Document:

Exhibit 10.28

 

INCENTIVE
STOCK OPTION AGREEMENT

UNDER THE

NEUSTAR,
INC. 1999 EQUITY INCENTIVE PLAN

 

THIS
AGREEMENT, made as of June 22, 2004 (the “Effective Date”), by and between
NeuStar, Inc., a Delaware corporation (the “Company”), and Jeffrey Babka
(the “Participant”).

 

W  I  T  N  E  S
S  E  T  H:

 

WHEREAS, the
Company desires to afford the Participant the opportunity to acquire an
ownership of the Company’s common stock, par value $.002 per share (“Common
Stock”), so that the Participant may have a direct proprietary interest in the
Company’s success.

 

NOW,
THEREFORE, in consideration of the covenants and agreements herein contained,
the parties hereto hereby agree as follows:

 

1.                                       Grant of
Option.  Subject to the terms and
conditions set forth herein and in the Company’s 1999 Equity Incentive Plan, as
restated as of March 13, 2002 and as amended as of June 21, 2004 (the
“Plan”), the Company hereby grants to the Participant, during the period
commencing on the date of this Agreement and ending on June 22, 2014 (the “Expiration
Date”), the right and option (the right to purchase any one share of Common
Stock hereunder being an “Option”) to purchase from the Company 27,426 shares of Common Stock.  The Options shall have an exercise price of
$8.75 per share.  Each of the Options
granted pursuant to this Section 1 is intended to constitute Incentive
Stock Options to the extent permissible under Section 422 of the Code and
the Plan; however, no assurances can be made that the Options will in form or
substance comply with all of the requirements for such treatment.  To the extent that the Options do not qualify
as “incentive stock options,” it shall not affect the validity of the Options
and shall constitute Nonqualified Stock Options.

 

2.                                       Limitations
on Exercise of Options.  Subject to
the terms and conditions set forth herein and the Plan, the Options shall vest
and become exercisable, on a cumulative basis, with respect to 25% of the
shares on April 26, 2005 so long as
the Participant continues in the Service of the Company from the Effective Date
through April 26, 2005, and with
respect to 2.083% of the shares on the last day of each succeeding calendar
month thereafter so long as the Participant continues in the Service of the
Company; provided, however, the Participant may not exercise any Option for
fractional shares of Common Stock.  The
Committee or the Board may accelerate the vesting and exercisability of any or
all of the then-unvested Options at any time.

 

3.                                       Termination
of Service.  (a)  If, prior to
the Expiration Date, the Participant’s Service with the Company shall terminate
(the date of termination being the “Date of Termination”) by reason of a Normal
Termination (as defined in the Plan), the Options shall remain exercisable
until the earlier of the Expiration Date or the day three (3) months after
the Date of Termination to the extent the Options were vested and exercisable
as of the Date of Termination.

 

 

(b)                                 If
the Participant’s Service with the Company shall cease prior to the Expiration
Date by reason of death or disability, or the Participant shall die or become
disabled while entitled to exercise any of the Options pursuant to paragraph
3(a), the Participant or the Participant’s legal representative, or, in the
case of death, the executor or administrator of the estate of the Participant
or the person or persons to whom the Options shall have been validly
transferred by the executor or administrator pursuant to will or the laws of
descent and distribution, shall have the right, until the earlier of the
Expiration Date or one year after the date of death or disability, to exercise
the Options to the extent that the Participant was entitled to exercise them on
the date of death or disability.  For
purposes of this Agreement, the term “disability” shall mean a permanent and
total disability as defined in Section 22(e)(3) of the Code.

 

(c)                                  If,
prior to the Expiration Date, the Participant’s Service with the Company is
terminated for “Cause” (as defined in the Plan), (i) unless otherwise
provided by the Committee, the Options, to the extent not exercised as of the
Date of Termination, shall lapse and be canceled, and (ii) all shares of
Common Stock received pursuant to an exercise of the Options after such
termination, in contravention of subsection (i) above, may be
purchased by the Company at its discretion for the exercise price of such
shares paid by the Participant.  If the
Participant’s Service relationship with the Company is suspended pending an
investigation of whether the Participant shall be terminated for Cause, all the
Participant’s rights with respect to the Options shall be suspended during the
period of investigation.

 

(d)                                 If,
prior to the Expiration Date, the Participant’s Service with the Company is
terminated other than for Cause, a Normal Termination, death or disability, the
Options, to the extent then vested and exercisable as of the Date of
Termination, shall remain exercisable until the earlier of the Expiration Date
or thirty (30) days after the Date of Termination.

 

(e)                                  After
the expiration of any exercise period described in any of Sections 3(a) - (d) hereof,
or otherwise upon the Expiration Date, the Options shall terminate together
with all of the Participant’s rights hereunder, to the extent not previously
exercised.

