Document:

Form of Stock Option Agreement

    

      EXHIBIT
        10.2

       

      STOCK
        OPTION AGREEMENT

       

      AGREEMENT
        made as of the _____ day of _____, 2006 between UPSNAP INC., a Nevada
        corporation (hereinafter referred to as the “Corporation”),
        and
        _____________ (hereinafter referred to as the “Optionee”).

       

      W
        I T N E
        S S E T H:

       

      WHEREAS,
        the Corporation desires, in connection with the [employment/
        consulting/directorship] of the Optionee and in accordance with its Omnibus
        Stock and Incentive Plan (the “Plan”),
        to
        provide the Optionee with an opportunity to acquire common stock, $.001 par
        value (hereinafter referred to as “Common
        Stock”),
        of
        the Corporation on favorable terms and thereby increase his proprietary interest
        in the continued progress and success of the business of the
        Corporation;

       

      NOW,
        THEREFORE, in consideration of the premises, the mutual covenants herein
        set
        forth and other good and valuable consideration, the Corporation and the
        Optionee hereby agree as follows:

       

      1.     Grant
        of Subject Option.
        Pursuant to a determination by the Committee of the Board of Directors of
        the
        Corporation authorized to administer the Plan made effective as of [DATE]
        (the
“Date
        of Grant”),
        the
        Corporation, subject to the terms of the Plan and this Agreement, hereby
        grants
        to the Optionee as a matter of separate inducement and agreement, and in
        addition to and not in lieu of salary or other compensation for services,
        the
        right to purchase (hereinafter referred to as the “Subject
        Option”)
        an
        aggregate of [NUMBER] shares of Common Stock, subject to adjustment as provided
        in Section 8 hereof (such shares, as adjusted, shall hereinafter be referred
        to
        as the “Shares”).
        The
        Subject Option is not intended to qualify as an incentive stock option under
        Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).
        The
        Subject Option is subject to all the terms and conditions of the Plan (including
        certain repurchase rights in favor of the Corporation) and in the event of
        any
        inconsistency between this Agreement and the Plan, the provisions of the
        Plan
        shall prevail. Optionee hereby acknowledges receipt of a copy of the Plan
        and
        agrees to be bound by all terms and provisions thereof. Capitalized terms
        not
        otherwise defined herein but defined in the Plan shall have the same meaning
        herein.

       

      2.     Purchase
        Price.
        The
        purchase price of shares of Common Stock covered by the Subject Option will
        be
        $[PRICE] per share, subject to adjustment as provided in Section 8
        hereof.

       

      3.     Exercise
        of Subject Option.
        The
        Subject Option shall be exercisable on the terms and conditions hereinafter
        set
        forth:

       

      (a)     The
        Subject Option shall become exercisable cumulatively as to the following
        percentages of the number of Shares originally subject thereto (after giving
        effect to 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      any
        adjustment pursuant to Section 9 of the Plan). There will be no vesting of
        the
        Subject Option until the anniversary date indicated:

       

      
        	 	
                (i)

              	
                25%
                  of Shares on or after one year from the Date of
                  Grant;

              

      

       

      
        	 	
                (ii)

              	
                50%
                  of Shares on or after two years from the Date of
                  Grant;

              

      

       

      
        	 	
                (iii)

              	
                75%
                  of Shares on or after three years from the Date of Grant;
                  and

              

      

       

      
        	 	
                (iv)

              	
                100%
                  of Shares on or after four years from the Date of
                  Grant.

              

      

       

      Notwithstanding
        the foregoing, the Subject Option shall become fully exercisable (without
        regard
        to the foregoing dates) immediately upon the occurrence of any of the following
        events: a Change in Control (in accordance with the provisions of Section
        8
        hereof) or the termination by the Corporation of Optionee’s
        [employment/consulting/directorship] other than for Cause (without regard
        for
        the provisions of Section 6 hereof regarding the extent to which a Subject
        Option may be exercised upon such termination). In the case a person serving
        solely as a director, the forgoing acceleration shall not occur by reason
        of the
        failure of the Optionee to be nominated or re-elected as a director upon
        the
        expiration of a term. A termination shall be for “Cause”
if
        the
        Optionee:

       

      
        	 	
                (i)

              	
                shall
                  have been convicted of a felony;

              

      

       

      
        	 	
                (ii)

              	
                shall
                  have engaged in an act or acts of personal dishonesty intended
                  to result
                  in personal enrichment at the expense of the
                  Corporation;

              

      

       

      
        	 	
                (iii)

              	
                shall
                  have engaged in gross negligence or willful misconduct with respect
                  to the
                  Corporation or its subsidiaries or affiliates, or has intentionally
                  engaged in any other conduct that is materially injurious (or would
                  be
                  reasonably likely to be materially injurious if made public) to
                  the
                  Corporation, monetarily or
                  otherwise.

              

      

       

      
        	 	
                (iv)

              	
                shall
                  have committed any act involving material dishonesty or material
                  disloyalty with respect to the Corporation or any of its subsidiaries
                  or
                  affiliates; or

              

      

       

      
        	 	
                (v)

              	
                shall
                  have engaged in any other malfeasance or act of moral turpitude
                  that
                  inflicts material harm (or would be reasonably likely to inflict
                  material
                  harm if made public) upon the reputation of the Corporation or
                  any of its
                  subsidiaries or affiliates;

              

      

       

      (b)     The
        Subject Option may be exercised pursuant to the provisions of this Section
        3, by
        notice and payment (including, but not limited to, a cashless exercise) to
        the
        Corporation as provided below.

