Document:

exv4w1

Exhibit 4.1

JABIL CIRCUIT, INC.

2011 STOCK AWARD AND INCENTIVE PLAN

	1.	 	Purposes of the Plan. The purposes of this Stock Award and Incentive Plan are to
help the Company and its Subsidiaries attract and retain personnel for positions of
substantial responsibility, to provide for incentive awards that appropriately reward
achievement of Company and business-unit goals, and to promote the success of the Company’s
business.
	 
	2.	 	Definitions. As used herein, the following definitions shall apply:

	 	a)	 	“Administrator” means the Board or any Committee or person(s) as shall be
administering the Plan, in accordance with Section 4 of the Plan.
	 
	 	b)	 	“Applicable Law” means the legal requirements relating to the administration of
the Plan under applicable federal, state, local and foreign corporate, tax, securities,
contract and other laws, and the rules and requirements of any stock exchange or
quotation system on which the Common Stock is listed or quoted, all as amended through
the applicable date. The term “Applicable Law” includes laws and regulations that are
not mandatory but compliance with which confers benefits on the Company or Grantees
(e.g., Code Sections 162(m), 409A, and 422, and Exchange Act Rule 16b-3), where such
compliance is intended under the Plan.
	 
	 	c)	 	“Award” means an Option, Stock Appreciation Right, Stock Award, Cash-Based
Award, or Other Stock-Based Award granted under the Plan.
	 
	 	d)	 	“Award Agreement” means the agreement, notice and/or terms or conditions by
which an Award is evidenced, documented in such form (including by electronic
communication) as may be approved by the Administrator.
	 
	 	e)	 	“Base Price” means the price to be used as the basis for determining the Spread
upon the exercise of a Stock Appreciation Right.
	 
	 	f)	 	“Board” means the Board of Directors of the Company.
	 
	 	g)	 	“Cash-Based Award” means an Award granted under Section 9 of the Plan.
	 
	 	h)	 	“Cause” means, unless otherwise provided in an Award Agreement:

	 	i)	 	A Grantee’s conviction of a crime involving fraud or
dishonesty; or
	 
	 	ii)	 	A Grantee’s continued willful or reckless material misconduct
in the performance of the Grantee’s duties after receipt of written notice from
the Company concerning such misconduct, provided, however, that for purposes of
this Section 2.h)ii), Cause shall not include any one or more of the following:
bad judgment, negligence or any act or omission believed by the Grantee in good
faith to have been in or not opposed to the interest of the Company (without
intent of the Grantee to gain, directly or indirectly, a profit to which the
Grantee was not legally entitled).

	 	i)	 	“Change in Control” means the happening of any of the following after the Plan
has become effective, unless otherwise provided in an Award Agreement:

	 	i)	 	the direct or indirect sale, lease, transfer, conveyance or
other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or

 

 

	 	 	 	substantially all of the properties or assets of the Company and its
Subsidiaries taken as a whole to any person (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) other than the Company or one
of its Subsidiaries, provided, for the avoidance of doubt, that the sale of
a Subsidiary shall not constitute a Change in Control if the Subsidiary does
not represent substantially all of the properties or assets of the Company
and its Subsidiaries taken as a whole;

	 	ii)	 	the adoption of a plan relating to the Company’s liquidation or
dissolution, with all material contingencies satisfied or waived, and the
taking of a substantial step to implement such liquidation or dissolution;
	 
	 	iii)	 	the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any person
other than the Company or its Subsidiaries, becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more
than 50% of the combined voting power of the Company’s voting stock or other
voting stock into which the Company’s voting stock is reclassified,
consolidated, exchanged or changed, measured by voting power rather than number
of shares;
	 
	 	iv)	 	the Company consolidates with, or merges with or into, any
person, or any person consolidates with, or merges with or into, the Company,
in any such event pursuant to a transaction in which any of the voting stock of
the Company or such other person is converted into or exchanged for cash,
securities or other property, other than any such transaction where the shares
of voting stock of the Company outstanding immediately prior to such
transaction directly or indirectly constitute, or are converted into or
exchanged for, a majority of the voting stock of the surviving person
immediately after giving effect to such transaction; or
	 
	 	v)	 	the first day on which a majority of the members of the Board
are not Continuing Directors. “Continuing Director” means, as of any date of
determination with respect to any Award, any member of the Board who (1) was a
member of the Board on the Date of Grant of such Award; or (2) was nominated
for election or elected to the Board with the approval of a majority of the
Continuing Directors who were members of the Board at the time of such
nomination or election.

	 	j)	 	“Code” means the Internal Revenue Code of 1986, as amended. References to any
provision of the Code or regulation includes regulations, proposed regulations and
applicable guidance thereunder.
	 
	 	k)	 	“Committee” means a Committee appointed by the Board in accordance with Section
4 of the Plan.
	 
	 	l)	 	“Common Stock” means the Common Stock, $.001 par value, of the Company.
	 
	 	m)	 	“Company” means Jabil Circuit, Inc., a Delaware corporation.
	 
	 	n)	 	“Consultant” means any person, including an advisor, engaged by the Company or
a Parent or Subsidiary to render services and who is compensated for such services,
excluding an Employee and Director performing services in his or her capacity as such.
	 
	 	o)	 	“Continuous Status as an Employee or Consultant or Non-Employee Director”
means, unless otherwise provided in an Award Agreement, that the employment or service
or consulting relationship is not interrupted or terminated in any way (whether by the
Company, any Parent or Subsidiary, or by the Grantee). Unless otherwise provided in an
Award Agreement, Continuous Status as an Employee or Consultant or Non-Employee
Director shall not be considered

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	 	 	 	interrupted in the case of (i) any leave of absence approved in writing by the
Board, an Officer, or a person designated in writing by the Board or an Officer as
authorized to approve a leave of absence, including sick leave, military leave, or
any other personal leave; provided, however, that for purposes of Incentive Stock
Options, any such leave may not exceed 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract (including certain Company
policies) or statute, or (ii) transfers between locations of the Company or between
the Company, a Parent, Subsidiary or successor of the Company; or (iii) a change in
the status of the Grantee from Employee to Consultant or Non-Employee Director, or
from Consultant to Employee or Non-Employee Director, or from Non-Employee Director
to Employee or Consultant (subject to Section 21 and other applicable requirements
of Code Section 409A).
	 
	 	p)	 	“Covered Shares” means the Common Stock subject to an Award, including the
gross number of shares underlying an Option or Stock Appreciation Right or Restricted
Stock Unit Award.
	 
	 	q)	 	“Date of Grant” means the date specified by the Administrator on which a grant
of an Award shall become effective, which shall not be earlier than the date on which
the Administrator makes the final determination granting the Award.
	 
	 	r)	 	“Date of Termination” means the date on which a Grantee’s Continuous Status as
an Employee or Consultant or Non-Employee Director terminates, unless otherwise
specified in an Award Agreement (subject to Section 21 and other applicable
requirements of Code Section 409A).
	 
	 	s)	 	“Director” means a member of the Board.
	 
	 	t)	 	“Disability” means, unless otherwise provided in an Award Agreement, total and
permanent disability as defined in Section 22(e)(3) of the Code.
	 
	 	u)	 	“Dividend Equivalent” means a right to receive a payment equal to the amount of
cash dividends and value of other distributions that would have been payable on Covered
Shares during a period of time had such Covered Shares been issued to the Grantee
during such period of time.
	 
	 	v)	 	“Employee” means any person, including Officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. Neither service as a Director nor
payment of a director’s fee by the Company shall be sufficient to constitute
“employment” by the Company.
	 
	 	w)	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act or regulation includes regulations and
applicable guidance thereunder.
	 
	 	x)	 	“Fair Market Value” means, as of any date, the value of Common Stock determined
as follows:

	 	i)	 	If the Common Stock is listed on any established stock exchange
and readily tradable on such market, the Fair Market Value of a Share of Common
Stock shall be the closing sales price for such stock in consolidated trading
in such listed securities on the day of determination (or, if no closing sales
price for such day is reported, on the latest previous trading day), as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable; or
	 
	 	ii)	 	In the absence of an established market for the Common Stock or
ready tradability in such market, the Administrator shall determine Fair Market
Value on a reasonable basis using a method that complies with Code Section
409A.

