Exhibit 10.42
INCENTIVE STOCK OPTION AGREEMENT
UNDER THE
NEUSTAR, INC. 1999 EQUITY INCENTIVE PLAN
THIS
AGREEMENT, made as of December 18, 2003 (the
“Effective Date”), by and between NeuStar, Inc., a
Delaware corporation (the “Company”), and Martin
Lowen (the “Participant”).
WITNESSETH :
WHEREAS,
the Company desires to afford the Participant the opportunity to
acquire an ownership of the Company’s common stock, par value
$.002 per share (“Common Stock”), so that the
Participant may have a direct proprietary interest in the
Company’s success.
NOW,
THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. Grant of Option .
Subject to the terms and conditions set forth herein and in the
Company’s 1999 Equity Incentive Plan, as restated as of
March 13, 2002 (the “Plan”), the Company hereby
grants to the Participant, during the period commencing on the date
of this Agreement and ending on December 18, 2013 (the
“Expiration Date”), the right and option (the right to
purchase any one share of Common Stock hereunder being an
“Option”) to purchase from the Company 14,513
shares of Common Stock. The Options shall have an exercise price of
$9.00 per share, which is not less than the Fair Market
Value per share of the Common Stock as of the date hereof. Each of
the Options granted pursuant to this Section 1 shall
constitute Incentive Common Stock Options to the extent permissible
under Section 422 of the Code and the Plan.
2. Limitations on Exercise
of Options . Subject to the terms and conditions set forth
herein and the Plan, the Options shall vest and become exercisable,
on a cumulative basis, with respect to 40% of the shares on
December 18, 2005, and with respect to 1.667% of the shares on
the last day of each succeeding calendar month thereafter so long
as the Participant continues in the Service of the Company;
provided, however, the Participant may not exercise any Option for
fractional shares of Common Stock. The Committee or the Board may
accelerate the vesting and exercisability of any or all of the
then-unvested Options at any time.
3. Termination of
Service . (a) If, prior to the Expiration Date, the
Participant’s Service with the Company shall terminate (the
date of termination being the “Date of Termination”) by
reason of a Normal Termination (as defined in the Plan), the
Options shall remain exercisable until the earlier of the
Expiration Date or the day three (3) months after the Date of
Termination to the extent the Options were vested and exercisable
as of the Date of Termination.
(b) If
the Participant’s Service with the Company shall cease prior
to the Expiration Date by reason of death or disability, or the
Participant shall die or become disabled while entitled to exercise
any of the Options pursuant to paragraph 3(a), the Participant or
the Participant’s legal representative, or, in the case of
death, the executor or administrator of the estate of the
Participant or the person or persons to whom the
Options
shall have been validly transferred by the executor or
administrator pursuant to will or the laws of descent and
distribution, shall have the right, until the earlier of the
Expiration Date or one year after the date of death or disability,
to exercise the Options to the extent that the Participant was
entitled to exercise them on the date of death or disability.
(c) If,
prior to the Expiration Date, the Participant’s Service with
the Company is terminated for “Cause” (as defined in
the Plan), (i) unless otherwise provided by the Committee, the
Options, to the extent not exercised as of the Date of Termination,
shall lapse and be canceled, and (ii) all shares of Common Stock
received pursuant to an exercise of the Options after such
termination, in contravention of subsection (i) above, may be
purchased by the Company at its discretion for the exercise price
of such shares paid by the Participant. If the Participant’s
Service relationship with the Company is suspended pending an
investigation of whether the Participant shall be terminated for
Cause, all the Participant’s rights with respect to the
Options shall be suspended during the period of
investigation.
(d) If,
prior to the Expiration Date, the Participant’s Service with
the Company is terminated other than for Cause, a Normal
Termination, death or disability, the Options, to the extent then
vested and exercisable as of the Date of Termination, shall remain
exercisable until the earlier of the Expiration Date or thirty
(30) days after the Date of Termination.
(e) After
the expiration of any exercise period described in any of
Sections 3(a) — (d) hereof, or otherwise upon the
Expiration Date, the Options shall terminate together with all of
the Participant’s rights hereunder, to the extent not
previously exercised.
4. Non-Transferable .
Except as specifically authorized by the Committee, the Participant
may not transfer the Options except by will or the laws of descent
and distribution and the Options shall be exercisable during the
Participant’s lifetime only by the Participant or, in the
event of the Participant’s legal incapacity, his guardian or
legal representative. Except as so authorized, no purported
assignment or transfer of the Options, or of the rights represented
thereby, whether voluntary or involuntary, by operation of law or
otherwise (except by will or the laws of descent and distribution),
shall vest in the assignee or transferee any interest or right
herein whatsoever.
5. Adjustments and Corporate
Reorganizations; Changes in Organization.
(a) In
accordance with and subject to the applicable terms of the Plan and
this Agreement, the Options shall be subject to adjustment or
substitution, as determined by the Committee in its sole
discretion, as to the number, price or kind of Common Stock or
other consideration subject to such Options or as otherwise
determined by the Committee in its sole discretion to be equitable
(i) in the event of changes in the outstanding Common Stock or
in the capital structure of the Company by reason of stock
dividends, stock splits, reverse stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges,
or other relevant changes in capitalization occurring after the
date hereof or (ii) in the event of any change in applicable
laws or any change in circumstances which results in or would
result in any substantial dilution or enlargement of the rights
granted to, or available for, the Participant. The Committee shall
give the Participant written notice of an adjustment
hereunder.
