exv10w51



 




Exhibit
10.51










NEUSTAR, INC.




2005 Stock Incentive Plan








 









 





TABLE OF CONTENTS




	 	 	 	 	 
	ARTICLE I PURPOSE

	 	 	1	 
	 
	 	 	 	 
	ARTICLE II DEFINITIONS

	 	 	1	 
	 
	 	 	 	 
	ARTICLE III ADMINISTRATION

	 	 	7	 
	 
	 	 	 	 
	ARTICLE IV SHARE LIMITATION

	 	 	10	 
	 
	 	 	 	 
	ARTICLE V ELIGIBILITY

	 	 	13	 
	 
	 	 	 	 
	ARTICLE VI STOCK OPTIONS

	 	 	13	 
	 
	 	 	 	 
	ARTICLE VII STOCK APPRECIATION RIGHTS

	 	 	16	 
	 
	 	 	 	 
	ARTICLE VIII RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNITS

	 	 	18	 
	 
	 	 	 	 
	ARTICLE IX PERFORMANCE AWARDS

	 	 	20	 
	 
	 	 	 	 
	ARTICLE X OTHER STOCK-BASED AWARDS

	 	 	21	 
	 
	 	 	 	 
	ARTICLE XI TERMINATION OR AMENDMENT OF PLAN/NON-TRANSFERABILITY OF AWARDS

	 	 	22	 
	 
	 	 	 	 
	ARTICLE XII UNFUNDED PLAN

	 	 	23	 
	 
	 	 	 	 
	ARTICLE XIII GENERAL PROVISIONS

	 	 	23	 
	 
	 	 	 	 
	ARTICLE XIV EFFECTIVE DATE OF PLAN

	 	 	26	 
	 
	 	 	 	 
	ARTICLE XV TERM OF PLAN

	 	 	26	 
	 
	 	 	 	 
	ARTICLE XVI NAME OF PLAN

	 	 	27	 
	 
	 	 	 	 





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NEUSTAR, INC.


 



2005 STOCK INCENTIVE PLAN


 


ARTICLE I

PURPOSE




     The purpose of this NeuStar, Inc. 2005 Stock Incentive Plan is to enhance the profitability
and value of the Company for the benefit of its stockholders by enabling the Company to offer
Eligible Employees, Consultants and Non-Employee Directors stock-based and other incentives
(thereby creating a means to raise the level of equity ownership by such individuals) and provide
other incentives in order to attract, retain and reward such individuals and strengthen the
mutuality of interests between such individuals and the Company’s stockholders.



ARTICLE II

DEFINITIONS




     For
purposes of the Plan, the following terms shall have the following
meanings:


     2.1 “Acquisition Event” has the meaning set forth in Section 4.2(d).



     2.2 “Affiliate” means each of the following: (a) any Subsidiary or Parent; (b) any
corporation, trade or business (including, without limitation, a partnership or limited liability
company) that is directly or indirectly controlled 50% or more (whether by ownership of stock,
assets or an equivalent ownership interest or voting interest) by the Company or one of its
Affiliates; and (c) any other entity in which the Company or any of its Affiliates has a material
equity interest and that is designated as an “Affiliate” by resolution of the Committee.



     2.3 “Award” means any award under the Plan of any Option, Stock Appreciation Right,
Restricted Stock Award, RSU Award, Performance Award or Other Stock-Based Award.



     2.4 “Board” means the Board of Directors of the Company.



     2.5 “Cause” means with respect to a Participant’s Termination of Employment or
Termination of Consultancy, the following: (a) in the case where there is an employment agreement,
consulting agreement, change in control agreement or similar agreement in effect between the
Company or an Affiliate and the Participant at the time of the grant of the Award that defines
“cause” (or words or a concept of like import), “cause” as defined under such agreement; provided,
however, that with regard to any agreement under which the definition of “cause” applies only on
occurrence of a change in control, such definition of “cause” shall not apply until a change in
control actually takes place and then only with regard to a termination in the period covered
thereby; or (b) if such an agreement does not exist or “cause” is not defined in any such
agreement, termination due to a Participant’s (i) insubordination, (ii) dishonesty, (iii) fraud,
(iv) incompetence, (v) moral turpitude, (vi) willful misconduct, (vii) refusal to perform his or
her duties or responsibilities for any reason other than illness or incapacity, or (viii)
materially



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unsatisfactory performance of his or her duties for the Company or an Affiliate, in each case
as determined by the Committee in its sole discretion. With respect to a Participant’s Termination
of Directorship, “cause” means an act or failure to act that constitutes cause for removal of a
director under applicable Delaware law.



     2.6 “Code” means the Internal Revenue Code of 1986, as amended. Any reference to any
section of the Code shall also be a reference to any successor provision and any Treasury
Regulation promulgated thereunder.



     2.7 “Committee”



     (a) With respect to the application of the Plan to Eligible Employees and Consultants, the
“Committee” means the Compensation and Stock Option Committee of the Board appointed from time to
time by the Board (or another committee or committees of the Board appointed for the purposes of
administering the Plan). In the event that more than one Committee is appointed by the Board, the
Board shall specify with respect to each Committee the group of Persons with respect to which such
Committee shall have the power to grant Awards. In the event that more than one Committee is
appointed by the Board, then each reference in the Plan to “the Committee” shall be deemed a
reference to each such Committee (subject to the last sentence of this paragraph); provided,
however, that each such Committee may exercise only the power and authority granted to “the
Committee” by the Plan with respect to those Persons to which it has the power to grant Awards as
specified in the resolution of the Board appointing such Committee. Each Committee shall be
comprised of two or more Directors. Each Committee shall consist of two or more non-employee
directors, each of whom is intended to be a “non-employee director” as defined in Rule 16b-3
promulgated under Section 16(b) of the Exchange Act, an “outside director” as defined under Section
162(m) of the Code and, to the extent required by the rules and regulations of the New York Stock
Exchange, an “independent director” as defined under such rules and regulations; provided, however,
that the foregoing shall not apply to any Committee that does not have the power to grant Awards to
executive officers or Directors of the Company or otherwise make any decisions with respect to the
timing or the pricing of any Awards granted to executive officers and Directors. If for any reason
such Committee does not meet the requirements of Rule 16b-3 or Section 162(m) of the Code, such
noncompliance with the requirements of Rule 16b-3 or Section 162(m) of the Code, as applicable,
shall not affect the validity of Awards, grants, interpretations or other actions of the Committee.



     (b) With respect to the application of the Plan to Non-Employee Directors, the “Committee”
means the Board.



     2.8 “Common Stock” means the Company’s Class A Common Stock, $0.001 par value per
share, of the Company.



     2.9 “Company” means NeuStar, Inc., a Delaware corporation, and its successors by
operation of law.



     2.10 “Consultant” means any individual who (either directly or through his or her
employer) is an advisor or consultant to, or subject to Section 5.3, a prospective advisor or



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consultant to, the Company or an Affiliate.



     2.11 “Detrimental Activity” means: (a) an activity that results, or if known could
result, in the Participant’s Termination for Cause; or (b) an activity that violates any agreement
or written policy of the Company or its Affiliates applicable to the Participant, including,
without limitation, regarding confidentiality, competition, solicitation or disparagement; or (c)
such other definition as the Committee may provide in an Award agreement. All determinations as to
the occurrence of a Detrimental Activity on the part of a Participant shall be made by the
Committee in its sole discretion.



     2.12 “Director” means a member of the Board of Directors of the Company (or any
successor to the Company).



     2.13 “Disability” means, with respect to a Participant’s Termination, the following:
(a) in the case where there is an employment agreement, consulting agreement, change in control
agreement or similar agreement in effect between the Company or an Affiliate and the Participant at
the time of the grant of the Award that defines “disability” (or words or a concept of like
import), “disability” as defined under such agreement; provided, however, that with regard to any
agreement under which the definition of “disability” applies only on occurrence of a change in
control, such definition of “cause” shall not apply until a change in control actually takes place
and then only with regard to a termination in the period covered thereby; or (b) if such an
agreement does not exist or if “disability” is not defined in any such agreement, a permanent and
total disability as defined in Section 22(e)(3) of the Code. A Disability shall be deemed to occur
only at the time of the determination by the Committee of the Disability.



     2.14 “Effective Date” means the effective date of the Plan as defined in Article XV.



     2.15 “Eligible Employee” means each employee of, or subject to Section 5.3, each
prospective employee of, the Company or an Affiliate.



     2.16 “Exchange Act” means the Securities Exchange Act of 1934, as amended. Any
references to any section of the Exchange Act shall also be a reference to any successor provision.



     2.17 “Fair Market Value” means, for purposes of the Plan, unless otherwise required by
any applicable provision of the Code or any regulations issued thereunder, as of any date and
except as provided below shall mean, with respect to any class or series of outstanding shares of
Common Stock, the Closing Price for such Common Stock on such date. The “Closing Price” on any
date shall mean the closing price for such Common Stock, regular way, or, in case no such sale
takes place on such day, the average of the high and low trading prices, regular way, for such
Common Stock, in either case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock Exchange or, if such
Common Stock is not listed or admitted to trading on the New York Stock Exchange, as reported on
the principal consolidated transaction reporting system with respect to securities listed on the
principal national securities exchange on which such Common Stock is listed or admitted to trading
or, if such Common Stock is not listed or admitted to trading on any national securities exchange,
the last quoted price, or, if not so quoted, the average of the high



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bid and low asked prices in the over-the-counter market, as reported by the Nasdaq Stock
Market or, if such system is no longer in use, the principal other automated quotation system that
may then be in use or, if such Common Stock is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker making a market in
such Common Stock selected by the Board or, in the event that no trading price is available for
such Common Stock, the fair market value of the Common Stock, as determined in good faith by the
Board of Directors of the Company. Notwithstanding the foregoing, if the Common Stock is offered
to the public in an initial public offering, the Fair Market Value of the shares of Common Stock at
the time that the offering commences shall be the price per share at which shares are first sold to
the public in the Company’s initial public offering.



     2.18 “Family Member” means “family member” as defined in Section A(1)(a)(5) of the
general instructions of Form S-8, or any successor thereto, as in effect from time to time.



     2.19 “Incentive Stock Option” means any Option awarded to an Eligible Employee under
this Plan intended to be and designated as an “Incentive Stock Option” within the meaning of
Section 422 of the Code.



     2.20 “Non-Employee Director” means a Director of the Company who is not an active
employee of the Company or an Affiliate.



     2.21 “Non-Qualified Stock Option” means any Option awarded under this Plan that is not
an Incentive Stock Option.



     2.22 “Non-Tandem Stock Appreciation Right” shall mean the right to receive an amount
in cash and/or stock equal to the difference between (a) the Fair Market Value of a share of Common
Stock on the date such right is exercised, and (b) the aggregate exercise price of such right,
otherwise than on surrender of an Option.