 

4.                                       Non-Transferable.  Except as specifically authorized by the
Committee, the Participant may not transfer the Options except by will or the
laws of descent and distribution and the Options shall be exercisable during
the Participant’s lifetime only by the Participant or, in the event of the
Participant’s legal incapacity, his guardian or legal representative.  Except as so authorized, no purported
assignment or transfer of the Options, or of the rights represented thereby,
whether voluntary or involuntary, by operation of law or otherwise (except by
will or the laws of descent and distribution), shall vest in the assignee or
transferee any interest or right herein whatsoever.

 

5.                                       Adjustments
and Corporate Reorganizations; Changes in Organization.

 

(a)           In
accordance with and subject to the applicable terms of the Plan and this
Agreement, the Options shall be subject to adjustment or substitution, as
determined by the Committee in its sole discretion, as to the number, price or
kind of

 

 

Common Stock or other consideration subject to such Options or as
otherwise determined by the Committee in its sole discretion to be equitable (i) in
the event of changes in the outstanding Common Stock or in the capital
structure of the Company by reason of stock dividends, stock splits, reverse
stock splits, recapitalizations, reorganizations, mergers, consolidations,
combinations, exchanges, or other relevant changes in capitalization occurring
after the date hereof or (ii) in the event of any change in applicable
laws or any change in circumstances which results in or would result in any
substantial dilution or enlargement of the rights granted to, or available for,
the Participant, or which otherwise warrants equitable adjustment because it
interferes with the intended operation of the Plan.  The Committee shall give the Participant
written notice of an adjustment hereunder. 
Neither the foregoing, nor any similar provision in the Plan, shall
apply to changes in tax laws, tax interpretations or tax rates.

 

(b)           In the event that the Company
undertakes a change in its organization, including but not limited to a
combination of business units, the creation of a new business unit, the
elimination of a business unit, or the acquisition, sale or transfer of an
interest in a business unit, the Options shall be subject to adjustment or
substitution (including but not limited to the substitution of common stock of
or other ownership interest in a Related Entity, other consideration or another
Award under the Plan), as to the number, price or kind of Common Stock or other
consideration subject to such Options or as otherwise determined by the
Committee in its sole discretion to be equitable.  For purposes of this Agreement, a “business
unit” shall mean any Related Entity or any division or other unit or group
within the Company that the Committee designates as a “business unit”.

 

(c)           Subject to the provisions of Section 13(b) of
the Plan, in the event of a Corporate Transaction (as defined below), if the
Options evidenced by this Agreement are not assumed or continued or a
substantially equivalent option or right is not substituted by the surviving
corporation, the successor corporation or its parent corporation, as applicable
(the “Successor Corporation”), the Participant shall, as of the date of the
Corporate Transaction, fully vest in and have the right to exercise such
Options as to all shares of Common Stock then subject thereto that would
otherwise have vested and become exercisable during the twelve-month period
commencing on the date of the Corporate Transaction and, subject to the next
sentence, unvested Options with respect to any other shares of Common Stock
shall continue to vest as set forth in Section 2.   If any Options evidenced by this Agreement
are assumed or replaced (and any such Options shall be considered assumed if
the Company in a Corporate Transaction reaffirms the Options) in connection
with a Corporate Transaction and do not otherwise vest at that time, and if
Participant’s Service with the Company is subsequently terminated within one (1) year
following such Corporate Transaction, unless such Service is terminated by the
Successor Corporation for Cause or by the Participant voluntarily other than
for Good Reason (as defined below), the Participant shall fully vest in and
have the right to exercise the Options as to all shares of Common Stock then
subject thereto that, but for such termination, would have otherwise vested and
become exercisable during the twelve-month period commencing on the effective
date of such termination, and unvested Options with respect to any other shares
of Common Stock shall continue to vest as set forth in Section 2.

 

 

(d)           For purposes of this Agreement, a “Corporate
Transaction” shall mean any of the following events:

 

(i)            The consummation of
any merger or consolidation of the Company, if immediately following such
merger or consolidation the holders of the Company’s outstanding voting
securities immediately prior to such merger or consolidation do not own at
least a majority of the outstanding voting securities of the surviving
corporation in approximately the same proportion as they did immediately prior
to such merger or consolidation.

 

(ii)           The consummation of
any sale, lease, exchange or other transfer in one transaction or a series of
related transactions of all or substantially all of the Company’s assets, other
than a transfer of the Company’s assets to a majority-owned subsidiary of the
corporation, or to an entity in which the holders of the majority of the
outstanding voting securities of the entity immediately prior to the transfer
own at least the majority of the outstanding securities immediately after such
transfer in approximately the same proportion as immediately prior to such
transfer.

 

(iii)          The approval by the
holders of the Common Stock of any plan or proposal for the liquidation or
dissolution of the Company.

 

(iv)          The acquisition by a
person, within the meaning of Section 3(a)(9) or of Section 13
(d)(3) of the Exchange Act of a majority or more of the Company’s
outstanding voting securities (whether directly or indirectly, beneficially or
of record), other than a person who held such majority on the date of adoption
of the Plan.  Ownership of voting
securities shall take into account and shall include ownership as determined by
applying Rule 13d-3(d)(1)(i) pursuant to the Exchange Act.