       

      4.     Term
        of Subject Option.
        The
        term of the Subject Option shall be a period of ten (10) years from the Date
        of
        Grant. This Subject Option, to the extent unexercised, shall expire

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      on
        the
        day immediately prior to the tenth anniversary of the Date of Grant. The
        holder
        of the Subject Option shall not have any rights to dividends or any other
        rights
        of a stockholder with respect to any shares of Common Stock subject to the
        Subject Option until such shares shall have been issued to him (as evidenced
        by
        the appropriate entry on the books of a duly authorized transfer agent of
        the
        Corporation) provided that the date of issuance shall not be earlier than
        the
        date this Subject Option is exercised and provision of the purchase price
        of the
        shares of Common Stock (with respect to which this Subject Option is being
        exercised) is made to the Corporation pursuant to the provisions contained
        herein.

       

      5.     Non
        transferability of Subject Option.
        The
        Subject Option shall not be assignable or transferable otherwise than by
        will or
        by the laws of descent and distribution, or as provided in the Plan, and
        the
        Subject Option may be exercised during the lifetime of the Optionee only
        by him.
        More particularly, but without limiting the generality of the foregoing,
        the
        Subject Option may not be assigned, transferred (except as provided in the
        next
        preceding sentence) or otherwise disposed of, or pledged or hypothecated
        in any
        way, and shall not be subject to execution, attachment or other process.
        Any
        assignment, transfer, pledge, hypothecation or other disposition of the Subject
        Option attempted contrary to the provisions of this Agreement, or any levy
        of
        execution, attachment or other process attempted upon the Subject Option,
        will
        be null and void and without effect. Any attempt to make any such assignment,
        transfer, pledge, hypothecation or other disposition of the Subject Option
        or
        any attempt to make any such levy of execution, attachment or other process
        will
        cause the Subject Option to terminate immediately upon the happening of any
        such
        event; provided, however, that any such termination of the Subject Option
        under
        the foregoing provisions of this Section 5 will not prejudice any rights
        or
        remedies which the Corporation or any Parent or Subsidiary may have under
        this
        Agreement or otherwise.

       

      6.     Exercise
        Upon Cessation of Employment.

       

      (a)     If
        the
        Optionee at any time ceases to be an employee, consultant, or director of
        the
        Corporation by reason of his discharge for Cause, the Subject Option shall,
        at
        the time of such termination, terminate and the Optionee shall forfeit all
        rights hereunder. If, however, the employee, consultant, or director for
        any
        other reason (other than permanent and total disability or death) ceases
        to be
        such an Optionee, the Subject Option may, subject to the provisions of Section
        5
        hereof, be exercised by the Optionee to the same extent the Optionee would
        have
        been entitled under Section 3 hereof to exercise the Subject Option immediately
        prior to such cessation, at any time within one (1) month after such cessation,
        at the end of which period the Subject Option to the extent not then exercised,
        shall terminate and the Optionee shall forfeit all rights hereunder. In no
        event, however, may the Subject Option be exercised after the expiration
        of the
        term provided in Section 4 hereof.

       

      (b)     The
        Subject Option shall not be affected by any change of duties or position
        of the
        Optionee so long as he continues to be an Optionee of the
        Corporation.

       

      7.     Exercise
        Upon Death or Disability.

       

      (a)     If
        the
        Optionee dies while he is employed or serving, as a consultant or director
        of
        the Corporation, and on or after the first date upon which he would have
        been
        entitled 

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      to
        exercise the Subject Option under the provisions of Section 3 hereof, the
        Subject Option may, subject to the provisions of Section 5 hereof, be exercised
        with respect to all or any part of the shares of Common Stock as to which
        the
        deceased Optionee had not exercised the Subject Option at the time of his
        death
        (but only to the extent the Subject Option was exercisable at the date of
        his
        death), by the estate of the Optionee (or by the person or persons who acquire
        the right to exercise the Subject Option by written designation of the Optionee)
        at any time within the period ending one (1) year after the date of the
        Optionee’s death (in no event, however, after the expiration of the term
        provided in Section 4 hereof), at the end of which period the Subject Option,
        to
        the extent not then exercised, shall terminate and the estate or other
        beneficiaries shall forfeit all rights hereunder.

       

      (b)     In
        the
        event that the employment or consulting or directorship by the Corporation
        is
        terminated by reason of the permanent and total disability of the Optionee
        on or
        after the first date upon which he would have been entitled to exercise the
        Subject Option under the provisions of Section 3 hereof, the Subject Option
        may,
        subject to the provisions of Section 5 hereof, be exercised with respect
        to all
        or any part of the shares of Common Stock as to which he had not exercised
        the
        Subject Option at the time of his disability (but only to the extent the
        Subject
        Option was exercisable at such time) by the Optionee at any time within the
        period ending one (1) year after the date of such termination of employment
        (in
        no event, however, after the expiration of the term provided in Section 4
        hereof), at the end of which period the Subject Option, to the extent not
        then
        exercised, shall terminate and the Optionee shall forfeit all rights hereunder
        even if the Optionee subsequently returns to the employ of the
        Corporation.

      
               
        8.  Merger,
        Consolidation or Change in Control of the Corporation.
        Upon
        (a) the merger or consolidation of the Corporation with or into another
        corporation (pursuant to which the stockholders of the Corporation immediately
        prior to such merger or consolidation will not, as of the date of such merger
        or
        consolidation, own a beneficial interest in shares of voting securities of
        the
        corporation surviving such merger or consolidation having at least a majority
        of
        the combined voting power of such corporation’s then outstanding securities), if
        the agreement of merger or consolidation does not provide for (i) the
        continuance of this Subject Option or (ii) the substitution of new option(s)
        for
        this Subject Option, or for the assumption of such Subject Option by the
        surviving corporation, (b) the dissolution, liquidation or sale of substantially
        all the assets of the Corporation or (c) a Change in Control of the Corporation,
        the Optionee shall have the right immediately prior to the effective date
        of
        such merger, consolidation, dissolution, liquidation, sale of assets or Change
        in Control of the Corporation to exercise this Subject Option (to the extent
        not
        exercised and not otherwise expired) in whole or in part without regard to
        any
        installment provision that may have been made part of the terms and conditions
        of this Subject Option. The Corporation, to the extent practicable, shall
        give
        advance notice to the Optionee of such merger, consolidation, dissolution,
        liquidation, sale of assets or Change in Control of the Corporation. If such
        an
        event occurs, to the extent a Subject Option is not exercised, it shall be
        forfeited as of the effective time of any such event (but not in the case
        of a
        Change in Control of the Corporation). Exercise of a Subject Option may be
        conditioned on the consummation of a transaction described in this Section.
        For
        purposes hereof, “Change
        of Control”
means
        any of the following events: 

