FORM OF PERFORMANCE AWARD AGREEMENT UNDER THE NEUSTAR, INC. 2005 STOCK INCENTIVE PLAN
Exhibit 99.3
FORM OF PERFORMANCE AWARD AGREEMENT
UNDER THE NEUSTAR, INC. 2005 STOCK INCENTIVE PLAN
UNDER THE NEUSTAR, INC. 2005 STOCK INCENTIVE PLAN
This PERFORMANCE AWARD AGREEMENT is entered into as of [Date of Grant], between NEUSTAR, INC.
(the “Company”) and [Awardee] (“you”).
1. Performance Award Grant. Subject to the restrictions, terms and conditions of the Plan
and this Agreement, the Company hereby awards you performance share units with respect to shares of
Common Stock. Your Performance Award is subject to certain restrictions as set forth in the Plan
and this Agreement. The performance share units awarded are referred to herein as “Performance
Share Units.”
2. The Plan. The Performance Share Units and Common Stock to be awarded in respect of
such units are subject to the terms of the Company’s 2005 Stock Incentive Plan (the “Plan”),
including its provisions regarding amendment of Awards. Capitalized terms used but not defined in
this Agreement have the meanings set forth in the Plan.
3. Specific Terms. Your Award of Performance Share Units shall have the following terms:
Grant Date
|
_______, 2007 | |
Number of Performance
Share Units Subject to
Award (the “Target
Award”)
|
____________, subject to adjustment pursuant to Section 10 hereof | |
Performance Period
|
January 1, 2007 through December 31, 2009 | |
Performance Goal
|
(1) Cumulative revenue and (2) Cumulative EBITDA (both of which are determined as set forth on Annex A hereto) | |
Vesting
|
Subject to your continued service as an employee, Consultant or Director with the Company or any of its Affiliates, and further subject to Section 4 below, the Award shall vest on January 1, 2010 (the “Vesting Date”) based on, and subject to, the achievement of the Performance Goal measured through the last day of the Performance Period. The number of shares of Common Stock earned as of the Vesting Date with respect to the level of the Performance Goal attained is indicated on Annex A. |
4. Payment. As soon as practicable following the Vesting Date, each of your Performance
Share Units, together with Dividend Equivalents on such units, will be converted to the number of
shares of Common Stock indicated by the degree of attainment of the Performance Goal set forth on
Annex A (provided the threshold level of performance is attained). Subject to the provisions of
the Plan and this Agreement, any payment with respect to the Award shall be paid in shares of
Common Stock, after the satisfactory payment of applicable withholding taxes as set forth in
Section 5, as soon as practicable following the date on which the Committee certifies the level of
achievement of the Performance Goal for the Performance Period.
5. Taxes. You will be liable for any and all taxes, including withholding taxes, arising
out of this Award, and the Company shall have the right to require, prior to the issuance or
delivery of Common Stock, payment of any federal, state or local taxes required by law to be
withheld. Prior to the delivery of Common Stock hereunder, you shall pay all required taxes to the
Company, which payment may be made in cash or by reducing the number of shares of
Common Stock otherwise deliverable under the Award, subject to the Company’s policies then in effect, unless the
Company has established alternative procedures for such payment. Any fraction
of a share of Common Stock required to satisfy such withholding shall be disregarded and the amount
due paid instead in cash by you.
6. Termination. In the event of your Termination for any reason prior to the Vesting
Date, the Award shall be immediately forfeited and automatically cancelled without further action
of the Company. Notwithstanding the foregoing, in the event of your Disability or death prior to
the Vesting Date, you or your legal representative will receive as soon as practicable following
such event a pro-rata payment as if the Target level of performance set forth on Annex A had been
attained.
