COSTAR GROUP INC
COSTAR GROUP, INC. STOCK INCENTIVE PLAN, AMENDED
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>w51677ex10-1.htm
<DESCRIPTION>COSTAR GROUP, INC. STOCK INCENTIVE PLAN, AMENDED
<TEXT>
<HTML>
<HEAD>
<TITLE>ex10-1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<P align="right">EXHIBIT 10.1

<P align="center"><B>COSTAR GROUP, INC.<BR>
1998 STOCK INCENTIVE PLAN<BR>
(AS LAST AMENDED ON JUNE&nbsp;19, 2001)</B>

<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2"><B>PURPOSE</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
CoStar Group, Inc., a Delaware corporation <I>(&#147;CoStar&#148; </I>or the
<I>&#147;Company</I>&#148;), wishes to recruit, reward, and retain employees
and outside directors. To further these objectives, the
Company hereby sets forth the CoStar Group, Inc. 1998 Stock
Incentive Plan (the <I>&#147;Plan</I>&#148;) to provide options <I>(&#147;Options</I>&#148;) or
direct grants <I>(&#147;Stock Grants</I>&#148; and, together with the Options,
<I>&#147;Awards</I>&#148;) to employees and outside directors with respect to
shares of the Company&#146;s common stock <I>(the &#147;Common Stock</I>&#148;).
The Plan is effective as of the effective date (the
<I>&#147;Effective Date</I>&#148;) of the Company&#146;s registration under Section
12 of the Securities Exchange Act of 1934 (the<I> &#147;Exchange
Act</I>&#148;) with respect to its initial public offering <I>(&#147;IPO</I>&#148;).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2"><B>PARTICIPANTS</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
All Employees of CoStar and any Eligible Subsidiaries are
eligible for Options and Stock Grants under this Plan, as are
the directors of CoStar and the Eligible Subsidiaries who are
not employees <I>(&#147;Eligible Directors</I>&#148;). Eligible employees and
directors become <I>&#147;optionees</I>&#148; when the Administrator grants
them an option under this Plan or <I>&#147;recipients</I>&#148; when they
receive a direct grant of Common Stock. (Optionees and
recipients are referred to collectively as <I>&#147;participants</I>.&#148;
The term <I>participant </I>also includes, where appropriate, a
person authorized to exercise an Award in place of the
original optionee.) The Administrator may also grant Options
or make Stock Grants to certain other service providers.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
<I>Employee </I>means any person employed as a common law employee
of the Company or an Eligible Subsidiary.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2"><B>ADMINISTRATOR</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The <I>Administrator </I>will be the Compensation Committee of the Board
of Directors of CoStar (the &#147;<I>Compensation Committee</I>&#148;), unless the Board
specifies another committee. The Board may also act under the Plan as
though it were the Compensation Committee.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Administrator is responsible for the general operation
and administration of the Plan and for carrying out its
provisions and has full discretion in interpreting and
administering the provisions of the Plan. Subject to the
express provisions of the Plan, the Administrator may
exercise such powers and authority of the Board as the
Administrator may find necessary or appropriate to carry
out its functions. The Administrator may delegate its</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<TABLE ALIGN="CENTER" WIDTH="100%" BORDER="0">
<TR>
<TD ALIGN="RIGHT"><FONT SIZE="2">
<hr noshade size="1">
CoStar Group, Inc.<BR>1998 Stock Incentive Plan</FONT></TD>
</TR>
</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>

<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
functions (other than those described in the <B>Granting of
Awards</B> section) to officers or employees of CoStar.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Administrator&#146;s powers will include, but not be limited
to, the power to amend, waive, or extend any provision or
limitation of any Award. The Administrator may act through
meetings of a majority of its members or by unanimous
consent.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2"><B>GRANTING OF<BR>
AWARDS</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Subject to the terms of the Plan, the Administrator will, in its sole
discretion, determine</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">the participants who receive Awards,</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">the terms of such Awards,</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">the schedule for exercisability or nonforfeitability<BR>
(including any requirements that the participant or<BR>
the Company satisfy performance criteria),</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">the time and conditions for expiration of the Award,
and</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">the form of payment due upon exercise, if any.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Administrator&#146;s determinations under the Plan need not
be uniform and need not consider whether possible