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	 	y)	 	“Good Reason” means, unless otherwise provided by an Award Agreement:

	 	i)	 	The assignment to the Grantee of any duties adverse to the
Grantee and materially inconsistent with the Grantee’s position (including
status, titles and reporting requirement), authority, duties or
responsibilities, or any other action by the Company that results in a material
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action that is not
taken in bad faith;
	 
	 	ii)	 	Any material reduction in compensation; or
	 
	 	iii)	 	Change in location of office of more than 35 miles without
prior consent of the Grantee;

	 	 	 	provided, however, that the Grantee’s resignation will not constitute a resignation
for Good Reason unless the Grantee first provides written notice to the Company of
the existence of the Good Reason within 90 days following the effective date of the
occurrence of the Good Reason, and the Good Reason remains uncorrected by the
Company for more than 30 days following such written notice of the Good Reason from
the Grantee to the Company, and the effective date of the Grantee’s resignation is
within one year following the effective date of the occurrence of the Good Reason.

	 	z)	 	“Grantee” means an individual who has been granted an Award.
	 
	 	aa)	 	“Incentive Stock Option” means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
	 
	 	bb)	 	“Non-Employee Director” means a Director who is not an Employee.
	 
	 	cc)	 	“Nonqualified Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.
	 
	 	dd)	 	“Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act.
	 
	 	ee)	 	“Option” means an option to purchase Shares granted under Section 6 of the Plan.
	 
	 	ff)	 	“Option Price” means the purchase price payable upon the exercise of an Option.
	 
	 	gg)	 	“Other Stock-Based Award” means an Award granted under Section 10 of the Plan.
	 
	 	hh)	 	“Parent” means a corporation, whether now or hereafter existing, in an unbroken
chain of corporations ending with the Company if each of the corporations other than
the Company holds at least 50 percent of the voting shares of one of the other
corporations in such chain.
	 
	 	ii)	 	“Plan” means this 2011 Stock Award and Incentive Plan, as amended from time to
time.
	 
	 	jj)	 	“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with respect
to the Plan.
	 
	 	kk)	 	“Share” means a share of the Common Stock, as adjusted in accordance with
Section 13 of the Plan.
	 
	 	ll)	 	“Spread” means, in the case of a Stock Appreciation Right, the amount by which
the Fair Market Value per Share on the date when any such right is exercised exceeds
the Base Price specified in such right.

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	 	mm)	 	“Stock Appreciation Right” or “SAR” means a right granted under Section 7 of
the Plan.
	 
	 	nn)	 	“Stock Award” means Restricted Stock or Restricted Stock Units granted to a
Grantee under Section 8 of the Plan.
	 
	 	o) 	 	“Subsidiary” means a corporation, domestic or foreign, of which not less than
50 percent of the voting shares are held by the Company or a Subsidiary, whether or not
such corporation now exists or is hereafter organized or acquired by the Company or a
Subsidiary

	3.	 	Stock Subject to the Plan.

	 	a)	 	Reserved Shares. Subject to the provisions of Section 13 of the Plan
and except as otherwise provided in this Section 3, the maximum aggregate number of
Shares that may be subject to Awards under the Plan is 8,850,000. The Shares may be
authorized, but unissued, or reacquired Common Stock. The Shares issued by the Company
hereunder may be, at the Company’s option, either (i) evidenced by a certificate
registered in the name of the Grantee, or (ii) credited to a book-entry account for the
benefit of the Grantee maintained by the Company’s stock transfer agent or its
designee. If an Award for any reason expires or is terminated or cancelled or
forfeited, the Shares allocable to the expired, terminated, canceled, or forfeited
portion of such Award shall become available for future Awards under the Plan (unless
the Plan has terminated). If any portion of an outstanding award that was granted
under the Jabil Circuit, Inc. 2002 Stock Incentive Plan (the “2002 Plan”) for any
reason expires or is terminated or canceled or forfeited on or after the date of
termination of the 2002 Plan, the Shares allocable to the expired, terminated,
canceled, or forfeited portion of such 2002 Plan award shall be available for issuance
under the Plan.
	 
	 	b)	 	Incentive Stock Option Maximum. In no event shall the number of Shares
issued upon the exercise of Incentive Stock Options exceed 8,850,000 Shares, subject to
adjustment as provided in Section 13 of the Plan.
	 
	 	c)	 	Maximum Fiscal Year Award. No Grantee may be granted Awards relating
to more than 3,000,000 Covered Shares in any one fiscal year of the Company, subject to
adjustment as provided in Section 13 of the Plan. In addition, the maximum amount that
a Grantee may earn by satisfaction of performance goals under cash-denominated Awards
during any one fiscal year of the Company is $45,000,000. For this purpose, the fiscal
year in which a performance goal is met is the year in which this limitation applies,
regardless of any continuing service-based vesting or other conditions relating to
settlement of the Award.

	4.	 	Administration of the Plan.

	 	a)	 	Procedure.

	 	i)	 	Multiple Administrative Bodies. The Plan may be
administered by different bodies with respect to different groups of Employees
and Consultants. Except as provided below, the Plan shall be administered by
(A) the Board or (B) a committee designated by the Board and constituted to
satisfy Applicable Law.
	 
	 	ii)	 	Rule 16b-3. To the extent the Board or the Committee
considers it desirable for transactions relating to Awards to be eligible to
qualify for an exemption under Rule 16b-3, the transactions contemplated under
the Plan shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
	 
	 	iii)	 	Section 162(m) of the Code. To the extent the Board or
the Committee considers it desirable for compensation delivered pursuant to
Awards to be eligible to qualify for an exemption from the limit on tax
deductibility of compensation under Section 162(m) of
the Code, the transactions contemplated under the Plan shall be structured
to satisfy the requirements for exemption under Section 162(m) of the Code.

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	 	iv)	 	Authorization of Officers to Grant Options. In
accordance with and to the extent permitted by Applicable Law, the Board may,
by a resolution adopted by the Board, authorize one or more Officers to
designate Employees (excluding Officers) to be Grantees of Awards and determine
the number of Covered Shares to be granted to such Employees; provided,
however, that the resolution adopted by the Board so authorizing such Officer
or Officers shall specify the total number of Covered Shares such Officer or
Officers may so grant and other terms as required by Delaware General
Corporation Law Section 157(c) and other Applicable Law.
	 
	 	v)	 	Ministerial Actions. Officers are authorized to
perform all ministerial functions under the Plan relating to all Grantees.
“Ministerial functions” do not include granting Awards and do not include
modifying Awards or taking other actions that materially increase benefits to a
Grantee or result in material additional cost to the Company.

	 	b)	 	Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of a Committee or an Officer, subject to the specific duties delegated
by the Board to such Committee or Officer, the Administrator shall have the authority,
in its discretion:

	 	i)	 	to determine the Fair Market Value of the Common Stock;
	 
	 	ii)	 	to select the Consultants and Employees and Non-Employee
Directors to whom Awards will be granted under the Plan;
	 
	 	iii)	 	to determine whether, when, to what extent and in what types
and amounts Awards are granted under the Plan;
	 
	 	iv)	 	to determine the number of Covered Shares with respect to each
Award granted under the Plan;
	 
	 	v)	 	to determine the forms of Award Agreements, which need not be
the same for each grant or for each Grantee, and which may be delivered
electronically, for use under the Plan;
	 
	 	vi)	 	to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Award granted under the Plan. Such terms and
conditions, which need not be the same for each grant or for each Grantee,
include, but are not limited to, the Option Price, the time or times when
Options and SARs may be exercised (which may be based on performance criteria),
the extent to which vesting is suspended during a leave of absence, any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Award or Covered Shares relating thereto, based in
each case on such factors as the Administrator shall determine;
	 
	 	vii)	 	to construe and interpret the terms of the Plan and Awards;
	 
	 	viii)	 	to prescribe, amend and rescind rules and regulations relating
to the Plan, including, without limiting the generality of the foregoing, rules
and regulations relating to the operation and administration of the Plan to
accommodate the specific requirements of local and foreign laws and procedures;
	 
	 	ix)	 	to modify or amend each Award (subject to Section 15 of the
Plan);

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	 	x)	 	to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Award previously granted by the
Administrator;
	 
	 	xi)	 	to determine the terms and restrictions applicable to Awards;
	 
	 	xii)	 	to make such adjustments or modifications to Awards granted to
Grantees who are Employees of foreign Subsidiaries as are advisable to fulfill
the purposes of the Plan or to comply with Applicable Law;
	 
	 	xiii)	 	to delegate its duties and responsibilities under the Plan
with respect to sub-plans applicable to foreign Subsidiaries, except its duties
and responsibilities with respect to Employees who are also Officers or
Directors subject to Section 16(b) of the Exchange Act;
	 
	 	xiv)	 	to provide any notice or agreement or other communication
required or permitted by the Plan in either written or electronic form;
	 
	 	xv)	 	to determine the vesting period during which each Award shall
be subject to a risk of forfeiture upon a voluntary termination of employment
or service, or termination in other specified circumstances, and the terms upon
which such risk will end (i.e., “vesting” will occur), at a stated date or
dates or on an accelerated basis in specified circumstances; and
	 
	 	xvi)	 	to make all other determinations deemed necessary or advisable
for administering the Plan.

	 	c)	 	Effect of Administrator’s Decision. The Administrator’s decisions,
determinations and interpretations shall be final and binding on all Grantees and any
other holders of Awards.