7. Corporate Transaction. Notwithstanding anything herein to the contrary, in the event a
Corporate Transaction (as defined below) occurs prior to the Vesting Date, your Performance Share
Units will be converted without pro-ration into shares of Restricted Stock that vest at the end of
the original Performance Period, subject to your continued service as an employee, Consultant or
Director. The number of shares of Restricted Stock into which your Performance Share Units will
convert shall be determined as follows:
| (i) | If the Corporate Transaction occurs during the period beginning on the first day of the Performance Period and ending on June 30 of the year following the year in which the Performance Period begins (the “First Period”), the Performance Share Units will be converted into that number of shares of Restricted Stock equal to the number of shares that would have been payable had the Target level of performance set forth on Annex A been achieved (i.e., 100% of the Target Award); or | ||
| (ii) | If the Corporate Transaction occurs after the First Period and prior to the Vesting Date, the Performance Share Units will be converted into shares of Restricted Stock based on the “deemed” level of performance achieved, calculated by measuring the actual level of cumulative revenue and EBITDA achieved through the date of the Corporate Transaction and assuming proportional achievement through the end of the Performance Period. Any conversion under this Section 7(ii) shall be subject to certification by the Committee concurrently with or as soon as practicable following the consummation of the Corporate Transaction. |
Your Restricted Stock shall immediately vest in full if you experience a Termination (other than by
the Company for Cause or by you without Good Reason (as defined below)) within two (2) years after
the Corporate Transaction.
For purposes of this Agreement, a “Corporate Transaction” shall mean any of the following events:
(i) the consummation of any merger or consolidation of the Company in which the Company is not the
continuing or surviving corporation, or pursuant to which shares of Common Stock are converted into
cash, securities or other property, if following such merger or consolidation the holders of the
Company’s outstanding voting securities immediately prior to such merger or consolidation do not
own a majority of the outstanding voting securities of the surviving corporation in approximately
the same proportion as before such merger or consolidation; (ii) individuals who constitute the
Board at the beginning of any 24-month period (“Incumbent Directors”) ceasing for any reason during
such 24-month period to constitute at least a majority of the Board, provided that any person
becoming a director during any such 24-month period whose election or nomination for election was
approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a
specific vote or by approval of the proxy statement for the Company in which such person is named
as a nominee for director, without objection to such nomination) shall be an Incumbent Director;
provided, however, that no individual initially elected or nominated as a director of the Company
as a result of an actual or threatened election contest with respect to directors or as a result of
any other actual or threatened solicitation of proxies by or on behalf of any person other than the
Board shall be an Incumbent Director; (iii) 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 Company or any other entity the majority of whose voting power is held by the shareholders of
the Company in approximately the same proportion as before such transaction; (iv) the approval by
the holders of the Common Stock of any plan or proposal for the liquidation or dissolution of the
Company; or (v) the acquisition by a person, within the meaning of Section 3(a)(9) or of Section
13(d)(3) (as in effect on the date of adoption of the Plan) of the Exchange Act of a majority or
more of the Company’s outstanding voting securities (whether directly or indirectly, beneficially
or of record), other than a person who held such majority on the date of adoption of the Plan. Ownership of voting securities
shall take into account and shall include ownership as determined by applying Rule 13d-3(d)(1)(i)
(as in effect on the date of adoption of the Plan) pursuant to the Exchange Act.
For purposes of this Agreement, “Good Reason” shall mean, without your prior written consent, any
of the following events or conditions and the failure of the surviving corporation, the successor
corporation or its parent corporation, as applicable (the “Successor Corporation”) to cure such
event or condition within thirty (30) days after receipt of written notice from you: (i) a
reduction in your annual base salary, except pursuant to a policy generally applicable to employees
at your level and above resulting in a reduction of 10% or less; (ii) the Successor Corporation’s
failure to cover you under employee benefit plans, programs and practices that, in the aggregate,
provide substantially comparable benefits (from an economic perspective) to you relative to the
benefits and total costs under the material employee benefit plans, programs and practices in which
you (and/or your family or dependents) are participating immediately preceding the Corporate
Transaction; (iii) the Successor Corporation’s requiring you to be based at any office location
that is more than fifty (50) miles further from your 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; or (iv) a material breach by the Successor Corporation of its obligations to you under
the Plan.
8. Detrimental Activity. For purposes of this Award, Detrimental Activity shall have the
meaning set forth in the Plan and additionally shall mean any of the activities set forth on Annex
B. In the event that you engage in Detrimental Activity, the Committee may direct that all
unvested Performance Share Units, unvested Restricted Stock issued pursuant to Section 7, and
Dividend Equivalents, together with any Performance Share Units and/or Restricted Stock and
Dividend Equivalents which have vested but with respect to which Common Stock has not yet been
issued, shall be immediately forfeited to the Company, and you shall pay to the Company an amount
equal to the Fair Market Value at the time of issuance or delivery of any Common Stock previously
delivered or issued to you in respect of the Award.