participants are similarly situated.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Options granted to employees may be nonqualified stock
options<I> (&#147;NQSOs&#148;)</I> or &#147;incentive stock options&#148; (&#147;<I>ISOs</I>&#148;)
within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended from time to time (the
<I>&#147;Code&#148;),</I> or the corresponding provision of any subsequently
enacted tax statute. Options granted to Eligible Directors
must be NQSOs. The Administrator will not grant ISOs
unless the stockholders have approved the Plan.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Administrator may impose such conditions on or charge
such price for the Stock Grants as it deems appropriate.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align="right" valign="top"><FONT size="2"><I>SUBSTITUTIONS</I></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Administrator may also grant Awards in substitution for
options or other equity interests held by individuals (i)&nbsp;as a
result of their employment by or services to CoStar Group, L.P. or
(ii) who become Employees of the Company or of an Eligible
Subsidiary as a result of the Company&#146;s acquiring or merging with
the individual&#146;s employer or acquiring its assets. If necessary to
conform the Awards to the interests for which they are substitutes,
the Administrator may grant substitute Awards under terms and
conditions that vary from those the Plan otherwise requires.</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE ALIGN="CENTER" WIDTH="100%" BORDER="0">
<TR>
<TD ALIGN="RIGHT"><FONT SIZE="2">
<hr noshade size="1">
CoStar Group, Inc.<BR>1998 Stock Incentive Plan</FONT></TD>
</TR>
</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>

<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>DIRECTOR<BR>
FORMULA<BR>
OPTIONS</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Each Eligible Director of the Company shall be entitled to receive at
the first meeting of the Board of Directors immediately following each
of the Company&#146;s Annual Meeting of Stockholders an Option to purchase 1,000 shares of the Company&#146;s Common Stock
at an exercise price equal to the Fair Market Value (as defined below) on such date of grant. Such Options
shall vest in full on the first anniversary of the date of grant, provided that such Director is still a
Director of the Company.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>DATE OF GRANT</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The <I>Date of Grant </I>will be the date as of which this Plan or the Administrator grants an Award to a participant,
as specified in the Plan or in the Administrator&#146;s minutes.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>EXERCISE PRICE</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The <I>Exercise Price </I>is the value of the consideration that a participant must provide in exchange for one share
of Common Stock. The Administrator will determine the Exercise Price under each Award and may set the Exercise
Price without regard to the Exercise Price of any other Awards granted at the same or any other time. The
Company may use the consideration it receives from the participant for general corporate purposes.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Exercise Price per share for NQSOs may not be less than
100% of the Fair Market Value of a share on the Date of
Grant. If an Option is intended to be an ISO, the Exercise
Price per share may not be less than 100% of the Fair
Market Value (on the Date of Grant) of a share of Common
Stock covered by the Option; <u>provided</u>, <u>however</u>, that if the
Administrator decides to grant an ISO to someone covered by
Sections&nbsp;422(b)(6) and 424(d) (as a
more-than-10%-stock-owner), the Exercise Price of the
Option must be at least 110% of the Fair Market Value (on
the Date of Grant).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Administrator may satisfy any state law requirements
regarding adequate consideration for Stock Grants by (i)
issuing Common Stock held as treasury stock or (ii)
charging the recipients at least the par value for the
shares covered by the Stock Grant. The Administrator may
designate that a recipient may satisfy (ii)&nbsp;either by
direct payments or by the Administrator&#146;s withholding from
other payments due to the recipient.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE="2"><I>FAIR MARKET<BR>
VALUE</I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
<I>Fair Market Value</I> of a share of Common Stock for purposes of the
Plan will be determined as follows:</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">if the Common Stock is traded on a national securities
exchange, the closing sale price on that date;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE ALIGN="CENTER" WIDTH="100%" BORDER="0">
<TR>
<TD ALIGN="RIGHT"><FONT SIZE="2">
<hr noshade size="1">
CoStar Group, Inc.<BR>1998 Stock Incentive Plan</FONT></TD>
</TR>
</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">if the Common Stock is not traded on any such
exchange, the closing sale price as reported by the
National Association of Securities Dealers, Inc.