      
         

        (a)  A
          sale,
          consolidation, merger, acquisition or affiliation which results in the
          stockholders of the Corporation (determined immediately prior to the
          consummation of

         

        
          
            
            

          

          
            4

            
              

            

          

          
            
            

          

        

         

        the
          transaction) holding immediately after consummation of such transaction
          less
          than 45% of the total outstanding capital stock of the surviving or successor
          corporation in the transaction (the “Surviving
          Corporation”);
          or

         

        (b)  A
          sale,
          consolidation, merger, or acquisition in which the Corporation becomes
          accountable to, or a part of, a newly created company or controlling
          organization where at least 51% of the members of the Board of the newly
          created
          Company or controlling organization were not members of the Corporation’s Board
          immediately prior to such sale, consolidation, merger, or acquisition;
          or

         

        (c)  A
          sale or
          other disposition by the Corporation of all or substantially all of the
          assets
          of the Corporation. 

         

      

      9.     Registration.
        The
        shares of Common Stock subject hereto and issuable upon the exercise hereof
        may
        not be registered under the Securities Act of 1933, as amended, and, if required
        by the Corporation, the Optionee will give a representation as to his investment
        intent with respect to such shares and as to such other facts as the Committee
        may deem necessary prior to their issuance as set forth in Section 10
        hereof.

       

      The
        Corporation may register or qualify the shares covered by the Subject Option
        for
        sale pursuant to the Securities Act of 1933, as amended, at any time prior
        to or
        after the exercise in whole or in part of the Subject Option, but the
        Corporation is under no obligation to register any of its shares or any transfer
        thereof.

       

      10.     Method
        of
        Exercise of Subject Option.

       

      (a)     Subject
        to the terms and conditions of this Agreement, the Subject Option shall be
        exercisable by notice in the manner set forth in Exhibit A hereto (the
“Notice”)
        and
        provision for payment to the Corporation in accordance with the procedure
        prescribed herein. Each such Notice shall:

       

      
        	 	
                (i)

              	
                state
                  the election to exercise the Subject Option and the number of Shares
                  in
                  respect of which it is being
                  exercised;

              

      

       

      
        	 	
                (ii)

              	
                contain
                  a representation and agreement as to investment intent, if required
                  by
                  counsel to the Corporation with respect to such Shares, in form
                  satisfactory to counsel for the
                  Corporation;

              

      

      
      

       

      
        	 	
                (iii)

              	
                be
                  signed by the Optionee or the person or persons entitled to exercise
                  the
                  Subject Option and, if the Subject Option is being exercised by
                  any person
                  or persons other than the Optionee, be accompanied by proof, satisfactory
                  to counsel for the Corporation, of the right of such person or
                  persons to
                  exercise the Subject Option; and

              

      

       

      
        	 	
                (iv)

              	
                be
                  received by the Corporation on or before the date of the expiration
                  of
                  this Subject Option. In the event the date of expiration of this
                  Subject
                  Option falls on a day which is not
                  a 

              

      

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        
          	 	
                  (iv)

                	
                  regular
                    business day in Davidson, North Carolina, then such written notice
                    must be
                    received at such office on or before the last regular business
                    day prior
                    to such date of expiration.

                

        

      

       

      (b)     Payment
        of the purchase price of any shares of Common Stock, in respect of which
        the
        Subject Option shall be exercised, shall be made by the Optionee or such
        person
        or persons at the place specified by the Corporation at the time the Notice
        is
        delivered to the Corporation (i) by delivering to the Corporation a certified
        or
        bank cashier’s check payable to the order of the Corporation, (ii) by delivering
        to the Corporation properly endorsed certificates of shares of Common Stock
        (or
        certificates accompanied by an appropriate stock power) with signature
        guaranties by a bank or trust company, (iii) by having withheld from the
        total
        number of shares of Common Stock to be acquired upon the exercise of this
        Subject Option a specified number of such shares of Common Stock, (iv) by
        any
        form of “cashless” exercise or (v) by any combination of the above. The
        Committee shall have discretion to interpret this provision to ensure that
        it is
        fairly administered.

       

      (c)     The
        Subject Option shall be deemed to have been exercised with respect to any
        particular shares of Common Stock if, and only if, the preceding provisions
        of
        this Section 10 and the provisions of Section 11 hereof shall have been complied
        with, in which event the Subject Option shall be deemed to have been exercised
        on the date the Notice of exercise of the Subject Option was received by
        the
        Corporation. Anything in this Agreement to the contrary notwithstanding,
        any
        notice of exercise given pursuant to the provisions of this Section 10 shall
        be
        void and of no effect if all the preceding provisions of this Section 10
        and the
        provisions of Section 11 shall not have been complied with.

       

      (d)    The
        certificate or certificates for shares of Common Stock as to which the Subject
        Option shall be exercised will be registered in the name of the Optionee
        (or in
        the name of the Optionee’s estate or other beneficiary if the Subject Option is
        exercised after the Optionee’s death), or if the Subject Option is exercised by
        the Optionee and if the Optionee so requests in the notice exercising the
        Subject Option, will be registered in the name of the Optionee and another
        person jointly, with right of survivorship and will be delivered as soon
        as
        practical after the date the Notice (and full payment) is received by the
        Corporation, but only upon compliance with all of the provisions of this
        Agreement.