	5.	 	Eligibility and General Conditions of Awards.

	 	a)	 	Eligibility. Awards other than Incentive Stock Options may be granted
to Employees, Non-Employee Directors, and Consultants. Incentive Stock Options may be
granted only to Employees. If otherwise eligible, an Employee, Non-Employee Director,
or Consultant who has been granted an Award may be granted additional Awards.
Modifications to outstanding Awards may be made without regard to whether the Grantee
is then currently eligible for a new Award.
	 
	 	b)	 	Maximum Term. Subject to the following provision, the term during
which an Award may be outstanding shall not extend more than ten years after the Date
of Grant, and shall be subject to earlier termination as specified elsewhere in the
Plan or Award Agreement; provided, however, that any deferral of a cash payment or of
the delivery of Shares that is permitted or required by the Administrator pursuant to
Section 12 of the Plan may, if so permitted or required by the Administrator, extend
more than ten years after the Date of Grant of the Award to which the deferral relates.
	 
	 	c)	 	Award Agreement. To the extent not set forth in the Plan, the terms
and conditions of each Award, which need not be the same for each grant or for each
Grantee, shall be set forth in an Award Agreement. The Administrator, in its
discretion, may require as a condition to any Award Agreement’s effectiveness that the
Award Agreement be executed by the Grantee, including by electronic signature or other
electronic indication of acceptance, and that the Grantee agree to such further terms
and conditions as specified in the Award Agreement.
	 
	 	d)	 	Death, Disability, Termination of Continuous Status as an Employee or
Consultant or Non-Employee Director, and Related Events.

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	 	i)	 	Death. Except as otherwise provided in an Award
Agreement, in the event that the Grantee’s Continuous Status as an Employee or
Consultant or Non-Employee Director terminates due to death, then (a) all of
the Grantee’s outstanding Options and Stock Appreciation Rights that are not
yet fully exercisable shall immediately become exercisable in full at the date
of death and shall remain exercisable in accordance with their terms, and (b)
all of the Grantee’s outstanding unvested Stock Awards, Cash-Based Awards, and
Other Stock-Based Awards shall become immediately fully vested and
non-forfeitable at the date of death. Notwithstanding the preceding sentence,
and except as otherwise provided in an Award Agreement, if the Grantee’s
outstanding Award remains subject to performance-based forfeiture conditions
immediately prior to the Grantee’s date of death, (a) a pro rata portion of the
Grantee’s outstanding Award for each applicable performance measurement period
that is an Option or a Stock Appreciation Right shall immediately become
non-forfeitable and exercisable at the date of death and shall remain
exercisable in accordance with its terms, and the remaining portion, if any,
shall be forfeited at the date of death; (b) a pro rata portion of the
Grantee’s outstanding Award for each applicable performance measurement period
that is a Stock Award, Cash-Based Award or Other Stock-Based Award shall become
immediately vested and non-forfeitable at the date of death, and the remaining
portion, if any, shall be forfeited at the date of death; and (c) any other
such outstanding Award for a performance measurement period that is not an
applicable performance measurement period shall be forfeited at the date of
death. The pro rata portion of the Grantee’s outstanding performance-based
Award for each applicable performance measurement period that shall become
non-forfeitable at the Grantee’s date of death shall be determined as follows:

	 	(A)	 	The Company’s fiscal quarter-end coincident
with or next preceding the Grantee’s death (or, if the Grantee’s death
occurs in the first fiscal quarter of the applicable performance
measurement period, then the Company’s fiscal quarter-end coincident
with or next following the Grantee’s death) shall be treated as the end
of the applicable performance measurement period, with the
Administrator determining the actual level of the performance goal(s)
achieved (such determination may be by means of a good faith estimate)
and calculating, on a preliminary basis, the resulting portion of the
Award that would have become non-forfeitable (or, with respect to
Options and Stock Appreciation Rights, that would have become
exercisable) for the applicable performance measurement period.
	 
	 	(B)	 	The portion of the Award determined under
clause (A) above shall be pro-rated by multiplying that portion by a
fraction, the numerator of which is the number of months from the
beginning of the applicable performance measurement period through the
date of death (rounding any partial month to the next whole month) and
the denominator of which is the aggregate number of months in the
applicable performance measurement period.

For purposes of this Section 5.d)i), “applicable performance measurement period” means a
performance measurement period that commences before the date of the Grantee’s death and that ends
after the date of the Grantee’s death. Any portion of an outstanding Award that remains subject to
performance-based forfeiture conditions immediately prior to the Grantee’s date of death and that
exceeds the pro rata portion of the Award determined under clause (A) and (B) above, including but
not limited to any portion of the Award that was subject to performance-based forfeiture conditions
for a performance measurement period that had not commenced at the Grantee’s date of death, shall
be forfeited at the Grantee’s date of death.

	 	ii)	 	Disability. Except as otherwise provided in an Award
Agreement, in the event that the Grantee’s Continuous Status as an Employee or
Consultant or Non-Employee Director terminates due to Disability, then (a) all
of the Grantee’s outstanding Options and Stock Appreciation Rights that are not
yet fully exercisable shall immediately become

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	 	 	 	exercisable in full at the date of termination and shall remain exercisable
in accordance with their terms, and (b) all of the Grantee’s outstanding
unvested Stock Awards, Cash-Based Awards, and Other Stock-Based Awards shall
become immediately fully vested and non-forfeitable at the date of
termination. Notwithstanding the preceding sentence, and except as otherwise
provided in an Award Agreement, if the Grantee’s outstanding Award remains
subject to performance-based forfeiture conditions immediately prior to the
Grantee’s date of termination, (a) a pro rata portion of the Grantee’s
outstanding Award for each applicable performance measurement period that is
an Option or a Stock Appreciation Right shall remain outstanding at the
Grantee’s date of termination and shall be eligible to become exercisable
and non-forfeitable based on the actual achievement of the performance
goal(s) in the applicable performance measurement period in accordance with
the terms of the Award Agreement, and the remaining portion, if any, shall
be forfeited at the date of termination; (b) a pro rata portion of the
Grantee’s outstanding Award for each applicable performance measurement
period that is a Stock Award, Cash-Based Award or Other Stock-Based Award
shall remain outstanding at the Grantee’s date of termination and shall be
eligible to become non-forfeitable based on the actual achievement of the
performance goal(s) in the applicable performance measurement period in
accordance with the terms of the Award Agreement, and the remaining portion,
if any, shall be forfeited at the date of termination; and (c) any other
such outstanding Award for a performance measurement period that is not an
applicable performance measurement period shall be forfeited at the date of
the Grantee’s termination due to Disability. The pro rata portion of the
Grantee’s outstanding performance-based Award for each applicable
performance measurement period that shall remain outstanding at the
Grantee’s date of termination and that shall be eligible to become
non-forfeitable shall be determined by multiplying the Award subject to the
performance-based forfeiture conditions for the applicable performance
measurement period as originally granted (i.e., the target Award for the
applicable performance measurement period) by a fraction, the numerator of
which is the number of months from the beginning of the applicable
performance measurement period through the date of termination (rounding any
partial month to the next whole month) and the denominator of which is the
aggregate number of months in the applicable performance measurement period.
For purposes of this Section 5.d)ii), “applicable performance measurement
period” means a performance measurement period that commences before the
Grantee’s date of termination and that ends after the date of the Grantee’s
termination due to Disability. Non-forfeitability of such pro rata portion
of the Grantee’s Award will remain subject to the achievement of the
performance goal(s) for the applicable performance measurement period in
accordance with the terms of the Award Agreement. The death of the Grantee
following a termination governed by this Section 5.d)ii), or a Change in
Control following such termination, shall not increase or decrease the
portion of the Award forfeited or not forfeited under this Section 5.d)ii)
except as otherwise provided in an Award Agreement. Any portion of an
outstanding Award that remains subject to performance-based forfeiture
conditions immediately prior to the Grantee’s date of termination due to
Disability and that exceeds the pro rata portion of the Award that remains
outstanding at the date of termination under this Section 5.d)ii), including
but not limited to any portion of the Award that was subject to
performance-based forfeiture conditions for a performance measurement period
that has not commenced at the date of the Grantee’s termination due to
Disability, shall be forfeited at the Grantee’s date of termination. Unless
otherwise determined by the Administrator, as a condition to the
non-forfeiture of an Award or any portion of an Award under this Section
5.d)ii), the Grantee shall be required to execute a separation agreement and
release, in a form prescribed by the Administrator, setting forth covenants
relating to noncompetition, nonsolicitation, nondisparagement,
confidentiality and similar covenants for the protection of the Company’s
business and releasing the Company from liability in connection with the
Grantee’s termination.