Automated Quotation System <I>(&#147;Nasdaq&#148;)</I> for such date;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">if no such closing sale price information is
available, the average of the closing bid and asked
prices as reported by Nasdaq for such date; or</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">if there are no such closing bid and asked prices, the
average of the closing bid and asked prices as
reported by any other commercial service for such
date.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
For any date that is not a trading day, the Fair Market
Value of a share of Common Stock for such date shall be
determined by using the closing sale price or the average
of the closing bid and asked prices, as appropriate, for
the immediately preceding trading day.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Fair Market Value will be deemed equal to the IPO price
for any Options granted as of the date on which the IPO&#146;s
underwriters price the IPO.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>EXERCISABILITY</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Administrator will determine the times and conditions for
exercise of or purchase under each Award but may not extend the period for
exercise beyond the tenth anniversary of its Date of Grant (or five years
for ISOs granted to 10% owners covered by Code Sections&nbsp;422(b)(6) and
424(d)).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Awards will become exercisable at such times and in such
manner as the Administrator determines and the Award
Agreement, if any, indicates; provided, however, that the
Administrator may, on such terms and conditions as it
determines appropriate, accelerate the time at which the
participant may exercise any portion of an Award or at
which restrictions on Stock Grants lapse. For Stock
Grants, &#147;exercise&#148; refers to acceptance of the Award or
lapse of restrictions, as appropriate in context.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
If the Administrator does not specify otherwise, Options
will become exercisable and restrictions on Stock Grants
(other than the Director Formula Grants) will lapse as to
one-third of the covered shares on each of the first,
second, and third anniversaries of the Date of Grant.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
No portion of an Award that is unexercisable at a
participant&#146;s termination of employment will thereafter
become exercisable, unless the Award Agreement provides
otherwise, either initially or by amendment.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE="2"><I>CHANGE OF</I></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Upon a Change of Control (as defined below), all Options held by</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE ALIGN="CENTER" WIDTH="100%" BORDER="0">
<TR>
<TD ALIGN="RIGHT"><FONT SIZE="2">
<hr noshade size="1">
CoStar Group, Inc.<BR>1998 Stock Incentive Plan</FONT></TD>
</TR>
</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>

<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD align="right" valign="top"><FONT size="2"><I>CONTROL</I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
current Employees and directors will become fully exercisable and
all restrictions on Stock Grants will lapse. A<I> Change of Control</I>
for this purpose means the occurrence, after the Company&#146;s IPO, of
any one or more of the following events:</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">a person, entity, or group (other than the Company,
any Company subsidiary, any Company benefit plan, or
any underwriter temporarily holding securities for an
offering of such securities) acquires ownership of
more than 80% of the undiluted total voting power of
the Company&#146;s then-outstanding securities eligible to
vote to elect members of the Board <em>(&#147;Company Voting
Securities&#148;)</em>;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">consummation of a merger or consolidation of the
Company into any other entity &#151; 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</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">the stockholders of the Company approve (i)&nbsp;a plan of
complete liquidation or dissolution of the Company or
(ii) an agreement for the Company&#146;s sale or
disposition of all or substantially all the Company&#146;s
assets, <I>and</I> such liquidation, dissolution, sale, or
disposition is consummated.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">Even if other tests are met, a Change of Control has
not occurred under any circumstance in which the
Company files for bankruptcy protection or is
reorganized following a bankruptcy filing.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The <B>Adjustment Upon Changes in Capital Stock </B>provisions
will also apply if the Change of Control is a <B>Substantial
Corporate Change </B>(as defined in those provisions).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>LIMITATION ON<BR>
ISOs</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
An Option granted to an employee will be an ISO only to the extent that
the aggregate Fair Market Value (determined at the Date of Grant) of the stock with respect to which ISOs are
exercisable for the first time by the optionee during any calendar year (under the Plan and all other plans of