     2.23 “Option” means any option to purchase shares of Common Stock granted to Eligible
Employees, Non-Employee Directors or Consultants pursuant to Article VI.



     2.24 “Other Stock-Based Award” means an Award under Article X of the Plan that is
valued in whole or in part by reference to, or is payable in or otherwise based on, Common Stock.



     2.25 “Parent” means any parent corporation of the Company within the meaning of
Section 424(e) of the Code.



     2.26 “Participant” means an Eligible Employee, Non-Employee Director or Consultant to
whom an Award has been granted pursuant to the Plan.



     2.27 “Performance Award” means an Award made pursuant to Article IX of the Plan, which
may be stated with reference to shares of Common Stock or to cash.



     2.28 “Performance Period” has the meaning set forth in Section 9.1.



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     2.29 “Person” means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust, incorporated organization,
governmental or regulatory or other entity.



     2.30 “Plan” means this NeuStar, Inc. 2005 Stock Incentive Plan, as amended from time
to time.



     2.31 “Prior Plan” means the NeuStar, Inc. 1999 Equity Incentive Plan, as amended from
time to time.



     2.32 “Reference Stock Option” has the meaning set forth in Section 7.1.



     2.33 “Restricted Stock Award” means an Award of shares of Common Stock, or the right
to receive shares of Common Stock in the future, subject to the restrictions under Article VIII.



     2.34 “RSU” means a restricted stock unit, which is an Award the value of which is
calculated by reference to the value of shares of Common Stock, subject to the restrictions under
Article VIII.



     2.35 “Restriction Period” has the meaning set forth in Subsection 8.3(a) with respect
to Restricted Stock Awards.



     2.36 “Retirement” means, unless otherwise provided by the Committee at grant, a
Termination of Employment without Cause or Termination of Consultancy without Cause (other than, in
any such case, after the occurrence of an event that would provide a basis for a Cause termination)
at or after age 60 (provided the Participant has at least ten years of service to the Company or
its Affiliates) or after age 65 (provided the Participant has at least five years of service to the
Company or its Affiliates). With respect to a Termination of Directorship, Retirement means the
failure to stand for reelection or the failure to be reelected on or after the Participant has
attained age 72 (provided the Participant has at least five years of service to the Company or its
Affiliates). Determinations of length of service shall be made by the Committee in its sole
discretion.



     2.37 “Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act as then in
effect or any successor provision.



     2.38 “Section 162(m) of the Code” means the exception for performance-based
compensation under Section 162(m) of the Code and any Treasury Regulations thereunder.



     2.39 “Securities Act” means the Securities Act of 1933, as amended and all rules and
regulations promulgated thereunder. Any reference to any section of the Securities Act shall also
be a reference to any successor provision.



     2.40 “Stock Appreciation Right” shall mean the right pursuant to an Award granted
under Article VII.



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     2.41 “Stock Option” or “Option” means any option to purchase shares of Common
Stock granted to Eligible Employees, Non-Employee Directors or Consultants granted pursuant to
Article VI.



     2.42 “Subsidiary” means any subsidiary corporation of the Company within the meaning
of Section 424(f) of the Code.



     2.43 “Substitute Awards” mean Awards granted or shares of Common Stock issued by the
Company in assumption of, or in substitution or exchange for, awards previously granted by a
company acquired by the Company or an Affiliate (including pursuant to an asset purchase) or with
which the Company or an Affiliate otherwise combines.



     2.44 “Tandem Stock Appreciation Right” means the right to surrender to the Company all
(or a portion) of an Option in exchange for an amount in cash and/or stock equal to the difference
between (a) the Fair Market Value, on the date such Option (or such portion thereof) is
surrendered, of the Common Stock covered by such Option (or such portion thereof), and (b) the
aggregate exercise price of such Option (or such portion thereof).



     2.45 “Ten Percent Stockholder” means a person owning stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company, its Subsidiaries or its
Parent, in accordance with the Treasury Regulations applicable to incentive stock options.



     2.46 “Termination” means a Termination of Consultancy, Termination of Directorship or
Termination of Employment, as applicable.



     2.47 “Termination of Consultancy” means: (a) that the Consultant is no longer acting
as a consultant to the Company or an Affiliate; or (b) when an entity retaining a Participant as a
Consultant ceases to be an Affiliate unless the Participant otherwise is, or thereupon becomes, a
Consultant to the Company or another Affiliate at the time the entity ceases to be an Affiliate.
In the event that a Consultant becomes an Eligible Employee or a Non-Employee Director upon the
termination of his or her consultancy, unless otherwise determined by the Committee, in its sole
discretion, no Termination of Consultancy shall be deemed to occur until such time as such
Consultant is no longer any of a Consultant, an Eligible Employee or a Non-Employee Director.
Notwithstanding the foregoing, the Committee may otherwise define Termination of Consultancy in the
Award agreement or, if no rights of a Participant are reduced, may otherwise define Termination of
Consultancy thereafter.



     2.48 “Termination of Directorship” means that the Non-Employee Director has ceased to
be a Director of the Company; except that if a Non-Employee Director becomes an Eligible Employee
or a Consultant upon the termination of his or her directorship, the Participant shall not
experience a Termination until the Participant has a Termination of Employment or Termination of
Consultancy, as the case may be.



     2.49 “Termination of Employment” means: (a) a termination of employment (for reasons
other than a military or personal leave of absence granted by the Company) of a Participant from
the Company and its Affiliates; or (b) when an entity employing a Participant ceases to be an
Affiliate, unless the Participant otherwise is, or thereupon becomes, employed by the Company or
another Affiliate at the time the entity ceases to be an Affiliate. In the event that



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an Eligible Employee becomes a Consultant or a Non-Employee Director upon the termination of
his or her employment, unless otherwise determined by the Committee, in its sole discretion, no
Termination of Employment shall be deemed to occur until such time as such Eligible Employee is no
longer any of an Eligible Employee, a Consultant or a Non-Employee Director. Notwithstanding the
foregoing, the Committee may otherwise define Termination of Employment in the Award agreement or,
if no rights of a Participant are reduced, may otherwise define Termination of Employment
thereafter.



     2.50 “Transfer” means: (a) when used as a noun, any direct or indirect transfer, sale,
assignment, pledge, hypothecation, encumbrance or other disposition (including the issuance of
equity in a Person), whether for value or no value and whether voluntary or involuntary (including
by operation of law), and (b) when used as a verb, to directly or indirectly transfer, sell,
assign, pledge, encumber, charge, hypothecate or otherwise dispose of (including by the issuance of
equity in a Person) whether for value or for no value and whether voluntarily or involuntarily
(including by operation of law). “Transferred” and “Transferable” shall have a correlative
meaning.



ARTICLE III

ADMINISTRATION




     3.1 The Committee. The Plan shall be administered and interpreted by the Committee.
Notwithstanding anything herein to the contrary, the Board shall have authority for administration
and interpretation of the Plan with respect to Non-Employee Directors and all references herein to
the authority of the Committee as applied to Non-Employee Directors shall be deemed to refer to the
Board.



     3.2 Grants of Awards. The Committee shall have full authority to grant, pursuant to
the terms of the Plan, to Eligible Employees, Consultants and Non-Employee Directors: (i) Options,
(ii) Stock Appreciation Rights, (iii) Restricted Stock Awards, (iv) RSU Awards, (v) Performance
Awards, and (vi) Other Stock-Based Awards. Without limiting the generality of the foregoing, the
Committee shall have the authority:



     (a) to select the Eligible Employees, Consultants and Non-Employee Directors to whom Awards
may from time to time be granted hereunder;



     (b) to determine whether and to what extent Awards, or any combination thereof, are to be
granted hereunder to one or more Eligible Employees, Consultants or Non-Employee Directors;



     (c) to determine the number of shares of Common Stock (if any) to be covered by an Award
granted hereunder;



     (d) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any
Award granted hereunder (including, but not limited to, the exercise or purchase price (if any),
any restriction or limitation, any vesting schedule or acceleration thereof, or any forfeiture
restrictions or waiver thereof, regarding any Award and the shares of Common Stock relating
thereto, based on such factors, if any, as the Committee shall determine, in its sole discretion);



7









 





     (e) to determine whether, to what extent and under what circumstances grants of Options and
other Awards under the Plan are to operate on a tandem basis and/or in conjunction with or apart
from other awards made by the Company outside of the Plan;



     (f) to determine whether and under what circumstances an Option may be settled in cash, Common
Stock and/or restricted stock;



     (g) to determine whether, to what extent and under what circumstances Common Stock and other
amounts payable with respect to an Award under the Plan shall be deferred either automatically or
at the election of the Participant;



     (h) to determine whether an Option is an Incentive Stock Option or Non-Qualified Stock Option;



     (i) to determine whether to require a Participant, as a condition of the granting of any
Award, to not sell or otherwise dispose of shares acquired pursuant to the exercise of an Award for
a period of time as determined by the Committee, in its sole discretion, following the date of the
acquisition of such Award;



     (j) to modify, extend or renew an Award, subject to Article XII herein and the prohibition on
“repricing” in Section 6.3(a), provided, however, that if an Award is modified, extended or renewed
and thereby deemed to be the issuance of a new Award under the Code or the applicable accounting
rules, the exercise price of an Option may continue to be the original exercise price even if less
than the Fair Market Value of the Common Stock at the time of such modification, extension or
renewal;



     (k) Subject to the prohibition on “repricing” in Section 6.3(a), to offer to buy out an Award
previously granted, based on such terms and conditions as the Committee shall establish and
communicate to the Participant at the time such offer is made;



     (l) to determine at grant that an Option shall cease to be exercisable or an Award shall be
forfeited, or that proceeds or profits applicable to an Award shall be returned to the Company, in
the event the Participant engages in a Detrimental Activity with respect to the Company or its
Affiliates and to interpret such definition and to approve waivers with regard thereto; and



     (m) to determine whether or not an Award is intended to comply with Section 162(m) of the
Code.



     3.3 Guidelines.



     (a) Subject to Article XI hereof, the Committee shall have the authority to adopt, alter and
repeal such administrative rules, guidelines and practices governing the Plan and perform all acts,
including the delegation of its responsibilities (to the extent permitted by applicable law and
applicable stock exchange rules), as it shall, from time to time, deem advisable; to construe and
interpret the terms and provisions of the Plan and any Award issued under the Plan (and any
agreements relating thereto); and to otherwise supervise the administration of the Plan. The
Committee may correct any defect, supply any omission or reconcile any inconsistency in the



8









 







Plan or in any agreement relating thereto in the manner and to the extent it shall deem
necessary to effectuate the purpose and intent of the Plan. Notwithstanding the foregoing, no
action of the Committee under this Section 3.3 shall reduce the rights of any Participant without
the Participant’s consent. To the extent applicable, the Plan is intended to comply with the
applicable requirements of Rule 16b-3 and Section 162(m) of the Code, and the Plan shall be
limited, construed and interpreted in a manner so as to comply therewith.



