STOCK OPTION AGREEMENT
EXHIBIT
10.2
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:
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(i)
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25%
of Shares on or after one year from the Date of
Grant;
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(ii)
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50%
of Shares on or after two years from the Date of
Grant;
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(iii)
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75%
of Shares on or after three years from the Date of Grant;
and
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(iv)
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100%
of Shares on or after four years from the Date of
Grant.
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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:
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(i)
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shall
have been convicted of a felony;
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(ii)
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shall
have engaged in an act or acts of personal dishonesty intended
to result
in personal enrichment at the expense of the
Corporation;
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(iii)
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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.
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(iv)
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shall
have committed any act involving material dishonesty or material
disloyalty with respect to the Corporation or any of its subsidiaries
or
affiliates; or
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(v)
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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;
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(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:
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(i)
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state
the election to exercise the Subject Option and the number of Shares
in
respect of which it is being
exercised;
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(ii)
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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;
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(iii)
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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
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(iv)
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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
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5
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(iv)
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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.
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(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.
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UPSNAP
Inc.
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| By: |
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Name:
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Title:
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| OPTIONEE | ||
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ATTEST:
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Secretary
or Assistant Secretary
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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 $__________________.**
Any
such stock certificate or certificates are endorsed, or accompanied by an
appropriate stock power, to the order of the Corporation, with my signature
guaranteed by a bank or trust company or by a member firm of the New York
Stock
Exchange. I hereby acknowledge that I am purchasing these shares for investment
purposes only and not for resale.
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Very
truly yours,
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Name:
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Address:
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10
OPTION
NO. 2006 NQO-[ ]
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UPSNAP
Inc.
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STOCK
OPTION
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Granted
To
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Optionee
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$
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Number
of Shares
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Price
per Share
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Date
Granted
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11
