Document:

ex_4-5.htm

    

     

     
      

     

    COSTAR
      GROUP, INC.

     

    2007
      STOCK INCENTIVE PLAN

    (Amended
      effective June 21, 2007)

     

    1.  Purpose

     

    The
      purpose of the CoStar Group, Inc. 2007 Stock Incentive Plan (the “Plan”) is to
      advance the interests of CoStar Group, Inc. (the “Company”) by enabling the
      Company and its subsidiaries to attract, retain and motivate employees of the
      Company by providing for or increasing the proprietary interests of such
      individuals in the Company, and by enabling the Company to attract, retain
      and
      motivate its nonemployee directors and further align their interests with those
      of the shareholders of the Company by providing for or increasing the
      proprietary interests of such directors in the Company. The Plan provides for
      the grant of Incentive and Nonqualified Stock Options, Stock Appreciation
      Rights, Restricted Stock and Restricted Stock Units, any of which may be
      performance-based, as determined by the Committee.

     

    2.  Definitions

     

    As
      used
      in the Plan, the following terms shall have the meanings set forth
      below:

     

    (a)  “Award”
      means an Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation
      Right, Restricted Stock, or Restricted Stock Unit granted to a Participant
      pursuant to the provisions of the Plan, any of which the Committee may structure
      to qualify in whole or in part as a Performance Award.

     

    (b)  “Award
      Agreement” means a written agreement or other instrument as may be approved from
      time to time by the Committee implementing the grant of each Award. An Agreement
      may be in the form of an agreement to be executed by both the Participant and
      the Company (or an authorized representative of the Company) or certificates,
      notices or similar instruments as approved by the Committee.

     

    (c)  “Board”
      means the board of directors of the Company.

     

    (d)  “Code”
      means the Internal Revenue Code of 1986, as amended from time to time, and
      the
      rulings and regulations issues thereunder.

     

    (e)  “Committee”
      means the Committee delegated the authority to administer the Plan in accordance
      with Section 16.

     

    (f)  “Common
      Share” means a share of the Company’s common stock, subject to adjustment as
      provided in Section 11.

     

    (g)  “Company”
      means CoStar Group, Inc., a Delaware corporation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (h)  “Fair
      Market Value” means, as of any given date, the closing sales price
      on such date during normal trading hours (or, if there are no reported sales
      on
      such date, on the last date prior to such date on which there were sales) of
      the
      Common Shares on NASDAQ, the New York Stock Exchange Composite Tape or, if
      not
      listed on such exchanges, on any other national securities exchange on which
      the
      Common Shares are listed, in any case, as reporting in such source as the
      Committee shall select. If there is no regular public trading market for such
      Common Shares, the Fair Market Value of the Common Shares shall be determined
      by
      the Committee in good faith and in compliance with Section 409A of the
      Code.

     

    (i)  “Incentive
      Stock Option” means a stock option that is intended to qualify as an “incentive
      stock option” within the meaning of Section 422 of the Code.

     

    (j)  “Nonemployee
      Director” means each person who is, or is elected to be, a member of the Board
      or the board of directors of any Subsidiary and who is not an employee of the
      Company or any Subsidiary.

     

    (k)  “Nonqualified
      Stock Option” means a stock option that is not intended to qualify as an
“incentive stock option” within the meaning of Section 422 of the
      Code.

     

    (l)  “Option”
      means an Incentive Stock Option and/or a Nonqualified Stock Option granted
      pursuant to Section 6 of the Plan.

     

    (m)  “Participant”
      means any individual described in Section 3 to whom Awards have been
      granted from time to time by the Committee and any authorized transferee of
      such
      individual.

     

    (n)  “Performance
      Award” means an Award, the grant, issuance, retention, vesting or settlement of
      which is subject to satisfaction of one or more performance criteria pursuant
      to
      Section 12.

     

    (o)  “Plan”
      means the CoStar Group, Inc. 2007 Stock Incentive Plan as set forth herein
      and
      as amended from time to time.

     

    (p)  “Prior
      Plan” means the CoStar Group, Inc. 1998 Stock Incentive Plan.

     

    (q)  “Qualifying
      Performance Criteria” has the meaning set forth in
      Section 12(b).

     

    (r)  “Restricted
      Stock” means Common Shares granted pursuant to Section 8 of the
      Plan.

     

    (s)  “Restricted
      Stock Unit” means an Award granted to a Participant pursuant to Section 8
      pursuant to which Common Shares or cash in lieu thereof may be issued in the
      future.

     

    (t)  “Stock
      Appreciation Right” means a right granted pursuant to Section 7 of the Plan
      that entitles the Participant to receive, in cash or Common Shares or a
      combination thereof, as determined by the Committee, value equal to or otherwise
      based on the excess of (i) the market price of a specified number of Common
      Shares at the time of exercise over (ii) the exercise price of the right, as
      established by the Committee on the date of grant.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    (u)  “Subsidiary”
      means any corporation (other than the Company) in an unbroken chain of
      corporations beginning with the Company where each of the corporations in the
      unbroken chain other than the last corporation owns stock possessing at least
      50
      percent or more of the total combined voting power of all classes of stock
      in
      one of the other corporations in the chain, and if specifically determined
      by
      the Committee in the context other than with respect to Incentive Stock Options,
      may include an entity in which the Company has a significant ownership interest
      or that is directly or indirectly controlled by the Company.

     

    (v)  “Substitute
      Awards” means Awards granted or Common Shares issued by the Company in
      assumption of, or in substitution or exchange for, awards previously granted,
      or
      the right or obligation to make future awards, by a corporation acquired by
      the
      Company or any Subsidiary or with which the Company or any Subsidiary
      combines.