 

(e)           For purposes of this Agreement, “Good
Reason” shall mean, without the Participant’s prior written consent, any of the
following events or conditions and the failure of the Successor Corporation to
cure such event or condition within thirty (30) days after receipt of written
notice from the Participant:

 

(i)            A substantial
diminution or material adverse change in the Participant’s status, title,
position, authority, duties or responsibilities (including reporting
responsibilities) as in effect immediately prior to a Corporate Transaction,
except in connection with the Participant’s termination of Service either by
the Company for Cause or by the Participant voluntarily other than for Good
Reason or temporarily while the Participant is incapacitated.

 

(ii)           A reduction in the
Participant’s annual base salary, except in connection with an across-the-board
salary reduction of less than ten percent (10%) affecting all senior executives
of the Company.

 

(iii)          The Successor
Corporation’s failure to cover the Participant under employee benefit plans,
programs and practices that, in the aggregate, provide substantially comparable
benefits (from an economic perspective) to the

 

 

Participant
relative to the benefits and total costs under the material employee benefit
plans, programs and practices in which the Participant (and/or his family or
dependents) is participating immediately preceding the Corporate Transaction.

 

(iv)          The Successor
Corporation’s requiring the Participant to be based at any office location that
is more than fifty (50) miles further from the Participant’s office location
immediately prior to a Corporate Transaction; except for reasonable required
travel for the Successor Corporation’s business that is not materially greater
than such travel requirements prior to such Corporate Transaction.

 

(v)           A material breach by
the Successor Corporation of its obligations to the Participant under the Plan.

 

6.                                       Exercise;
Payment For and Delivery of Common Stock; Shareholders Agreement.  (a)  The Options shall be exercised by
delivering written notice to the Committee stating the number of whole shares
of Common Stock to be purchased, the person or persons in whose name the shares
of Common Stock are to be registered and each such person’s address and social
security number.  Such notice shall not
be effective unless accompanied by the full purchase price for all shares to be
purchased, and any applicable withholding (as described below).  The purchase price shall be payable in cash,
in shares of Common Stock, any combination of cash or shares of Common Stock or
such other method of payment as is authorized by the Plan with the consent of
the Committee; provided, however, that the Participant may use
Common Stock in payment of the exercise price only if the shares so used are
considered “mature” for purposes of generally accepted accounting principles (i.e.,
(i) been held by the Participant free and clear for at least six (6) months
(or such other period necessary to avoid a charge, for accounting purposes,
against the Company’s earnings as reported in the Company’s financial
statements) prior to the use thereof to pay part of an Option exercise price, (ii) been
purchased by the Participant in other than a compensatory transaction, or (iii) meet
any other requirements for “mature” shares as may exist on the date of the use
thereof to pay part of an Option exercise price) and the Participant has good
title free and clear of any liens and encumbrances.  In the event that all or part of the purchase
price is paid in shares of Common Stock, the shares used in payment shall be
valued at their Fair Market Value on the date of exercise of the Options.  At the time of exercise, the Committee shall
require the Participant to pay to the Company an amount sufficient to pay all
federal, state and local withholding taxes incurred, in the Committee’s
judgment, by reason of the exercise of the Options. and the Participant’s right
to receive shares of Common Stock shall be contingent upon such payment.  Such payment to the Company may be effected
through (a) payment by the Participant to the Company of the aggregate
withholding taxes in cash or cash equivalents; (b) at the discretion of
the Committee, the Company’s withholding from the number of shares of Common
Stock that would otherwise be delivered to the Participant upon exercise of the
Options, a number of shares of Common Stock with an aggregate Fair Market Value
on the Settlement Date equal to the aggregate amount of minimum required
withholding taxes; or (c) at the discretion of the Committee, any
combination of these two methods.

 

(b)                                 Notwithstanding
anything herein to the contrary, in accordance with Section 12(q) of the
Plan, as a condition to the receipt of a certificate or certificates 

 

 

representing shares of Common Stock acquired pursuant to the exercise
of Options, to the extent required by the Committee, the Participant shall
execute and deliver a shareholders agreement or such other documentation which
shall provide for restrictions on transferability of the shares of Common Stock
acquired hereunder, a right of first refusal of the Company with respect to the
shares of Common Stock acquired hereunder and such other terms as the Board or
Committee shall from time to time require.

 

7.                                       Rights as
Common Stockholder.  The Participant
or a transferee of the Options shall have no rights as a stockholder with
respect to any shares covered by the Options until he shall have become the
holder of record of such shares (and the Company shall use its reasonable best
efforts to cause the Participant promptly to become the holder of record of
such shares), and, except as provided in Section 5 hereof, no adjustment
shall be made for dividends or distributions or other rights in respect of such
shares for which the record date is prior to the date upon which he shall
become the holder or record thereof.

 

8.                                       Company;
Participant.  (a)  The term “Company”
as used in this Agreement with reference to employment shall include the
Company and its affiliates.