       

      (e)     If
        the
        Optionee fails to accept delivery of and pay for all or any part of the number
        of Shares specified in such Notice upon tender or delivery thereof, his right
        to
        exercise the Subject Option with respect to such undelivered Shares may be
        terminated in the sole 

      discretion
        of the Board of Directors of the Corporation. The Subject Option may be
        exercised only with respect to full Shares.

       

      (f)     The
        Corporation shall not be required to issue or deliver any certificate or
        certificates for shares of its Common Stock purchased upon the exercise of
        any
        part of this Subject Option prior to the payment to the Corporation, upon
        its
        demand, of any amount requested by the Corporation for the purpose of satisfying
        its liability, if any, to withhold state or local income or earnings tax
        or any
        other applicable tax or assessment (plus interest or penalties thereon, if
        any,
        caused by a delay in making such payment) incurred by reason of the exercise
        of
        this Subject Option or the transfer of shares thereupon. Such payment shall
        be
        made by the

      
         

        
          
            
            

          

          
            6

            
              

            

          

          
            
            

          

        

      

       

      Optionee
        in cash or, with the consent of the Corporation and to the extent permitted
        by
        the Plan, by tendering to the Corporation shares of Common Stock equal in
        value
        to the amount of the required withholding. In the alternative, the Corporation
        may, at its option, satisfy such withholding requirements by withholding
        from
        the shares of Common Stock to be delivered to the Optionee pursuant to an
        exercise of this Subject Option a number of shares of Common Stock equal
        in
        value to the amount of the required withholding.

       

      (g)     The
        Corporation may as a condition to the exercise of a Subject Option prior
        to the
        Initial Public Offering require that the Optionee enter into a stockholders
        agreement to which at least a majority of the shares of Common Stock is then
        subject..

       

      11.   Approval
        of Counsel.
        The
        exercise of the Subject Option and the issuance and delivery of shares of
        Common
        Stock pursuant thereto shall be subject to approval by the Corporation’s counsel
        of all legal matters in connection therewith, including, but not limited
        to,
        compliance with the requirements of the Securities Act of 1933, as amended,
        and
        the Securities Exchange Act of 1934, as amended, and the rules and regulations
        thereunder, and the requirements of any stock exchange upon which the Common
        Stock may then be listed.

       

      12.   Resale
        of Common Stock.

       

      (a)     If
        so
        requested by the Corporation, upon any permitted sale or transfer of the
        Common
        Stock purchased upon exercise of the Subject Option, the Optionee shall deliver
        to the Corporation an opinion of counsel satisfactory to the Corporation
        to the
        effect that either (i) the Common Stock to be sold or transferred has been
        registered under the Securities Act of 1933, as amended, and that there is
        in
        effect a current prospectus meeting the requirements of Section 10(a) of
        said
        Act which is being or will be delivered to the purchaser or transferee at
        or
        prior to the time of delivery of the certificates evidencing the Common Stock
        to
        be sold or transferred, or (ii) such Common Stock may then be sold without
        violating Section 5 of said Act.

       

      (b)     The
        Common Stock issued upon exercise of the Subject Option shall bear the following
        legend if required by counsel for the Corporation:

       

      THE
        SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
        SECURITIES ACT OF 1933 (THE “ACT”)
        AND
        MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
        DISPOSED OF UNLESS THEY HAVE FIRST

      BEEN
        REGISTERED UNDER THE ACT, OR UNLESS, IN THE OPINION OF COUNSEL FOR THE
        CORPORATION, SUCH REGISTRATION IS NOT REQUIRED.

       

      13.   Market
        Stand-Off Agreement.
        Upon
        the request of the Corporation or the underwriters managing any underwritten
        public offering of the Corporation’s securities, the Optionee agrees not to
        sell, make any short sale of, loan, grant any option for the purchase of,
        or
        otherwise dispose of shares acquired upon exercise of the Subject Option,
        without the prior written consent of the Corporation or such underwriters,
        for
        such period of time (not to exceed

       

      
        
          
            
            

          

          
            7

            
              

            

          

          
            
            

          

        

      

       

      180
        days)
        from the effective date of such registration as may be required by the
        Corporation or such underwriter.

       

      14.   Reservation
        of Shares.
        To the
        extent shares of Common Stock are not readily tradable over an established
        securities market, the Corporation shall at all times during the term of
        the
        Subject Option reserve and keep available such number of shares of the class
        of
        stock then subject to the Subject Option as will be sufficient to satisfy
        the
        requirements of this Agreement.

       

      15.   Limitation
        of Action.
        The
        Optionee and the Corporation each acknowledges that every right of action
        accruing to him or it, as the case may be, and arising out of or in connection
        with this Agreement against the Corporation, on the one hand, or against
        the
        Optionee, on the other hand, shall, irrespective of the place where an action
        may be brought, cease and be barred by the expiration of six months from
        the
        date of the act or omission in respect of which such right of action
        arises.

       

      16.   Notices.
        Each
        notice relating to this Agreement shall be in writing and delivered in person
        or
        by certified mail to the proper address. All notices to the Corporation or
        the
        Committee shall be addressed to them at the Corporation’s principal office. All
        notices to the Optionee shall be addressed to the Optionee or such other
        person
        or persons at the Optionee’s address above specified. Anyone to whom a notice
        may be given under this Agreement may designate a new address by notice to
        that
        effect.

       

      17.   Benefits
        of Agreement.
        This
        Agreement shall inure to the benefit of and be binding upon each successor
        and
        assign of the Corporation. All obligations imposed upon the Optionee and
        all
        rights granted to the Corporation under this Agreement shall be binding upon
        the
        Optionee’s heirs, legal representatives and successors.