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	 	iii)	 	Non-Employee Directors; Other Termination Events.
Notwithstanding anything to the contrary in Sections 5.d)i) and 5.d)ii) above,
such sections shall not apply to Awards granted to Non-Employee Directors.
Except as otherwise provided in Sections 5.d)i) and 5.d)ii) above, the
Administrator shall establish and set forth in each Award Agreement the manner
in which the Grantee’s termination of Continuous Status as an Employee or
Consultant or Non-Employee Director and related events will affect an Award.

	 	e)	 	Buyout Provisions. Except as otherwise provided in this Section 5.e),
the Administrator may at any time offer to buy out, for a payment in cash or Shares, an
Award previously granted, based on such terms and conditions as the Administrator shall
establish and communicate to the Grantee at the time that such offer is made. No such
buy out shall occur without the prior approval or consent of the Company’s stockholders
if such a transaction would constitute a “repricing” defined in Section 15 of the Plan.
This provision is intended only to clarify the powers of the Administrator and shall
not in any way be deemed to create any rights on the part of Grantees to buyout offers
or payments.
	 
	 	f)	 	Nontransferability of Awards.

	 	i)	 	Except as provided in Section 5.f)iii) below, each Award, and
each right under any Award, shall be exercisable only by the Grantee during the
Grantee’s lifetime, or, if permissible under Applicable Law, by the Grantee’s
guardian or legal representative.
	 
	 	ii)	 	Except as provided in Section 5.f)iii) below, no Award (prior
to the time, if applicable, Shares are issued in respect of such Award), and no
right under any Award, may be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Grantee otherwise than by will or by
the laws of descent and distribution (or to the Company) and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company or any Subsidiary; provided, that
the designation of a beneficiary shall not constitute an assignment,
alienation, pledge, attachment, sale, transfer or encumbrance.
	 
	 	iii)	 	To the extent and in the manner permitted by Applicable Law
(including restrictions applicable to Incentive Stock Options), and to the
extent and in the manner permitted by the Administrator, and subject to such
terms and conditions as may be prescribed by the Administrator, a Grantee may
transfer an Award to:

	 	(a)	 	a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law of the Grantee (including adoptive
relationships);
	 
	 	(b)	 	any person sharing the employee’s household
(other than a tenant or employee);
	 
	 	(c)	 	a trust in which persons described in (a) and
(b) have more than 50 percent of the beneficial interest;
	 
	 	(d)	 	a foundation in which persons described in (a)
or (b) or the Grantee control the management of assets; or
	 
	 	(e)	 	any other entity in which the persons described
in (a) or (b) or the Grantee own more than 50 percent of the voting
interests;

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	 	(f)	 	provided, however, that such transfer is not
for value. The following shall not be considered transfers for value: a
transfer under a domestic relations order in settlement of marital
property rights, and a transfer to an entity in which more than 50
percent of the voting interests are owned by persons described in (a)
above or the Grantee, in exchange for an interest in such entity.

	6.	 	Options. The Administrator may grant Options to Employees or Consultants or
Non-Employee Directors from time to time upon such terms and conditions as the Administrator
may determine in accordance with the following provisions:

	 	a)	 	Limitations on Incentive Stock Options. Options granted under this
Plan may be Incentive Stock Options, Nonqualified Stock Options or a combination of the
foregoing. Each grant shall specify whether (or the extent to which) the Option is an
Incentive Stock Option or a Nonqualified Stock Option. Notwithstanding any such
designation, to the extent that the aggregate Fair Market Value of the Shares as of the
Date of Grant with respect to which Options designated as Incentive Stock Options are
exercisable for the first time by a Grantee during any calendar year (under all plans
of the Company) exceeds $100,000, such Options shall be treated as Nonqualified Stock
Options. In the case of an Incentive Stock Option granted to a Grantee who, at the
time the Incentive Stock Option is granted, owns stock representing more than 10
percent of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Incentive Stock Option shall be five years from the Date of
Grant, or such shorter term as may be provided in the Award Agreement.
	 
	 	b)	 	Option Price and Consideration.

	 	i)	 	Option Price. The per share Option Price for the
Shares to be issued pursuant to exercise of an Option shall be determined by
the Administrator and, except as otherwise provided in this Section 6.b)i),
shall be no less than 100 percent of the Fair Market Value per Share on the
Date of Grant.

	 	(a)	 	In the case of an Incentive Stock Option
granted to an Employee who on the Date of Grant owns stock representing
more than 10 percent of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share Option Price shall
be no less than 110 percent of the Fair Market Value per Share on the
Date of Grant.
	 
	 	(b)	 	Any Option that is (1) granted to a Grantee in
connection with the acquisition (“Acquisition”), however effected, by
the Company of another corporation or entity (“Acquired Entity”) or the
assets thereof, (2) associated with an option to purchase shares of
stock or other equity interest of the Acquired Entity or an affiliate
thereof (“Acquired Entity Option”) held by such Grantee immediately
prior to such Acquisition, and intended to preserve for the Grantee the
economic value of all or a portion of such Acquired Entity Option, may
be granted with such Option Price as the Administrator determines to be
necessary to achieve such preservation of economic value.

	 	c)	 	Waiting Period and Exercise Dates. At the time an Option is granted,
the Administrator shall fix the period within which the Option may be exercised
(subject to Section 5.b)) and shall determine any conditions that must be satisfied
before the Option may be exercised. An Option shall be exercisable only to the extent
that it is vested and exercisable according to the terms of the Award Agreement.

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	 	d)	 	Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method of
payment. In the case of an Incentive Stock
Option, the Administrator shall determine the acceptable form of consideration at
the time of grant. The acceptable form of consideration may consist of any
combination of cash, personal check, wire transfer or, subject to the approval of
the Administrator:

	 	i)	 	pursuant to rules and procedures approved by the Administrator,
promissory note, provided however that, a promissory note shall not be an
acceptable form of consideration to the extent that such a promissory note is
prohibited by Applicable Law as a result of the Company’s acceptance of such a
promissory note constituting (within the meaning of Section 13(k) of the
Exchange Act) a direct or indirect (including through any Subsidiary) extension
or maintenance of credit, arrangement for the extension of credit, or renewal
of an extension of credit, in the form of a personal loan to or for any
Director or executive Officer by the Company;
	 
	 	ii)	 	nonforfeitable, unrestricted Shares owned by the Grantee at the
time of exercise and which have a value at the time of exercise that is equal
to the Option Price;
	 
	 	iii)	 	net exercise, in which case the Company will not require a
payment of the Option Option Price from the Grantee but will reduce the number
of Shares issued upon the exercise by the number of whole Shares that has an
aggregate Fair Market Value that equal to the aggregate Option Price for the
portion of the Option exercised;
	 
	 	iv)	 	pursuant to procedures approved by the Administrator, through
the sale of the Shares acquired on exercise of the Option through a
broker-dealer to whom the Grantee has submitted an irrevocable notice of
exercise and irrevocable instructions to deliver promptly to the Company the
cash amount sufficient to pay the Option Price, together with, if requested by
the Company, the amount of federal, state, local or foreign withholding taxes
payable by the Grantee by reason of such exercise; or
	 
	 	v)	 	such other consideration and method of payment for the issuance
of Shares to the extent permitted by Applicable Law.

	 	e)	 	Exercise of Option.

	 	i)	 	Procedure for Exercise; Rights as a Stockholder.

	 	(a)	 	Any Option granted hereunder shall be
exercisable according to the terms of the Plan and at such times and
under such conditions as determined by the Administrator and set forth
in the Award Agreement.
	 
	 	(b)	 	An Option may not be exercised for a fraction
of a Share.
	 
	 	(c)	 	An Option shall be deemed exercised when the
Company receives:

	 	(1)	 	written or electronic notice of
exercise (in accordance with the Award Agreement and any action
taken by the Administrator pursuant to Section 4.b) of the Plan
or otherwise) from the person entitled to exercise the Option,
and
	 
	 	(2)	 	full payment for the Shares with
respect to which the Option is exercised. Full payment may
consist of any consideration and method of payment authorized by
the Administrator and permitted by the Award Agreement and the
Plan.