 

(b)           Whenever the word “Participant” is
used in any provision of this Agreement under circumstances where the provision
should logically be construed to apply to the executors, the administrators,
legal representatives or the person or persons to whom the Options may be
transferred by will or by the laws of descent and distribution, the word “Participant”
shall be deemed to include such person or persons.

 

9.                                       Requirements
of Law.  (a)  By accepting the
Options, the Participant represents and agrees for himself and his transferees
(whether by will or the laws of descent and distribution) that, unless a
registration statement under the Securities Act of 1933, as amended (the “Act”),
is in effect as to shares purchased upon any exercise of the Options, (i) any
and all shares so purchased shall be acquired for his personal account and not
with a view to, or for sale in connection with, any distribution, (ii) each
notice of the exercise of any portion of the Options shall be accompanied by a
representation and warranty in writing, signed by the person entitled to
exercise the same, that the shares are being so acquired in good faith for his
personal account and not with any present intention of distributing or selling
any of such shares of Common Stock; and (iii) the shares have not been
registered under the Securities Act on the ground that no distribution or
public offering of the shares is to be effected (it being understood, however,
that the shares are being issued and sold in reliance on the exemption provided
under Rule 701 under the Securities Act), and in this connection the
Company is relying in part on the Participant’s representations set forth in
this Section.

 

(b)                                 No
certificate or certificates for shares of Common Stock may be purchased, issued
or transferred if the exercise hereof or the issuance or transfer of such
shares shall constitute a violation by the Company or the Participant of any (i) provision
of any Federal, state or other securities law, (ii) requirement of any
securities exchange listing agreement to which the Company may be a party, or (iii) other
requirement of law or of any regulatory body having jurisdiction over the
Company.  Any reasonable determination in
this connection by the Board or the Committee, upon notice given to the
Participant, shall be final, binding and conclusive.

 

 

(c)                                  The
certificates representing shares of Common Stock acquired pursuant to the
exercise of Options shall carry such appropriate legend, and such written
instructions shall be given to the Company’s transfer agent, as may be deemed
necessary or advisable by counsel to the Company in order to comply with the
requirements of the Act or any state securities laws.

 

(d)                                 The
Participant hereby confirms that the Participant has been informed that any
shares of Common Stock acquired hereunder are restricted securities under Rule 144
promulgated under the Securities Act and may not be resold or transferred
unless the Common Stock is first registered under the Federal securities laws
or unless an exemption from registration is available.  The Company shall in no event be obligated to
register any securities pursuant to the Securities Act or to take any other
affirmative action in order to cause the issuance or transfer of shares
acquired pursuant to this Agreement to comply with any law or regulation of any
governmental authority.

 

10.                                 Notices.  Any notice to be given to either party shall
be in writing and shall be given by hand delivery to such party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company in care of its Secretary at its principal office, and
to the Participant at the address given beneath his signature hereto, or at
such other address as either party shall have furnished to the other in writing
in accordance herewith.  Notice and
communications shall be effective when actually received by the addressee.

 

11.                                 Disposition of
Common Stock.  The Participant agrees
to notify the Company, in writing, within thirty (30) days of any disposition
(whether by sale, exchange, gift or otherwise) of shares of Common Stock
purchased under this Agreement.

 

12.                                 Binding Effect.  Subject to Section 4 hereof, this
Agreement shall be binding upon the heirs, executors, administrators,
successors and permitted assigns of the parties hereto.

 

13.                                 Plan.  The terms and provisions of the Plan are
incorporated herein by reference and made a part hereof as though fully set
forth herein.  In the event of any
conflict or inconsistency between discretionary terms and provisions of this
Agreement, this Agreement shall govern and control.  In all other instances of conflicts or
inconsistencies or omissions, the terms and provisions of the Plan shall govern
and control.  All capitalized terms not
otherwise expressly defined in this Agreement shall have the meaning ascribed
to them in the Plan.

 

14.                                 Governing Law.  This Agreement shall be construed and
interpreted in accordance with the laws of the State of Delaware, without
regard to the principles of conflicts of law thereof.

 

15.                                 Counterparts.  This Agreement may be signed in counterparts,
each of which shall be an original with the same effect as if the signatures
thereto and hereto were upon the same instrument.

 

16.                                 No Right to
Continued Service.  This Agreement
does not confer upon the Participant any right to continue as an employee of
the Company, nor shall it interfere in 

 

 

any way with the right of the Company to terminate the Participant’s
employment at any time for any reason (subject to any employment agreement).

 

17.                                 Entire Agreement.  This Agreement, together with the Plan,
contains the entire agreement and understanding between the parties with
respect to the subject matter hereof and supersedes all prior agreements,
written or oral, with respect thereto.

 

IN WITNESS WHEREOF, the Company has granted
this Option on the Effective Date.