       

      18.   Severability.
        In the
        event that any one or more provisions of this Agreement shall be deemed to
        be
        illegal or unenforceable, such illegality or unenforceability shall not affect
        the validity and enforceability of the remaining legal and enforceable
        provisions hereof, which shall be construed as if such illegal or unenforceable
        provision or provisions had not been inserted.

       

      19.   Governing
        Law.
        The
        validity, interpretation, construction and performance of this Agreement
        will be
        construed and governed in accordance with the laws of the State of North
        Carolina, without giving effect to the conflicts of laws principles
        thereof.

       

      20.   Jurisdiction.
        Service
        of Process. Any action or proceeding seeking to enforce any provision of,
        or
        based on any right arising out of, this Agreement may be brought in the courts
        of the State of North Carolina, County of Mecklenburg, or, if it has or can
        acquire jurisdiction, inthe
        United States District Court for the State of North Carolina, Western District.
        Each of the parties consents to the jurisdiction of such courts (and of the
        appropriate appellate courts) in any such action or proceeding and waives
        any
        objection to venue laid therein. Process in any action or proceeding referred
        to
        in the preceding sentence may be served on any party anywhere in the
        world.

       

      21.   [Applicable
        to Options Granted Prior to Plan Approval by Stockholders] Condition of
        Award.
        Optionee understands that the Plan shall be effective upon its adoption by
        the
        Board, provided however that the shareholders of the Corporation approve
        the
        Plan within

       

      
        
          
            
            

          

          
             8

            
              

            

          

          
            
            

          

        

      

       

      twelve
        months of its adoption by the Board and that all Awards granted prior to
        such
        approval, including that reflected by this Agreement, shall be subject to
        such
        approval. If the stockholders do not so approve the Plan, the Plan shall
        terminate and all Awards previously issued, including that reflected by this
        Agreement, shall terminate as if they had never been awarded.

       

      22.   Employment.
        Nothing
        contained in this Agreement shall be construed as:

       

      (a)     a
        contract of employment between the Optionee and the Corporation,

       

      (b)    
as
        a
        right of the Optionee to be continued in the employ of the Corporation or
        any
        parent or subsidiary, or

       

      (c)     as
        a
        limitation on the right of the Corporation to discharge the Optionee at any
        time, with or without Cause.

       

      IN
        WITNESS WHEREOF, the Corporation has caused this Agreement to be executed
        in its
        name by its President or one of its Vice Presidents and its corporate seal
        to be
        hereunto affixed and attested by its Secretary or one of its Assistant
        Secretaries and the Optionee has hereunto set his hand all as of the date,
        month
        and year first above written.

       

      
        
          	 	
                   UPSNAP
                    Inc.

                   

                
	 	By: 	
                   

                
	 	 	
                  Name:

                
	 	 	
                  Title:

                
	 	
                   

                   

                
	 	 OPTIONEE

        

      

       

       

      
        	
                ATTEST:

                 

              	 
	
                Secretary
                  or Assistant Secretary 

              	 

      

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A

       

      STOCK
        OPTION EXERCISE FORM

       

      DATE:

       

      UPSNAP
        Inc.

       

      Dear
        Sirs:

       

      Pursuant
        to the provisions of the Stock Option Agreement dated [DATE,] whereby you
        have
        granted to me a stock option to purchase shares of Common Stock of UPSNAP
        Inc.
        (the “Corporation”),
        I
        hereby notify you that I elect to exercise my option to purchase [NUMBER]
        of the
        shares covered by such option at the price specified therein. In full payment
        of
        the price for the shares being purchased hereby, I am delivering to you herewith
        (e) a certified or bank cashier’s check payable to the order of the Corporation
        in the amount of $[AMOUNT,]* or (f) a certificate or certificates for [NUMBER]
        shares of Common Stock of the Corporation, and which have a fair market value
        as
        of the date hereof of $[AMOUNT] and a certified or bank cashier’s check, payable
        to the order of the Corporation, in the amount of $__________________.**
        Any
        such stock certificate or certificates are endorsed, or accompanied by an
        appropriate stock power, to the order of the Corporation, with my signature
        guaranteed by a bank or trust company or by a member firm of the New York
        Stock
        Exchange. I hereby acknowledge that I am purchasing these shares for investment
        purposes only and not for resale.

       

      
        
          	 	
                  Very
                    truly yours,

                   

                
	 	 
	 	
                  Name:

                
	 	
                  Address:

                

        

      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      OPTION
        NO. 2006 NQO-[ ]

       

      
        	
                UPSNAP
                  Inc.

              	 	 
	 	 	 
	
                STOCK
                  OPTION

              	 	 
	 	 	 
	
                Granted
                  To

              	 	 
	 	 	 
	
                Optionee

              	 	 
	 	 	 
	 	 	
                $

              
	
                Number
                  of Shares

              	 	
                Price
                  per Share

              
	 	 	 
	
                Date
                  Granted

              	 	 

      

       

      
        
          
          

        

        
          11EX-10.1

 

Exhibit 10.1

UST INC.

2005 LONG-TERM INCENTIVE PLAN

NOTICE OF GRANT OF STOCK OPTION

     This Notice is to certify that the Optionee named below has been granted the number of options
set forth below under the UST Inc. 2005 Long-Term Incentive Plan (the “Plan”) and the terms and
conditions set forth in this Notice and attached Nonstatutory Stock Option Agreement (the
“Agreement”). This Notice is subject to and incorporates by reference the terms and conditions of
the Agreement, a copy of which is enclosed. Please refer to the Agreement and the Plan document
for an explanation of the terms and conditions of this grant and a full description of your rights
and obligations. If the Agreement is not signed and returned to the Company, on or before the date
on which these Stock Options vest, the Stock Options granted hereunder shall be forfeited. Please
sign and date the Agreement and return it promptly in the enclosed envelope.