the Company and its subsidiary corporations, within the meaning of Code Section&nbsp;422(d)), does not exceed
$100,000. This limitation will be applied by taking Options into account in the order in which such Options were
granted. If, by design or operation, the Option exceeds this limit, the excess will be treated as an NQSO.</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE ALIGN="CENTER" WIDTH="100%" BORDER="0">
<TR>
<TD ALIGN="RIGHT"><FONT SIZE="2">
<hr noshade size="1">
CoStar Group, Inc.<BR>1998 Stock Incentive Plan</FONT></TD>
</TR>
</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>METHOD OF<BR>
EXERCISE</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
To exercise any exercisable portion of an Award, the participant must:</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">Deliver a written notice of exercise to the Secretary
of the Company (or to whomever the Administrator
designates), in a form complying with any rules the
Administrator may issue, signed by the participant,
and specifying the number of shares of Common Stock
underlying the portion of the Award the participant is
exercising;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">Pay the full Exercise Price, if any, by cashier&#146;s or
certified check for the shares of Common Stock with
respect to which the Award is being exercised, unless
the Administrator consents to another form of payment
(which could include the use of Common Stock); and</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">Deliver to the Administrator such representations and
documents as the Administrator, in its sole
discretion, may consider necessary or advisable.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Payment in full of the Exercise Price need not accompany
the written notice of exercise provided the notice directs
that the stock certificates for the shares issued upon the
exercise be delivered to a licensed broker acceptable to
the Company as the agent for the individual exercising the
option and at the time of closing of the sale of the Common
Stock issued upon exercise of the Option, the broker will
tender to the Company cash or cash equivalents acceptable
to the Company and equal to the Exercise Price.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
If the Administrator agrees to payment through the tender
to the Company of shares of Common Stock, the individual
must have held the stock being tendered for at least six
months at the time of surrender. Shares of stock offered
as payment will be valued, for purposes of determining the
extent to which the participant has paid the Exercise
Price, at their Fair Market Value on the date of exercise.
The Administrator may also, in its discretion, accept
attestation of ownership of Common Stock and issue a net
number of shares upon Option exercise.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>AWARD<BR>
EXPIRATION</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
No one may exercise an Award more than ten years after its Date of
Grant (or five years, for an ISO granted to a more-than-10% shareholder). Unless the Award Agreement provides
otherwise, either initially or by amendment, no one may exercise an Award after the first to occur of:</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="10%">&nbsp;</TD>
        <TD width="15%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD>&nbsp;</TD>
        <TD VALIGN="TOP"><FONT SIZE="2"><I>EMPLOYMENT<BR>
TERMINATION</I></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The 90th day after the date of termination of employment (other
than for death or Disability), where termination of
employment means the time when the employer-employee or other
service-providing relationship between the employee and the Company
ends for any reason, including retirement. Unless the Award
Agreement provides otherwise, termination of employment does not
include instances in</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE ALIGN="CENTER" WIDTH="100%" BORDER="0">
<TR>
<TD ALIGN="RIGHT"><FONT SIZE="2">
<hr noshade size="1">
CoStar Group, Inc.<BR>1998 Stock Incentive Plan</FONT></TD>
</TR>
</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="10%">&nbsp;</TD>
        <TD width="15%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD>&nbsp;</TD>
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
which the Company immediately rehires a common law
employee as an independent contractor. The
Administrator, in its sole discretion, will determine
all questions of whether particular terminations or
leaves of absence are terminations of employment;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="10%">&nbsp;</TD>
        <TD width="15%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD>&nbsp;</TD>
        <TD VALIGN="TOP"><FONT SIZE="2"><I>DISABILITY</I></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
For disability, the earlier of (i)&nbsp;the first anniversary of
the participant&#146;s termination of employment for disability and
(ii) thirty (30)&nbsp;days after the participant no longer has a
disability, where &#147;<I>disability</I>&#148; means the inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in
death or that has lasted or can be expected to last for a continuous
period of not less than twelve months; or</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="10%">&nbsp;</TD>