 

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

 

	
   

  	
  NEUSTAR, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey E. Ganek

  	
   

  
	
   

  	
  Name: Jeffrey
  E. Ganek

  
	
   

  	
  Title: Chairman
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED:

  
	
   

  
	
   

  
	
  /s/ Jeffrey
  Babka

  	
   

  
	
  Jeffrey BabkaExhibit 10.29

 

 

NONQUALIFIED
STOCK OPTION AGREEMENT

UNDER THE

NEUSTAR,
INC. 1999 EQUITY INCENTIVE PLAN

 

THIS
AGREEMENT, made as of June 22, 2004 (the “Effective Date”), by and between
NeuStar, Inc., a Delaware corporation (the “Company”), and Jeffrey Babka
(the “Participant”).

 

W  I  T  N  E  S
S  E  T  H:

 

WHEREAS, the
Company desires to afford the Participant the opportunity to acquire an
ownership of the Company’s common stock, par value $.002 per share (“Common
Stock”), so that the Participant may have a direct proprietary interest in the
Company’s success.

 

NOW,
THEREFORE, in consideration of the covenants and agreements herein contained,
the parties hereto hereby agree as follows:

 

1.                                       Grant of
Option.  Subject to the terms and
conditions set forth herein and in the Company’s 1999 Equity Incentive Plan, as
restated as of March 13, 2002 and as amended as of June 21, 2004 (the
“Plan”), the Company hereby grants to the Participant, during the period
commencing on the date of this Agreement and ending on June 22, 2014 (the “Expiration
Date”), the right and option (the right to purchase any one share of Common
Stock hereunder being an “Option”) to purchase from the Company 532,574 shares of Common Stock.  The Options shall have an exercise price
of  $ 8.75 per share.  None of the Options granted pursuant to this Section 1
is intended to constitute Incentive Stock Options.

 

2.                                       Limitations
on Exercise of Options.  Subject to
the terms and conditions set forth herein and the Plan, the Options shall vest
and become exercisable, on a cumulative basis, with respect to 25% of the
shares on April 26, 2005 so long as
the Participant continues in the Service of the Company from the Effective Date
through April 26, 2005, and with
respect to 2.083% of the shares on the last day of each succeeding calendar
month thereafter so long as the Participant continues in the Service of the
Company; provided, however, the Participant may not exercise any Option for
fractional shares of Common Stock.  The
Committee or the Board may accelerate the vesting and exercisability of any or
all of the then-unvested Options at any time.

 

3.                                       Termination
of Service.  (a)  If, prior to
the Expiration Date, the Participant’s Service with the Company shall terminate
(the date of termination being the “Date of Termination”) by reason of a Normal
Termination (as defined in the Plan), the Options shall remain exercisable
until the earlier of the Expiration Date or the day three (3) months after
the Date of Termination to the extent the Options were vested and exercisable
as of the Date of Termination.

 

(b)                                 If
the Participant’s Service with the Company shall cease prior to the Expiration
Date by reason of death or disability, or the Participant shall die or become
disabled while entitled to exercise any of the Options pursuant to paragraph
3(a), the Participant or the Participant’s legal representative, or, in the
case of death, the executor 

 

 

or administrator of the estate of the
Participant or the person or persons to whom the Options shall have been
validly transferred by the executor or administrator pursuant to will or the
laws of descent and distribution, shall have the right, until the earlier of
the Expiration Date or one year after the date of death or disability, to
exercise the Options to the extent that the Participant was entitled to
exercise them on the date of death or disability.

 

(c)                                  If,
prior to the Expiration Date, the Participant’s Service with the Company is
terminated for “Cause” (as defined in the Plan), (i) unless otherwise
provided by the Committee, the Options, to the extent not exercised as of the
Date of Termination, shall lapse and be canceled, and (ii) all shares of
Common Stock received pursuant to an exercise of the Options after such
termination, in contravention of subsection (i) above, may be
purchased by the Company at its discretion for the exercise price of such
shares paid by the Participant.  If the
Participant’s Service relationship with the Company is suspended pending an
investigation of whether the Participant shall be terminated for Cause, all the
Participant’s rights with respect to the Options shall be suspended during the
period of investigation.

 

(d)                                 If,
prior to the Expiration Date, the Participant’s Service with the Company is
terminated other than for Cause, a Normal Termination, death or disability, the
Options, to the extent then vested and exercisable as of the Date of
Termination, shall remain exercisable until the earlier of the Expiration Date
or thirty (30) days after the Date of Termination.

 

(e)                                  After
the expiration of any exercise period described in any of Sections 3(a) - (d) hereof,
or otherwise upon the Expiration Date, the Options shall terminate together
with all of the Participant’s rights hereunder, to the extent not previously
exercised.

 

4.                                       Non-Transferable.  Except as specifically authorized by the
Committee, the Participant may not transfer the Options except by will or the
laws of descent and distribution and the Options shall be exercisable during
the Participant’s lifetime only by the Participant or, in the event of the
Participant’s legal incapacity, his guardian or legal representative.  Except as so authorized, no purported
assignment or transfer of the Options, or of the rights represented thereby,
whether voluntary or involuntary, by operation of law or otherwise (except by
will or the laws of descent and distribution), shall vest in the assignee or
transferee any interest or right herein whatsoever.