	 	 	 
	Name of Optionee:
	 	Murray S. Kessler
	 
	 	 
	Type of Option:
	 	Nonstatutory
	 
	 	 
	Number of Shares Under Option:
	 	200,000
	 
	 	 
	Per Share Exercise Price:
	 	$53.47
	 
	 	 
	Grant Date:
	 	November 2, 2006

	 	 	 	 	 	 
	Vesting Schedule:		Options
	 	On
	 
	 
		50,000	 	November 2, 2007
	 
		50,000	 	November 2, 2008
	 
		50,000	 	November 2, 2009
	 
		50,000	 	November 2, 2010

	 	 	 
	Expiration
Date:

	 	November 1, 2016
	 
	 	 
	Additional
Terms:

	 	See the Nonstatutory Stock Option Agreement.

 

 

UST INC.

2005 LONG-TERM INCENTIVE PLAN

NONSTATUTORY STOCK OPTION AGREEMENT

          NONSTATUTORY STOCK OPTION AGREEMENT, made as of the date set forth on the Notice of Grant of
Stock Option pursuant to the UST Inc. 2005 Long-Term Incentive Plan (the “Plan”), between UST Inc.,
a Delaware corporation (the “Company”), and the employee of the Company or a Subsidiary named on
the Notice of Grant of Stock Option (the “Employee”).

          WHEREAS, the Company desires, by affording the Employee an opportunity to purchase shares of
its common stock, $.50 par value (“Common Stock”), as hereinafter provided and subject to the terms
and conditions hereof, to carry out the purpose of the Plan; and

          WHEREAS, the Committee administering the Plan has granted (as of the effective date of grant
specified in the Notice of Grant of Stock Option) to the Employee the number of options as set
forth in the Notice of Grant of Stock Option which is incorporated herein by reference.

          NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other
good and valuable consideration, the parties hereto have agreed and do hereby agree as follows:

          1. Grant. The Company has granted to the Employee a Nonstatutory Stock Option (the
“Option”) to purchase the aggregate number of shares as shown on the Notice of Grant of Stock
Option, subject to adjustment as provided in the Plan, on the terms and conditions herein set
forth.

          2. Exercise Price. The exercise price of the shares of Common Stock covered by the
Option shall be as shown on the Notice of Grant of Stock Option.

          3. Vesting and Exercise. Except as set forth below, the Option shall vest and become
exercisable in accordance with the Vesting Schedule as shown on the Notice of Grant of Stock
Option, and shall expire at the close of business on the date shown on the Notice of Grant of Stock
Option. The Option, to the extent vested, may be exercised either for the total number of shares
granted, or for less than the total number in multiples of 100 shares. In the event that the
Employee makes a “hardship withdrawal” under the UST Inc. Employees’ Savings Plan (the “Savings
Plan”), as amended from time to time, the right of exercise shall be suspended during the period
prescribed by the Savings Plan beginning on the date of such withdrawal, except that this
restriction shall not apply if for any reason such suspension is not required under Section 401(k)
of the Code or any final regulations issued thereunder.

          4. Method of Exercise. Upon the exercise of the Option, the exercise price may be
paid (i) in full in cash; (ii) by tendering previously owned mature shares with a value on the date
of exercise equal to the purchase price as described below or (iii) by any such other method of
exercise approved by the Committee. The Option shall be exercised in accordance with the
procedures adopted by the Company from time to time.

          The Employee may pay the purchase price by tendering to the Company, in whole or in part, in
lieu of cash, shares of Common Stock owned by such purchaser for at least six months prior to the
date of exercise, accompanied by the certificates therefor registered in the
name of such purchaser and properly endorsed for transfer, having a Fair Market Value equal to
the cash exercise price applicable to the portion of such Option being so exercised.

 

 

          5. No Rights as a Stockholder or to Continued Employment. The Employee shall not have
any of the rights of a stockholder with respect to the shares of Common Stock covered by the
Option, including, without limitation, the right to vote on all matters with respect to which the
stockholders of the Company have the right to vote and the right to receive current cash dividends
thereon, until the shares are issued or transferred to the Employee upon exercise of the Option.
The Option shall not confer on the Employee any right to continued employment.

          6. Restrictions on Transfer. The Option shall not be transferred or otherwise
disposed of by the Employee, including by way of sale, assignment, transfer, pledge, hypothecation
or otherwise, except as permitted by the Committee in its discretion, or by will or the laws of
descent and distribution and shall be exercisable during the Employee’s lifetime only by the
Employee or by his/her guardian or legal representative. The Committee may, in its sole
discretion, permit the transfer of the Option subject to any conditions that the Committee may
prescribe; provided, however, that in no event may the Option be transferred for consideration.

          7. Invalid Transfers. No purported sale, assignment, mortgage, hypothecation,
transfer, pledge, encumbrance, gift, transfer in trust (voting or otherwise) or other disposition
of, or creation of a security interest in or lien on, the Option by any holder thereof in violation
of the provisions of this Nonstatutory Stock Option Agreement shall be valid, and the Company will
not transfer the Option on its books, unless and until there has been full compliance with these
provisions to the satisfaction of the Committee. The foregoing restrictions are in addition to and
not in lieu of any other remedies, legal or equitable, available to enforce these provisions.

          8. Adjustments; Change in Control. In the event of any change in the outstanding
shares of Common Stock, through declaration of stock or other dividends or distributions with
respect to such shares, through restructuring, recapitalization or other similar event or through
stock splits, change in par value, combination or exchange of shares, or the like, then the number
or kind of shares covered by the Option and/or the purchase price of the shares covered by the
Option, as appropriate, shall be adjusted proportionately, as necessary to reflect equitably such
changes; provided, however, that any fractional shares resulting from such adjustment shall be
eliminated. Upon the occurrence of a Change in Control prior to the expiration of the Option, any
then unexercisable portion of the Option shall become immediately vested and/or exercisable. Upon
a Change in Control where the Company is not the surviving corporation (or survives only as a
subsidiary of another corporation) or other Change in Control described in clause (iii) or (iv) of
the definition of “Change in Control,” the Option shall be canceled and, in exchange therefore the
Company shall pay the Employee an amount in cash equal to the difference between the per share
exercise price of such Option and the Fair Market Value of a share of Common Stock. For this
purpose the Fair Market Value of a share of Common Stock shall be the highest Fair Market Value of
such Common Stock during the sixty-day period prior to the date of the Change in Control.

