS
FIRST AMENDMENT to the Employment Agreement is made and entered into December
__, 2008, effective as of January 1, 2009 by and between CoStar Realty
Information, Inc. (“Company”) and Andrew
C. Florance (“Executive”).

       

      W
I T N E S S E T H;

       

      WHEREAS,
Company and Executive are parties to that certain Employment Agreement dated as
of April 24, 1998, effective as of January 1, 1998 (the “Employment
Agreement”) pursuant to which Executive is employed as Company’s
President and Chief Executive Officer; and

       

      WHEREAS,
Company and Executive desire to amend the terms of the Employment Agreement as
set forth herein effective as of January 1, 2009 (the Employment Agreement, as
amended, is hereinafter referred to as the “Agreement”), in order
to comply with the provisions of Section 409A of the Internal Revenue Code and
the rules and regulations promulgated thereunder and to make certain other
clarifying revisions.

       

      NOW,
THEREFORE, in consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:

       

      
        	
                1.  

              	
                Section
      4(a) is deleted and replaced in its entirety to read as
      follows:

              

      

       

      “The
annual base salary (the “Base Salary”) of
Executive under this Agreement shall be at the rate set by the Compensation
Committee of the Board of Directors of the Company (the “Compensation
Committee”) or the Board of Directors of the Company (the “Board”)
annually.  Base Salary shall be payable in biweekly or such other
installments as shall be consistent with the Company’s payroll procedures for
its senior executives.”

       

      
        	
                2.  

              	
                Section
      4(b) is deleted and replaced in its entirety to read as
      follows:

              

      

       

      “The
Company shall maintain for the benefit of Executive during the term of
Executive’s employment under this Agreement (and, where applicable, for such
period thereafter as Executive is entitled to payments thereunder pursuant to
this Agreement) an executive cash bonus program (the “Bonus Program”) on
the terms set by the Compensation Committee or the Board, which will provide
Executive with an opportunity to receive an annual cash bonus based on
attainment of performance objectives set annually by the Compensation Committee
or the Board.  The annual bonus shall be paid as soon as reasonably
practicable after the end of the calendar year for which it is earned and, in
any case, no later than March 15 of the following calendar year.”

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                3.  

              	
                Section
      7(a) is deleted and replaced in its entirety to read as
      follows:

              

      

       

      “(a)           By the Company Without
Cause.  The Company may terminate Executive’s employment at any
time, without Cause (as defined herein), upon sixty (60) days written notice to
Executive.  If the Company terminates Executive’s employment without
Cause, Executive: (x) shall receive through the later of (i) the expiration of
the Current Term or (ii) one year from the date of termination, the compensation
provided for under paragraph 4(a) of this Agreement, provided that any payments
that would otherwise be made under this subsection (x) after March 15 of the
year following the calendar year of termination shall be paid to Executive no
later than March 15 of the year following the calendar year of termination of
employment; (y) shall be entitled to receive the bonus he would have received
under the Bonus Program (as in effect on the date of termination) as if he
continued in the position he held immediately prior to termination for the
balance of the calendar year in which such termination occurs, provided that such bonus shall
be paid no later than March 15 of the year following the calendar year of
termination of employment; and (z) shall be, if not otherwise, fully vested in
all stock options granted to Executive under the Company’s stock incentive plans
(as in effect on the date of termination).  Upon termination of
Executive’s employment without Cause, the exercise period for all vested options
shall be one-hundred eighty (180) days after cessation of
employment.

       

      
        	
                4.  

              	
                The
      last paragraph of Section 7(c) is deleted and replaced in its entirety to
      read as follows:

              

      

       

      “If
Executive terminates his employment for Good Reason, Executive: (x) shall
receive through the later of (i) the expiration of the Current Term or (ii) one
year from the date of termination, the compensation provided for under paragraph
4(a) of this Agreement, provided that any payments
that would otherwise be made under this subsection (x) after March 15 of the
year following the calendar year of termination shall be paid to Executive no
later than March 15 of the year following the calendar year of termination of
employment; (y) shall be entitled to receive the bonus he would have received
under the Bonus Program (as in effect on the date of termination) as if he
continued in the position he held immediately prior to termination for the
balance of the calendar year in which such termination occurs, provided that such bonus shall
be paid no later than March 15 of the year following the calendar year of
termination of employment; and (z) shall be, if not otherwise, fully vested in
all stock options granted to Executive under the Company’s stock incentive plans
(as in effect on the date of termination).  Upon termination of
Executive’s employment with Good Reason, the exercise period for all vested
options shall be one-hundred eighty (180) days after cessation of
employment.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                5.  