     

    3.  Eligibility

     

    Any
      person who is an officer or employee of the Company or of any Subsidiary
      (including any director who is also an employee, in his or her capacity as
      such)
      shall be eligible for selection by the Committee for the grant of Awards
      hereunder. In addition, Nonemployee Directors shall be eligible for the grant
      of
      Awards hereunder as determined by the Committee. In addition any service
      provider who has been retained to provide consulting, advisory or other services
      to the Company or to any Subsidiary shall be eligible for selection by the
      Committee for the grant of Awards hereunder. Options intending to qualify as
      Incentive Stock Options may only be granted to employees of the Company or
      any
      Subsidiary within the meaning of the Code, as selected by the
      Committee.

     

    4.  Effective
      Date and Termination of Plan

     

    This
      Plan
      was adopted by the Board and became effective as of April 26, 2007 (the
“Effective Date”), subject to the approval by the Company’s stockholders. All
      Awards granted under this Plan are subject to, and may not be exercised before,
      the approval of this Plan by the stockholders prior to the first anniversary
      date of the effective date of the Plan by the affirmative vote of the holders
      of
      a majority of the outstanding Common Shares of the Company present, or
      represented by proxy, and entitled to vote, at a meeting of the Company’s
      stockholders or by written consent in accordance with the laws of the State
      of
      Delaware; provided that if such approval by the stockholders of the Company
      is
      not forthcoming, all Awards previously granted under this Plan shall be void.
      The Plan shall remain available for the grant of Awards until the tenth (10th)
      anniversary of the Effective Date. Notwithstanding the foregoing, the Plan
      may
      be terminated at such earlier time as the Board may determine. Termination
      of
      the Plan will not affect the rights and obligations of the Participants and
      the
      Company arising under Awards theretofore granted and then in
      effect.

     

    5.  Common
      Shares Subject to the Plan and to Awards

     

    (a)  Aggregate
      Limits. The aggregate number of Shares issuable pursuant to all Awards
      shall not exceed 1,000,000 shares, plus (i) any Shares that were authorized
      for issuance under the Prior Plan that, as of June 7, 2007, remain available
      for
      issuance under the Prior Plan (not including any Shares that are subject to,
      as
      of June 7, 2007, outstanding awards under the

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

      Prior
        Plan or any Shares that prior to June 7, 2007 were issued pursuant to awards
        granted under the Prior Plan) and (ii) any Shares subject to outstanding
        awards under the Prior Plan as of June 7, 2007 that on or after such date
        cease
        for any reason to be subject to such awards (other than by reason of exercise
        or
        settlement of the awards to the extent they are exercised for or settled
        in
        vested and nonforfeitable shares). The aggregate number of Common Shares
        available for grant under this Plan and the number of Common Shares subject
        to
        outstanding Awards shall be subject to adjustment as provided in
        Section 11. The Common Shares issued pursuant to Awards granted under this
        Plan may be shares that are authorized and unissued or shares that were
        reacquired by the Company, including shares purchased in the open
        market.

    

     

    (b)  Issuance
      of Common Shares. For purposes of this Section 5, the aggregate number
      of Common Shares available for Awards under this Plan at any time shall not
      be
      reduced by (i) shares subject to Awards that have been terminated, expired
      unexercised, forfeited or settled in cash, (ii) shares subject to Awards
      that have been retained by the Company in payment or satisfaction of the
      exercise price, purchase price or tax withholding obligation of an Award, or
      (iii) shares subject to Awards that otherwise do not result in the issuance
      of Common Shares in connection with payment or settlement of an Award. In
      addition, Common Shares that have been delivered (either actually or by
      attestation) to the Company in payment or satisfaction of the exercise price,
      purchase price or tax withholding obligation of an Award shall be available
      for
      Awards under this Plan.

     

    (c)  Tax
      Code Limits. The aggregate number of Common Shares subject to Awards
      granted under this Plan during any calendar year to any one Participant shall
      not exceed 200,000, which number shall be calculated and adjusted pursuant
      to
      Section 11 only to the extent that such calculation or adjustment will not
      affect the status of any Award intended to qualify as “performance based
      compensation” under Section 162(m) of the Code but which number shall not
      count any tandem SARs (as defined in Section 7). Any Common Shares
      that may be issued under this Plan may be issued pursuant to the exercise
      of Incentive Stock Options.

     

    (d)  Substitute
      Awards. Substitute Awards shall not reduce the Common Shares authorized for
      issuance under the Plan or authorized for grant to a Participant in any calendar
      year. Additionally, in the event that a corporation acquired by the Company
      or
      any Subsidiary, or with which the Company or any Subsidiary combines, has shares
      available under a pre-existing plan approved by shareholders and not adopted
      in
      contemplation of such acquisition or combination, the shares available for
      grant
      pursuant to the terms of such pre-existing plan (as adjusted, to the extent
      appropriate, using the exchange ratio or other adjustment or valuation ratio
      or
      formula used in such acquisition or combination to determine the consideration
      payable to the holders of common stock of the entities party to such acquisition
      or combination) may be used for Awards under the Plan and shall not reduce
      the
      Common Shares authorized for issuance under the Plan; provided that Awards
      using
      such available shares shall not be made after the date awards or grants could
      have been made under the terms of the pre-existing plan, absent the acquisition
      or combination, and shall only be made to individuals who were not employees,
      directors or consultants of the Company or its Subsidiaries immediately before
      such acquisition or combination.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    6.  Options

     

    (a)  Option
      Awards. Options may be granted at any time and from time to time prior to
      the termination of the Plan to Participants as determined by the Committee.
      No
      Participant shall have any rights as a stockholder with respect to any Common
      Shares subject to Option hereunder until said Common Shares have been issued,
      except that the Committee may authorize dividend equivalent accruals with
      respect to such Common Shares. Each Option shall be evidenced by an Award
      Agreement. Options granted pursuant to the Plan need not be identical but each
      Option must contain and be subject to the terms and conditions set forth
      below.