        <TD width="15%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD>&nbsp;</TD>
        <TD VALIGN="TOP"><FONT SIZE="2"><I>DEATH</I></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The date twelve months after the participant&#146;s death.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
If exercise is permitted after termination of employment,
the Award will nevertheless expire as of the date that the
former service provider violates any covenant not to
compete in effect between the Company and the former
employee. In addition, an optionee who exercises an Option
more than 90&nbsp;days after termination of employment with the
Company and/or the Eligible Subsidiaries will only receive
ISO treatment to the extent permitted by law, and becoming
or remaining an employee of another related company (that
is not an Eligible Subsidiary) or an independent contractor
to the Company will not prevent loss of ISO status as a
result of the formal termination of employment.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Nothing in this Plan extends the term of an Award beyond
the tenth anniversary of its Date of Grant, nor does
anything in this <B>Award Expiration </B>section make an Award
exercisable that has not otherwise become exercisable.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>AWARD<BR>
AGREEMENT</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Option Agreements will set forth the terms of each Option and will
include such terms and conditions, consistent with the Plan, as the Administrator may determine are
necessary or advisable. To the extent the agreement is inconsistent with the Plan, the Plan will govern. The
Option Agreements may contain special rules. The Administrator may, but is not required to, issue agreements for
Stock Grants.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>STOCK SUBJECT<BR>
TO PLAN</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Except as adjusted below under <B>Corporate Changes</B>, the aggregate
number of shares of Common Stock that may be issued under the Awards
(whether ISOs, NQSOs, or Stock Grants) may not exceed 3,750,000 shares and
the maximum number of shares that may be granted under Awards for a single
individual in a calendar year may not exceed 400,000 shares. (The
individual maximum applies only to Awards first made under this Plan and
not to Awards made in substitution of a prior employer&#146;s options or other
incentives, except as Code Section&nbsp;162(m) otherwise requires.) The Common
Stock will come from</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE ALIGN="CENTER" WIDTH="100%" BORDER="0">
<TR>
<TD ALIGN="RIGHT"><FONT SIZE="2">
<hr noshade size="1">
CoStar Group, Inc.<BR>1998 Stock Incentive Plan</FONT></TD>
</TR>
</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
either authorized but unissued shares or from previously
issued shares that the Company reacquires, including shares
it purchases on the open market. If any Award expires, is
canceled, or terminates for any other reason, the shares of
Common Stock available under that Award will again be
available for the granting of new Awards (but will be
counted against that calendar year&#146;s limit for a given
individual).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
No adjustment will be made for a dividend or other right
for which the record date precedes the date of exercise.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The participant will have no rights of a stockholder with
respect to the shares of stock subject to an Award except
to the extent that the Company has issued certificates for,
or otherwise confirmed ownership of, such shares upon the
exercise of the Award.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Company will not issue fractional shares pursuant to
the exercise of an Award, but the Administrator may, in its
discretion, direct the Company to make a cash payment in
lieu of fractional shares.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>PERSON WHO<BR>
MAY EXERCISE</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
During the participant&#146;s lifetime, only the participant or his duly
appointed guardian or personal representative may exercise the Awards. After his death, his personal
representative or any other person authorized under a will or under the laws of descent and distribution may
exercise any then exercisable portion of an Award. If someone other than the original recipient seeks to
exercise any portion of an Award, the Administrator may request such proof as it may consider necessary or
appropriate of the person&#146;s right to exercise the Award.</FONT></TD>
</TR>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>ADJUSTMENTS<BR>
UPON CHANGES<BR>
IN CAPITAL STOCK</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Subject to any required action by the Company (which it shall
promptly take) or its stockholders, and subject to the provisions of
applicable corporate law, if, after the Date of Grant of an Award,</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">the outstanding shares of Common Stock increase or
decrease or change into or are exchanged for a
different number or kind of security by reason of any
recapitalization, reclassification, stock split,
reverse stock split, combination of shares, exchange