              	
                A
      new Section 7(e) shall be added and read as
  follows:

              

      

       

      “In the
event that under the terms of the applicable stock incentive plan(s), all or any
portion of Executive’s stock options that are not otherwise fully vested upon
termination of employment and are scheduled to vest pursuant to Section 7 in
connection with such termination cannot be accelerated in accordance with the
terms of this Agreement, then Executive shall be entitled to receive cash
consideration for each share underlying that portion of Executive’s stock
options that cannot be so accelerated equal to the excess (if any) of the
highest closing price of the Company’s common stock during the 180 days
following Executive's date of termination (or, if the Company is no longer
publicly traded as of the date of termination, the per-share price in connection
with the transaction(s) that resulted in the Company no longer being publicly
traded) over the exercise price of such option.  Any such cash
consideration shall be paid within 10 days following the date the amount of the
payment pursuant to this Section 7(e) is determined.”

       

      
        	
                6.  

              	
                Section
      9 is amended to add the following to the end of subsection (ii) of the
      first sentence of Section 9:  “, payable no later than March 15
      of the year following the calendar year of
  termination.”

              

      

       

      
        	
                7.  

              	
                Section
      10 is amended to add the following to the end of subsection (ii) of the
      first sentence of Section 10:  “, payable no later than March 15
      of the year following the calendar year of
  termination.”

              

      

       

      
        	
                8.  

              	
                Section
      22 is amended by adding the following sentence to the end
      thereof:  “In all events, any amount payable under this Section
      22 shall be paid no later than the end of the calendar year after the
      applicable tax is remitted to the applicable taxing
      authority.”

              

      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	
                9.  

              	
                A
      new Section 23 is added as follows:

              

      

       

      Compliance with Section
409A.  It is the intention of the parties hereto that this
Agreement comply with the provisions of Section 409A of the Internal Revenue
Code (the “Code”) and the rules and regulations promulgated thereunder
(collectively, “Section 409A”).  Notwithstanding anything in this
Agreement to the contrary, to the extent that the Company determines, in its
sole discretion, that any payment or benefit to be provided under the Agreement
to or for the benefit of Executive would be subject to the additional tax
imposed under Section 409A(a)(1)(B) of the Code, the commencement of such
payments and/or benefits shall be delayed (but only to the extent necessary
under Section 409A) until the earlier of (i) the date that is six months
after Executive’s “separation from service” (as such term is defined under
Section 409A) or (ii) the date of Executive’s death.  Any
payments delayed pursuant to section (i) of the preceding sentence shall be paid
on the first day of the seventh month after Executive’s separation from service,
or as soon as reasonably practicable thereafter and any remaining payments shall
be made as originally scheduled (e.g. if payments under Section 7(a)(x) of the
Agreement would be subject to the additional tax, Executive would not receive
payments for six months after termination, then would receive six months of base
salary on the first day of the seventh month after termination, and the
remaining installments of base salary provided by Section 7(a)(x) (approximately
six months’ base salary) would be paid to Executive as provided by Section
4(a)).  In the event of Executive’s death, any payments shall be made
pursuant to section (ii) of the sentence above no later than the later of (a) 75
days following the Executive’s death, or (b) the last
day of Executive’s taxable year in which such death
occurs.

       

      
        	
                10.  

              	
                Counterparts.  This
      First Amendment, for the convenience of the parties, may be executed in
      any number of counterparts, all of which when taken together shall
      constitute one and the same
agreement.

              

      

       

      
        	
                11.  

              	
                Except
      as modified hereby, the Employment Agreement continues in full force and
      effect.

              

      

       

      

       

      IN
WITNESS WHEREOF, the parties have executed this First Amendment on the day and
year first above written.

       

       

      COSTAR
REALTY INFORMATION, INC.

       

      

       

      

       

      By: 
/s/ Michael
Klein        
                    

             
Michael Klein

             
Chairman of the Board

       

      

       

               
  /s/ Andrew C.
Florance                   

                             
Andrew C. Florance

       

       

      
        
          
          

        

        
          4

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