     

    (b)  Price.
      The Committee will establish the exercise price per Common Share under each
      Option, which, in no event will be less than the Fair Market Value of the Common
      Shares on the date of grant; provided, however, that the exercise price per
      Common Share with respect to an Option that is granted in connection with a
      merger or other acquisition as a substitute or replacement award for options
      held by optionees of the acquired entity may be less than 100% of the market
      price of the Common Shares on the date such Option is granted if such exercise
      price is based on a formula set forth in the terms of the options held by such
      optionees or in the terms of the agreement providing for such merger or other
      acquisition. The exercise price of any Option may be paid in Common Shares,
      cash, certified check, money order or a combination thereof, as determined
      by
      the Committee, including an irrevocable commitment by a broker to pay over
      such
      amount from a sale of the Common Shares issuable under an Option, the delivery
      of previously owned Common Shares and withholding of Common Shares deliverable
      upon exercise.

     

    (c)  No
      Repricing. Other than in connection with a change in the Company’s
      capitalization (as described in Section 11) the exercise price of an Option
      may not be reduced without stockholder approval (including canceling previously
      awarded Options and regranting them with a lower exercise price).

     

    (d)  Provisions
      Applicable to Options. The date on which Options become exercisable shall
      be determined at the sole discretion of the Committee and set forth in an Award
      Agreement; provided, however, that except in the case of a change of control
      of
      the Company or the death or disability of the Participant, vesting of the Option
      shall be no earlier than one (1) year from the date of grant. Unless provided
      otherwise in the applicable Award Agreement, to the extent that the Committee
      determines that an approved leave of absence or employment on a less than
      full-time basis is not a Termination of employment, the vesting period and/or
      exercisability of an Option shall be adjusted by the Committee during or to
      reflect the effects of any period during which the Participant is on an approved
      leave of absence or is employed on a less than full-time basis.

     

    (e)  Term
      of Options and Termination of Employment:  The Committee shall
      establish the term of each Option, which in no case shall exceed a period of
      ten
      (10) years from the date of grant. Unless an Option earlier expires upon the
      expiration date established pursuant to the foregoing sentence, upon the
      termination of the Participant’s employment, his or her rights to exercise an
      Option then held shall be determined by the Committee and set forth in an Award
      Agreement.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    (f)  Incentive
      Stock Options. Notwithstanding anything to the contrary in this
      Section 6, in the case of the grant of an Option intending to qualify as an
      Incentive Stock Option: (i) if the Participant owns stock possessing more
      than 10 percent of the combined voting power of all classes of stock of the
      Company (a “10% Common Shareholder”), the exercise price of such Option must be
      at least 110 percent of the Fair Market Value of the Common Shares on the date
      of grant and the Option must expire within a period of not more than five (5)
      years from the date of grant, and (ii) termination of employment will occur
      when the person to whom an Award was granted ceases to be an employee (as
      determined in accordance with Section 3401(c) of the Code and the
      regulations promulgated thereunder) of the Company and its Subsidiaries.
      Notwithstanding anything in this Section 6 to the contrary, options
      designated as Incentive Stock Options shall not be eligible for treatment under
      the Code as Incentive Stock Options (and will be deemed to be Nonqualified
      Stock
      Options) to the extent that either (a) the aggregate Fair Market Value of Common
      Shares (determined as of the time of grant) with respect to which such Options
      are exercisable for the first time by the Participant during any calendar year
      (under all plans of the Company and any Subsidiary) exceeds $100,000, taking
      Options into account in the order in which they were granted, or (b) such
      Options otherwise remain exercisable but are not exercised within three (3)
      months of Termination of employment (or such other period of time provided
      in
      Section 422 of the Code).

     

    7.  Stock
      Appreciation Rights

     

    Stock
      Appreciation Rights may be granted to Participants from time to time either
      in
      tandem with or as a component of other Awards granted under the Plan (“tandem
      SARs”) or not in conjunction with other Awards (“freestanding SARs”) and may,
      but need not, relate to a specific Option granted under Section 6. The
      provisions of Stock Appreciation Rights need not be the same with respect to
      each grant or each recipient. Any Stock Appreciation Right granted in tandem
      with an Award may be granted at the same time such Award is granted or at any
      time thereafter before exercise or expiration of such Award. All freestanding
      SARs shall be granted subject to the same terms and conditions applicable to
      Options as set forth in Section 6 and all tandem SARs shall have the same
      exercise price, vesting, exercisability, forfeiture and termination provisions
      as the Award to which they relate. Subject to the provisions of Section 6
      and the immediately preceding sentence, the Committee may impose such other
      conditions or restrictions on any Stock Appreciation Right as it shall deem
      appropriate. Stock Appreciation Rights may be settled in Common Shares, cash
      or
      a combination thereof, as determined by the Committee and set forth in the
      applicable Award Agreement. Other than in connection with a change in the
      Company’s capitalization (as described in Section 11) the exercise price of
      Stock Appreciation Rights may not be reduced without stockholder approval
      (including canceling previously awarded Stock Appreciation Rights and regranting
      them with a lower exercise price).