     (b) Without limiting the generality of the foregoing, the Committee may adopt special
guidelines and provisions for persons who are residing in or employed in, or subject to, the taxes
of, any domestic or foreign jurisdictions, to comply with applicable laws, regulations, or
accounting, listing or other rules with respect to such domestic or foreign jurisdictions.



     3.4 Decisions Final. Any decision, interpretation or other action made or taken in
good faith by or at the direction of the Company, the Board or the Committee (or any of its
members) arising out of or in connection with the Plan shall be within the sole discretion of all
and each of them, as the case may be, and shall be final, binding and conclusive on the Company and
all employees and Participants and their respective heirs, executors, administrators, successors
and assigns.



     3.5 Procedures. The Board shall designate one of the members of the Committee as
chairman and the Committee shall hold meetings, subject to the By-Laws of the Company, at such
times and places as it shall deem advisable, including, without limitation, by telephone conference
or by written consent to the extent permitted by applicable law. A majority of the Committee
members shall constitute a quorum. All determinations of the Committee shall be made by a majority
of its members. Any decision or determination reduced to writing and signed by all the Committee
members in accordance with the By-Laws of the Company, shall be fully effective as if it had been
made by a vote at a meeting duly called and held. The Committee shall make such rules and
regulations for the conduct of its business as it shall deem advisable.



     3.6 Assistance of Employees and Advisors; Liability and Indemnification.



     (a) The Committee may designate employees of the Company and professional advisors to assist
the Committee in the administration of the Plan and (to the extent permitted by applicable law and
applicable exchange rules) may grant authority to officers or other employees to execute agreements
or other documents on behalf of the Committee.



     (b) The Committee may employ such legal counsel, consultants and agents as it may deem
desirable for the administration of the Plan and may rely upon any opinion received from any such
counsel or consultant and any computation received from any such consultant or agent. Expenses
incurred by the Committee or the Board in the engagement of any such counsel, consultant or agent
shall be paid by the Company. The Committee, its members and any person designated pursuant to
sub-section (a) above shall not be liable for any action or determination made in good faith with
respect to the Plan. To the maximum extent permitted by applicable law, no officer of the Company
or member or former member of the Committee or of the Board shall be liable for any action or
determination made in good faith with respect to the Plan or any Award granted under it.



9









 





     3.7 Indemnification. To the maximum extent permitted by applicable law and the
Certificate of Incorporation and By-Laws of the Company and to the extent not covered by insurance
directly insuring such person, each officer and member or former member of the Committee or the
Board shall be indemnified and held harmless by the Company against any cost or expense (including
reasonable fees of counsel reasonably acceptable to the Committee) or liability (including any sum
paid in settlement of a claim with the approval of the Committee), and advanced amounts necessary
to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any
act or omission to act in connection with the administration of the Plan, except to the extent
arising out of such officer’s, member’s or former member’s own fraud or bad faith. Such
indemnification shall be in addition to any rights of indemnification the employees, officers,
Directors or members or former officers, Directors or members may have under applicable law or
under the Certificate of Incorporation or By-Laws of the Company or any Affiliate or any agreement
of indemnification. Notwithstanding anything else herein, this indemnification will not apply to
the actions or determinations made by an individual with regard to Awards granted to him or her
under the Plan.



     3.8 Delegation. The Committee may delegate, to the extent permitted by law and
applicable stock exchange rules, to one or more Directors or one or more officers or a committee of
Directors or officers the right to grant Awards to Eligible Employees who are not Directors or
officers of the Company and to cancel or suspend Awards to Eligible Employees who are not Directors
or officers of the Company.



ARTICLE IV

SHARE LIMITATION




     4.1 Shares.



     (a) Aggregate Limitation. The following provisions apply in determining the aggregate
number of shares of Common Stock available under the Plan.




	 	(i)	 	The aggregate number of shares of Common Stock that may be granted under the
Plan shall not exceed 6,044,715 shares plus (x) any Common Stock available for grant
under the Prior Plan as of the date stockholder approval of the Plan is obtained, and
(y) any other shares under the Prior Plan that again become available under Section
4.1(a)(ii) (subject to any increase or decrease pursuant to Section 4.2), which may be
either authorized and unissued Common Stock or Common Stock held in or acquired for the
treasury of the Company or both. In no event shall the aggregate number of shares of
Common Stock granted pursuant to Incentive Stock Options exceed 6,044,715 shares.
	 
	 	(ii)	 	If an Award (or an award under the Prior Plan) is forfeited, expires or
otherwise terminates without issuance, or is settled for cash, the shares of Common
Stock subject to such Award shall, to the extent of such forfeiture, expiration,
termination or cash settlement, again be available for Awards under the Plan. If any shares of Common Stock subject to an Award (or an award under the Prior Plan) are
forfeited, expire or otherwise terminate without issuance of such shares, or any Award
or Prior Plan award is settled for cash, the shares shall, to the extent




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	 	 	 	of such forfeiture, expiration, termination or cash settlement, again be available
for Awards under the Plan. If a Stock Appreciation Right is granted in tandem with
an Option, such grant shall apply only once against the maximum number of shares of
Common Stock that may be issued under the Plan. Shares of Common Stock underlying
Awards (or Prior Plan stock options) settled in cash shall again be available for
issuance under the Plan.





     (b) Substitute Awards. Substitute Awards shall not reduce the shares of Common Stock
authorized for grant under the Plan pursuant to Section 4.1(a). Additionally, in the event that a
company acquired by the Company or an Affiliate, or with which the Company or an Affiliate
combines, has shares available under a pre-existing plan approved by stockholders and not adopted
in contemplation of such acquisition or combination, the shares available for grant pursuant to the
terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio
or other adjustment or valuation ratio or formula used in such acquisition or combination to
determine the consideration payable to the holders of common stock of the entities party to such
acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares
of Common Stock authorized for grant under the Plan; provided that Awards using such available
shares shall not be made after the date awards or grants could have been made under the terms of
the pre-existing plan, absent the acquisition or combination, and shall be made only to individuals
who were employed by the acquired company prior to such acquisition or combination.



     4.2 Changes.



     (a) The existence of the Plan and the Awards granted hereunder shall not affect in any way the
right or power of the Board or the stockholders of the Company to make or authorize (i) any
adjustment, recapitalization, reorganization or other change in the Company’s capital structure or
its business, (ii) any merger or consolidation of the Company or any Affiliate, (iii) any issuance
of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock,
(iv) the dissolution or liquidation of the Company or any Affiliate, (v) any sale or transfer of
all or part of the assets or business of the Company or any Affiliate or (vi) any other corporate
act or proceeding.



     (b) Subject to the provisions of Section 4.2(d), in the event of any such change in the
capital structure or business of the Company by reason of any stock split, reverse stock split,
stock dividend, combination or reclassification of shares, recapitalization, merger, consolidation,
spin-off, reorganization, partial or complete liquidation, issuance of rights or warrants to
purchase any Common Stock or securities convertible into Common Stock, any sale or transfer of all
or part of the Company’s assets or business, any special cash dividend or any other corporate
transaction or event having an effect similar to any of the foregoing and effected without receipt
of consideration by the Company and the Committee determines in good faith that an adjustment is
necessary or appropriate under the Plan to prevent substantial dilution or enlargement of the
rights granted to, or available for, Participants under the Plan, then the aggregate number and
kind of shares that thereafter may be issued under the Plan, the number and kind of shares or other
property (including cash) to be issued upon exercise of an outstanding Award or under other Awards
granted under the Plan and the purchase price thereof shall be appropriately adjusted consistent
with such change in such manner as the Committee may deem



11









 







equitable to prevent substantial dilution or enlargement of the rights granted to, or
available for, Participants under the Plan, and any such adjustment determined by the Committee in
good faith shall be final, binding and conclusive on the Company and all Participants and employees
and their respective heirs, executors, administrators, successors and assigns. In connection with
any event described in this paragraph, the Committee may provide, in its sole discretion, for the
cancellation of any outstanding Awards and payment in cash or other property in exchange therefor.
Except as provided in this Section 4.2 or in the applicable Award agreement, a Participant shall
have no rights by reason of any issuance by the Company of any class or securities convertible into
stock of any class, any subdivision or consolidation of shares of stock of any class, the payment
of any stock dividend, any other increase or decrease in the number of shares of stock of any
class, any sale or transfer of all or part of the Company’s assets or business or any other change
affecting the Company’s capital structure or business.



     (c) Except as otherwise determined by the Committee, fractional shares of Common Stock
resulting from any adjustment in Awards pursuant to Section 4.2(a) or (b) shall be aggregated
until, and eliminated at, the time of exercise by rounding-down and any remaining fractional shares
of Common Stock shall be settled in cash. Notice of any adjustment shall be given by the Committee
to each Participant whose Award has been adjusted and such adjustment (whether or not such notice
is given) shall be effective and binding for all purposes of the Plan.



     (d) In the event of (x) a merger or consolidation in which the Company is not the surviving
entity, (y) any transaction that results in the acquisition of substantially all of the Company’s
outstanding Common Stock by a single person or entity or by a group of persons and/or entities
acting in concert, or (z) the sale or transfer of all or substantially all of the Company’s assets
(all of the foregoing being referred to as an “Acquisition Event”), then the Committee, in
its sole discretion, may terminate all vested and unvested Awards that are outstanding as of the
date of Acquisition Event by delivering notice of termination to each Participant at least 20 days
prior to the date of the Acquisition Event, in which case, during the period from the date on which
such notice of termination is delivered to the date of the Acquisition Event, each such Participant
shall have the right to exercise in full all of his or her vested and unvested Awards that are then
outstanding (without regard to any limitations on vesting or exercisability otherwise contained in
the Award agreements), but any such exercise shall be contingent on the consummation of the
Acquisition Event, and, provided that, if the Acquisition Event does not occur within a specified
period after giving such notice for any reason whatsoever, the notice and exercise pursuant thereto
shall be null and void. If an Acquisition Event occurs but the Committee does not terminate the
outstanding Awards pursuant to this Section 4.2(d), then the provisions of Section 4.2(b) shall
apply.



     4.3 Minimum Purchase Price. Notwithstanding any provision of the Plan to the
contrary, if authorized but previously unissued shares of Common Stock are issued under the Plan,
such shares shall not be issued for a consideration that is less than as permitted under applicable
law.




12









 





ARTICLE V

ELIGIBILITY




     5.1 General Eligibility. All Eligible Employees, Consultants and Non-Employee
Directors are eligible to be granted Awards. Eligibility for the grant of Awards and actual
participation in the Plan shall be determined by the Committee in its sole discretion.



     5.2 Incentive Stock Options. Notwithstanding the foregoing, only Eligible Employees
of the Company, its Subsidiaries and its Parent (if any) are eligible to be granted Incentive Stock
Options under this Plan. Eligibility for the grant of an Incentive Stock Option and actual
participation in this Plan shall be determined by the Committee in its sole discretion.