of shares, stock dividend, or other distribution
payable in capital stock, or</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">some other increase or decrease in such Common Stock
occurs without the Company&#146;s receiving consideration,</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
the Administrator may make a proportionate and appropriate
adjustment in the number of shares of Common Stock
underlying each Award, so that the proportionate interest
of the participant immediately following such event will,</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE ALIGN="CENTER" WIDTH="100%" BORDER="0">
<TR>
<TD ALIGN="RIGHT"><FONT SIZE="2">
<hr noshade size="1">
CoStar Group, Inc.<BR>1998 Stock Incentive Plan</FONT></TD>
</TR>
</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
to the extent practicable, be the same as immediately
before such event. (This adjustment does not apply to
Common Stock that the optionee has already purchased nor to
Stock Grants that are already nonforfeitable, except to the
extent of similar treatment for all stockholders.) Unless
the Administrator determines another method would be
appropriate, any such adjustment to an Award will not
change the total price with respect to shares of Common
Stock underlying the unexercised portion of the Award but
will include a corresponding proportionate adjustment in
the Award&#146;s Exercise Price.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Administrator will make a commensurate change to the
maximum number and kind of shares provided in the <B>Stock
Subject to Plan </B>section.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Any issue by the Company of any class of preferred stock,
or securities convertible into shares of common or
preferred stock of any class, will not affect, and no
adjustment by reason thereof will be made with respect to,
the number of shares of Common Stock subject to any Award
or the Exercise Price except as this <B>Adjustments </B>section
specifically provides. The grant of an Award under the
Plan will not affect in any way the right or power of the
Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business
structure, or to merge or to consolidate, or to dissolve,
liquidate, sell, or transfer all or any part of its
business or assets.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE="2"><I>SUBSTANTIAL<BR>
CORPORATE&nbsp;&nbsp;<BR>
CHANGE</I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Upon a <I>Substantial Corporate Change</I>, the Plan and any unexercised
Awards will terminate unless provision is made in writing in connection
with such transaction for</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">the assumption or continuation of outstanding Awards,
or</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">the substitution for such options or grants of any
options or grants covering the stock or securities of
a successor employer corporation, or a parent or
subsidiary of such successor, with appropriate
adjustments as to the number and kind of shares of
stock and prices, in which event the Awards will
continue in the manner and under the terms so
provided.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2"></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Unless the Board determines otherwise, if an Award would
otherwise terminate pursuant to the preceding sentence,
participants who are then Employees or directors of the
Company will have the right, at such time before the
consummation of the transaction causing such termination as
the Board reasonably designates, to exercise any
unexercised portions of the Award, whether or not they had
previously become exercisable. However, unless the Board
determines otherwise, the acceleration will not occur if it
would render unavailable &#147;pooling of interest&#148; accounting
for any reorganization, merger, or consolidation of the
Company.</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE ALIGN="CENTER" WIDTH="100%" BORDER="0">
<TR>
<TD ALIGN="RIGHT"><FONT SIZE="2">
<hr noshade size="1">
CoStar Group, Inc.<BR>1998 Stock Incentive Plan</FONT></TD>
</TR>
</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
A <I>Substantial Corporate Change</I> means the</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">dissolution or liquidation of the Company,</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">merger, consolidation, or reorganization of the
Company with one or more corporations in which the
Company is not the surviving corporation,</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">the sale of substantially all of the assets of the
Company to another corporation, or</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">any transaction (including a merger or reorganization
in which the Company survives) approved by the Board
that results in any person or entity (other than any
affiliate of the Company as defined in Rule&nbsp;144(a)(1)
under the Securities Act) owning 100% of the combined
voting power of all classes of stock of the Company.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>SUBSIDIARY<BR>
EMPLOYEES</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Employees of Company Subsidiaries will be entitled to participate in
the Plan, except as otherwise designated by the Board of Directors or the Committee.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Eligible Subsidiary means each of the Company&#146;s