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	 	(d)	 	Shares issued upon exercise of an Option shall
be issued in the name of the Grantee or, if requested by the Grantee,
in the name of the Grantee and his or her spouse (or other permitted
transferee). Until the stock certificate evidencing such Shares is
issued or delivery is otherwise effected by the Company (as evidenced
by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate, or
provide a commercially reasonable alternative means of delivery,
promptly after the Option is exercised. No Dividend Equivalents will be
credited on any outstanding Option and no adjustment will be made for a
dividend or other right for which the record date is prior to the date
the Shares are delivered upon exercise, except as provided in Section
13 of the Plan.

	 	(e)	 	Exercising an Option in any manner shall
decrease the number of Shares thereafter available under the Option, by
the number of Shares as to which the Option is exercised.

	7.	 	Stock Appreciation Rights. The Administrator may grant Stock Appreciation Rights to
Employees or Consultants or Non-Employee Directors from time to time upon such terms and
conditions as the Administrator may determine in accordance with the following provisions. A
Stock Appreciation Right is the right of the Grantee to receive from the Company an amount in
cash or Shares equal to the Spread at the time of the exercise of such right.

	 	a)	 	Base Price. The Base Price shall be equal to or greater than the Fair
Market Value on the Date of Grant.
	 
	 	b)	 	Exercise of SARs. SARs shall be exercised by the delivery of a written
or electronic notice of exercise to the Company (in accordance with the Award Agreement
and any action taken by the Administrator pursuant to Section 4.b) of the Plan or
otherwise), setting forth the number of Covered Shares with respect to which the SAR is
to be exercised.
	 
	 	c)	 	Payment of SAR Benefit. Upon exercise of a SAR, the Grantee shall be
entitled to receive payment from the Company in an amount determined by multiplying:

	 	i)	 	the Spread; by
	 
	 	ii)	 	the number of Shares with respect to which the SAR is
exercised; provided, that the Administrator may provide in the Award Agreement
that the benefit payable on exercise of an SAR shall not exceed such limit
(which may be expressed as a percentage of the Fair Market Value of a Share on
the Date of Grant or as a fixed value limit or otherwise) as the Administrator
shall specify (this limit cannot operate to exceed the Spread). As determined
by the Administrator, the payment upon exercise of an SAR may be in cash, in
Shares that have an aggregate Fair Market Value (as of the date of exercise of
the SAR) equal to the amount of the payment, or in some combination thereof, as
set forth in the Award Agreement.

	 	(a)	 	No Dividend Equivalents will be credited on any
outstanding SAR and no adjustment will be made for a dividend or other
right for which the record date is prior to the date the Shares (if
any) are delivered upon exercise of a SAR, except as provided in
Section 13 of the Plan.

13

 

	8.	 	Stock Awards.

	 	a)	 	Authorization to Grant Stock Awards. The Administrator may grant Stock
Awards to Employees or Consultants or Non-Employee Directors from time to time. A
Stock Award may be made in Shares or denominated in units representing rights to
receive Shares. Each Stock Award shall be evidenced by an Award Agreement that shall
set forth the conditions, if any, which will need to be timely satisfied before the
Stock Award will be vested and settled and the conditions, if any, under which the
Grantee’s interest in the related Shares or units will be forfeited. Any such
conditions for effectiveness or non-forfeitability may be based upon the passage of
time and continued service by the Grantee, or the achievement of specified performance
objectives, or both time-based and performance-based conditions. A Stock Award made in
Shares that are subject to forfeiture conditions and/or other restrictions may be
designated as an Award of “Restricted Stock.” A Stock Award denominated in units that
are subject to forfeiture conditions and/or other restrictions may be designated as an
Award of “Restricted Stock Units.” For the avoidance of doubt, the Administrator is
authorized to grant Shares as a bonus, or to grant Shares or other Awards in lieu of
obligations of the Company or a Subsidiary or affiliate to pay cash or deliver other
property under the Plan or under other plans or compensatory arrangements, subject to
such terms as shall be determined by the Administrator.
	 
	 	b)	 	Dividends, Voting and Other Ownership Rights.

	 	i)	 	Restricted Stock Awards. Unless otherwise determined
by the Administrator, an Award of Restricted Stock shall entitle the Grantee to
dividend, voting and other ownership rights during the period for which such
substantial risk of forfeiture is to continue; provided, however, that, in the
case of an Award of Restricted Stock that is conditioned on the attainment of
performance goals, the Grantee shall not receive payment of any dividends
unless and not earlier than such time as the Restricted Stock becomes earned.
An Award Agreement may require that any or all dividends or other distributions
paid on the Restricted Stock during the period for which the substantial risk
of forfeiture is to continue be automatically sequestered and reinvested in
additional Shares, which may be subject to the same restrictions as the
underlying Award or such other restrictions as the Administrator may determine.
	 
	 	ii)	 	Restricted Stock Unit Awards. Unless otherwise
determined by the Administrator, a Grantee shall not have any rights as a
stockholder with respect to Shares underlying an Award of Restricted Stock
Units until such time, if any, as the underlying Shares are actually issued to
the Grantee. The Administrator may provide in a Restricted Stock Unit Award
Agreement for the payment of Dividend Equivalents to the Grantee at such times
as paid to stockholders generally or at the time of vesting or other payout of
the Restricted Stock Units, provided, however, that in the case of such an
Award that is conditioned on the attainment of performance goals, the Grantee
shall not receive payment of any Dividend Equivalents unless and not earlier
than such time as the Restricted Stock Units have become earned, and provided
further, that if the payment or crediting of Dividend Equivalents is in respect
of an Award that is subject to Code Section 409A, then the payment or crediting
of such dividends or Dividend Equivalents shall conform to the requirements of
Code Section 409A.

	9.	 	Cash-Based Awards. The Administrator may grant Cash-Based Awards to Employees or
Consultants or Non-Employee Directors from time to time. Cash-Based Awards may be granted in such
amounts and on such terms and conditions as the Administrator determines in its discretion.
Cash-Based Awards may be denominated in cash, in Common Stock or other securities, in units, in
securities or debentures convertible into Common Stock, or in any combination of the foregoing, and
may be paid in Common Stock or other securities, in cash, or in a combination of Common Stock or
other securities and cash, all as determined in the discretion of the Administrator.

14

 

	10.	 	Other Stock-Based Awards. The Administrator may grant Other Stock-Based Awards to
Employees or Consultants or Non-Employee Directors from time to time. Other Stock-Based Awards may
be granted in such amounts, on such terms and conditions, and for such consideration, including no
consideration or such minimum consideration as may be required by Applicable Law, as the
Administrator determines in its discretion. Other Stock-Based Awards may be denominated in cash,
in Common Stock or other securities, in units, in securities or debentures convertible into Common
Stock, or in any combination of the foregoing, and may be paid in Common Stock or other securities,
in cash, or in a combination of Common Stock or other securities and cash, all as determined in the
discretion of the Administrator.
	 
	11.	 	Code Section 162(m) Provisions.

	 	a)	 	Notwithstanding any other provision of the Plan, if the Compensation Committee
of the Board (the “Compensation Committee”) determines at the time an Award is granted
to a Grantee that such Grantee is, or may be as of the end of the tax year for which
the Company would claim a tax deduction in connection with such Award, a “covered
employee” within the meaning of Code Section 162(m)(3), and to the extent the
Compensation Committee considers it desirable for compensation delivered pursuant to
such Award to be eligible to qualify for an exemption from the limit on tax
deductibility of compensation under Code Section 162(m), then the Compensation
Committee may provide that this Section 11 is applicable to such Award under such terms
as the Compensation Committee shall determine.
	 
	 	b)	 	If an Award is subject to this Section 11, then the lapsing of restrictions
thereon and the distribution of Shares pursuant thereto or payment, as applicable,
shall be subject to satisfaction of one, or more than one, objective performance goals.
The Compensation Committee shall determine the performance goals that will be applied
with respect to each Award subject to this Section 11 at the time of grant, but in no
event later than 90 days after the commencement of the period of service to which the
performance goal(s) relate (or 25% of the specified performance measurement period if
such period is less than one year). The performance criteria applicable to Awards
subject to this Section 11 will be one or more of the following criteria: stock price;
market share; sales, including to specified market segments or targeted customers;
earnings per share, core earnings per share or variations thereof; return on equity;
costs; revenue; cash to cash cycle; days payables outstanding; days of supply; days
sales outstanding; cash flow; operating income; profit after tax; profit before tax;
return on assets; return on net assets; return on sales; inventory turns; invested
capital, including completion of a specified capital-raising transaction; net operating
profit after tax; return on invested capital; total stockholder return; earnings;
return on equity or average shareowners’ equity; return on capital; return on
investment; income or net income; operating income or net operating income; operating
profit or net operating profit; operating margin; return on operating revenue; contract
awards or backlog; overhead or other expense reduction; growth in shareowner value
relative to the moving average of the S&P 500 Index or a peer group index; credit
rating; strategic plan development and implementation; net cash provided by operating
activities; gross margin; economic value added; customer satisfaction; financial return
ratios; market performance; completion of a specified acquisition or disposition;
bookings; business divestitures and acquisitions; cash position; contribution margin;
customer renewals; customer retention rates; earnings before interest and taxes;
EBITDA; employee satisfaction; expenses; gross profit dollars; growth in bookings;
growth in revenues; net profit; net sales; new product development; number of
customers; productivity; operating cash flow; operating expenses; product defect
measures; product release timelines; productivity; research and development milestones;
revenue growth; time to market; working capital; or such similarly objectively
determinable financial or other measures as may be adopted by the Compensation
Committee.