     5.3 General Requirement. The vesting and exercise of Awards granted to a prospective
employee or consultant shall be conditioned upon such individual actually becoming an employee of
or consultant to the Company or an Affiliate within a reasonable time thereafter, as determined by
the Committee.



ARTICLE VI

STOCK OPTIONS




     6.1 Options. Options may be granted alone or in addition to other Awards granted
under the Plan. The Committee shall have the authority to grant any Eligible Employee, Consultant
or Non-Employee Director one or more Options. Each Option granted under the Plan shall be either:
(a) an Incentive Stock Option or (b) a Non-Qualified Stock Option.



     6.2 Grants. The Committee shall have the authority to grant to any Eligible Employee
one or more Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock Options.
The Committee shall have the authority to grant any Consultant or Non-Employee Director one or more
Non-Qualified Stock Options. To the extent that any Stock Option does not qualify as an Incentive
Stock Option (whether because of its provisions or the time or manner of its exercise or
otherwise), such Stock Option or the portion thereof that does not so qualify shall constitute a
separate Non-Qualified Stock Option.



     6.3 Terms of Options. Options granted under the Plan shall be subject to the
following terms and conditions and shall be in such form and contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable:



     (a) Exercise Price. Other than in connection with Substitute Awards, the exercise
price per share of Common Stock subject to an Option shall be determined by the Committee at the
time of grant, provided that the per-share exercise price of any Option shall not be less than 100%
(or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 110%) of the
Fair Market Value of the Common Stock at the time of grant (unless adjusted in accordance with
Section 4.2(b) pursuant to a merger, acquisition, or similar corporate transaction). Other than
pursuant to Section 4.2(b), in the absence of stockholder approval, the Committee shall not be
permitted to (a) lower the option price per share of an Option after it is granted, (b) cancel an
Option when the option price per share exceeds the Fair Market Value of the underlying shares in
exchange for another Award (other than in connection with Substitute Awards), and (c) take any
other action with respect to an Option that may be treated as a



13









 







repricing under the rules and regulations of the New York Stock Exchange.



     (b) Option Term. The term of each Option shall be fixed by the Committee, provided
that no Option shall be exercisable more than ten (10) years after the date the Option is granted,
and provided, further, that the term of an Incentive Stock Option granted to a Ten Percent
Stockholder shall not exceed five years.



     (c) Exercisability. Options shall be exercisable at such time or times and subject to
such terms and conditions as shall be determined by the Committee at grant. Notwithstanding the
foregoing, the Committee may waive any limitations on exercisability at any time at or after grant
in whole or in part (including waiver of installment exercise provisions or acceleration of the
time at which such Option may be exercised), including, without limitation, in connection with an
employment termination.



     (d) Method of Exercise. Subject to whatever installment exercise and waiting period
provisions apply under subsection (c) above, to the extent vested, Options may be exercised in
whole or in part at any time during the Option term, by giving written notice of exercise to the
Company specifying the number of shares of Common Stock to be purchased. Such notice shall be
accompanied by payment in full of the purchase price (or arrangements satisfactory to the Committee
made for such payment) as follows: (i) in cash or by check, bank draft or money order payable to
the order of the Company; or (ii) on such other terms and conditions as may be acceptable to the
Committee, including the tendering (either actually or through attestation) or withholding of
shares of Common Stock. No shares of Common Stock shall be issued until payment therefor, as
provided herein, has been made or provided for.



     (e) Non-Transferability of Options. No Option shall be Transferable by the
Participant otherwise than by will or by the laws of descent and distribution, and all Options
shall be exercisable, during the Participant’s lifetime, only by the Participant. Notwithstanding
the foregoing, the Committee may determine, in its sole discretion, at the time of grant or
thereafter that a Non-Qualified Stock Option that is otherwise not Transferable pursuant to this
Section is Transferable to a Family Member in whole or in part and in such circumstances, and under
such conditions, as specified by the Committee (including as provided under Section 11.2). A
Non-Qualified Stock Option that is Transferred to a Family Member pursuant to the preceding
sentence (i) may not be subsequently Transferred otherwise than by will or by the laws of descent
and distribution and (ii) remains subject to the terms of the Plan and the applicable Award
agreement. Any shares of Common Stock acquired upon the exercise of a Non-Qualified Stock Option
by a permissible transferee of a Non-Qualified Stock Option or a permissible transferee pursuant to
a Transfer after the exercise of the Non-Qualified Stock Option shall be subject to the terms of
the Plan and the applicable Award agreement.



     (f) Termination by Death, Disability or Retirement. Except as otherwise (x) provided
in a written agreement between the Company and the Participant or (y) determined by the Committee
at grant or (if no rights of the Participant are reduced) thereafter, if a Participant’s
Termination is by reason of death, Disability or Retirement, all Options that are held by such
Participant that are vested and exercisable at the time of the Participant’s Termination may be
exercised by the Participant (or, in the case of death, by the legal representative of the
Participant’s estate) at any time within a period of one year from the date of such Termination,



14









 







but in no event beyond the expiration of the stated term of such Options if the Options are
Incentive Stock Options or if such Termination is by reason of Retirement; provided, however, that
in the case of Retirement or Disability, if the Participant dies within such exercise period, all
unexercised Options held by such Participant shall thereafter be exercisable, to the extent to
which they were exercisable at the time of death, for a minimum period of 90 days from the date of
such death, but in no event beyond the expiration of the stated term of such Options if the Options
are Incentive Stock Options.



     (g) Termination for Cause. Except as otherwise (x) provided in a written agreement
between the Company and the Participant or (y) determined by the Committee at grant or (if no
rights of the Participant are reduced) thereafter, if a Participant’s Termination (i) is for Cause
or (ii) is a voluntary Termination after the occurrence of an event that would be grounds for a
Termination for Cause, all Options held by such Participant, whether or not vested, shall
thereupon terminate and expire as of the date of such Termination or, if earlier, the date of the
Cause event. If a Participant’s service with the Company is suspended pending an investigation of
whether the Participant shall be terminated for Cause, all of the Participant’s rights under any
Option shall be suspended during the period of investigation.



     (h) Termination for Any Other Reason. Except as otherwise (x) provided in a written
agreement between the Company and the Participant or (y) determined by the Committee at grant, or
(if no rights of the Participant are reduced) thereafter, if a Participant’s Termination is for any
reason not set forth in Section 6.3(g) or (h), all Options that are held by such Participant that
are vested and exercisable at the time of the Participant’s Termination may be exercised by the
Participant at any time within a period of 90 days from the date of such Termination, but in no
event beyond the expiration of the stated term of such Options.



     (i) Unvested Options. Except as otherwise (x) provided in a written agreement between
the Company and the Participant or (y) determined by the Committee at grant or (if no rights of the
Participant are reduced) thereafter, Options that are not vested as of the date of a Participant’s
Termination for any reason shall terminate and expire as of the date of such Termination.



     (j) Incentive Stock Option Limitations. To the extent that the aggregate Fair Market
Value (determined as of the time of grant) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an Eligible Employee during any calendar year
under this Plan and/or any other stock option plan of the Company, any Subsidiary or any Parent
exceeds $100,000 (or such other amount specified by applicable law), such Options shall be treated
as Non-Qualified Stock Options. Should any provision of this Plan not be necessary in order for
the Stock Options to qualify as Incentive Stock Options, or should any additional provisions be
required, the Committee may amend this Plan accordingly, without the necessity of obtaining the
approval of the stockholders of the Company.



     (k) Form, Modification, Extension and Renewal of Options. Subject to the terms and
conditions and within the limitations of the Plan, Options shall be evidenced by such form of
agreement or grant as is approved by the Committee, and the Committee may (i) modify, extend or
renew outstanding Options granted under the Plan (provided that the rights of a Participant are not
reduced without his or her consent), and (ii) accept the surrender of outstanding Options (up



15









 







to the extent not theretofore exercised) and authorize the granting of new Options in
substitution therefor (to the extent not theretofore exercised). Notwithstanding the foregoing, an
outstanding Option may not be modified to reduce the exercise price thereof nor may a new Option at
a lower price be substituted for a surrendered Option (other than adjustments or substitutions in
accordance with Section 4.2), unless such action is approved by the stockholders of the Company.



     (l) Buyout and Settlement Provisions. The Committee may at any time offer to buy out
an Option previously granted, based on such terms and conditions as the Committee shall establish
and communicate to the Participant at the time that such offer is made.



     (m) Early Exercise. The Committee may provide that an Option include a provision
whereby the Participant may elect at any time before the Participant’s Termination to exercise the
Option as to any part or all of the shares of Common Stock subject to the Option prior to the full
vesting of the Option and such shares shall be subject to the provisions of Article VIII and
treated as restricted stock. Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Committee determines to
be appropriate.



     (n) Other Terms and Conditions. Options may contain such other provisions, which
shall not be inconsistent with any of the terms of the Plan, as the Committee shall deem
appropriate.



ARTICLE VII

STOCK APPRECIATION RIGHTS




     7.1 Tandem Stock Appreciation Rights. Tandem Stock Appreciation Rights may be granted
in conjunction with all or part of any Option (a “Reference Stock Option”) granted under
the Plan. In the case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of the grant of such Reference Stock Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of the grant of such Reference Stock Option.



     7.2 Terms and Conditions of Tandem Stock Appreciation Rights. Tandem Stock
Appreciation Rights granted hereunder shall be subject to such terms and conditions, not
inconsistent with the provisions of the Plan, as shall be determined from time to time by the
Committee, and the following:



     (a) Term. A Tandem Stock Appreciation Right or applicable portion thereof granted
with respect to a Reference Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the Reference Stock Option, except that, unless otherwise determined by
the Committee, in its sole discretion, at the time of grant, a Tandem Stock Appreciation Right
granted with respect to less than the full number of shares covered by the Reference Stock Option
shall not be reduced until and then only to the extent the exercise or termination of the Reference
Stock Option causes the number of shares covered by the Tandem Stock Appreciation Right to exceed
the number of shares remaining available and unexercised under the Reference Stock Option.



     (b) Exercisability. Tandem Stock Appreciation Rights shall be exercisable only at



16









 







such time or times and to the extent that the Reference Stock Options to which they relate
shall be exercisable in accordance with the provisions of Article VI, and shall be subject to the
provisions of Section 6.3(c).



     (c) Method of Exercise. A Tandem Stock Appreciation Right may be exercised by the
Participant by surrendering the applicable portion of the Reference Stock Option. Upon such
exercise and surrender, the Participant shall be entitled to receive an amount determined in the
manner prescribed in this Section 7.2. Options that have been so surrendered, in whole or in part,
shall no longer be exercisable to the extent the related Tandem Stock Appreciation Rights have been
exercised.