Subsidiaries, except as the Board otherwise specifies. For
ISO grants, <I>Subsidiary</I> means any corporation (other than
the Company) in an unbroken chain of corporations beginning
with the Company if, at the time an ISO is granted to a
Participant under the Plan, each of the corporations (other
than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in
such chain. For NQSOs, the Board or the Committee can use
a different definition of Subsidiary in its discretion.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>LEGAL<BR>
COMPLIANCE</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Company will not issue any shares of Common Stock under an
Award until all applicable requirements imposed by Federal and
state securities and other laws, rules, and regulations, and by
any applicable regulatory agencies or stock exchanges, have
been fully met. To that end, the Company may require the
participant to take any reasonable action to comply with such
requirements before issuing such shares. No provision in the
Plan or action taken under it authorizes any action that is
otherwise prohibited by Federal or state laws.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Plan is intended to conform to the extent necessary
with all provisions of the Securities Act of 1933
(&#147;<I>Securities Act</I>&#148;) and the Exchange Act and all regulations
and rules the Securities and Exchange Commission issues
under those laws. Notwithstanding anything in the Plan to
the contrary, the</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE ALIGN="CENTER" WIDTH="100%" BORDER="0">
<TR>
<TD ALIGN="RIGHT"><FONT SIZE="2">
<hr noshade size="1">
CoStar Group, Inc.<BR>1998 Stock Incentive Plan</FONT></TD>
</TR>
</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Administrator must administer the Plan, and Awards may be
granted and exercised, only in a way that conforms to such
laws, rules, and regulations. To the extent permitted by
applicable law, the Plan and any Awards will be deemed
amended to the extent necessary to conform to such laws,
rules, and regulations.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>PURCHASE FOR<BR>
INVESTMENT<BR>
AND OTHER<BR>
RESTRICTIONS</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Unless a registration statement under the Securities Act covers the
shares of Common Stock a participant receives upon exercise of his
Award, the Administrator may require, at the time of such exercise or
receipt of a grant, that the participant agree in writing to acquire such shares for investment and not for public
resale or distribution, unless and until the shares subject to the Award are registered under the Securities Act.
Unless the shares are registered under the Securities Act, the participant must acknowledge:</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">that the shares purchased on exercise of the Award are
not so registered,</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="30%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">that the participant may not sell or otherwise
transfer the shares unless</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="40%">&nbsp;</TD>
        <TD width="60%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="40%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">the shares have been registered under the
Securities Act in connection with the sale or
transfer thereof, or</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="40%">&nbsp;</TD>
        <TD width="60%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="40%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">counsel satisfactory to the Company has issued
an opinion satisfactory to the Company that the
sale or other transfer of such shares is exempt
from registration under the Securities Act, and</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="40%">&nbsp;</TD>
        <TD width="60%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD width="40%">&nbsp;</TD>
        <TD valign="top"><FONT size="2">such sale or transfer complies with all other
applicable laws, rules, and regulations,
including all applicable Federal and state
securities laws, rules, and regulations.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Additionally, the Common Stock, when issued upon the
exercise of an Award, will be subject to any other transfer
restrictions, rights of first refusal, and rights of
repurchase set forth in or incorporated by reference into
other applicable documents, including the Company&#146;s
articles or certificate of incorporation, by-laws, or
generally applicable stockholders&#146; agreements.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Administrator may, in its sole discretion, take
whatever additional actions it deems appropriate to comply
with such restrictions and applicable laws, including
placing legends on certificates and issuing stop-transfer
orders to transfer agents and registrars.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>TAX WITHHOLDING</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The participant must satisfy all applicable Federal, state,
and local income and employment tax withholding requirements before the
Company will deliver stock certificates upon the exercise of an Award.