15

 

	 	c)	 	The targeted level or levels of performance with respect to such business
criteria may be established at such levels and in such terms as the Compensation
Committee may determine, in its discretion, including in absolute terms, as a goal
relative to performance in prior periods, or as a goal compared to the performance of
one or more comparable companies or an index covering
multiple companies. The targeted level or levels of performance may be established
in terms of Company-wide objectives or objectives that are related to the
performance of the individual Grantee or the Subsidiary, division, department or
function within the Company or Subsidiary in which the Grantee is employed. The
specified performance measurement period(s) may be annual, multi-year, quarterly, or
of any other duration determined by the Compensation Committee. The Compensation
Committee may specify that performance will be determined before payment of bonuses,
capital charges, non-recurring or extraordinary income or expense, or other
financial and general and administrative expenses for the performance period.
Performance goals need not be based on audited financial results.
	 
	 	d)	 	Notwithstanding any contrary provision of the Plan, the Compensation Committee
may not increase the number of Shares granted pursuant to any Stock Award subject to
this Section 11, nor may it waive the achievement of any performance goal established
pursuant to this Section 11 after the performance goals(s) have been determined under
Section 11.b).
	 
	 	e)	 	Prior to the payment of any Award subject to this Section 11, the Compensation
Committee shall certify in writing that the performance goal(s) applicable to such
Award was met.
	 
	 	f)	 	The Compensation Committee shall have the power to impose such other
restrictions on Awards subject to this Section 11 as it may deem necessary or
appropriate to ensure that such Awards satisfy all requirements for “performance-based
compensation” within the meaning of Code section 162(m).

	12.	 	Deferral of Receipt of Payment. The Administrator may permit or require a Grantee to
defer receipt of the payment of cash or the delivery of Shares that would otherwise be due by
virtue of the grant of or the lapse or waiver of restrictions with respect to Awards other
than Options and SARs. If any such deferral is required or permitted, the Administrator shall
establish such rules and procedures for such deferral, including rules and procedures
implemented pursuant to Section 21 for compliance with Code Section 409A.
	 
	13.	 	Adjustments Upon Changes in Capitalization or Change of Control.

	 	a)	 	Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of Covered Shares, and the number of Shares
which have been authorized for issuance under the Plan (including Section 3.a) and
3.b)) but as to which no Awards have yet been granted or which have been returned to
the Plan upon cancellation or expiration of an Award, and the annual per-person
limitation on equity Awards, as well as the price per share of Covered Shares and
share-based performance conditions of Awards, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting from a
stock split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company, and in the event
of an extraordinary dividend, spinoff or similar event affecting the value of Common
Stock; provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of consideration.” Such
adjustment shall be made by the Board, whose determination in that respect shall be
final, binding and conclusive. In furtherance of the foregoing, a Grantee shall have a
legal right to an adjustment to an Award which constitutes “share-based equity” in the
event of an “equity restructuring,” as such terms are defined under Financial
Accounting Standards Board Accounting Standards Codification Topic 718, which
adjustment shall preserve without enlarging the value of the Award to the Grantee.
Except as expressly provided herein, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall affect,
and no adjustment by reason thereof shall be made with respect to, the number or price
of shares of Covered Shares. No adjustment shall be made pursuant to this Section 13
in a manner that would cause Incentive Stock Options to violate Code Section 422(b) or
cause an Award to be subject to adverse tax consequences under Code Section 409A.

16

 

	 	b)	 	Change in Control. Unless otherwise provided in an Award Agreement,
the following provisions shall apply to outstanding Awards in the event of a Change in
Control.

	 	i)	 	Continuation, Assumption, or Replacement of Awards.

	 	(a)	 	In General. In the event of a Change
in Control, the surviving or successor entity (or its parent
corporation) may continue, assume, or replace Awards outstanding as of
the date of the Change in Control (with such adjustments as may be
required or permitted by the Plan), and such Awards or replacements
therefore shall remain outstanding and be governed by their respective
terms. A surviving or successor entity may elect to continue, assume,
or replace all Awards or only some Awards or portions of Awards. For
purposes of this subsection 13.b)i)(a), an Award shall be considered
assumed or replaced if, in connection with the Change in Control and in
a manner consistent with Code Sections 409A and 424, either (i) the
contractual obligations represented by the Award are expressly assumed
by the surviving or successor entity (or its parent corporation) with
appropriate adjustments to the number and type of securities subject to
the Award and the Option Price thereof that preserves the intrinsic
value of the Award existing at the time of the Change in Control, or
(ii) the Grantee has received a comparable equity-based award that
preserves the intrinsic value of the Award existing at the time of the
Change in Control without increasing the aggregate Option Price or Base
Price of such Award and provides for a vesting or exercisability
schedule that is the same as or more favorable to the Grantee.
	 
	 	(b)	 	Vesting following Continuation, Assumption,
or Replacement.

	 	(1)	 	If the Grantee’s Continuous
Status as an Employee or Consultant or Non-Employee Director
does not terminate prior to the first anniversary of the date of
the Change in Control (the “Change in Control Anniversary”),
then on the Change in Control Anniversary (i) all of the
Grantee’s continued, assumed, or replaced outstanding Options
and Stock Appreciation Rights that are not yet fully exercisable
shall immediately become exercisable in full and shall remain
exercisable in accordance with their terms, (ii) all of the
Grantee’s continued, assumed, or replaced unvested Stock Awards
and Other Stock-Based Awards will become immediately fully
vested and non-forfeitable; and (iii) any performance objectives
applicable to the Grantee’s continued, assumed, or replaced
unvested Awards for performance measurement periods not yet
ended at the date of the Change in Control Anniversary will be
deemed to have been satisfied at the greater of the designated
target level or the level actually achieved by performance
through the Change in Control Anniversary (with similar
performance assumed to be achieved through the remainder of the
performance period) in connection with the Award. This
subsection 13.b)i)(b)(1) shall supersede the standard vesting
provision contained in an Award Agreement only to the extent
that it results in accelerated vesting of the Award, and it
shall not result in a delay of any vesting of an Award that
otherwise would occur under the terms of the standard vesting
provision contained in the Award Agreement.

17

 

	 	(2)	 	If the Grantee’s Continuous
Status as an Employee or Consultant or Non-Employee Director
terminates prior to the Change in Control Anniversary as a
result of termination by the Company without Cause or
resignation by the Grantee for Good Reason, then on the Date of
Termination (i) all of the Grantee’s outstanding continued,
assumed, or replaced Options and Stock Appreciation Rights
that are not yet fully exercisable shall immediately become
exercisable in full and shall remain exercisable in
accordance with their terms, (ii) all of the Grantee’s
continued, assumed, or replaced unvested Stock Awards and
Other Stock-Based Awards will become immediately fully vested
and non-forfeitable; and (iii) any performance objectives
applicable to the Grantee’s unvested continued, assumed, or
replaced Awards for performance measurement periods not yet
ended at the date of termination will be deemed to have been
satisfied at the greater of the designated target level or
the level actually achieved by performance through the date
of termination (with similar performance assumed to be
achieved through the remainder of the performance period) in
connection with the Award. This subsection 13.b)i)(b)(2)
shall supersede the standard vesting provision contained in
an Award Agreement only to the extent that it results in
accelerated vesting of the Award, and it shall not result in
a delay of any vesting of an Award that otherwise would occur
under the terms of the standard vesting provision contained
in the Award Agreement.