     

    8.  Restricted
      Stock and Restricted Stock Units

     

    (a)  Restricted
      Stock and Restricted Stock Unit Awards. Restricted Stock and Restricted
      Stock Units may be granted at any time and from time to time prior to the
      termination of the Plan to Participants as determined by the Committee.
      Restricted Stock is an award or issuance of Common Shares the grant, issuance,
      retention, vesting and/or transferability of which is subject during specified
      periods of time to such conditions (including continued employment or
      performance conditions) and terms as the Committee deems appropriate. Restricted
      Stock 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

      Units
        are
        Awards denominated in units of Common Shares under which the issuance of
        Common
        Shares is subject to such conditions (including continued employment or
        performance conditions) and terms as the Committee deems appropriate. Each
        grant
        of Restricted Stock and Restricted Stock Units shall be evidenced by an Award
        Agreement. Unless determined otherwise by the Committee, each Restricted
        Stock
        Unit will be equal to one Common Share and will entitle a Participant to
        either
        the issuance of Common Shares or payment of an amount of cash determined
        with
        reference to the value of Common Shares. To the extent determined by the
        Committee, Restricted Stock and Restricted Stock Units may be satisfied or
        settled in Common Shares, cash or a combination thereof. Restricted Stock
        and
        Restricted Stock Units granted pursuant to the Plan need not be identical
        but
        each grant of Restricted Stock and Restricted Stock Units must contain and
        be
        subject to the terms and conditions set forth below.

    

     

    (b)  Contents
      of Agreement. Each Award Agreement shall contain provisions regarding (i)
      the number of Common Shares or Restricted Stock Units subject to such Award
      or a
      formula for determining such number, (ii) the purchase price of the Common
      Shares, if any, and the means of payment, (iii) the performance criteria, if
      any, and level of achievement versus these criteria that shall determine the
      number of Common Shares or Restricted Stock Units granted, issued, retainable
      and/or vested, (iv) such terms and conditions on the grant, issuance, vesting
      and/or forfeiture of the Common Shares or Restricted Stock Units as may be
      determined from time to time by the Committee, (v) the term of the
      performance period, if any, as to which performance will be measured for
      determining the number of such Common Shares or Restricted Stock Units, and
      (vi)
      restrictions on the transferability of the Common Shares or Restricted Stock
      Units. Common Shares issued under a Restricted Stock Award may be issued in
      the
      name of the Participant and held by the Participant or held by the Company,
      in
      each case as the Committee may provide.

     

    (c)  Vesting
      and Performance Criteria. The grant, issuance, retention, vesting and/or
      settlement of shares of Restricted Stock and Restricted Stock Units will occur
      when and in such installments as the Committee determines or under criteria
      the
      Committee establishes, which may include Qualifying Performance Criteria;
      provided, however, that, except in the case of a change of control of the
      Company or the death or disability of the Participant, vesting of Restricted
      Stock and Restricted Stock Units shall be no earlier than three (3) years from
      the date of grant for Awards not subject to vesting based on performance
      criteria and one (1) year from the date of grant for Awards that vest based
      on
      the achievement of performance criteria. Notwithstanding anything in this Plan
      to the contrary, the performance criteria for any Restricted Stock or Restricted
      Stock Unit that is intended to satisfy the requirements for “performance-based
      compensation” under Section 162(m) of the Code will be a measure based on
      one or more Qualifying Performance Criteria selected by the Committee and
      specified when the Award is granted.

     

    (d)  Discretionary
      Adjustments and Limits. Subject to the limits imposed under
      Section 162(m) of the Code for Awards that are intended to qualify as
“performance based compensation,” notwithstanding the satisfaction of any
      performance goals, the number of Common Shares granted, issued, retainable
      and/or vested under an Award of Restricted Stock or Restricted Stock Units
      on
      account of either financial performance or personal performance evaluations
      may,
      to the extent specified in the Award Agreement, be reduced by the Committee
      on
      the basis of such further considerations as the Committee shall
      determine.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

    (e)  Voting
      Rights. Unless otherwise determined by the Committee, Participants holding
      shares of Restricted Stock granted hereunder may exercise full voting rights
      with respect to those shares during the period of restriction. Participants
      shall have no voting rights with respect to Common Shares underlying Restricted
      Stock Units unless and until such Common Shares are reflected as issued and
      outstanding shares on the Company’s stock ledger.

     

    (f)  Dividends
      and Distributions. Participants in whose name Restricted Stock is granted
      shall be entitled to receive all dividends and other distributions paid with
      respect to those Common Shares, unless determined otherwise by the Committee.
      The Committee will determine whether any such dividends or distributions will
      be
      automatically reinvested in additional shares of Restricted Stock and subject
      to
      the same restrictions on transferability as the Restricted Stock with respect
      to
      which they were distributed or whether such dividends or distributions will
      be
      paid in cash. Common Shares underlying Restricted Stock Units shall be entitled
      to dividends or dividend equivalents only to the extent provided by the
      Committee.

     

    9.  Deferral
      of Gains

     

    The
      Committee may, in an Award Agreement or otherwise, provide for the deferred
      delivery of Common Shares upon settlement, vesting or other events with respect
      to Restricted Stock or Restricted Stock Units. Notwithstanding anything herein
      to the contrary, in no event will any deferral of the delivery of Common Shares
      or any other payment with respect to any Award be allowed if the Committee
      determines, in its sole discretion, that the deferral would result in the
      imposition of the additional tax under Section 409A(a)(1)(B) of the
      Code.