The Company may decide to satisfy the withholding obligations through
additional withholding on salary or</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE ALIGN="CENTER" WIDTH="100%" BORDER="0">
<TR>
<TD ALIGN="RIGHT"><FONT SIZE="2">
<hr noshade size="1">
CoStar Group, Inc.<BR>1998 Stock Incentive Plan</FONT></TD>
</TR>
</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
wages. If the Company does not or cannot withhold from
other compensation, the participant must pay the Company,
with a cashier&#146;s check or certified check, the full amounts
required by withholding. Payment of withholding
obligations is due before the Company issues shares with
respect to the Award. If the Committee so determines, the
participant may instead satisfy the withholding obligations
by directing the Company to retain shares from the Award
exercise, by tendering previously owned shares, or by
attesting to his ownership of shares (with the distribution
of net shares).</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>TRANSFERS,<BR>
ASSIGNMENTS,<BR>
AND PLEDGES</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Unless the Administrator otherwise approves in advance in writing, an
Award may not be assigned, pledged, or otherwise transferred in any
way, whether by operation of law or otherwise or through any legal or equitable proceedings (including
bankruptcy), by the participant to any person, except by will or by operation of applicable laws of descent and
distribution. If Rule&nbsp;16b-3 then applies to an Award, the participant may not transfer or pledge shares of Common
Stock acquired under a Stock Grant or upon exercise of an Option until at least six (6)&nbsp;months have elapsed from
(but excluding) the Date of Grant, unless the Administrator approves otherwise in advance in writing.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>AMENDMENT OR<BR>
TERMINATION<BR>
OF PLAN AND<BR>
OPTIONS</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The Board may amend, suspend, or terminate the Plan at any time,
without the consent of the participants or their beneficiaries; provided,
however, that no amendment will deprive any participant or beneficiary
of any previously declared Award. Except as required by law or by the <B>Corporate Changes </B>section, the
Administrator may not, without the participant&#146;s or beneficiary&#146;s consent, modify the terms and conditions
of an Award so as to adversely affect the participant. No amendment, suspension, or termination of the
Plan will, without the participant&#146;s or beneficiary&#146;s consent, terminate or adversely affect any right or
obligations under any outstanding Awards.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>PRIVILEGES OF<BR>
STOCK OWNERSHIP</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
No participant and no beneficiary or other person claiming under or
through such participant will have any right, title, or interest in or to any shares of Common Stock allocated or
reserved under the Plan or subject to any Award except as to such shares of Common Stock, if any, that have been issued to such
participant.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>EFFECT ON<BR>
OTHER PLANS</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Whether exercising or receiving an Award causes the participant to
accrue or receive additional benefits under any pension or other plan is governed solely by the
terms of such other plan.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>LIMITATIONS ON<BR>
LIABILITY</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Notwithstanding any other provisions of the Plan, no individual
acting as a director, employee, or agent of the Company shall be liable to any participant,
former participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense
incurred in connection with the Plan, nor shall</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE ALIGN="CENTER" WIDTH="100%" BORDER="0">
<TR>
<TD ALIGN="RIGHT"><FONT SIZE="2">
<hr noshade size="1">
CoStar Group, Inc.<BR>1998 Stock Incentive Plan</FONT></TD>
</TR>
</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<CENTER>
<TABLE cellspacing="0" BORDER="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
such individual be personally liable because of any
contract or other instrument he executes in such other
capacity. The Company will indemnify and hold harmless
each director, employee, or agent of the Company to whom
any duty or power relating to the administration or
interpretation of the Plan has been or will be delegated,
against any cost or expense (including attorneys&#146; fees) or
liability (including any sum paid in settlement of a claim
with the Board&#146;s approval) arising out of any act or
omission to act concerning this Plan unless arising out of
such person&#146;s own fraud or bad faith.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>NO EMPLOYMENT<BR>
CONTRACT</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Nothing contained in this Plan constitutes an employment contract
between the Company and the participants. The Plan does not give any participant any right to be retained in
the Company&#146;s employ, nor does it enlarge or diminish the Company&#146;s right to terminate the participant&#146;s
employment.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>APPLICABLE LAW</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
The laws of the State of Delaware (other than its choice of law provisions) govern this Plan and its
interpretation.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="77%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD VALIGN="TOP"><FONT SIZE="2"><B>DURATION OF PLAN</B></FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
Unless the Board extends the Plan&#146;s term, the Administrator
may not grant Awards after May&nbsp;8, 2008. The Plan will then terminate but
will continue to govern unexercised and unexpired Awards.</FONT></TD>
</TR>
</TABLE>
</CENTER>


<P>
<TABLE ALIGN="CENTER" WIDTH="100%" BORDER="0">
<TR>
<TD ALIGN="RIGHT"><FONT SIZE="2">
<hr noshade size="1">
CoStar Group, Inc.<BR>1998 Stock Incentive Plan</FONT></TD>
</TR>
</TABLE>
</BODY>
</HTML>

</TEXT>
</DOCUMENT>