(b) In
the event that the Company undertakes a change in its organization,
including but not limited to a combination of business units, the
creation of a new business unit, the elimination of a business
unit, or the acquisition, sale or transfer of an interest in a
business unit, the Options shall be subject to adjustment or
substitution (including but not limited to the substitution of
common stock of or other ownership interest in a Related Entity,
other consideration or another Award under the Plan), as to the
number, price or kind of Common Stock or other consideration
subject to such Options or as otherwise determined by the Committee
in its sole discretion to be equitable. For purposes of this
Agreement, a “business unit” shall mean any Related
Entity or any division or other unit or group within the Company
that the Committee designates as a “business
unit”.
(c) Subject
to the provisions of Section 13(b) of the Plan, in the event of a
Corporate Transaction (as defined below), if the Options evidenced
by this Agreement are not assumed or continued or a substantially
equivalent option or right is not substituted by the surviving
corporation, the successor corporation or its parent corporation,
as applicable (the “Successor Corporation”), the
Participant shall, as of the date of the Corporate Transaction,
fully vest in and have the right to exercise such Options as to all
shares of Common Stock then subject thereto that would otherwise
have vested and become exercisable during the twelve-month period
commencing on the date of the Corporate Transaction and, subject to
the next sentence, unvested Options with respect to any other
shares of Common Stock shall continue to vest as set forth in
Section 2. If any Options evidenced by this Agreement are assumed
or replaced (and any such Options shall be considered assumed if
the Company in a Corporate Transaction reaffirms the Options) in
connection with a Corporate Transaction and do not otherwise vest
at that time, and if Participant’s Service with the Company
is subsequently terminated within one (1) year following such
Corporate Transaction, unless such Service is terminated by the
Successor Corporation for Cause or by the Participant voluntarily
without Good Reason (as defined below), the Participant shall fully
vest in and have the right to exercise the Options as to all shares
of Common Stock then subject thereto that, but for such
termination, would have otherwise vested and become exercisable
during the twelve-month period commencing on the effective date of
such termination, and unvested Options with respect to any other
shares of Common Stock shall continue to vest as set forth in
Section 2.
(d) For
purposes of this Agreement, a “Corporate Transaction”
shall mean any of the following events:
(i) The consummation of any merger or
consolidation of the Company in which the Company is not the
continuing or surviving corporation, or pursuant
to which shares
of Common Stock are converted into cash, securities or other
property, if following such merger or consolidation the holders of
the Company’s outstanding voting securities immediately prior
to such merger or consolidation own less than a majority of the
outstanding voting securities of the surviving corporation.
(ii) The consummation of any sale,
lease, exchange or other transfer in one transaction or a series of
related transactions of all or substantially all of the
Company’s assets, other than a transfer of the
Company’s assets to a majority-owned subsidiary of the
corporation.
(iii) The approval by the holders of
the Common Stock of any plan or proposal for the liquidation or
dissolution of the Company.
(iv) The acquisition by a person,
within the meaning of Section 3(a)(9) or of Section 13
(d)(3) (as in effect on the date of adoption of the Plan) of the
Exchange Act of a majority or more of the Company’s
outstanding voting securities (whether directly or indirectly,
beneficially or of record), other than a person who held such
majority on the date of adoption of the Plan. Ownership of voting
securities shall take into account and shall include ownership as
determined by applying Rule 13d-3(d)(l)(i) (as in effect on
the date of adoption of the Plan) pursuant to the Exchange
Act.
(e) For
purposes of this Agreement, “Good Reason” shall mean,
without the Participant’s prior written consent, any of the
following events or conditions and the failure of the Successor
Corporation to cure such event or condition within thirty
(30) days after receipt of written notice from the
Participant:
(i) A substantial diminution or
material adverse change in the Participant’s status, title,
position, authority, duties or responsibilities (including
reporting responsibilities) as in effect immediately prior to a
Corporate Transaction, except in connection with the
Participant’s termination of Service with the Company for
Cause, disability, death or by the Participant other than for Good
Reason.
(ii) A reduction in the
Participant’s annual base salary.
(iii) The Successor
Corporation’s failure to cover the Participant under employee
benefit plans, programs and practices that, in the aggregate,
provide substantially comparable benefits (from an economic
perspective) to the Participant relative to the benefits and total
costs under the material employee benefit plans, programs and
practices in which the Participant (and/or his family or
dependents) is participating immediately preceding the Corporate
Transaction.
(iv) The Successor
Corporation’s requiring the Participant to be based at any
office location that is more than fifty (50) miles further
from the Participant’s office location immediately prior to a
Corporate Transaction; except for reasonable required travel for
the Successor Corporation’s business that is not
materially
greater than such travel requirements prior to such Corporate
Transaction.
(v) A material breach by the
Successor Corporation of its obligations to the Participant under
the Plan.
6. Exercise; Payment For and
Delivery of Common Stock . The Options shall be exercised by
delivering written notice to the Committee stating the number of
whole shares of Common Stock to be purchased, the person or persons
in whose name the shares of Common Stock are to be registered and
each such person’s address and social security number. Such
notice shall not be effective unless accompanied by the full
purchase price for all shares to be purchased, and any applicable
withholding (as described below). The purchase price shall be
payable in cash, in shares of Common Stock, any combination of cash
or shares of Common Stock or such other method of payment as is
authorized by the Plan with the consent of the Committee;
provided , however , that the Participant may use
Common Stock in payment of the exercise price only if the shares so
used are considered “mature” for purposes of generally
accepted accounting principles ( i.e. , (i) been held by the
Participant free and clear for at least six (6) months prior
to the use thereof to pay part of an Option exercise price,
(ii) been purchased by the Participant in other t
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