	 	ii)	 	Acceleration of Awards. Except as otherwise provided
in subsection 13.b)iii) of the Plan, if and to the extent that outstanding
Awards are not continued, assumed or replaced in connection with a Change in
Control, then (a) outstanding Options and Stock Appreciation Rights issued to
the Grantee that are not yet fully exercisable shall immediately become
exercisable in full and shall remain exercisable in accordance with their
terms, (b) all unvested Stock Awards and Other Stock-Based Awards will become
immediately fully vested and non-forfeitable; and (c) any performance
objectives for performance measurement periods not yet ended at the date of the
Change in Control will be deemed to have been satisfied at the greater of the
designated target level or the level actually achieved by performance through
the Change in Control (with similar performance assumed to be achieved through
the remainder of the performance period) in connection with the Award. The
foregoing notwithstanding, an Award that constitutes a deferral of compensation
under Code Section 409A will be settled on an accelerated basis only if and to
the extent that such settlement does not result in tax penalties to Grantees
under Section 409A.
	 
	 	iii)	 	Payment for Awards. If and to the extent that
outstanding Awards are not continued, assumed or replaced in connection with a
Change in Control, then the Administrator in its discretion may terminate some
or all of such outstanding Awards, in whole or in part, as of the effective
time of the Change in Control in exchange for payments to the holders as
provided in this subsection 13.b)iii). The Administrator will not be required
to treat all Awards similarly for purposes of this subsection 13.b)iii). The
payment for any Award or portion thereof terminated shall be in an amount equal
to the excess, if any, of (a) the fair market value (as determined in good
faith by the Administrator) of the consideration that would otherwise be
received in the Change in Control for the number of Shares subject to the Award
or portion thereof being terminated, or, if no consideration is to be received
by the Company’s stockholders in the Change in Control, the Fair Market Value
of such number of shares immediately prior to the effective date of the Change
in Control, over (b) the aggregate Option Price or Base Price (if any) for the
Shares subject to the Award or portion thereof being terminated. If there is
no excess, the Award may be terminated without payment. Any payment shall be
made in such form, on such terms and subject to such conditions as the
Administrator determines in its discretion, which may or may not be the same as
the form, terms and conditions applicable to payments to the Company’s
stockholders in connection with the Change in Control, and may include
subjecting such payments to vesting conditions comparable to those of the
Award surrendered.

18

 

	14.	 	Term of Plan. The Plan shall become effective upon its approval by the stockholders
of the Company within 12 months after the date the Plan is adopted by the Board. Such
stockholder approval shall be obtained in the manner and to the degree required under
Applicable Law. The Plan shall continue in effect until October 21, 2020, unless terminated
earlier under Section 15 of the Plan.
	 
	15.	 	Amendment and Termination of the Plan and Awards.

	 	a)	 	Amendment and Termination. Subject to the requirements of this Section
15, the Board may at any time amend, alter, suspend or terminate the Plan. The
Compensation Committee may amend, alter, suspend or terminate the Plan so long as such
action complies with Applicable Law, except that any Plan amendment to be presented to
the stockholders for approval shall first be approved by the Board. The Administrator
may at any time amend, alter, suspend or terminate an outstanding Award.
	 
	 	b)	 	Stockholder Approval. The Company shall obtain stockholder approval of
any Plan amendment to the extent necessary and desirable to comply with Applicable Law.
Such stockholder approval, if required, shall be obtained in such a manner and to such
a degree as is required by the Applicable Law. Without the approval of stockholders,
no amendment or alteration of the Plan or any outstanding Option or SAR will have the
effect of amending or replacing such an Option or SAR in a transaction that constitutes
a “repricing.” For this purpose, a “repricing” means: (1) amending the terms of an
Option or SAR after it is granted to lower its Option Price or Base Price; (2) any
other action that is treated as a repricing under generally accepted accounting
principles; and (3) canceling an Option or SAR at a time when its strike price is equal
to or greater than the fair market value of the underlying Stock, in exchange or
substitution for another Option, SAR, Stock Award, other equity, or cash or other
property. A cancellation and exchange or substitution described in clause (3) of the
preceding sentence will be considered a repricing regardless of whether the Option,
SAR, Stock Award, or other equity is delivered simultaneously with the cancellation,
regardless of whether it is treated as a repricing under generally accepted accounting
principles, and regardless of whether it is voluntary on the part of the Grantee.
Adjustments to Awards under Section 13 will not be deemed “repricings,” however. The
Administrator shall have no authority to amend, alter, or modify any Award term after
the Award has been granted to the extent that the effect is to waive a term that
otherwise at that time would be mandatory for a new Award of the same type under the
Plan. 
	 
	 	c)	 	Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan or an Award (i) shall materially impair the
rights of any Grantee, unless mutually agreed otherwise between the Grantee and the
Company, which agreement must be in writing and signed by the Grantee and the Company,
or (ii) impose any additional obligation on the Company or right on the Grantee unless
evidenced in writing and signed by the Company.

	16.	 	Conditions Upon Issuance of Shares.

	 	a)	 	Legal Compliance. The Company shall not be obligated to issue Shares
pursuant to an Award unless the exercise, if applicable, of such Award and the issuance
and delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the Exchange
Act, the rules and regulations promulgated thereunder, other Applicable Law, and the
requirements of any stock exchange or quotation system upon which the Shares may then
be listed or quoted, and may be further subject to the approval of counsel for the
Company with respect to such compliance.
	 
	 	b)	 	Investment Representations. As a condition to the exercise of an Award
or issuance of Shares in connection with an Award, the Company may require the Grantee
or permitted transferee to
represent and warrant at the time of any such exercise or issuance that the Shares
are being purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required or advisable.

19

 

	17.	 	Liability of Company.

	 	a)	 	Inability to Obtain Authority. The inability of the Company to obtain
authorization from any regulatory body having jurisdiction, which authorization is
deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any
Shares hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have been
obtained. The Company shall use its best efforts to obtain such authorization.
	 
	 	b)	 	Grants Exceeding Allotted Shares. If the Covered Shares covered by an
Award exceeds, as of the date of grant, the number of Shares that may be issued under
the Plan without additional stockholder approval, such Award shall be void with respect
to such excess Covered Shares, unless stockholder approval of an amendment sufficiently
increasing the number of Shares subject to the Plan is timely obtained in accordance
with Section 15 of the Plan.

	18.	 	Reservation of Shares. The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

	19.	 	Rights of Grantees. Neither the Plan nor any Award shall confer upon a Grantee any
right with respect to continuing the Grantee’s employment, service as a Director or consulting
relationship with the Company or a Subsidiary, nor shall they interfere in any way with the
Grantee’s right or the Company’s right to terminate such employment, service or consulting
relationship at any time, with or without cause.

	20.	 	Sub-plans for Foreign Subsidiaries. The Board may adopt sub-plans applicable to
particular foreign Subsidiaries. All Awards granted under such sub-plans shall be treated as
grants under the Plan. The rules of such sub-plans may take precedence over other provisions
of the Plan, with the exception of Section 3, but unless otherwise superseded by the terms of
such sub-plan, the provisions of the Plan shall govern the operation of such sub-plan.

	21.	 	Code Section 409A. It is intended that the Plan and all Awards hereunder be
administered in a manner that will comply with Code Section 409A. The Administrator is
authorized to adopt rules or regulations deemed necessary or appropriate to qualify for an
exception from or to comply with the requirements of Code Section 409A. Notwithstanding
anything in this Section to the contrary, no amendment to or payment under any Award will be
made unless such transaction will result in no tax penalty to the Grantee. Without limiting
the generality of the foregoing, if any amount shall be payable with respect to any Award
hereunder as a result of a Grantee’s “separation from service” at such time as the Grantee is
a “specified employee” (as those terms are defined for purposes of Code Section 409A) and such
amount constitutes a deferral of compensation subject to Code Section 409A, then no payment
shall be made, except as permitted under Code Section 409A, prior to the date six months after
the Grantee’s separation from service (or the date of his or her earlier death). The Company
may adopt a specified employee policy that will apply to identify the specified employees for
all deferred compensation plans subject to Code Section 409A; otherwise, specified employees
will be identified using the default standards contained in the regulations under Code Section
409A.

	22.	 	Withholding. The Company and any Subsidiary or affiliate is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan, including from a
distribution of Shares, or any payroll or other payment to a Grantee, amounts of withholding
and other taxes due or potentially payable in connection with any transaction involving an
Award, and to take such other action as the Administrator may deem advisable to enable the
Company and Grantees to satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include authority to withhold or
receive Stock or other property and to make cash payments in respect thereof in satisfaction
of
a Grantee’s withholding obligations, either on a mandatory or elective basis in the
discretion of the Administrator. Other provisions of the Plan notwithstanding, only the
minimum amount of Stock deliverable in connection with an Award necessary to satisfy
statutory withholding requirements will be withheld, except a greater amount of Stock may be
withheld provided that any such withholding transaction that potentially will result in
additional accounting expense to the Company must be expressly authorized by the
Administrator.