     (d) Payment. Upon the exercise of a Tandem Stock Appreciation Right, a Participant
shall be entitled to receive up to, but no more than, an amount in cash and/or Common Stock (as
determined by the Committee in its sole discretion at the time of grant or, if permitted by the
grant, at the time of exercise) equal in value to the excess of the Fair Market Value of one share
of Common Stock over the Option exercise price per share specified in the Reference Stock Option
agreement multiplied by the number of shares in respect of which the Tandem Stock Appreciation
Right shall have been exercised. The exercise price of a Tandem Stock Appreciation Right shall be
required to be in accordance with Section 6.3(a) on the date of grant except (i) if such Tandem
Stock Appreciation Right is added to an Option after the date of grant of the Option, or (ii) in
the case of Substitute Awards, in connection with an adjustment pursuant to Section 4.2(b).



     7.3 Non-Tandem Stock Appreciation Rights. Non-Tandem Stock Appreciation Rights may
also be granted without reference to any Options granted under the Plan.



     7.4 Terms and Conditions of Non-Tandem Stock Appreciation Rights. Non-Tandem Stock
Appreciation Rights granted hereunder shall be subject to such terms and conditions, not
inconsistent with the provisions of the Plan, as shall be determined from time to time by the
Committee, and the following:



     (a) Term. The term of each Non-Tandem Stock Appreciation Right shall be fixed by the
Committee, but shall not exceed ten (10) years after the date the right is granted.



     (b) Exercisability. Non-Tandem Stock Appreciation Rights shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined by the Committee at
grant.



     (c) Method of Exercise. Subject to the installment, exercise and waiting period
provisions that apply under subsection (b) above, Non-Tandem Stock Appreciation Rights may be
exercised in whole or in part at any time in accordance with the applicable Award agreement, by
giving written notice of exercise to the Company specifying the number of Non-Tandem Stock
Appreciation Rights to be exercised.



     (d) Payment. Upon the exercise of a Non-Tandem Stock Appreciation Right, a
Participant shall be entitled to receive, for each right exercised, an amount in cash and/or Common
Stock (as determined by the Committee in its sole discretion at the time of grant or, if permitted
by the grant, at the time of exercise) no greater than the excess of the Fair Market



17









 







Value of one share of Common Stock on the date the right is exercised over the Fair Market
Value of one share of Common Stock on the date the right was awarded to the Participant. The
exercise price of a Non-Tandem Stock Appreciation Right may not be less than 100% of Fair Market
Value of a share of Common Stock on the date of grant except in the case of Substitute Awards, in
connection with an adjustment pursuant to Section 4.2(b). Other than pursuant to Section 4.2(b),
in the absence of stockholder approval, the Committee shall not be permitted to (a) lower the Fair
Market Value per share of a Non-Tandem Stock Appreciation Right after it is granted, (b) cancel a
Non-Tandem Stock Appreciation Right when the Fair Market Value per share at grant exceeds the Fair
Market Value of the underlying shares in exchange for another Award (other than in connection with
Substitute Awards), and (c) take any other action with respect to a Non-Tandem Stock Appreciation
Right that may be treated as a repricing under the rules and regulations of the New York Stock
Exchange.



ARTICLE VIII

RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNITS




     8.1 Restricted Stock Awards and RSU Awards. Restricted Stock Awards and RSU Awards
may be issued either alone or in addition to other Awards granted under the Plan. The Committee
shall determine the Eligible Employees, Consultants and Non-Employee Directors, to whom, and the
time or times at which, grants of Restricted Stock Awards and RSU Awards shall be made, the number
of shares to be awarded, the price (if any) to be paid by the Participant (subject to Section 8.2),
the time or times within which such Awards may be subject to forfeiture, the vesting schedule and
rights to acceleration thereof, and all other terms and conditions of the Awards. RSU Awards may
be settled in shares of Common Stock and/or in cash or any combination as determined by the
Committee in its sole discretion at or after the time of grant.



     8.2 Awards and Certificates. Eligible Employees, Consultants and Non-Employee
Directors selected to receive a Restricted Stock Award or RSU Award shall not have any rights with
respect to such Award, unless and until such Participant has delivered a fully executed copy of the
agreement evidencing the Award to the Company and has otherwise complied with the applicable terms
and conditions of such Award. Further, such Award shall be subject to the following conditions:



     (a) Purchase Price. Unless (x) otherwise provided by the Committee or (y) prohibited
by applicable law, the purchase price of a Restricted Stock Award or RSU Award shall be zero. If
required by law or the Committee otherwise determines that a Restricted Stock Award or RSU Award
shall have a purchase price, such purchase price shall not be less than par value.



     (b) Acceptance. Restricted Stock Awards must be accepted within the period, if any,
specified by the Committee at grant, by executing an Award agreement and by paying the price (if
any) the Committee has designated thereunder (such acceptance may be in any manner that the
Committee may establish, including deemed acceptance).



     8.3 Restrictions and Conditions. Restricted Stock Awards and RSU Awards awarded
pursuant to the Plan shall be subject to the following restrictions and conditions:



18









 






	 	(a)	 	Restriction Period.
	 
	 	(i)	 	The Participant shall not be permitted to Transfer a Restricted Stock Award or
RSU Award awarded under the Plan during the period or periods set by the Committee (the
“Restriction Period”) commencing on the date of such Award, as set forth in the
Award agreement and such agreement shall set forth a vesting schedule and any events
that would accelerate vesting of the Restricted Stock Award or RSU Award. The
Committee may place conditions on the grant based on service, attainment of performance
goals pursuant to Section 8.3(a)(ii) below and/or such other factors or criteria as the
Committee may determine in its sole discretion. In addition, the Committee in its sole
discretion may (A) provide for the lapse of restrictions in whole or in part, (B)
accelerate the vesting of all or any part of any Restricted Stock Award or RSU Award
and/or (C) waive the deferral limitations for all or any part of any such Award.
	 
	 	(ii)	 	Objective Performance Goals, Formulas or Standards. If the grant of a
Restricted Stock Award or RSU Award or the lapse of restrictions is based on the
attainment of performance goals, the Committee shall establish the objective
performance goals, including, to the extent the Committee so determines, from among
those set forth in Exhibit A hereto, and the applicable vesting percentage of the
Restricted Stock Award or RSU Award applicable to each Participant or class of
Participants in writing prior to the beginning of the applicable fiscal year or at such
later date as otherwise determined by the Committee and while the outcome of the
performance goals are substantially uncertain.





     (b) Rights as a Stockholder; Dividends. Beginning on the date of grant of a
Restricted Stock Award and subject to acceptance of the associated Award agreement, the Participant
shall become a stockholder of the Company with respect to all shares of Common Stock subject to the
Restricted Stock Award and shall have all of the rights of a stockholder, including the right to
vote such shares and the right to receive distributions made with respect to such shares; provided,
however, that, in the absence of Committee action to the contrary, any shares of Common Stock or
any other property (other than regular cash distributions) distributed as a dividend or otherwise
with respect to any Restricted Stock Award as to which the restrictions have not yet lapsed shall
be subject to the same restrictions as the shares covered by such Award.



     (c) Termination. Except as otherwise (x) provided in a written agreement between the
Company and the Participant or (y) determined by the Committee at grant or (if no rights of the
Participant are reduced) thereafter, subject to the applicable provisions of the Award agreement
and the Plan, upon a Participant’s Termination for any reason during the relevant Restriction
Period, all Restricted Stock Awards and RSU Awards still subject to restriction will vest or be
forfeited in accordance with the terms and conditions established by the Committee at grant or
thereafter. In the absence of such provisions in the Award agreement, in the event of: (i) death,
Disability or Retirement, restrictions shall lapse on the Participant’s Restricted Stock Awards and
RSU Awards on a pro rata monthly basis through the date of Termination, with performance awards
paid at the end of the performance period based on actual results; and (ii) any other Termination,
any unvested Restricted Stock Awards or RSUs shall immediately be



19









 







cancelled.



     (d) Lapse of Restrictions. If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock Award or RSU Award, certificates for shares attributable to such
Award shall be delivered to the Participant (or, if certificates were previously issued,
replacement certificates shall be delivered upon return of the previously issued certificates).
All legends shall be removed from said certificates at the time of delivery to the Participant,
except as otherwise required by applicable law or other limitations imposed by the Committee.
Notwithstanding the foregoing, actual certificates shall not be issued to the extent that book
entry recordkeeping is used.



ARTICLE IX

PERFORMANCE AWARDS




     9.1 Performance Awards. Performance Awards may be awarded either alone or in addition
to other Awards granted under the Plan. The Committee shall determine the Eligible Employees,
Consultants and Non-Employee Directors, to whom, and the time or times at which, Performance Awards
shall be awarded, the number of Performance Awards to be awarded to any person, the duration of the
period (the “Performance Period”) during which, and the conditions under which, a
Participant’s right to Performance Awards will be vested, the ability of Participants to defer
receipt of Performance Awards, and the other terms and conditions of the Award in addition to those
set forth in Section 9.2.



     The Committee shall condition the right to payment or vesting of any Performance Award upon
the attainment of objective performance goals established pursuant to Section 9.2(b) below.



     9.2 Terms and Conditions. Performance Awards awarded pursuant to this Article IX
shall be subject to the following terms and conditions:



     (a) Earning or Vesting of Performance Award. At the expiration of the applicable
Performance Period, the Committee shall determine the extent to which the performance goals
established pursuant to Section 9.2(b) are achieved and the percentage of each Performance Award
that has been earned or vested.



     (b) Objective Performance Goals, Formulas or Standards. The Committee shall establish
the objective performance goals, including, to the extent the Committee so determines, from among
those set forth in Exhibit A hereto, for the earning of Performance Awards based on a Performance
Period applicable to each Participant or class of Participants in writing prior to the beginning of
the applicable Performance Period or, to the extent such Award is intended to comply with Section
162(m) of the Code, at such later date as permitted thereunder and while the outcome of the
performance goals is substantially uncertain.



     (c) Payment. Following the Committee’s determination, shares of Common Stock and/or
cash, as determined by the Committee in its sole discretion at the time of grant or, if permitted
by the grant, thereafter, shall be delivered to the Eligible Employee, Consultant or Non-Employee
Director, or his legal representative, in an amount equal to such individual’s earned or vested
Performance Award. Notwithstanding the foregoing, the Committee may, in its



20









 







sole discretion and, to the extent Section 162(m) of the Code is applicable, in accordance
therewith, (i) award a number of shares of Common Stock or an amount of cash less than the earned
Performance Award and/or (ii) subject the payment of all or part of any Performance Award to
additional vesting, forfeiture and deferral conditions.



     (d) Termination. Subject to the applicable provisions of the Award agreement and the
Plan, upon a Participant’s Termination for any reason during the Performance Period for a
Performance Award, such Performance Award will vest or be forfeited in accordance with the terms
and conditions established by the Committee at grant or, if no rights of the Participant are
reduced, thereafter.