     

    10.  Conditions
      and Restrictions Upon Securities Subject to Awards

     

    The
      Committee may provide that the Common Shares issued upon exercise of an Option
      or Stock Appreciation Right or otherwise subject to or issued under an Award
      shall be subject to such further agreements, restrictions, conditions or
      limitations as the Committee in its discretion may specify prior to the exercise
      of such Option or Stock Appreciation Right or the grant, vesting or settlement
      of such Award, including without limitation, conditions on vesting or
      transferability, forfeiture or repurchase provisions and method of payment
      for
      the Common Shares issued upon exercise, vesting or settlement of such Award
      (including the actual or constructive surrender of Common Shares already owned
      by the Participant) or payment of taxes arising in connection with an Award.
      Without limiting the foregoing, such restrictions may address the timing and
      manner of any resales by the Participant or other subsequent transfers by the
      Participant of any Common Shares issued under an Award, including without
      limitation (i) restrictions under an insider trading policy or pursuant to
      applicable law, (ii) restrictions designed to delay and/or coordinate the timing
      and manner of sales by Participant and holders of other Company equity
      compensation arrangements, (iii) restrictions as to the use of a specified
      brokerage firm for such resales or other transfers, and (iv) provisions
      requiring Common Shares to be sold on the open market or to the Company in
      order
      to satisfy tax withholding or other obligations.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    11.  Adjustment
      of and Changes in the Stock

     

    The
      number and kind of Common Shares available for issuance under this Plan
      (including under any Awards then outstanding), and the number and kind of Common
      Shares subject to the limits set forth in Section 5 of this Plan, shall be
      equitably adjusted by the Committee to reflect any reorganization,
      reclassification, combination of shares, stock split, reverse stock split,
      spin-off, dividend or distribution of securities, property or cash (other than
      regular, quarterly cash dividends), or any other equity restructuring
      transaction, as that term is defined in Statement of Financial Accounting
      Standards No. 123 (revised). Such adjustment may be designed to comply with
      Section 425 of the Code or, except as otherwise expressly provided in
      Section 5(c) of this Plan, may be designed to treat the Common Shares
      available under the Plan and subject to Awards as if they were all outstanding
      on the record date for such event or transaction or to increase the number
      of
      such Common Shares to reflect a deemed reinvestment in Common Shares of the
      amount distributed to the Company’s securityholders. The terms of any
      outstanding Award shall also be equitably adjusted by the Committee as to price,
      number or kind of Common Shares subject to such Award, vesting, and other terms
      to reflect the foregoing events, which adjustments need not be uniform as
      between different Awards or different types of Awards.

     

    In
      the
      event there shall be any other change in the number or kind of outstanding
      Common Shares, or any stock or other securities into which such Common Shares
      shall have been changed, or for which it shall have been exchanged, by reason
      of
      a change of control, other merger, consolidation or otherwise in circumstances
      that do not involve an equity restructuring transaction, as that term is defined
      in Statement of Financial Accounting Standards No. 123 (revised), then the
      Committee shall determine the appropriate adjustment, if any, to be effected.
      In
      addition, in the event of such change described in this paragraph, the Committee
      may accelerate the time or times at which any Award may be exercised and may
      provide for cancellation of such accelerated Awards that are not exercised
      within a time prescribed by the Committee in its sole discretion.

     

    No
      right
      to purchase fractional shares shall result from any adjustment in Awards
      pursuant to this Section 11. In case of any such adjustment, the Common
      Shares subject to the Award shall be rounded down to the nearest whole share.
      The Company shall notify Participants holding Awards subject to any adjustments
      pursuant to this Section 11 of such adjustment, but (whether or not notice
      is given) such adjustment shall be effective and binding for all purposes of
      the
      Plan.

     

    12.  Qualifying
      Performance-Based Compensation

     

    (a)  General.
      The Committee may establish performance criteria and level of achievement versus
      such criteria that shall determine the number of Common Shares, units, or cash
      to be granted, retained, vested, issued or issuable under or in settlement
      of or
      the amount payable pursuant to an Award, which criteria may be based on
      Qualifying Performance Criteria or other standards of financial performance
      and/or personal performance evaluations. In addition, the Committee may specify
      that an Award or a portion of an Award is intended to satisfy the requirements
      for “performance-based compensation” under Section 162(m) of the Code,
      provided that the performance criteria for such Award or portion of an Award
      that is intended by

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

      the
        Committee to satisfy the requirements for “performance-based compensation” under
        Section 162(m) of the Code shall be a measure based on one or more
        Qualifying Performance Criteria selected by the Committee and specified at
        the
        time the Award is granted. The Committee shall certify the extent to which
        any
        Qualifying Performance Criteria has been satisfied, and the amount payable
        as a
        result thereof, prior to payment, settlement or vesting of any Award that
        is
        intended to satisfy the requirements for “performance-based compensation” under
        Section 162(m) of the Code. Notwithstanding satisfaction of any performance
        goals, the number of Common Shares issued under or the amount paid under
        an
        award may, to the extent specified in the Award Agreement, be reduced by
        the
        Committee on the basis of such further considerations as the Committee in
        its
        sole discretion shall determine.

    

     

    (b)  Qualifying
      Performance Criteria. For purposes of this Plan, the term “Qualifying
      Performance Criteria” shall mean any one or more of the following performance
      criteria, either individually, alternatively or in any combination, applied
      to
      either the Company as a whole or to a business unit or Subsidiary, either
      individually, alternatively or in any combination, and measured either annually
      or cumulatively over a period of years, on an absolute basis or relative to
      a
      pre-established target, to previous years’ results or to a designated comparison
      group, in each case as specified by the Committee: (i) cash flow (before or
      after dividends), (ii) earnings or earnings per share (including earnings before
      interest, taxes, depreciation and amortization), (iii) stock price, (iv)
      return on equity, (v) total stockholder return, (vi) return on capital or
      investment (including return on total capital, return on invested capital,
      or
      return on investment), (vii) return on assets or net assets, (viii) market
      capitalization, (ix) economic value added, (x) debt leverage (debt to
      capital), (xi) revenue, (xii) income or net income, (xiii) operating income,
      (xiv) operating profit or net operating profit, (xv) operating margin or profit
      margin, (xvi) return on operating revenue, (xvii) cash from operations, (xviii)
      operating ratio, (xix) operating revenue, or (xx) customer service. To the
      extent consistent with Section 162(m) of the Code, the Committee
      (A) shall appropriately adjust any evaluation of performance under a
      Qualifying Performance Criteria to eliminate the effects of charges for
      restructurings, discontinued operations, extraordinary items and all items
      of
      gain, loss or expense determined to be extraordinary or unusual in nature or
      related to the acquisition or disposal of a segment of a business or related
      to
      a change in accounting principle all as determined in accordance with standards
      established by opinion No. 30 of the Accounting Principles Board (APA
      Opinion No. 30) or other applicable or successor accounting provisions, as
      well
      as the cumulative effect of accounting changes, in each case as determined
      in
      accordance with generally accepted accounting principles or identified in the
      Company’s financial statements or notes to the financial statements, and (B) may
      appropriately adjust any evaluation of performance under a Qualifying
      Performance Criteria to exclude any of the following events that occurs during
      a
      performance period: (i) asset write-downs, (ii) litigation, claims, judgments
      or
      settlements, (iii) the effect of changes in tax law or other such laws or
      provisions affecting reported results, (iv) accruals for reorganization and
      restructuring programs and (v) accruals of any amounts for payment under this
      Plan or any other compensation arrangement maintained by the
      Company.