	23.	 	Governing Law. The Plan and any Award Agreements and any and all determinations made
and actions taken in connection with the Plan and Award Agreements, shall be governed by and
construed in accordance with the Delaware General Corporation Law and applicable federal law,
and in other respects with the substantive laws of the State of Florida.

20exv10w42

Exhibit 10.42

AGREEMENT RESPECTING NONCOMPETITION,

NONSOLICITATION AND NONDISPARAGEMENT

     This AGREEMENT RESPECTING NONCOMPETITION, NONSOLICITATION AND NONDISPARAGEMENT (this
“Agreement”) is entered into this ____ day of ________ 20__, by and between __________ (“Employee”)
and NeuStar, Inc. (together with its affiliates and successors, “Neustar”) (hereinafter
collectively referred to as “the Parties”).

     WHEREAS, Employee is employed by Neustar;

     NOW, THEREFORE, in consideration of Employee’s employment and the compensation and benefits
received and to be received by Employee from Neustar from time to time, and the mutual covenants
described below, the Parties agree as follows:

     1. Noncompetition. Employee acknowledges that his or her employment with Neustar has
created and will create a relationship of confidence and trust between Employee and Neustar.
During the term of Employee’s employment, Employee has obtained and will obtain confidential
information with regard to Neustar, its officers, directors and employees and/or its clients,
customers and vendors and has obtained contacts, training and experience. Employee acknowledges
and agrees that there is a substantial probability that such Confidential Information, contacts,
training and experience could be used to the substantial advantage of a competitor of Neustar
and/or to Neustar’s substantial detriment. Therefore, in consideration for Employee’s employment
and the compensation and benefits received and to be received by Employee from Neustar, Employee
agrees that prior to 18 months from the date his or her employment is terminated or otherwise
ceases, with respect to any state or country in which Neustar engaged in business during Employee’s
employment term, Employee shall not participate or engage, directly or indirectly, for himself or
herself or on behalf of or in conjunction with any person, partnership, corporation, or other
entity, whether as an employee, agent, officer, director, shareholder, partner, joint venturer,
investor or otherwise, in any business competitive with a business undertaken by Neustar or by
Employee at any time during Employee’s employment term. For purposes of this paragraph, such
business will include but not be limited to the activities of numbering; number management;
numbering and IP address management; internet domains; web performance and network monitoring;
communication registries; registries relating to barcodes, common short codes, media and
entertainment services; and infrastructure services relating to mobile data and messaging.

     Notwithstanding the foregoing, nothing herein shall prohibit Employee from being employed by,
or holding a passive or indirect equity ownership in, any person or entity that has operations that
compete with Neustar so long as Employee does not personally participate in the management of, or
provide strategic advice to, the operations of such person or entity that compete with Neustar.

     2. Nonsolicitation. Employee agrees that during his or her employment with Neustar
and for 18 months thereafter, Employee shall not engage in Solicitation, whether for Employee’s own
account or for the account of any other individual, partnership, firm, corporation or other
business organization (other than Neustar). “Solicitation” means any of the following, or an
attempt to do any of the following: (i) recruiting, soliciting or inducing any non-clerical
employee or consultant of Neustar (including, but not limited to, any independent sales
representative or organization) to terminate his or her employment with, or otherwise cease or
reduce his or her relationship with, Neustar; (ii) hiring or assisting another person or entity to
hire any non-clerical employee or consultant of Neustar or any person who within 12 months before
was such a person; or (iii) soliciting or inducing any person or entity (including any person who
within the preceding 12 months was a customer or client of Neustar) to terminate, suspend, reduce,
or diminish in any way its relationship with or prospective relationship with Neustar. The
placement of general classified or “help wanted” advertisements and/or general solicitations to the
public at large shall not constitute a violation of this Paragraph 2 unless Employee’s name is
contained in such advertisements or solicitations.

     3. Nondisparagement. Employee agrees not to issue or communicate, directly or
indirectly, any public statement (or statement likely to become public) that disparages,
denigrates, maligns or

1

 

impugns Neustar or its officers, directors, employees, products or services, except truthful
responses to legal process or governmental inquiry or by Employee in carrying out his or her duties
while employed by Neustar.

     4. Consideration. Employee acknowledges and agrees that the covenants provided for in
this Agreement, including the term of the restricted period, the range of activities and the
geographic area encompassed in such covenants, are reasonable and necessary in order to protect
Neustar in the conduct of its business and the utilization of its assets. Employee agrees that the
prohibitions and restrictions in this Agreement will not prevent Employee from earning a livelihood
after the termination of his or her employment. Employee further agrees that his or her
employment, compensation and benefits are in consideration of his or her entering into this
Agreement.

     5. Interpretation. If any restriction with regard to this Agreement is found by a
court of competent jurisdiction to be invalid or unenforceable because it extends for too long a
period of time or over too great a range of activities or in too broad a geographic area, it shall
be deemed amended to extend over the maximum period of time, range of activities and/or geographic
area to which it may be enforceable.

     6. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

     7. Waiver of Rights. No delay or omission by Neustar in exercising any right under
this Agreement will operate as a waiver of that or any other right. A waiver or consent given by
Neustar on any one occasion is effective only in that instance and will not be construed as a bar
to, or waiver of, any right on any other occasion.

     8. Equitable Remedies. The restrictions contained in this Agreement are necessary for
the protection of the business and goodwill of Neustar and are considered by Employee to be
reasonable for such purpose. Employee agrees that any breach or threatened breach of this
Agreement is likely to cause Neustar substantial and irreparable damage and therefore, in the event
of any such breach or threatened breach, Employee agrees that Neustar, in addition to such other
remedies which may be available, shall be entitled to specific performance and other injunctive
relief. In addition, Employee acknowledges that Neustar may, in its sole discretion, upon or after
termination of Employee’s employment with Neustar, notify any future employer of Employee or other
person or entity with which Employee has dealings of his or her obligations under this Agreement.

     9. Stay of Time. In the event that Employee violates Paragraph 1 or 2 of this
Agreement, the running of the time period of such provision so violated shall be automatically
suspended on the date of such violation and shall resume on the date such violation permanently
ceases.

     10. Assignability. Neustar may assign this Agreement to any of its affiliates or any
other company or entity that acquires (whether by purchase, merger, consolidation or otherwise) all
or substantially all of the business and/or assets of Neustar; provided, however, that in the event
of such an acquisition, the restrictions in Paragraph 1 of this Agreement shall apply only to
participation in a business competitive with a business undertaken by Neustar or by Employee during
Employee’s employment term up to the date of such acquisition.

     11. Amendment. This Agreement may not be amended, modified, altered or supplemented
other than by means of a written instrument duly executed by and delivered on behalf of Employee
and Neustar.

     12. Governing Law. The parties agree that this Agreement, and all rights and
obligations hereunder, shall be deemed to have been made in the Commonwealth of Virginia, shall
take effect as an instrument under seal within Virginia, and shall be governed by and construed in
accordance with Virginia law, without giving effect to conflict of law principles. Any action,
demand, claim or counterclaim relating

2

 

to the terms and provisions of this Agreement, or to its formation or breach, shall be
commenced in Virginia in state or federal court, and venue for such actions shall lie exclusively
in Virginia. Employee and Neustar consent to the jurisdiction of such a court.

     13. Entire Agreement. This Agreement and the Employee Proprietary Information,
Inventions and Nonsolicitation Agreement dated on or about the date hereof set forth the entire
agreement and understanding between Employee and Neustar relating to the subject matter herein and
merge all prior discussions, correspondence, understandings and agreements relating to the subject
matter herein.

     14. Signature in Counterparts. This Agreement may be signed in counterparts.

     15. EMPLOYEE ACKNOWLEDGES THAT HE OR SHE HAS CAREFULLY READ THIS AGREEMENT AND UNDERSTANDS AND
AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.

     IN WITNESS WHEREOF, the Parties to this Agreement Respecting Noncompetition, Nonsolicitation
and Nondisparagement have executed this instrument on the date(s) set forth below.

	 	 	 	 	 	 	 	 	 

	 	 	EMPLOYEE	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date:                                         
	 	 	Name:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	NEUSTAR, INC.	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 	 	Date:                                         
	 

	 	 	 	 

Name:
	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 

3

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