9. Restrictions on Transfer. The Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner.
10. Adjustments. In the case of any change in corporate structure as contemplated under
Section 4.2(b) of the Plan, an equitable adjustment shall be deemed necessary and shall be made in
accordance with such Section 4.2(b).
11. Amendment. This Agreement is intended to comply with the applicable requirements of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and shall be limited,
construed and interpreted in a manner so as to comply therewith. Notwithstanding anything herein
to the contrary, any provision in this Agreement that is inconsistent with Section 409A of the Code
shall be amended by the Committee in good faith to comply with Section 409A of the Code and to the
extent such provision cannot be amended to comply therewith, such provision shall be null and void.
12. Severability. The provisions of this Award and the Plan are intended to be severable,
and any illegal or invalid term shall not affect the validity or legality of the remaining terms.
13. Not an Employment Agreement. The issuance of this Award does not constitute an
agreement by the Company to continue to employ you during the entire, or any portion of, the
Performance Period or otherwise.
14. Notice. Any notice or communication to the Company concerning the Performance Share
Units must be in writing and delivered in person, or by U.S. mail, to the following address (or
another address specified by the Company): NeuStar, Inc., Attn: General Counsel, 00000 Xxxxxx Xxx
Xxxxx, Xxxxxxxx, XX 00000.
You will not have any rights with respect to your Performance Award unless and until you deliver an
executed copy of this Agreement to the Company within 60 days of the Grant Date.
| NEUSTAR, INC. | ||||
By:
|
||||
| Xxxxxxx X. Xxxxx | [Awardee] | |||
Annex A
Performance Goal
Performance Goal
The Participant shall be paid a percentage of the Target Award, after satisfactory payment of
applicable withholding taxes, to the extent the Committee determines that the Performance Goal has
been achieved. The Participant shall be paid no portion of the Target Award if the threshold level
of performance is not achieved.
The Performance Goal comprises the following two components:
| (1) | the Company’s cumulative revenue during the Performance Period, defined as the aggregate amount of revenue recognized by the Company in its audited consolidated statements of operations for the years ending December 31, 2007, 2008 and 2009 (the “Audited Financials”); and | ||
| (2) | the Company’s cumulative EBITDA during the Performance Period, defined as the aggregate amount of earnings before interest income, interest expense, income taxes, depreciation and amortization reflected in the Audited Financials. |
30% of the number of Performance Share Units granted on the Grant Date, together with Dividend
Equivalents on such units (“Revenue Shares”), shall be earned as follows:
| Degree of Performance | Cumulative Revenue | % of Revenue | ||
| Attainment | (2007-2009) | Shares Earned | ||
| Outstanding | $___ | 150% | ||
| Target | $___ | 100% | ||
| Threshold | $___ | 50% | ||
| Less than Threshold | $___ | 0% |
70% of the number of Performance Share Units granted on the Grant Date, together with Dividend
Equivalents on such units (“EBITDA Shares”), shall be earned as follows:
| Degree of Performance | Cumulative EBITDA | % of EBITDA | ||
| Attainment | (2007-2009) | Shares Earned | ||
| Outstanding | $___ | 150% | ||
| Target | $___ | 100% | ||
| Threshold | $___ | 50% | ||
| Less than Threshold | $___ | 0% |
Payouts between performance levels will be determined by the Committee based on straight-line
interpolation; provided, however, that no payout shall be made if the threshold level of
performance is not attained.
Should the Company enter into a material acquisition or divestiture transaction during the
Performance Period, the Committee will adjust the Performance Goal to reflect the impact of the
business acquired or divested.
Annex B
Detrimental Activity
Detrimental Activity
“Detrimental Activity” shall have the meaning set forth in the Plan and additionally shall mean any
of the following:
(i) For the period commencing on your first day of employment with the Company and ending on the
date which is 18 months following your termination of employment with the Company for any reason
(such period hereinafter referred to as the “Restricted Period”), with respect to any state or
country in which the Company is engaged in business during your employment term, you participate or
engage, directly or indirectly, for yourself 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 the Company or by you at any time during your employment term.