 

5.                                       Adjustments
and Corporate Reorganizations; Changes in Organization.

 

(a)                                  In accordance with
and subject to the applicable terms of the Plan and this Agreement, the Options
shall be subject to adjustment or substitution, as determined by the Committee
in its sole discretion, as to the number, price or kind of Common Stock or
other consideration subject to such Options or as otherwise determined by the
Committee in its sole discretion to be equitable (i) in the event of
changes in the outstanding Common Stock or in the capital structure of the
Company by reason of stock dividends, stock splits, reverse stock splits,
recapitalizations, reorganizations, mergers, 

 

 

consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the date hereof or (ii) in the event of any
change in applicable laws or any change in circumstances which results in or
would result in any substantial dilution or enlargement of the rights granted
to, or available for, the Participant, or which otherwise warrants equitable
adjustment because it interferes with the intended operation of the Plan.  The Committee shall give the Participant
written notice of an adjustment hereunder. 
Neither the foregoing, nor any similar provision in the Plan, shall
apply to changes in tax laws, tax interpretations or tax rates.

 

(b)  In the event that the Company undertakes a
change in its organization, including but not limited to a combination of
business units, the creation of a new business unit, the elimination of a
business unit, or the acquisition, sale or transfer of an interest in a
business unit, the Options shall be subject to adjustment or substitution
(including but not limited to the substitution of common stock of or other
ownership interest in a Related Entity, other consideration or another Award
under the Plan), as to the number, price or kind of Common Stock or other
consideration subject to such Options or as otherwise determined by the
Committee in its sole discretion to be equitable.  For purposes of this Agreement, a “business
unit” shall mean any Related Entity or any division or other unit or group
within the Company that the Committee designates as a “business unit”.

 

(c)  Subject to the provisions of Section 13(b) of
the Plan, in the event of a Corporate Transaction (as defined below), if the
Options evidenced by this Agreement are not assumed or continued or a
substantially equivalent option or right is not substituted by the surviving
corporation, the successor corporation or its parent corporation, as applicable
(the “Successor Corporation”), the Participant shall, as of the date of the
Corporate Transaction, fully vest in and have the right to exercise such
Options as to all shares of Common Stock then subject thereto that would
otherwise have vested and become exercisable during the twelve-month period
commencing on the date of the Corporate Transaction and, subject to the next
sentence, unvested Options with respect to any other shares of Common Stock
shall continue to vest as set forth in Section 2.   If any Options evidenced by this Agreement
are assumed or replaced (and any such Options shall be considered assumed if
the Company in a Corporate Transaction reaffirms the Options) in connection
with a Corporate Transaction and do not otherwise vest at that time, and if
Participant’s Service with the Company is subsequently terminated within one (1) year
following such Corporate Transaction, unless such Service is terminated by the
Successor Corporation for Cause or by the Participant voluntarily other than
for Good Reason (as defined below), the Participant shall fully vest in and have
the right to exercise the Options as to all shares of Common Stock then subject
thereto that, but for such termination, would have otherwise vested and become
exercisable during the twelve-month period commencing on the effective date of
such termination, and unvested Options with respect to any other shares of
Common Stock shall continue to vest as set forth in Section 2.

 

(d)  For purposes of this Agreement, a “Corporate
Transaction” shall mean any of the following events:

 

 

(i) The
consummation of any merger or consolidation of the Company, if immediately
following such merger or consolidation the holders of the Company’s outstanding
voting securities immediately prior to such merger or consolidation do not own
at least a majority of the outstanding voting securities of the surviving
corporation in approximately the same proportion as they did immediately prior
to such merger or consolidation.

 

(ii) The
consummation of any sale, lease, exchange or other transfer in one transaction
or a series of related transactions of all or substantially all of the Company’s
assets, other than a transfer of the Company’s assets to a majority-owned
subsidiary of the corporation, or to an entity in which the holders of the
majority of the outstanding voting securities of the entity immediately prior
to the transfer own at least the majority of the outstanding securities
immediately after such transfer in approximately the same proportion as
immediately prior to such transfer.

 

(iii) The
approval by the holders of the Common Stock of any plan or proposal for the
liquidation or dissolution of the Company.

 

(iv) The
acquisition by a person, within the meaning of Section 3(a)(9) or of Section 13
(d)(3) of the Exchange Act of a majority or more of the Company’s
outstanding voting securities (whether directly or indirectly, beneficially or
of record), other than a person who held such majority on the date of adoption
of the Plan.  Ownership of voting
securities shall take into account and shall include ownership as determined by
applying Rule 13d-3(d)(1)(i) pursuant to the Exchange Act.