          9. Effect of Termination of Employment. If the employment of the Employee is
terminated by reason of his/her death or Disability, or upon his/her Retirement, or for any other
reason if the Committee so determines, any portion of the Option that has not theretofore become
vested and exercisable shall become fully vested and exercisable as of the date of such termination
of employment. If the employment of the Employee is terminated by the Company other than for Cause,
or by the Employee for Good Reason (as defined in the employment agreement, severance agreement or
change in control agreement entered into

 

 

between the Company and the Employee), the Employee shall become vested as of the date of
termination with respect to a pro rata portion of the Option. For this purpose, the pro rata
portion shall be the number of shares covered by the Option multiplied by a fraction, the numerator
of which is the number of full months which have elapsed from the Grant Date specified in the
Notice of Grant of Stock Option until the date of termination, and the denominator of which is 48.
If the resulting number is not a whole number of shares, the number calculated shall be rounded up
or down (as appropriate) to the nearest whole number of shares. Options that remain outstanding at
the effective date of a termination by reason of death, Disability or Retirement, a termination by
the Company other than for Cause, or a termination by the Employee for Good Reason shall remain
exercisable until the expiration of the original term. If the employment of the Employee is
terminated for any other reason other than for Cause and if the Committee does not determine otherwise, any portion of
the Option that has not theretofore become vested and exercisable shall be forfeited and shall
lapse; and any portion of the Option that has vested as of the date of the Employee’s termination of
employment other than for Cause shall be exercisable for a period of 90 days following the date of
termination. Upon expiration of such 90 day period, any unexercised portion of the Option shall
terminate in full and shall lapse. Notwithstanding the foregoing, in no event may the Option be
exercised after the expiration date specified in the Notice of Grant of Stock Option. For purposes
of this Agreement, the term “Disability” shall mean a “disability,” as defined in the Company’s
Long-Term Disability Plan or, if such plan is not applicable to the Employee, as defined by the
State or federal disability program which applies to the Employee.

          10. Non-Competition.

               (a) In consideration of the grant of the Option made pursuant to this Agreement, during the
term of the Employee’s employment with the Company and for a period of one (1) year after that
employment is terminated, by the Company or the Employee, for any reason other than the cessation
of business by the Company pursuant to a filing for bankruptcy protection or liquidation initiated
by the Company, the Employee will not, without the Company’s prior written approval, directly or
indirectly:

                    (i) recruit, solicit or knowingly induce, or attempt to induce, any employee or consultant of
the Company to terminate his/her employment or consulting relationship with, or otherwise cease
his/her relationship with, the Company; or

                    (ii) solicit, divert or take away, or attempt to divert or to take away, the business or
patronage of any of the clients, customers or accounts, or prospective clients, customers or
accounts, of the Company. For purposes of this Agreement, a prospective client, customer or account
is any individual or entity whose business is solicited by the Company, proposed to be solicited by
the Company, or who approaches the Company with respect to possibly becoming a client, customer, or
account during the period of Employee’s employment with the Company; or

                    (iii) engage (whether for compensation or without compensation), directly or indirectly, as an
individual proprietor, partner, officer, employee, director, independent contractor, consultant or
in any other capacity whatsoever, in any business currently involved in, or actually contemplating
involvement in, the manufacture or distribution of smokeless tobacco or tobacco seed, wines or
distilled spirits, whether or not the same is pursued for gain, profit or other pecuniary
advantage. The foregoing shall not, however, be construed as
preventing the Employee from making
investments in any other business, provided, however, that such investments do not require his/her
services in the operation of the affairs of the businesses in which such investments are made.

 

 

               (b) If any restriction set forth in this Section 10 is found by any court of competent
jurisdiction to be 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 interpreted to extend only
over the maximum period of time, range of activities or geographic areas to which it may be
enforceable.

               (c) The restrictions contained in this Section 10 are necessary for the protection of the
business and goodwill of the Company and are considered by the Employee to be reasonable for this
purpose. The Employee agrees that any breach of this Section 10 will cause the Company substantial
and irrevocable damage and, therefore, in the event of any such breach, in addition to such other
remedies which may be available, the Company will have the right to seek specific performance and
injunctive relief, attorney’s fees, costs and disbursements to enforce its rights hereunder.

          11. Finding of Cause; Violation of Non-Competition Covenant.

               (a) If (i) the employment of the Employee is terminated for Cause or (ii) after the Employee’s
termination of employment with the Company other than for Cause, the Company discovers the
occurrence of an act or failure to act by the Employee, while in the employ of the Company, that
would have enabled the Company to terminate the Employee’s employment for Cause had the Company
known of such act or failure to act at the time of its occurrence, or (iii) subsequent to the
Employee’s termination of employment, the Employee violates the restrictions set forth in Section
10 of this Agreement and, in each case, such act is discovered by the Company within three (3)
years of its occurrence, then, unless otherwise determined by the Committee,

                    (i) any portion of the Option (whether or not then exercisable) that has not been exercised as
of the date of such termination or discovery shall thereupon be forfeited and shall lapse; and

                    (ii) the Employee (or, in the event of the Employee’s death following the commission of such
act, his beneficiaries or estate) shall (A) sell back to Company all Acquired Shares (as defined in
paragraph (b) of this Section 11) held by the Employee (or, if applicable, his beneficiaries or
estate) as of the date of such termination or discovery, for a per share price equal to the per
share exercise price of the Option (or if less, the Fair Market Value at the time of such sale back
to the Company), and (B) to the extent such Acquired Shares have previously been sold or otherwise
disposed of by the Employee, other than by reason of death (or if applicable, by his beneficiaries
or estate), repay to the Company the excess of the aggregate Fair Market Value of such Acquired
Shares on the date of such sale or disposition over the aggregate exercise price of such Acquired
Shares.