(ii) During the Restricted Period, you engage in Solicitation, whether for your own account or for
the account of any other individual, partnership, firm, corporation or other business organization
(other than the Company). “Solicitation” means any of the following, or an attempt to do any of the
following: (i) recruiting, soliciting or inducing any nonclerical employee or consultant of the
Company (including, but not limited to, any independent sales representatives or organizations) to
terminate his or her employment with, or otherwise cease or reduce his or her relationship with,
the Company; (ii) hiring or assisting another person or entity to hire any nonclerical employee or
consultant of the Company 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 the Company) to terminate, suspend, reduce, or diminish in any
way its relationship with or prospective relationship with the Company.
(iii) (a) You disclose to any person or entity or use, at any time, any information not in the
public domain or generally known in the industry (except as may be required by law or legal
process), in any form, acquired by the you while employed by the Company or any predecessor to the
Company’s business or, if acquired following the employment term, such information which, to your
knowledge, has been acquired, directly or indirectly, from any person or entity owing a duty of
confidentiality to the Company (or to which the Company owes a duty of confidentiality), including
but not limited to information regarding customers, vendors, suppliers, trade secrets, training
programs, manuals or materials, technical information, contracts, systems, procedures, mailing
lists, know-how, trade names, improvements, price lists, financial or other data (including the
revenues, costs or profits associated with any of the Company’s products or services), business
plans, code books, invoices and other financial statements, computer programs, software systems,
databases, discs and printouts, plans (business, technical or otherwise), customer and industry
lists, correspondence, internal reports, personnel files, sales and advertising material, telephone
numbers, names, addresses or any other compilation of information, written or unwritten, which is
or was used in the business of the Company; or (b) you fail to return to the Company the originals
and all copies of any such information in any form, and copies and extracts thereof, provided to or
acquired by you in connection with the performance of your duties for the Company (which are and
shall remain the sole and exclusive property of the Company); or (c) you fail to return to the
Company all files, correspondence and/or other communications received, maintained and/or
originated by you during the course of your employment whether for your own account or for the
account of any other individual, partnership, firm, corporation or other business organization
(other than the Company).
(iv) You issue or communicate, directly or indirectly, any public statement (or statement likely to
become public) that disparages, denigrates, maligns or impugns the Company, its affiliates, or
their respective officers, directors, employees, products or services, except truthful responses to
legal process or governmental inquiry or by you in carrying out your duties while employed by the
Company.
Pursuant to Section 11 of the
PERFORMANCE AWARD AGREEMENT, dated [Date of Grant] (the
“Agreement”), between NEUSTAR, INC. and you, the Agreement is hereby amended as follows to comply
with the requirements of Section 409A of the Internal Revenue Code of 1986. Capitalized terms used
but not defined herein have the meanings set forth in the Agreement.
Section 4 of the Agreement is hereby replaced in its entirety by the following:
4. Payment. As soon as practicable following the Vesting Date, each of your Performance
Share Units, together with Dividend Equivalents on such units, will be converted to the number of
shares of Common Stock indicated by the degree of attainment of the Performance Goal set forth on
Annex A (provided the threshold level of performance is attained). Subject to the provisions of
the Plan and this Agreement, any payment with respect to the Award shall be paid in shares of
Common Stock, after the satisfactory payment of applicable withholding taxes as set forth in
Section 5, as soon as practicable in 2010 following the date on which the Committee certifies the
level of achievement of the Performance Goal for the Performance Period.
Section 6 of the Agreement is hereby replaced in its entirety by the following:
6. Termination. In the event of your Termination for any reason prior to the Vesting
Date, the Award shall be immediately forfeited and automatically cancelled without further action
of the Company. Notwithstanding the foregoing, in the event of your Disability or death prior to
the Vesting Date, you or your legal representative will receive as soon as practicable following
such event a pro-rata payment as if the Target level of performance set forth on Annex A had been
attained; provided, however, that if you are a “specified employee,” as defined in and pursuant to
Reg. Section 1.409A 1(i) or any successor regulation, on the date of your Disability, such pro-rata
payment shall not be made to you earlier than the earlier of (i) the date which is six months from
the date of your “separation from service” (as defined in Reg. Section 1.409A 1(h) or any successor
regulation) as a result of such Disability and (ii) your death.