 

(e)  For purposes of this Agreement, “Good Reason”
shall mean, without the Participant’s prior written consent, any of the
following events or conditions and the failure of the Successor Corporation to
cure such event or condition within thirty (30) days after receipt of written
notice from the Participant:

 

(i) 
A substantial diminution or material adverse change in the Participant’s
status, title, position, authority, duties or responsibilities (including
reporting responsibilities) as in effect immediately prior to a Corporate
Transaction, except in connection with the Participant’s termination of Service
either by the Company for Cause or by the Participant voluntarily other than
for Good Reason or temporarily while the Participant is incapacitated.

 

(ii) A
reduction in the Participant’s annual base salary, except in connection with an
across-the-board salary reduction of less than ten percent (10%) affecting all
senior executives of the Company.

 

(iii) 
The Successor Corporation’s failure to cover the Participant under employee
benefit plans, programs and practices that, in the aggregate, provide
substantially comparable benefits (from an economic perspective) to the
Participant relative to the benefits and total costs under the material
employee 

 

 

benefit plans, programs
and practices in which the Participant (and/or his family or dependents) is
participating immediately preceding the Corporate Transaction.

 

(iv) 
The Successor Corporation’s requiring the Participant to be based at any office
location that is more than fifty (50) miles further from the Participant’s
office location immediately prior to a Corporate Transaction; except for
reasonable required travel for the Successor Corporation’s business that is not
materially greater than such travel requirements prior to such Corporate
Transaction.

 

(v) 
A material breach by the Successor Corporation of its obligations to the
Participant under the Plan.

 

6.                                       Exercise;
Payment For and Delivery of Common Stock; Shareholders Agreement.  (a)  The Options shall be exercised by
delivering written notice to the Committee stating the number of whole shares
of Common Stock to be purchased, the person or persons in whose name the shares
of Common Stock are to be registered and each such person’s address and social
security number.  Such notice shall not
be effective unless accompanied by the full purchase price for all shares to be
purchased, and any applicable withholding (as described below).  The purchase price shall be payable in cash,
in shares of Common Stock, any combination of cash or shares of Common Stock or
such other method of payment as is authorized by the Plan with the consent of
the Committee; provided, however, that the Participant may use
Common Stock in payment of the exercise price only if the shares so used are
considered “mature” for purposes of generally accepted accounting principles (i.e.,
(i) been held by the Participant free and clear for at least six (6) months
(or such other period necessary to avoid a charge, for accounting purposes,
against the Company’s earnings as reported in the Company’s financial
statements) prior to the use thereof to pay part of an Option exercise price, (ii) been
purchased by the Participant in other than a compensatory transaction, or (iii) meet
any other requirements for “mature” shares as may exist on the date of the use
thereof to pay part of an Option exercise price) and the Participant has good
title free and clear of any liens and encumbrances.  In the event that all or part of the purchase
price is paid in shares of Common Stock, the shares used in payment shall be
valued at their Fair Market Value on the date of exercise of the Options.  At the time of exercise, the Committee shall
require the Participant to pay to the Company an amount sufficient to pay all
federal, state and local withholding taxes incurred, in the Committee’s
judgment, by reason of the exercise of the Options. and the Participant’s right
to receive shares of Common Stock shall be contingent upon such payment.  Such payment to the Company may be effected
through (a) payment by the Participant to the Company of the aggregate
withholding taxes in cash or cash equivalents; (b) at the discretion of
the Committee, the Company’s withholding from the number of shares of Common
Stock that would otherwise be delivered to the Participant upon exercise of the
Options, a number of shares of Common Stock with an aggregate Fair Market Value
on the Settlement Date equal to the aggregate amount of minimum required
withholding taxes; or (c) at the discretion of the Committee, any
combination of these two methods.

 

(b)                                 Notwithstanding
anything herein to the contrary, in accordance with Section 12(q) of the
Plan, as a condition to the receipt of a certificate or certificates 

 

 

representing shares of Common Stock acquired pursuant to the exercise
of Options, to the extent required by the Committee, the Participant shall
execute and deliver a shareholders agreement or such other documentation which
shall provide for restrictions on transferability of the shares of Common Stock
acquired hereunder, a right of first refusal of the Company with respect to the
shares of Common Stock acquired hereunder and such other terms as the Board or
Committee shall from time to time require.

 

7.                                       Rights as
Common Stockholder.  The Participant
or a transferee of the Options shall have no rights as a stockholder with
respect to any shares covered by the Options until he shall have become the
holder of record of such shares (and the Company shall use its reasonable best
efforts to cause the Participant promptly to become the holder of record of
such shares), and, except as provided in Section 5 hereof, no adjustment
shall be made for dividends or distributions or other rights in respect of such
shares for which the record date is prior to the date upon which he shall
become the holder or record thereof.

 

8.                                       Company;
Participant.  (a)  The term “Company”
as used in this Agreement with reference to employment shall include the
Company and its affiliates.

 

(b)                                 Whenever
the word “Participant” is used in any provision of this Agreement under
circumstances where the provision should logically be construed to apply to the
executors, the administrators, legal representatives or the person or persons
to whom the Options may be transferred by will or by the laws of descent and
distribution, the word “Participant” shall be deemed to include such person or
persons.