     (e) Accelerated Vesting. The Committee, in its sole discretion, may accelerate the
vesting of all or any part of any Performance Award or waive the deferral limitations for all or
any part of such Award.



ARTICLE X

OTHER STOCK-BASED AWARDS




     10.1 Other Awards.



     (a) Subject to the limitations set forth in Section 4.1(a), the Committee is authorized to
grant to Eligible Employees, Consultants and Non-Employee Directors Other Stock-Based Awards that
are payable in, valued in whole or in part by reference to, or otherwise based on or related to,
shares of Common Stock, including, but not limited to, (a) shares of Common Stock awarded purely as
a bonus and not subject to any restrictions or conditions, (b) shares of Common Stock in payment of
the amounts due under an incentive or performance plan sponsored or maintained by the Company or an
Affiliate, (c) stock equivalent units, and (d) Awards valued by reference to book value of shares
of Common Stock. Other Stock-Based Awards may be granted either alone or in addition to or in
tandem with other Awards granted under the Plan.



     (b) Subject to the provisions of the Plan, the Committee shall have authority to determine the
Eligible Employees, Consultants and Non-Employee Directors to whom, and the time or times at which,
such Awards shall be made, the number of shares of Common Stock to be awarded pursuant to such
Awards, and all other conditions of the Awards.



     (c) The Committee may condition the grant or vesting of Other Stock-Based Awards upon the
attainment of specified performance goals, including, to the extent the Committee so determines,
from among those set forth on Exhibit A hereto, as the Committee may determine, in its sole
discretion.



     10.2 Terms and Conditions. Other Stock-Based Awards made pursuant to this Article X
shall be subject to the following terms and conditions:



     (a) Vesting. Any Award under this Article X and any Common Stock covered by any such
Award shall vest or be forfeited to the extent so provided in the Award agreement, as determined by
the Committee, in its sole discretion.



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     (b) Price. Common Stock issued on a bonus basis under this Article X may be issued
for no cash consideration to the extent permitted by law.



ARTICLE XI

TERMINATION OR AMENDMENT OF PLAN/NON-TRANSFERABILITY OF AWARDS




     11.1 Termination or Amendment. Notwithstanding any other provision of the Plan, the
Board (or a duly authorized Committee thereof) may at any time, and from time to time, amend, in
whole or in part, any or all of the provisions of the Plan (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement referred to in
Article XIV), or suspend or terminate it entirely, retroactively or otherwise; provided, however,
that, except (x) to correct obvious drafting errors or as otherwise required by law or (y) as
specifically provided herein, the rights of a Participant with respect to Awards granted prior to
such amendment, suspension or termination, may not be reduced without the consent of such
Participant and, provided further, without the approval of the holders of the Company’s Common
Stock entitled to vote in accordance with applicable law, no amendment may be made that would (i)
increase the aggregate number of shares of Common Stock that may be issued under the Plan under
Section 4.1(a) (except by operation of Section 4.2); (ii) change the classification of individuals
eligible to receive Awards under the Plan; (iii) extend the maximum option period under Section
6.3; (iv) materially alter the performance goals as set forth in Exhibit A; or (v) require
stockholder approval in order for the Plan to continue to comply with the applicable provisions of
Section 162(m) of the Code, the applicable stock exchange rules, or, to the extent applicable to
Incentive Stock Options, Section 422 of the Code. In no event may the Plan be amended without the
approval of the stockholders of the Company in accordance with the applicable laws of the State of
Delaware to increase the aggregate number of shares of Common Stock that may be issued under the
Plan, decrease the minimum exercise price of any Award, or to make any other amendment that would
require stockholder approval under the rules of any exchange or system on which the Company’s
securities are listed or traded at the request of the Company. The Committee may amend the terms
of any Award theretofore granted, prospectively or retroactively, but, subject to Article IV above,
except (x) to correct obvious drafting errors or as otherwise required by law or applicable
accounting rules, or (y) as specifically provided herein, no such amendment or other action by the
Committee shall reduce the rights of any holder without the holder’s consent.



     11.2 Non-Transferability of Awards. Subject to Section 6.3(e), except as the
Committee may permit, in its sole discretion, at the time of grant or thereafter, no Award shall be
Transferable by the Participant (including, without limitation to, a Family Member) otherwise than
by will or by the laws of descent and distribution, and all Awards shall be exercisable, during the
Participant’s lifetime, only by the Participant. Any attempt to Transfer any Award or benefit not
otherwise permitted by the Committee in accordance with the foregoing sentence shall be void, and
any such benefit shall not in any manner be liable for or subject to the debts, contracts,
liabilities, engagements or torts of any person who shall be entitled to such benefit, nor shall it
be subject to attachment or legal process for or against such person. An Option that is
Transferred pursuant to the preceding sentence (i) may not be subsequently Transferred otherwise
than by will or by the laws of descent and distribution, except as may otherwise be permitted by
the Committee and (ii) remains subject to the terms of the Plan and the applicable



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Award agreement. Notwithstanding anything to the contrary contained in this Section 11.2 (or,
with respect to a Non-Qualified Stock Option, Section 6.3(e)), if and to the extent approved by the
Committee in its sole discretion, an employee or Non-Employee Director may transfer an Award (but
not Awards constituting in excess of one percent of the Common Stock outstanding in any single
Transfer) to a charitable organization. Any shares of Common Stock acquired by a permissible
transferee shall continue to be subject to the terms of the Plan and the applicable Award
agreement.



ARTICLE XII

UNFUNDED PLAN




     12.1 Unfunded Status of Plan. The Plan is intended to constitute an “unfunded” plan
for incentive and deferred compensation. With respect to any payments as to which a Participant
has a fixed and vested interest but that are not yet made to a Participant by the Company, nothing
contained herein shall give any such Participant any rights that are greater than those of a
general unsecured creditor of the Company.



ARTICLE XIII

GENERAL PROVISIONS




     13.1 Legend and Custody.



     (a) The Committee may require each person receiving shares of Common Stock pursuant to an
Option or other Award under the Plan to represent to and agree with the Company in writing that the
Participant is acquiring the shares without a view to distribution thereof. In addition to any
legend required by the Plan, the certificates for such shares may include any legend that the
Committee deems appropriate to reflect any restrictions on Transfer.



     (b) All certificates for shares of Common Stock delivered under the Plan shall be subject to
such stop transfer orders and other restrictions as the Committee may deem advisable under (a) the
rules, regulations and other requirements of the Securities and Exchange Commission, (b) any stock
exchange upon which the Common Stock is then listed or any national securities exchange system upon
whose system the Common Stock is then quoted, or (c) applicable law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate reference to such
restrictions.



     (c) If stock certificates are issued in respect of an Award, the Committee may require that
any stock certificates evidencing such Award be held in custody by the Company until the Award has
vested or the restrictions thereon have lapsed, and that, as a condition of any grant of such an
Award, the Participant shall have delivered a duly signed stock power, endorsed in blank, relating
to the Common Stock covered by such Award.



     13.2 Other Plans. Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval if such approval is
required; and such arrangements may be either generally applicable or applicable only in specific
cases.



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     13.3 Deferral; Dividends and Dividend Equivalents. The Committee may, in its sole
discretion, establish terms and conditions pursuant to which the cash payment or delivery of Common
Stock pursuant to an Award may be deferred. Subject to the provisions of the Plan, the terms of
any Award (including a deferred Award) may provide, if so determined by the Committee in its sole
discretion, for the payment of cash, Common Stock or other property dividends, or cash payments in
amounts equivalent to cash, Common Stock or other property dividends (“Dividend
Equivalents”), on either a current or a deferred basis, with respect to the number of shares of
Common Stock subject to such Award. The Committee may also provide that any such dividends or
dividend equivalents shall be subject to the same restrictions and risk of forfeiture as the
underlying Award or be deemed to have been reinvested in additional Awards or otherwise reinvested.



     13.4 No Right to Employment/Directorship/Consultancy. Neither the Plan nor the grant
of any Option or other Award hereunder shall give any Participant or other employee, Consultant or
Non-Employee Director any right with respect to continuance of employment, consultancy or
directorship by the Company or any Affiliate, nor shall they be a limitation in any way on the
right of the Company or any Affiliate by which an employee is employed or a Consultant or
Non-Employee Director is retained to terminate his or her employment, consultancy or directorship
at any time.



     13.5 Withholding of Taxes. The Company shall have the right to deduct from any
payment to be made pursuant to the Plan, or to otherwise require, prior to the issuance or delivery
of any shares of Common Stock or the payment of any cash hereunder, payment by the Participant of,
any federal, state or local taxes required by law to be withheld. Upon the vesting of a Restricted
Stock Award or RSU Award (or other Award that is taxable upon vesting), or upon making an election
under Section 83(b) of the Code, a Participant shall pay all required withholding to the Company.
If permitted by the Committee, the minimum statutorily required withholding obligation with regard
to any Participant may be satisfied by (i) reducing the number of shares of Common Stock otherwise
deliverable or by delivering shares of Common Stock already owned, or (ii) the Participant’s
tendering to the Company of shares of Common Stock owned by such Participant for at least six
months (or such other period, if any, required by the Committee to avoid adverse accounting
treatment) or otherwise acquired by such Participant on the open market. Any fraction of a share
of Common Stock required to satisfy such tax obligations shall be disregarded and the amount due
shall be paid instead in cash by the Participant.



     13.6 Listing and Other Conditions.



     (a) Except as otherwise determined by the Committee, as long as the Common Stock is listed on
a national securities exchange or system sponsored by a national securities association, the
issuance of any shares of Common Stock pursuant to an Award shall be conditioned upon such shares
being listed on such exchange or system. The Company shall have no obligation to issue such shares
unless and until such shares are so listed, and the right to exercise any Option or other Award
with respect to such shares shall be suspended until such listing has been effected.



24









 





     (b) If at any time counsel to the Company shall be of the opinion that any sale or delivery of
shares of Common Stock pursuant to an Option or other Award is or may be unlawful or result in the
imposition of excise taxes on the Company under the statutes, rules or regulations of any
applicable jurisdiction, the Company shall have no obligation to make such sale or delivery, or to
make any application or to effect or to maintain any qualification or registration under the
Securities Act or otherwise, with respect to shares of Common Stock or Awards, and the right to
exercise any Option or other Award shall be suspended until, in the opinion of said counsel, such
sale or delivery shall be lawful or will not result in the imposition of excise taxes on the
Company.



     (c) Upon termination of any period of suspension under this Section 13.6, any Award affected
by such suspension that shall not then have expired or terminated shall be reinstated as to all
shares available before such suspension and as to shares that would otherwise have become available
during the period of such suspension, but no such suspension shall extend the term of any Award.