     

    13.  Transferability

     

    Unless
      the Committee provides otherwise, each Award may not be sold, transferred,
      pledged, assigned, or otherwise alienated or hypothecated by a Participant
      other
      than by will or

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

      the
        laws
        of descent and distribution, and each Option or Stock Appreciation Right
        shall
        be exercisable only by the Participant during his or her
        lifetime.

    

     

    14.  Compliance
      with Laws and Regulations

     

    This
      Plan, the grant, issuance, vesting, exercise and settlement of Awards
      thereunder, and the obligation of the Company to sell, issue or deliver Common
      Shares under such Awards, shall be subject to all applicable foreign, federal,
      state and local laws, rules and regulations, stock exchange rules and
      regulations, and to such approvals by any governmental or regulatory agency
      as
      may be required. The Company shall not be required to register in a
      Participant’s name or deliver any Common Shares prior to the completion of any
      registration or qualification of such shares under any foreign, federal, state
      or local law or any ruling or regulation of any government body which the
      Committee shall determine to be necessary or advisable. To the extent the
      Company is unable to or the Committee deems it infeasible to obtain authority
      from any regulatory body having jurisdiction, which authority is deemed by
      the
      Company’s counsel to be necessary to the lawful issuance and sale of any Common
      Shares hereunder, the Company and its Subsidiaries shall be relieved of any
      liability with respect to the failure to issue or sell such Common Shares as
      to
      which such requisite authority shall not have been obtained. No Option shall
      be
      exercisable and no Common Shares shall be issued and/or transferable under
      any
      other Award unless a registration statement with respect to the Common Shares
      underlying such Option is effective and current or the Company has determined
      that such registration is unnecessary.

     

    15.  Withholding

     

    To
      the
      extent required by applicable federal, state, local or foreign law, a
      Participant shall be required to satisfy, in a manner satisfactory to the
      Company, any withholding tax obligations that arise by reason of an Option
      exercise, disposition of Common Shares issued under an Incentive Stock Option,
      the vesting of or settlement of an Award, an election pursuant to
      Section 83(b) of the Code or otherwise with respect to an Award. The
      Company and its Subsidiaries shall not be required to issue Common Shares,
      make
      any payment or to recognize the transfer or disposition of Common Shares until
      such obligations are satisfied. The Committee may provide for or permit the
      minimum statutory withholding obligations to be satisfied through the mandatory
      or elective sale of Common Shares and/or by having the Company withhold a
      portion of the Common Shares that otherwise would be issued to him or her upon
      exercise of the Option or the vesting or settlement of an Award, or by tendering
      Common Shares previously acquired.

     

    16.  Administration
      of the Plan

     

    (a)  Committee
      of the Plan. The Plan shall be administered by the Compensation Committee
      of the Board or the Board itself. Any power of the Committee may also be
      exercised by the Board, except to the extent that the grant or exercise of
      such
      authority would cause any Award or transaction to become subject to (or lose
      an
      exemption under) the short-swing profit recovery provisions of Section 16
      of the Securities Exchange Act of 1934 or cause an Award designated as a
      Performance Award not to qualify for treatment as performance-based compensation
      under Section 162(m) of the Code. To the extent that any permitted action
      taken

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

      by
        the
        Board conflicts with action taken by the Committee, the Board action shall
        control. The Compensation Committee may by resolution authorize one or more
        officers of the Company to perform any or all things that the Committee is
        authorized and empowered to do or perform under the Plan, and for all purposes
        under this Plan, such officer or officers shall be treated as the Committee;
        provided, however, that the resolution so authorizing such officer or officers
        shall specify the total number of Awards (if any) such officer or officers
        may
        award pursuant to such delegated authority, and any such Award shall be subject
        to the form of Award Agreement theretofore approved by the Compensation
        Committee. No such officer shall designate himself or herself as a recipient
        of
        any Awards granted under authority delegated to such officer. In addition,
        the
        Compensation Committee may delegate any or all aspects of the day-to-day
        administration of  the Plan to one or more officers or employees of
        the Company or any Subsidiary, and/or to one or more agents.