 

9.                                       Requirements
of Law.  (a)  By accepting the
Options, the Participant represents and agrees for himself and his transferees
(whether by will or the laws of descent and distribution) that, unless a
registration statement under the Securities Act of 1933, as amended (the “Act”),
is in effect as to shares purchased upon any exercise of the Options, (i) any
and all shares so purchased shall be acquired for his personal account and not
with a view to, or for sale in connection with, any distribution, (ii) each
notice of the exercise of any portion of the Options shall be accompanied by a
representation and warranty in writing, signed by the person entitled to
exercise the same, that the shares are being so acquired in good faith for his
personal account and not with any present intention of distributing or selling
any of such shares of Common Stock; and (iii) the shares have not been
registered under the Securities Act on the ground that no distribution or
public offering of the shares is to be effected (it being understood, however,
that the shares are being issued and sold in reliance on the exemption provided
under Rule 701 under the Securities Act), and in this connection the
Company is relying in part on the Participant’s representations set forth in
this Section.

 

(b)                                 No
certificate or certificates for shares of Common Stock may be purchased, issued
or transferred if the exercise hereof or the issuance or transfer of such
shares shall constitute a violation by the Company or the Participant of any (i) provision
of any Federal, state or other securities law, (ii) requirement of any
securities exchange listing agreement to which the Company may be a party, or (iii) other
requirement of law or of any regulatory body having jurisdiction over the
Company.  Any reasonable 

 

 

determination in this connection by the Board
or the Committee, upon notice given to the Participant, shall be final, binding
and conclusive.

 

(c)                                  The
certificates representing shares of Common Stock acquired pursuant to the
exercise of Options shall carry such appropriate legend, and such written
instructions shall be given to the Company’s transfer agent, as may be deemed
necessary or advisable by counsel to the Company in order to comply with the
requirements of the Act or any state securities laws.

 

(d)                                 The
Participant hereby confirms that the Participant has been informed that any
shares of Common Stock acquired hereunder are restricted securities under Rule 144
promulgated under the Securities Act and may not be resold or transferred
unless the Common Stock is first registered under the Federal securities laws
or unless an exemption from registration is available.  The Company shall in no event be obligated to
register any securities pursuant to the Securities Act or to take any other
affirmative action in order to cause the issuance or transfer of shares acquired
pursuant to this Agreement to comply with any law or regulation of any
governmental authority.

 

10.                                 Notices.  Any notice to be given to either party shall
be in writing and shall be given by hand delivery to such party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company in care of its Secretary at its principal office, and
to the Participant at the address given beneath his signature hereto, or at
such other address as either party shall have furnished to the other in writing
in accordance herewith.  Notice and
communications shall be effective when actually received by the addressee.

 

11.                                 Disposition of
Common Stock.  The Participant agrees
to notify the Company, in writing, within thirty (30) days of any disposition
(whether by sale, exchange, gift or otherwise) of shares of Common Stock
purchased under this Agreement.

 

12.                                 Binding Effect.  Subject to Section 4 hereof, this
Agreement shall be binding upon the heirs, executors, administrators, successors
and permitted assigns of the parties hereto.

 

13.                                 Plan.  The terms and provisions of the Plan are
incorporated herein by reference and made a part hereof as though fully set
forth herein.  In the event of any
conflict or inconsistency between discretionary terms and provisions of this
Agreement, this Agreement shall govern and control.  In all other instances of conflicts or
inconsistencies or omissions, the terms and provisions of the Plan shall govern
and control.  All capitalized terms not
otherwise expressly defined in this Agreement shall have the meaning ascribed
to them in the Plan.

 

14.                                 Governing Law.  This Agreement shall be construed and
interpreted in accordance with the laws of the State of Delaware, without
regard to the principles of conflicts of law thereof.

 

15.                                 Counterparts.  This Agreement may be signed in counterparts,
each of which shall be an original with the same effect as if the signatures
thereto and hereto were upon the same instrument.

 

 

16.                                 No Right to
Continued Service.  This Agreement
does not confer upon the Participant any right to continue as an employee of
the Company, nor shall it interfere in any way with the right of the Company to
terminate the Participant’s employment at any time for any reason (subject to
any employment agreement).

 

17.                                 Entire Agreement.  This Agreement, together with the Plan,
contains the entire agreement and understanding between the parties with
respect to the subject matter hereof and supersedes all prior agreements,
written or oral, with respect thereto.

 

IN WITNESS WHEREOF, the Company has granted
this Option on the Effective Date.

 

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

 

	
   

  	
  NEUSTAR, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jeffrey E. Ganek

  	
   

  
	
   

  	
  Name: Jeffrey
  Ganek

  
	
   

  	
  Title: Chairman
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED:

  
	
   

  
	
   

  
	
  /s/ Jeffrey
  Babka

  	
   

  
	
  Jeffrey Babka

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