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 than a compensatory transaction, or (iii) meet any
other requirements for “mature” shares as may exist on the date of the use
thereof to pay part of an Option exercise price). In the event that all or part
of the purchase price is paid in shares of Common Stock, the shares used in
payment shall be valued at their Fair Market Value on the date of exercise of
the Options. At the time of exercise, the Participant shall pay to the Company,
in cash, or by having the Company withhold upon exercise of the Option a
sufficient number of shares of Common Stock otherwise deliverable to the
Participant based on the Fair Market Value of the Common Stock on the date of
exercise, at the election of the Participant, such minimum amount as the Company
deems necessary to satisfy its obligation to withhold Federal, state or local
income or other taxes incurred by reason of the exercise or the transfer of
shares thereupon. Payment in currency or by certified or cashier’s check shall
be considered payment in cash.
     7. Rights as Common Stockholder. The Participant or a transferee of the
Options shall have no rights as a stockholder with respect to any shares covered
by the Options until he or she shall have become the holder of record of such
shares (and the Company shall use its reasonable best efforts to cause the
Participant promptly to become the holder of record of such shares), and, except
as provided in Section 5 hereof, no adjustment shall be made for dividends or
distributions or other rights in respect of such shares for which the record
date is prior to the date upon which he shall become the holder or record
thereof.
     8. Company; Participant. (a) The term “Company” as used in this Agreement
with reference to employment shall include the Company and its affiliates.
          (b) Whenever the word “Participant” is used in any provision of this
Agreement under circumstances where the provision should logically be construed
to apply to the executors, the administrators, legal representatives or the
person or persons

 

--------------------------------------------------------------------------------

 

to whom the Options may be transferred by will or by the laws of descent and
distribution, the word “Participant” shall be deemed to include such person or
persons.
     9. Requirements of Law. (a) By accepting the Options, the Participant
represents and agrees for himself and his transferees (whether by will or the
laws of descent and distribution) that, unless a registration statement under
the Securities Act of 1933, as amended (the “Act”), is in effect as to shares
purchased upon any exercise of the Options, (i) any and all shares so purchased
shall be acquired for his or her personal account and not with a view to or for
sale in connection with any distribution, and (ii) each notice of the exercise
of any portion of this Option shall be accompanied by a representation and
warranty in writing, signed by the person entitled to exercise the same, that
the shares are being so acquired in good faith for his personal account and not
with a view to or for sale in connection with any distribution.
          (b) No certificate or certificates for shares of Common Stock may be
purchased, issued or transferred if the exercise hereof or the issuance or
transfer of such shares shall constitute a violation by the Company or the
Participant of any (i) provision of any Federal, state or other securities law,
(ii) requirement of any securities exchange listing agreement to which the
Company may be a party, or (iii) other requirement of law or of any regulatory
body having jurisdiction over the Company. Any reasonable determination in this
connection by the Board or the Committee, upon notice given to the Participant,
shall be final, binding and conclusive.
          (c) The certificates representing shares of Common Stock acquired
pursuant to the exercise of options shall carry such appropriate legend, and
such written instructions shall be given to the Company’s transfer agent, as may
be deemed necessary or advisable by counsel to the Company in order to comply
with the requirements of the Act or any state securities laws.
     10. Notices. Any notice to be given to either party shall be in writing and
shall be given by hand delivery to such party or by registered or certified
mail, return receipt requested, postage prepaid, addressed to the Company in
care of its Secretary at its principal office, and to the Participant at the
address given beneath his signature hereto, or at such other address as either
party shall have furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually received by the
addressee.
     11. Disposition of Common Stock. The Participant agrees to notify the
Company, in writing, within thirty (30) days of any disposition (whether by
sale, exchange, gift or otherwise) of shares of Common Stock purchased under
this Agreement.
     12. Binding Effect. Subject to Section 4 hereof, this Agreement shall be
binding upon the heirs, executors, administrators, successors and permitted
assigns of the parties hereto.
     13. Plan. The terms and provisions of the Plan are incorporated herein by
reference and made a part hereof as though fully set forth herein. In the event
of any conflict or inconsistency between discretionary terms and provisions of
this Agreement, this Agreement shall govern and control. In all

 