    

     

    (b)  Powers
      of Committee. Subject to the express provisions of this Plan, the Committee
      shall be authorized and empowered to do all things that it determines to be
      necessary or appropriate in connection with the administration of this Plan,
      including, without limitation: (i) to prescribe, amend and rescind rules and
      regulations relating to this Plan and to define terms not otherwise defined
      herein; (ii) to determine which persons are Participants, to which of such
      Participants, if any, Awards shall be granted hereunder and the timing of any
      such Awards; (iii) to grant Awards to Participants and determine the terms
      and conditions thereof, including the number of Common Shares subject to Awards
      and the exercise or purchase price of such Common Shares and the circumstances
      under which Awards become exercisable or vested or are forfeited or expire,
      which terms may but need not be conditioned upon the passage of time, continued
      employment, the satisfaction of performance criteria, the occurrence of certain
      events (including events which constitute a change of control), or other
      factors; (iv) to establish and verify the extent of satisfaction of any
      performance goals or other conditions applicable to the grant, issuance,
      exercisability, vesting and/or ability to retain any Award; (v) to prescribe
      and
      amend the terms of the agreements or other documents evidencing Awards made
      under this Plan (which need not be identical) and the terms of or form of any
      document or notice required to be delivered to the Company by Participants
      under
      this Plan; (vi) to determine the extent to which adjustments are required
      pursuant to Section 11; (vii) to interpret and construe this Plan, any
      rules and regulations under this Plan and the terms and conditions of any Award
      granted hereunder, and to make exceptions to any such provisions in good faith
      and for the benefit of the Company; and (viii) to make all other determinations
      deemed necessary or advisable for the administration of this Plan.

     

    (c)  Determinations
      by the Committee. All decisions, determinations and interpretations by the
      Committee regarding the Plan, any rules and regulations under the Plan and
      the
      terms and conditions of or operation of any Award granted hereunder, shall
      be
      final and binding on all Participants, beneficiaries, heirs, assigns or other
      persons holding or claiming rights under the Plan or any Award. The Committee
      shall consider such factors as it deems relevant, in its sole and absolute
      discretion, to making such decisions, determinations and interpretations
      including, without limitation, the recommendations or advice of any officer
      or
      other employee of the Company and such attorneys, consultants and accountants
      as
      it may select.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

    

    17.  Amendment
      of the Plan or Awards

     

    The
      Board
      may amend, alter or discontinue this Plan and the Committee may amend, or alter
      any agreement or other document evidencing an Award made under this Plan but,
      except as specifically provided for hereunder, no such amendment shall, without
      the approval of the stockholders of the Company (a) reduce the exercise
      price of outstanding Options or Stock Appreciation Rights, (b) reduce the
      price at which Options may be granted below the price provided for in
      Section 6 or (c) otherwise amend the Plan in any manner requiring
      stockholder approval by law or under the NASDAQ’s listing requirements. No
      amendment or alteration to the Plan or an Award or Award Agreement shall be
      made
      which would impair the rights of the holder of an Award, without such holder’s
      consent, provided that no such consent shall be required if the Committee
      determines in its sole discretion and prior to the date of any change of control
      that such amendment or alteration either is required or advisable in order
      for
      the Company, the Plan or the Award to satisfy any law or regulation or to meet
      the requirements of or avoid adverse financial accounting consequences under
      any
      accounting standard.

     

    18.  Miscellaneous

     

    (a)  No
      Liability of Company. The Company and any Subsidiary or affiliate
      which is in existence or hereafter comes into existence shall not be liable
      to a
      Participant or any other person as to: (i) the non-issuance or sale of Common
      Shares as to which the Company has been unable to obtain from any regulatory
      body having jurisdiction the authority deemed by the Company’s counsel to be
      necessary to the lawful issuance and sale of any Common Shares hereunder; and
      (ii) any tax consequence expected, but not realized, by any Participant or
      other
      person due to the receipt, exercise or settlement of any Award granted
      hereunder.

     

    (b)  Non-Exclusivity
      of Plan. Neither the adoption of this Plan by the Board nor the submission
      of this Plan to the stockholders of the Company for approval shall be construed
      as creating any limitations on the power of the Board or the Committee to adopt
      such other incentive arrangements as either may deem desirable, including
      without limitation, the granting of restricted stock or stock options otherwise
      than under this Plan or an arrangement not intended to qualify under Code
      Section 162(m), and such arrangements may be either generally applicable or
      applicable only in specific cases. 

     

    (c)  Governing
      Law. This Plan and any agreements or other documents hereunder shall be
      interpreted and construed in accordance with the laws of the Delaware and
      applicable federal law. 

     

    (d)  No
      Right to Employment, Reelection or Continued Service. Nothing in this Plan
      or an Award Agreement shall interfere with or limit in any way the right of
      the
      Company, its Subsidiaries and/or its affiliates to terminate any Participant’s
      employment, service on the Board or service for the Company at any time or
      for
      any reason not prohibited by law, nor shall this Plan or an Award itself confer
      upon any Participant any right to continue his or her employment or service
      for
      any specified period of time. Neither an Award nor any benefits arising under
      this Plan shall constitute an employment contract with the Company, any
      Subsidiary and/or its affiliates. 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (e)  Unfunded
      Plan. The Plan is intended to be an unfunded plan. Participants are and
      shall at all times be general creditors of the Company with respect to their
      Awards. If the Committee or the Company chooses to set aside funds in a trust
      or
      otherwise for the payment of Awards under the Plan, such funds shall at all
      times be subject to the claims of the creditors of the Company in the event
      of
      its bankruptcy or insolvency.EXHIBIT 10.1

 

STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.

Depositor

WELLS FARGO BANK, NATIONAL ASSOCIATION,

Trustee

and

EMC MORTGAGE CORPORATION

Servicer, Sponsor and Company

 

 

AMENDMENT NO. 1

 

dated as of June 21, 2007

 

 

Amending the

 

POOLING AND SERVICING AGREEMENT

 

among the Depositor, the Trustee, the Servicer, the Sponsor and the Company

 

Dated as of March 1, 2007

 

STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.