Section 7 of the Agreement is hereby replaced in its entirety by the following:
7. Corporate Transaction. Notwithstanding anything herein to the contrary, in the event a
Corporate Transaction (as defined below) occurs prior to the Vesting Date, your Performance Share
Units will be converted without pro-ration into shares of Restricted Stock that vest at the end of
the original Performance Period, subject to your continued service as an employee, Consultant or
Director. The number of shares of Restricted Stock into which your Performance Share Units will
convert shall be determined as follows:
| (i) | If the Corporate Transaction occurs during the period beginning on the first day of the Performance Period and ending on June 30 of the year following the year in which the Performance Period begins (the “First Period”), the Performance Share Units will be converted into that number of shares of Restricted Stock equal to the number of shares that would have been payable had the Target level of performance set forth on Annex A been achieved (i.e., 100% of the Target Award); or | ||
| (ii) | If the Corporate Transaction occurs after the First Period and prior to the Vesting Date, the Performance Share Units will be converted into shares of Restricted Stock based on the “deemed” level of performance achieved, calculated by measuring the actual level of cumulative revenue and EBITDA achieved through the date of the Corporate Transaction and assuming proportional achievement through the end of the Performance Period. Any conversion under this Section 7(ii) shall be subject to certification by the Committee concurrently with or as soon as practicable following the consummation of the Corporate Transaction. |
Your Restricted Stock shall immediately vest in full if you experience a Termination (other than by
the Company for Cause or by you without Good Reason (as defined below)) within two (2) years after
the Corporate Transaction; provided, however, that if you are a “specified employee,” as defined in
and pursuant to Reg. Section 1.409A 1(i) or any successor regulation, on the date of any such
Termination, you will not be entitled to such vesting earlier than the earlier of (i) the date
which is six months from the date of your “separation from service” (as defined in Reg. Section
1.409A 1(h) or any successor regulation) as a result of such Termination and (ii) your death.
For purposes of this Agreement, a “Corporate Transaction” shall mean any of the following events:
(i) the consummation of any merger or consolidation of the Company in which the Company is not the
continuing or surviving corporation, or pursuant to which shares of Common Stock are converted into
cash, securities or other property, if following such merger or consolidation the holders of the
Company’s outstanding voting securities immediately prior to such merger or consolidation do not
own a majority of the outstanding voting securities of the surviving corporation in approximately
the same proportion as before such merger or consolidation; (ii) individuals who constitute the
Board at the beginning of any 24-month period (“Incumbent Directors”) ceasing for any reason during
such 24-month period to constitute at least a majority of the Board, provided that any person
becoming a director during any such 24-month period whose election or nomination for election was
approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a
specific vote or by approval of the proxy statement for the Company in which such person is named
as a nominee for director, without objection to such nomination) shall be an Incumbent Director;
provided, however, that no individual initially elected or nominated as a director of the Company
as a result of an actual or threatened election contest with respect to directors or as a result of
any other actual or threatened solicitation of proxies by or on behalf of any person other than the
Board shall be an Incumbent Director; (iii) 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 Company or any other entity the majority of whose voting power is held by the shareholders of
the Company in approximately the same proportion as before such transaction; (iv) the approval by
the holders of the Common Stock of any plan or proposal for the liquidation or dissolution of the
Company; or (v) the acquisition by a person, within the meaning of Section 3(a)(9) or of Section
13(d)(3) (as in effect on the date of adoption of the Plan) of the Exchange Act of a majority or
more of the Company’s outstanding voting securities (whether directly or indirectly, beneficially
or of record), other than a person who held such majority on the date of adoption of the Plan.
Ownership of voting securities shall take into account and shall include ownership as determined by
applying Rule 13d-3(d)(1)(i) (as in effect on the date of adoption of the Plan) pursuant to the
Exchange Act.
For purposes of this Agreement, “Good Reason” shall mean, without your prior written consent, any
of the following events or conditions and the failure of the surviving corporation, the successor
corporation or its parent corporation, as applicable (the “Successor Corporation”) to cure such
event or condition within thirty (30) days after receipt of written notice from you: (i) a
reduction in your annual base salary, except pursuant to a policy generally
applicable to employees at your level and above resulting in a reduction of 10% or less; (ii) the
Successor Corporation’s failure to cover you under employee benefit plans, programs and practices
that, in the aggregate, provide substantially comparable benefits (from an economic perspective) to
you relative to the benefits and total costs under the material employee benefit plans, programs
and practices in which you (and/or your family or dependents) are participating immediately
preceding the Corporate Transaction; (iii) the Successor Corporation’s requiring you to be based at
any office location that is more than fifty (50) miles further from your 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; or (iv) a material breach by the Successor Corporation of its
obligations to you under the Plan.