     (d) A Participant shall be required to supply the Company with any certificates,
representations and information that the Company requests, and otherwise to cooperate with the
Company in obtaining any listing, registration, qualification, exemption, consent or approval as
the Company deems necessary or appropriate.



     13.7 Governing Law. The Plan and actions taken in connection herewith shall be
governed and construed in accordance with the laws of the State of Delaware (regardless of the law
that might otherwise govern under applicable Delaware principles of conflict of laws).



     13.8 Construction. Wherever any words are used in the Plan in the masculine gender
they shall be construed as though they were also used in the feminine gender in all cases where
they would so apply, and wherever any words are used herein in the singular form they shall be
construed as though they were also used in the plural form in all cases where they would so apply.



     13.9 Other Benefits. No Award granted or paid out under the Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the Company or its
Affiliates nor affect any benefits under any other benefit plan now or subsequently in effect under
which the availability or amount of benefits is related to the level of compensation.



     13.10 Costs. The Company shall bear all expenses associated with administering the
Plan, including expenses of issuing Common Stock pursuant to any Awards hereunder.



     13.11 No Right to Same Benefits. The provisions of Awards need not be the same with
respect to each Participant, and such Awards to individual Participants need not be the same in
subsequent years.



     13.12 Death/Disability. The Committee may, in its sole discretion, require the
transferee of a Participant to supply it with written notice of the Participant’s death or
Disability and to supply it with a copy of the will (in the case of the Participant’s death) and/or
such other evidence as the Committee deems necessary to establish the validity of the transfer of
an Award.



25









 




The Committee may also require that the agreement of the transferee to be bound by all of the
terms and conditions of the Plan.




     13.13 Section 16(b) of the Exchange Act. All elections and transactions under the
Plan by persons subject to Section 16 of the Exchange Act involving shares of Common Stock are
intended to comply with any applicable exemptive condition under Rule 16b-3. The Committee may
establish and adopt written administrative guidelines, designed to facilitate compliance with
Section 16(b) of the Exchange Act, as it may deem necessary or proper for the administration and
operation of the Plan and the transaction of business thereunder.



     13.14 Section 409A of the Code. The Board may amend the Plan as it deems advisable to
comply with Section 409A of the Code without stockholder consent.



     13.15 Successor and Assigns. The Plan shall be binding on all successors and
permitted assigns of a Participant, including, without limitation, the estate of such Participant
and the executor, administrator or trustee of such estate.



     13.16 Severability of Provisions. If any provision of the Plan shall be held invalid
or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof,
and the Plan shall be construed and enforced as if such provisions had not been included.



     13.17 Payments to Minors, Etc. Any benefit payable to or for the benefit of a minor,
an incompetent person or other person incapable of receipt thereof shall be deemed paid when paid
to such person’s guardian or to the party providing or reasonably appearing to provide for the care
of such person, and such payment shall fully discharge the Committee, the Board, the Company, its
Affiliates and their employees, agents and representatives with respect thereto.



     13.18 Headings and Captions. The headings and captions herein are provided for
reference and convenience only, shall not be considered part of the Plan, and shall not be employed
in the construction of the Plan.



ARTICLE XIV

EFFECTIVE DATE OF PLAN




     The Plan shall become effective upon the date specified by the Board in its resolution
adopting the Plan, subject to the approval of the Plan by the stockholders of the Company within 12
months before or after such date of adoption, in accordance with the requirements of the laws of
the State of Delaware.



ARTICLE XV

TERM OF PLAN




     No Award shall be granted pursuant to the Plan on or after the tenth anniversary of the
earlier of the date the Plan is adopted or the date of stockholder approval, but Awards granted
prior to such tenth anniversary may extend beyond that date.



26









 





ARTICLE XVI

NAME OF PLAN




The Plan shall be known as “NeuStar, Inc. 2005 Stock Incentive Plan.”





27









 








EXHIBIT A

PERFORMANCE GOALS




     Performance goals established for purposes of the grant or vesting of performance-based
Restricted Stock Awards, RSU Awards, Performance Awards and/or Other Stock-Based Awards shall be
based on one or more of the following performance goals (“Performance Goals”), which may be
set in terms of the performance of the Company or any subsidiary, division, other operational unit
or business segment of the Company: (i) the attainment of certain target levels of, or a specified
increase in, enterprise value or value creation targets; (ii) the attainment of certain target
levels of, or a specified increase in, after-tax or pre-tax profits, including without limitation
as attributable to continuing and/or other operations of the Company; (iii) the attainment of
certain target levels of, or a specified increase in, operational cash flow or economic value
added; (iv) the attainment of a certain level of reduction of, or other specified objectives with
regard to limiting the level of increase in all or a portion of, the Company’s bank debt or other
long-term or short-term public or private debt or other similar financial obligations of the
Company, which may be calculated net of cash balances and/or other offsets and adjustments as may
be established by the Committee; (v) the attainment of certain target levels of, or a specified
increase in, earnings per share or earnings per share from continuing operations; (vi) the
attainment of certain target levels of, or a specified increase in, net sales, revenues, net income
or earnings before income tax or other exclusions; (vii) the attainment of certain target levels
of, or a specified increase in, return on capital employed or return on invested capital; (viii)
the attainment of certain target levels of, or a specified increase in, after-tax or pre-tax return
on stockholder equity; (ix) the attainment of certain target levels of, or a specified increase in,
the fair market value of the shares of the Company’s Common Stock; (x) the growth in the value of
an investment in the Company’s Common Stock assuming the reinvestment of dividends; (xi) a
transaction that results in the sale of stock or assets of the Company; (xii) the attainment of
certain target levels of, or a specified reduction in, expenses; or (xiii) implementation,
completion or attainment of interim measurable goals with regard to research, development, products
or projects. The Committee may also exclude the impact of an event or occurrence which the
Committee determines should be appropriately excluded, including (i) restructurings, discontinued
operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event either
not directly related to the operations of the Company or not within the reasonable control of the
Company’s management, or (iii) a change in tax law or accounting standards required by generally
accepted accounting principles.



     In addition, such Performance Goals may be based upon the attainment of specified levels of
Company (or subsidiary, division or other operational unit or business segment of the Company)
performance under one or more of the measures described above relative to the performance of other
corporations. The Committee may: (i) designate additional business criteria on which the
performance goals may be based or (ii) adjust, modify or amend the aforementioned business
criteria.




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NEUSTAR, INC.




APPENDIX A — ISRAEL 




TO THE 2005 STOCK INCENTIVE PLAN 





	1.	 	GENERAL






	 	1.1	 	This appendix (the “Appendix”) shall apply only to Participants who are
residents of the state of Israel upon the date of grant of the Award, as defined below
in Section 2, or those who are deemed to be residents of the state of Israel for tax
purposes upon the date of grant of the Award (collectively, “Israeli Participants”).
The provisions specified hereunder shall form an integral part of the NeuStar, Inc.
2005 Stock Incentive Plan (hereinafter the “Plan”).
	 
	 	1.2	 	This Appendix is to be read as a continuation of the Plan and modifies Awards
granted to Israeli Participants only to the extent necessary to comply with the
requirements set by the Israeli law in general, and in particular, with the provisions
of the Israeli Income Tax Ordinance [New Version] 1961, as may be amended or replaced
from time to time. This Appendix does not add to or modify the Plan in respect of any
other category of Participants.
	 
	 	1.3	 	The Plan and this Appendix are complementary to each other and shall be deemed
as one. In the event of any conflict, whether explicit or implied, between the
provisions of this Appendix and the Plan, the provisions set out in the Appendix shall
prevail.
	 
	 	1.4	 	Any capitalized term not specifically defined in this Appendix shall be
construed according to the interpretation given to it in the Plan.






	2.	 	DEFINITIONS






	 	2.1	 	“3(i) Award” means an Award granted pursuant to Section 3(i) of the Ordinance
to an Unapproved Israeli Participant.
	 
	 	2.2	 	“102 Award” means any Award granted to an Approved Israeli Participant
pursuant to Section 102.
	 
	 	2.3	 	“Approved Israeli Participant” means an Israeli Participant who is an Employee,
Director or Officer, but excluding any Controlling Shareholder.
	 
	 	2.4	 	“Capital Gain Award” or “CGA” means a Trustee 102 Award elected and designated
by the Company to qualify under the capital gain tax treatment in accordance with the
provisions of Section 102(b)(2).
	 
	 	2.5	 	“Cash Award” means any Award granted to an Israeli Participant, provided that
such Award shall be Settled using only cash.
	 
	 	2.6	 	“Controlling Shareholder” shall have the meaning ascribed to it in Section
32(9) of the Ordinance.




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	 	2.7	 	“Employing Company” means any Israeli corporation, or any foreign corporation
with an Israeli permanent enterprise or research & development center confirmed by the
ITA, that is directly or indirectly Controlled by the Company or Controls the Company
(a “Related Company”); or (b) any Israeli corporation, or any foreign corporation with
an Israeli permanent enterprise or research & development center confirmed by the ITA,
that is Controlled by a Controlling Shareholder of a Related Company. “Control” for
the purpose of this definition shall have the meaning ascribed to it in Section 32(9)
of the Ordinance.
	 
	 	2.8	 	“Israeli Award Agreement” means the Israeli Award Agreement between the
Company and an Israeli Participant that sets out the terms and conditions of an Award.
	 
	 	2.9	 	“ITA” means the Israeli Tax Authority.
	 
	 	2.10	 	“Non-Trustee 102 Award” means a 102 Award granted pursuant to Section 102(c)
and not held in trust by, or under the control or supervision of, a Trustee.
	 
	 	2.11	 	“Ordinance” means the Israeli Income Tax Ordinance [New Version] 1961 as now
in effect or as hereafter amended.
	 
	 	2.12	 	“Ordinary Income Award” or “OIA” means a Trustee 102 Award elected and
designated by the Company to qualify under the ordinary income tax treatment in
accordance with the provisions of Section 102(b)(1).
	 
	 	2.13	 	“Section 102” means section 102 of the Ordinance and any regulations, rules,
orders or procedures promulgated thereunder as now in effect or as hereafter amended.
	 
	 	2.14	 	“Settlement of Award” means the exercise of Options, exercise of Stock
Appreciation Rights, vesting of Restricted Stock Awards, vesting of RSU Awards or
vesting of Performance Awards, into Common Stock.
	 
	 	2.15	 	“Tax” means any applicable tax and other compulsory payments such as social
security and health tax contributions under any applicable law.
	 
	 	2.16	 	“Trustee” means any person or entity appointed by the Company to serve as a
trustee and approved by the ITA, all in accordance with the provisions of Section
102(a).
	 
	 	2.17	 	“Trustee 102 Award” means a 102 Award granted pursuant to Section 102(b) and
held in trust by, or under the control or supervision of, a Trustee, for the benefit
of an Approved Israeli Participant in an Employing Company, provided that such Award
shall be Settled using only Common Stock.
	 