--------------------------------------------------------------------------------

 

other instances of conflicts or inconsistencies or omissions, the terms and
provisions of the Plan shall govern and control. All capitalized terms not
otherwise expressly defined in this Agreement shall have the meaning ascribed to
them in the Plan.
     14. Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of law thereof.
     15. Entire Agreement. This Agreement, together with the Plan, contains the
entire agreement and understanding between the parties with respect to the
subject matter hereof and supersedes all prior agreements, written or oral, with
respect thereto.
          IN WITNESS WHEREOF, the Company has granted this Option on the
Effective Date.
          This instrument may be executed in any number of counterparts, each of
which shall be deemed to be an original, and such counterparts together shall
constitute one and the same instrument.

            NEUSTAR, INC.
      By:   /s/ Jeffrey Ganek         Name:   Jeffrey Ganek        Title:  
Chairman and Chief Executive Officer     

     
ACCEPTED:
   
 
   
/s/ Martin Lowen
 
Martin Lowen
   

 

--------------------------------------------------------------------------------

 

INCENTIVE STOCK OPTION AGREEMENT AMENDMENT
     This Incentive Stock Option Agreement Amendment dated as of June 22, 2004
(this “Amendment”) is made by and between NeuStar, Inc. a Delaware corporation
having its principal place of business in Sterling, Virginia (the “Company”),
and Martin Lowen (the “Participant”). Capitalized terms not otherwise defined
herein shall have the meaning ascribed to such terms in the Option Agreement (as
defined below).
WITNESSETH:
     WHEREAS, Company granted Participant the right and option to purchase from
the Company 14,513 shares (the “Option Shares”) of Company’s common stock, par
value $.002 per share;
     WHEREAS, Company and Participant entered into an Incentive Stock Option
Agreement under the NeuStar, Inc. 1999 Equity Incentive Plan (the “Option
Agreement”) dated December 18, 2003;
     WHEREAS, the Company and Participant desire to amend the Option Agreement
to revise the definitions of “Corporate Transaction” under Section 5(d) thereof
and the definition of “Good Reason” under Section 5(e) thereof as set forth
below.
     NOW, THEREFORE, in consideration of the premises and further valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
     1. Amendment to Section 5 (d) and 5(e) of the Option Agreement. Subject to
the terms and conditions set forth herein, Sections 5 (d) and 5(e) of the Option
Agreement are hereby amended and restated in their entirety as follows:
     “(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, if
immediately following such merger or consolidation the holders of the Company’s
outstanding voting securities immediately prior to such merger or consolidation
do not own at least a majority of the outstanding voting securities of the
surviving corporation in approximately the same proportion as they did
immediately prior to such merger or consolidation.
     (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.
First Amendment to ISO Option Agreement with Optionee

 

--------------------------------------------------------------------------------

 

other than a transfer of the Company’s assets to a majority-owned subsidiary of
the corporation, or to an entity in which the holders of the majority of the
outstanding voting securities of the entity immediately prior to the transfer
own at least the majority of the outstanding securities immediately after such
transfer in approximately the same proportion as immediately prior to such
transfer.
     (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) 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) 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,
except in connection with an across-the-board salary reduction of less than ten
percent (10%) affecting all senior executives of the Company.     (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

First Amendment to ISO Option Agreement with Optionee

 

--------------------------------------------------------------------------------

 

      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.”

     2. Entire Agreement. This Amendment sets forth the entire understanding and
agreement of the parties hereto in relation to the subject matter hereof and
supersedes any prior negotiations and agreements among the parties relating to
such subject matter. None of the terms or conditions of this Amendment may be
changed, modified, waived or canceled orally or otherwise, except in writing.
     3. Full Force and Effect of Agreement. Except as hereby specifically
amended, modified or supplemented, the Option Agreement is hereby confirmed and
ratified in all respects and shall be and remain in full force and effect
according to their respective terms.
     4. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original as against any party
whose signature appears thereon, and all of which shall together constitute one
and the same instrument.
     5. Governing Law. This Amendment shall be construed and interpreted in
accordance with the laws of the State of Delaware, without regards to the
principles of conflicts of law.
First Amendment to ISO Option Agreement with Optionee

 

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
made, executed and delivered by their duly authorized officers as of the day and
year first above written.