                    (iii) for purpose of clause (ii)(B) above, (A) the amount of repayment described therein shall
not be affected by whether the Employee (or, if applicable, his/her beneficiaries or estate)
actually received such Fair Market Value with respect to such sale or other disposition, and (B)
repayment may, without limitation, be affected, at the discretion of the Company, by means of
offset against any amount owed by the Company to the Employee (or, if applicable, his/her
beneficiaries or estate).

               (b) For purposes of this Agreement, Acquired Shares shall mean shares of Common Stock that
were acquired upon exercise of the Option on or after the date which is 180 days prior to the
Employee’s termination of employment.

 

 

          12. Approvals. The sale and delivery of any shares of Common Stock hereunder is
subject to approval of any government agency which may, in the opinion of counsel, be required in
connection with the authorization, issuance or sale of Common Stock. No Common Stock shall be
issued under the Option prior to compliance with such requirements and with the Company’s listing
agreement with the New York Stock Exchange (or other national exchange upon which the Company’s
shares may then be listed).

          13. Taxes. The Employee understands that he or she (and not the Company) shall be
responsible for any tax liability that may arise as a result of the transactions contemplated by
this Agreement. As a condition precedent to the delivery of shares of Common Stock upon exercise
of the Option, the Employee shall, upon request by the Company, pay to the Company in addition to
the exercise price, such amount of cash as the Company may be required, under all applicable
federal, state, local or other laws or regulations, to withhold and pay over as income or other
withholding taxes (the “Required Tax Payments”) with respect to such exercise of the Option. If
the Employee shall fail to advance the Required Tax Payments after request by the Company, the
Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Employee. In lieu of the cash payment described above, the Employee
may elect to satisfy his or her obligation to advance the Required Tax Payments by tendering to the
Company shares of Common Stock owned by the Employee for at least six months prior to the date of
tender, accompanied by the certificates evidencing such shares registered in the name of the
Employee and properly endorsed for transfer, having a Fair Market Value, determined as of the date
the obligation to withhold or pay taxes first arises in connection with the Option (the “Tax
Date”), equal to the Required Tax Payments, or by such other method approved by the Committee. No
certificate representing a share of Common Stock shall be delivered until the Required Tax Payments
have been satisfied in full.

          14. Section 409A. This Agreement shall be interpreted and applied so that the Option
will not be subject to Code section 409A. In addition, this Agreement shall be interpreted and
applied as if it contains any additional provisions that it is required to contain in order for the
Option to be exempt from Code section 409A.

          15. Compliance with Law and Regulations. This Agreement and any obligation of the
Company hereunder shall be subject to all applicable federal, state and local laws, rules and
regulations and to such approvals by any government or regulatory agency as may be required.

          16. Incorporation of Plan. This Agreement is made under the provisions of the Plan
(which is incorporated herein by reference) and shall be interpreted in a manner consistent with
it. To the extent that this Agreement is silent with respect to, or in any way inconsistent with,
the terms of the Plan, the provisions of the Plan, as determined by the Committee, shall control
and this Agreement shall be deemed to be modified accordingly. Unless otherwise defined herein or
otherwise required by the context, all terms used herein shall have the meaning ascribed to them in
the Plan.

          17. Notices. Any notices required or permitted hereunder shall be addressed to the
Company, at 100 West Putnam Avenue, Greenwich, Connecticut 06830, or to the Employee at the address
then on record with the Company, as the case may be, and deposited, postage prepaid, in the United
States mail; provided, however, that a notice of exercise pursuant to paragraph 7 hereof shall be
effective only upon receipt by the Company of such notice and all necessary documentation,
including payment. Either party may, by notice to the other given in the manner aforesaid, change
his/her or its address for future notices.

 

 

          18. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware. The Committee shall have final authority to interpret and
construe the Plan and this Agreement and to make any and all determinations under them, and its
decision shall be binding and conclusive upon the Employee and his/her legal representative in
respect of any questions arising under the Plan or this Agreement.

          19. Successor. This Agreement shall bind and inure to the benefit of the Company, its
successors and assigns, and the Employee and his or her personal representatives and beneficiaries.

          20. Amendment. This Agreement may be amended or modified by the Company at any time;
provided that notice is provided to the Employee in accordance with Section 17; and provided
further that no amendment or modification that is adverse to the rights of the Employee as provided
by this Agreement and the related Notice of Grant of Stock Option shall be effective unless set
forth in a writing signed by the parties hereto (except that an amendment or modification that is
made to comply with Code section 409A, or to preserve an exemption from Code section 409A, shall be
effective upon adoption by the Company unless expressly rejected by the Employee in writing).

          21. Binding Agreement. By signing below, the Employee acknowledges that he or she has
read this Agreement and the Notice of Grant of Stock Option and agrees to the terms and conditions
specified therein and in the Plan. This Agreement shall be binding upon the Employee and his or
her personal representatives and beneficiaries without any need for additional action by the
Employee, and any attempt by the Employee and his or her personal representatives and beneficiaries
to exercise any rights under this Agreement shall be conclusive evidence of such person’s
acceptance thereof.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its officer
thereunder duly authorized and the Employee has hereunto set his or her hand, all as of the day and
year set forth above.

UST INC.

	 	 	 
	 

Name: Richard A. Kohlberger

	 	 
	Title: Senior Vice President, General Counsel and Secretary
	 	 

	 	 	 	 	 	 	 
	 

Employee Signature

	 	 	 	 

Date

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