	 	2.18	 	“Unapproved Israeli Participant” means an Israeli Participant who is a
Consultant or a Controlling Shareholder.






	3.	 	ISSUANCE OF AWARDS






	 	3.1	 	The persons eligible for participation in the Plan as Israeli Participants
shall include Approved Israeli Participants and Unapproved Israeli Participants,
provided, however, that (i) Approved Israeli Participants may not be granted 3(i)
Awards; and (ii) Unapproved Israeli Participants may not be granted 102 Awards.




2









 






	 	3.2	 	The Company may designate Awards granted to Approved Israeli Participants
pursuant to Section 102 as Trustee 102 Awards or Non-Trustee 102 Awards.
	 
	 	3.3	 	The grant of Trustee 102 Awards shall be made under this Appendix, shall not
be made until 30 days from the date the Plan has been submitted for approval by the
ITA and shall be conditioned upon the approval of the Plan and this Appendix by the
ITA.
	 
	 	3.4	 	Trustee 102 Awards may either be classified as Capital Gain Awards (CGAs) or
Ordinary Income Awards (OIAs).
	 
	 	3.5	 	No Trustee 102 Award may be granted under this Appendix to any Approved
Israeli Participant, unless and until the Company has filed with the ITA its election
regarding the type of Trustee 102 Awards, whether CGAs or OIAs, that will be granted
under the Plan and this Appendix (the “Election”). Such Election shall become
effective beginning the first date of grant of a Trustee 102 Award under this Appendix
and shall remain in effect at least until the end of the year following the year
during which the Company first granted Trustee 102 Awards. The Election shall obligate
the Company to grant only the type of Trustee 102 Award it has elected, and shall
apply to all Israeli Participants who are granted Trustee 102 Awards during the period
indicated herein, all in accordance with the provisions of Section 102(g). The
Election shall not prevent the Company from granting Non-Trustee 102 Awards, 3(i)
Awards or Cash Awards simultaneously.
	 
	 	3.6	 	All Trustee 102 Awards must be held in trust by, or under the control or
supervision of, a Trustee, as described in Section 4 below.
	 
	 	3.7	 	The designation of Non-Trustee 102 Awards and Trustee 102 Awards shall be
subject to the terms and conditions set forth in Section 102.






	4.	 	TRUSTEE






	 	4.1	 	Trustee 102 Awards which shall be granted under this Appendix and/or any share
of Common Stock allocated or issued upon Settlement of a Trustee 102 Award and/or
other shares of Common Stock received following any realization of rights under the
Plan shall be allocated or issued to the Trustee or controlled by the Trustee, for the
benefit of the Approved Israeli Participants, in accordance with the provisions of
Section 102. In the event that the requirements for Trustee 102 Awards are not met,
the Trustee 102 Awards may be regarded as Non-Trustee 102 Awards, all in accordance
with the provisions of Section 102.
	 
	 	4.2	 	With respect to any Trustee 102 Award, subject to the provisions of Section
102, an Approved Israeli Participant shall not sell or release from trust any share of
Common Stock received upon the Settlement of a Trustee 102 Award and/or any share of
Common Stock received following any realization of rights, including, without
limitation, stock dividends, under the Plan until the lapse of the period of time
required under Section 102 or any other period of time determined by the ITA (the
“Holding Period”). Notwithstanding the above, if any such sale or release occurs
during the Holding Period, the sanctions under Section 102 shall apply to and shall be
borne by such Approved Israeli Participant.




3









 






	 	4.3	 	Notwithstanding anything to the contrary, the Trustee shall not release or
sell any shares of Common Stock allocated or issued upon Settlement of a Trustee 102
Award unless the Company, the Employing Company and the Trustee are satisfied that the
full amounts of Tax due have been paid or will be paid.
	 
	 	4.4	 	Upon receipt of any Trustee 102 Award, the Approved Israeli Participant will
consent to the grant of the Award and to the Election under Section 102 and undertake
to comply with the terms of Section 102 and the trust arrangement between the Company
and the Trustee.






	5.	 	THE AWARDS






The terms and conditions upon which the Awards shall be issued and Settled, shall be as
specified in the Israeli Award Agreement to be executed pursuant to the Plan and to this
Appendix. Each Israeli Award Agreement shall state, inter alia, the number of shares of
Common Stock to which the Award relates, the type of Award granted thereunder (i.e., a CGA,
OIA, Non-Trustee 102 Award, 3(i) Award or Cash Award), and any applicable vesting provisions
and exercise price that may be payable.




	6.	 	FAIR MARKET VALUE






Without derogating from Section 2.17 of the Plan and solely for the purpose of determining
the Participant’s tax liability pursuant to Section 102(b)(3), if at the date of grant the
Company’s shares of Common Stock are listed on any established stock exchange or a national
market system, or if the Company’s shares of Common Stock will be registered for trading
within ninety (90) days following the date of grant, the fair market value of the Common
Stock at the date of grant of a CGA shall be determined in accordance with the average value
of the Company’s shares of Common Stock on the thirty (30) trading days preceding the date
of grant, or on the thirty (30) trading days following the date of registration for trading,
as the case may be.




	7.	 	SETTLEMENT OF AWARDS






Settlement of Awards granted to Israeli Participants shall be subject to the terms and
conditions and, with respect to exercise, the method, as may be determined by the Company
and, when applicable, by the Trustee and/or the Employing Company, in accordance with the
requirements of Section 102.



8.  ASSIGNABILITY, DESIGNATION AND SALE OF AWARDS





	 	8.1.	 	Notwithstanding any other provision of the Plan, no Award or any right with
respect thereto, or purchasable hereunder, whether fully paid or not, shall be
assignable, transferable or given as collateral, or any right with respect to any
Award given to any third party whatsoever, and during the lifetime of the Israeli
Participant, each and all of such Israeli Participant’s rights with respect to an
Award shall belong only to the Israeli Participant. Any such action made directly or
indirectly, for an immediate or future validation, shall be void.
	 
	 	8.2	 	As long as Awards or shares of Common Stock allocated or issued hereunder are
held by the Trustee on behalf of the Israeli Participant, all rights of the Israeli
Participant over the shares of Common Stock cannot be transferred, assigned, pledged
or mortgaged, other than by will or laws of descent and distribution.




4









 












	9.	 	INTEGRATION OF SECTION 102 AND TAX ASSESSING OFFICER’S APPROVAL






	 	9.1.	 	With regard to Trustee 102 Awards, the provisions of the Plan and/or the
Appendix and/or the Israeli Award Agreement shall be subject to the provisions of
Section 102 and any approval issued by the ITA and the said provisions shall be deemed
an integral part of the Plan, the Appendix and the Israeli Award Agreement.
	 
	 	9.2.	 	Any provision of Section 102 and/or said approval issued by the ITA which must
be complied with in order to receive and/or to maintain any tax benefit pursuant to
Section 102, which is not expressly specified in the Plan, the Appendix or the Israeli
Award Agreement, shall be considered binding upon the Company, the Affiliates and the
Israeli Participants.





10. DIVIDEND





Subject to the provisions of the Plan, with respect to all shares of Common Stock allocated
or issued to the Israeli Participant and held by the Israeli Participant or by the Trustee,
as the case may be, the Israeli Participant shall be entitled to receive dividends, if any,
in accordance with the quantity of such shares of Common Stock, subject to the provisions of
the Company’s Certificate of Incorporation (and all amendments thereto) and subject to any
applicable taxation on distribution of dividends, and when applicable subject to the
provisions of Section 102.




	11.	 	TERMINATION






For the purpose of grants to Israeli Participants, the term Cause as defined in Section 2.5
of the Plan shall inter alia include circumstances justifying the revocation and/or
reduction of an Israeli Participant’s entitlement to severance pay under applicable Israeli
law.




	12.	 	TAX CONSEQUENCES






	 	12.1	 	Any tax consequences arising from the grant or Settlement of any Award, from
the payment for shares of Common Stock covered thereby or from any other event or act
(of the Company and/or an Affiliate and/or the Trustee and/or the Israeli
Participant), hereunder, shall be borne solely by the Israeli Participant. The Company
and/or the Affiliate and/or the Trustee shall withhold Tax according to the
requirements under the applicable laws, rules, and regulations, including withholding
taxes at source. Furthermore, the Israeli Participant agrees to indemnify the Company
and/or the Affiliate and/or the Trustee and hold them harmless against and from any
and all liability for any such Tax or interest or penalty thereon, including without
limitation, liabilities relating to the necessity to withhold, or to have withheld,
any such Tax from any payment made to the Israeli Participant.
	 
	 	12.2	 	The Company and/or, when applicable, the Trustee shall not be required to
release any share of Common Stock to an Israeli Participant until all required Tax
payments have been fully made.
	 
	 	12.3	 	With respect to Non-Trustee 102 Awards, in case of Termination of Employment,
or otherwise if so requested by the Company or an Affiliate, the Israeli Participant
shall extend to the Company and/or the Affiliate a security or guarantee for the
payment




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	 	 	 	of Tax due at the time of sale of shares of Common Stock, in accordance with the
provisions of Section 102.
	 
	 	12.4	 	Section 409A of the United States Internal Revenue Code and the guidance
thereunder governs nonqualified deferred compensation arrangements. If a participant
is subject to U.S. taxation and Section 409A of the United States Internal Revenue Code
is not satisfied, such participant will incur adverse tax consequences, including
interest and penalties.
	 
	 	 	 	Notwithstanding anything in this Appendix to the contrary, the Plan will be
administered, including for purposes of any distribution, in a manner that is
consistent with the Company’s good faith interpretation of Section 409A of the
United States Internal Revenue Code and the guidance thereunder. None of the
Company, any affiliate, the Plan administrator nor any of their agents shall have
any liability to any participant or beneficiary as a result of any tax, interest,
penalty or other payment required to be paid or due pursuant to, or because of a
violation of, Section 409A of the United States Internal Revenue Code.






	13.	 	ONE TIME BENEFIT, NOT A SALARY COMPONENT






The Awards and underlying Shares are extraordinary, one-time benefits granted to the
Participants, and are not and shall not be deemed a salary component for any purpose
whatsoever, including without limitation in connection with calculating severance
compensation under any applicable law.




	14.	 	TERM OF PLAN AND APPENDIX






Notwithstanding anything to the contrary in the Plan and in addition thereto, the Company
shall obtain all approvals for the adoption of this Appendix or for any amendment to this
Appendix as are necessary to comply with (i) any applicable law, including without
limitation U.S. securities laws and the securities laws of any other jurisdiction applicable
to Awards granted to Israeli Participants under this Appendix, (ii) any national securities
exchange on which the shares of Common Stock are traded, and (iii) any applicable rules and
regulations promulgated by the U.S. Securities and Exchange Commission.




	15.	 	GOVERNING LAW






This Appendix shall be governed by and construed and enforced in accordance with the laws of
the State of Israel, without giving effect to the principles of conflict of laws.



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