Bear Stearns Mortgage Funding Trust 2007-AR3

Mortgage Pass-Through Certificates, Series 2007-AR3

 

 

 

 

 

AMENDMENT NO. 1 ("Amendment"), dated as of June 21, 2007, to the Pooling Agreement (as defined below).  Capitalized terms used herein shall have the meanings given thereto in the Pooling Agreement.

 

WHEREAS, STRUCTURED ASSET MORTGAGE INVESTMENTS II INC., as depositor (the "Depositor"), WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee (the “Trustee”), EMC MORTGAGE CORPORATION, as servicer, sponsor and company (the “Servicer,” “Sponsor” and “Company,” respectively), entered into a Pooling and Servicing Agreement, dated as of March 1, 2007 (the "Pooling Agreement"), providing for the issuance of Bear Stearns Mortgage Funding Trust 2007-AR3, Mortgage Pass-Through Certificates, Series 2007-AR3 (the “Certificates”);

 

WHEREAS, the Company, the Depositor, the Servicer and the Trustee desire to amend the definition of "Delinquent" in Article I of the Pooling Agreement; 

 

WHEREAS, Section 11.02(a)(ii) of the Pooling Agreement permits the amendment of the Agreement by the Company, the Depositor, the Servicer and the Trustee without notice to or the consent of any of the Certificateholders, to correct or supplement any provisions of the Pooling Agreement that may be defective or inconsistent with other provisions therein; and

 

WHEREAS, the execution of this Amendment has been duly authorized by the Company, the Depositor, the Servicer and the Trustee; 

 

NOW THEREFORE, the Company, the Depositor, the Servicer and the Trustee hereby agree as follows:

 

Section 1.  The definition of "Delinquent" in Article I of the Agreement is hereby amended as follows:

 

Delinquent:  The delinquency method used for calculations with respect to the Mortgage Loans will be in accordance with the methodology used by lenders regulated by the Office of Thrift Supervision. Under this method, a mortgage loan is considered “30 days or more Delinquent” if the borrower fails to make a scheduled payment prior to the close of business on the mortgage loan’s first succeeding due date.  For example, if a securitization had a closing date occurring in August and a cut-off date of August 1, a mortgage loan with a payment due on July 1 that remained unpaid as of the close of business on July 31 would not be described as 30 days delinquent as of the cut-off date. Such mortgage loan with a payment due on June 1 that remained unpaid as of the close of business on July 31 would be described as 30 days delinquent as of the cut-off date.
A mortgage loan would be considered “60 days or more Delinquent” with respect to such scheduled payment if such scheduled payment were not made prior to the close of business on the mortgage loan’s second succeeding due date  (or, in the preceding example, if the mortgage loan with a payment due on May 1 remained unpaid as of the close of business on July 31). Similarly for “90 days or more Delinquent” and so on.  Unless otherwise specified, with 

 

respect to any date of determination, determinations of delinquency are made as of the last day of the prior calendar month.  Mortgage Loans with Due Dates which are not the first of the month are treated as if the Due Date was the first of the following month.

Section 2.

 

This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument.

 

Section 3.

 

THIS AMENDMENT SHALL BE DEEMED TO HAVE BEEN MADE AND PERFORMED IN THE STATE OF NEW YORK AND SHALL BE INTERPRETED IN ACCORDANCE WITH THE LAWS OF SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.

 

[Signatures Follow]

 

2

 

IN WITNESS WHEREOF, the parties hereto have caused their names to be signed hereto by their officers thereunto duly authorized and their seal, duly attested, to be hereunto affixed, all as of the day and year first above written.

 

 

	
            STRUCTURED ASSET MORTGAGE INVESTMENTS II INC., as Depositor
 
	
            By: /s/ Baron Silverstein                             
 
	
            Name: Baron Silverstein   
 Title: Senior Managing Director  
 
	
             
 
	
            WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
 
	
             
 
	
            By: /s/ Stacey Taylor                                  
 
	
            Name: Stacey Taylor  
 Title: Vice President 
 
	
             
 
	
             
 
	
             
 
	
            EMC MORTGAGE CORPORATION,
 
	
            as Servicer and Company
 
	
             
 
	
            By: /s/ Gail Andrews                                  
 
	
            Name: Gail Andrews
 Title: Senior Vice President 
 

 

 

3

 

 

	
            STATE OF NEW YORK
 	
            )
 
	
             
 	
            ) ss.:
 
	
            COUNTY OF NEW YORK 
 	
            )
 

 

On the 21st day of June, 2007, before me, a notary public in and for said State, personally appeared  Baron Silverstein, known to me to be a Senior Managing Director of Structured Asset Mortgage Investments II Inc., the corporation that executed the within instrument, and also known to me to be the person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written.

	
             
 	
            /s/ Michelle Sterling  
 

Notary Public

[Notarial Seal]

 

	
            STATE OF MARYLAND
 	
            )
 
	
             
 	
            ) ss.:
 
	
            COUNTY OF HOWARD
 	
            )
 

 

On the 21st day of June, 2007, before me, a notary public in and for said State, personally appeared Stacey Taylor, known to me to be a Vice President of Wells Fargo Bank, National Association, the entity that executed the within instrument, and also known to me to be the person who executed it on behalf of said entity, and acknowledged to me that such entity executed the within instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written.

	
             
 	
            /s/ Graham M. Oglesby  
 

Notary Public

[Notarial Seal]

 

	
            STATE OF TEXAS
 	
            )
 
	
             
 	
            ) ss.:
 
	
            COUNTY OF DALLAS 
 	
            )
 

 

On the 21st day of June, 2007, before me, a notary public in and for said State, personally appeared Gail Andrews, known to me to be Senior Vice President of EMC Mortgage Corporation, the corporation that executed the within instrument, and also known to me to be the person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written.

	
             
 	
            /s/ Kay J. Ottinger  
 

Notary Public

[Notarial Seal]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}]]