            NEUSTAR, INC.
      By:   /s/ Jeffrey E. Ganek         Name:   Jeffrey E. Ganek       
Title:   Chairman and Chief Executive Officer        OPTIONEE:
      Martin Lowen            /s/ Martin Lowen    

First Amendment to ISO Option Agreement with Optionee

 

--------------------------------------------------------------------------------

 

     INCENTIVE STOCK OPTION AGREEMENT AMENDMENT
     This Incentive Stock Option Agreement Amendment dated as of May 20, 2005
(this “Amendment”) is made by and between NeuStar, Inc. a Delaware corporation
having its principal place of business in Sterling, Virginia (the “Company”),
and Martin Lowen (the “Participant”). Capitalized terms not otherwise defined
herein shall have the meaning ascribed to such terms in the Option Agreement (as
defined below).
WITNESSETH:
     WHEREAS, Company granted Participant the right and option to purchase from
the Company 14,513 shares (the “Option Shares”) of Company’s common stock, par
value $.002 per share;
     WHEREAS, Company and Participant entered into an Incentive Stock Option
Agreement under the NeuStar, Inc. 1999 Equity Incentive Plan (the “Option
Agreement”) dated December 18, 2003, as amended on June 22, 2004.
     WHEREAS, the Company and Participant desire to amend the Option Agreement
to provide for, among other things, accelerated vesting of a certain number of
the Option Shares under the circumstance and terms as set forth below.
     NOW, THEREFORE, in consideration of the premises and further valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
     1. Amendment to Section 5 of the Option Agreement. Subject to the terms and
conditions set forth herein, Section 5 of the Option Agreement is hereby amended
by deleting Sections 5 (c), (d) and (e) thereof and replacing such Sections with
the following language:
     “(c) Subject to the provisions of Section 13(b) of the Plan, in the event
of a Corporate Transaction (as defined below), if the Option evidenced by this
Agreement is 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 fully vest in and have the right to exercise the Option as to
all shares of Common Stock then subject thereto, including shares as to which
the Option would not otherwise be vested or exercisable. Any such Options that
are assumed or replaced (and any such Option shall be considered assumed if the
Company in a Corporate Transaction reaffirms the Option) in connection with a
Corporate Transaction and do not otherwise vest at that time shall be fully
vested and exercisable in the event the Participant’s Service with the Company
should

 

--------------------------------------------------------------------------------

 

subsequently be terminated within two (2) years 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).
     (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, if
immediately following such merger or consolidation the holders of the Company’s
outstanding voting securities immediately prior to such merger or consolidation
do not own at least a majority of the outstanding voting securities of the
surviving corporation in approximately the same proportion as they did
immediately prior to such merger or consolidation.
     (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, or to an entity in which the
holders of the majority of the outstanding voting securities of the entity
immediately prior to the transfer own at least the majority of the outstanding
securities immediately after such transfer in approximately the same proportion
as immediately prior to such transfer.
     (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) 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) 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

2

--------------------------------------------------------------------------------

 

      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.”

     2. Entire Agreement. This Amendment sets forth the entire understanding and
agreement of the parties hereto in relation to the subject matter hereof and
supersedes any prior negotiations and agreements among the parties relating to
such subject matter. None of the terms or conditions of this Amendment may be
changed, modified, waived or canceled orally or otherwise, except in writing.
     3. Full Force and Effect of Agreement. Except as hereby specifically
amended, modified or supplemented, the Option Agreement is hereby confirmed and
ratified in all respects and shall be and remain in full force and effect
according to their respective terms.
     4. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original as against any party
whose signature appears thereon, and all of which shall together constitute one
and the same instrument.
Governing Law. This Amendment shall be construed and interpreted in accordance
with the laws of the Sate of Delaware, without regards to the principles of
conflicts of law.

3

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to
the Incentive Stock Option Agreement to be made, executed and delivered by their
duly authorized officers as of the day and year first above written.

            NEUSTAR, INC.
      By:   /s/ Jeffrey E. Ganek         Name:   Jeffrey E. Ganek       
Title:   Chairman and Chief Executive Officer        OPTIONEE:
      Martin Lowen            /s/ Martin Lowen      

4