GATEWAY DISTRIBUTORS, LTD
STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of February 3, 0000 XXXXXXX XXXXXXX
DISTRIBUTORS LTD, a Nevada corporation (the "Company"), and XXXX XXXXX
(the "Optionee").
THE PARTIES AGREE AS FOLLOWS:
1. OPTION GRANT. The Company hereby grants to the Optionee an option
-------------
(the "Option") to purchase the number of shares of the Company's common stock
(the "Shares"), for an exercise price per share (the "Option Price") and based
upon a Grant Date, all as set forth below:
Shares under option: 3,000,000,000
Option Price per Share: $.0001
Grant Date: February 3, 2006
The Option granted hereunder will be an incentive stock option within
the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.
2. STOCKHOLDER RIGHTS. No rights or privileges of a stockholder in
-------------------
the Company are conferred by reason of the granting of the Option. Optionee will
not become a stockholder in the Company with respect to the Shares unless and
until the Option has been properly exercised and the Option Price fully paid as
to the portion of the Option exercised.
3. EXERCISE PROCEDURE. Subject to the conditions set forth in this
-------------------
Agreement. this option shall be exercised by the Optionee's delivery of written
notice of exercise to the Treasurer of the Company, specifying the number of
shares to be purchased and the purchase price to be paid therefore and
accompanied by payment in full in accordance with Section 4. Such exercise shall
be effective upon receipt by the Treasurer of the Company of such written notice
together with the required payment. The Optionee may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
option may be for any fractional share or for fewer than ten whole shares.
Notwithstanding anything herein contained to the contrary, the Optionee and the
Company acknowledge that the Optionee exercised the Option to acquire all of the
Shares. Optionee will deliver to the Company $300,000 dollars, the receipt and
sufficiency of which is acknowledged by the Company. However, the Shares were
not issued to the Optionee. Instead, the Optionee and the Company agreed that
the certificates for the Shares would be issued at a subsequent date as
determined by the Optionee. However, the parties have agreed that the number of
the Shares to be issued to the Optionee shall be adjusted to reflect any reverse
splits in the shares of the common stock of the Company which have occurred, so
that the number of the Shares to be to be issued to the Optionee will be
proportionately increased so that the number of the Shares shall be
proportionately the same number of the Shares immediately following any such
subdivision as existed before any such subdivision.
RELATIONSHIP WITH THE COMPANY. Except as otherwise provided in this Section 3,
-------------------------------
this option may not be exercised unless the Optionee, at the time he or she
exercises this option, is, and has been at all times since the date of grant of
this option, an employee, officer or director of, or consultant or advisor to,
the Company (an "Eligible
1
Optionee").
5. TERMINATION OF RELATIONSHIP WITH THE COMPANY. If the Optionee
--------------------------------------------------
ceases to be an Eligible Optionee for any reason, then, except as provided in
paragraphs (a) and (b) below, the right to exercise this option shall terminate
three (3) years after such cessation (but in no event after the Expiration
Date), provided that this option shall be exercisable only to the extent that
the Optionee was entitled to exercise this option on the date of such cessation.
Notwithstanding the foregoing, if the Optionee, prior to the Expiration Date,
materially violates the non-competition or confidentiality provisions of any
employment contract, confidentiality and nondisclosure agreement or other
agreement between the Optionee and the Company. the right to exercise this
option shall terminate immediately upon written notice to the Optionee from the
Company describing such violation.
(a) Exercise Period Upon Death or Disability. If the Optionee
dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Expira1ion Date while he or she is an Eligible
Optionee, or if the Optionee dies within three months after the
Optionee ceases to be an Eligible Optionee (other than as the result
of a termination of such relationship by the Company for "cause" as
specified in paragraph (f) below), this option shall be exercisable,
within the period of three years following the date of death or
disability of the Optionee (whether or not such exercise occurs before
the Expiration Date), by the Optionee or by the person to whom this
option is transferred by will or the laws of descent and distribution,
provided that this option shall be exercisable only to the extent that
this option was exercisable by the Optionee on the date of his or her
death or disability. Except as otherwise indicated by the context, the
term "Optionee," as used in this option, shall be deemed to include
the estate of the Optionee or any person who acquires the right to
exercise this option by Bequest or inheritance or otherwise by reason
of the death of the Optionee
(b) Discharge for Cause. If the Optionee, prior to the Expiration
Date, is discharged by the company for "cause" (as defined below), the
right to exercise this option shall terminate immediately upon such
cessation of employment. "Cause" shall mean willful misconduct by the
Optionee or willful failure to perform his or her responsibilities in
the best interests of the Company (including, without limitation,
breach by the Optionee of any provision of any employment, consulting,
advisory, nondisclosure, non-competition or other similar agreement
between the Optionee and the Company), as determined by the Company,
which determination shall be conclusive. The Optionee shall be
considered to have been discharged for "cause" if the Company
determines, within 30 days after the Optionee's resignation, that
discharge for cause was warranted.
6 PAYMENT OF PURCHASE PRICE.
-------------------------
(a) Method of Payment. Payment of the purchase price for shares
purchased upon exercise of this option shall be made (i) by delivery
to the Company of cash or a check to the order of the Company in an
amount equal to the purchase price of such shares, (ii) subject to the
consent of the Company. by delivery to the Company of shares of Common
Stock of the Company then owned by the Optionee having a fair market
value equal in amount to the purchase price of such shares, (iii) by
any other means which the Board of Directors determines are
2
consistent with the purpose of the Plan and with applicable laws
and regulations (including, without limitation, the provisions of Rule
16b-3 under the Securities Exchange Act of 1934 and Regulation T
promulgated by the Federal Reserve Board), or (iv) by any combination
of such methods of payment.
(b) Valuation of Shares or Other Non-Cash Consideration Tendered
in Payment of Purchase Price. For the purposes hereof, the fair market
value of any share of the Company's Common Stock or other non-cash
consideration which may be delivered to the Company in exercise of
this option shall be determined in good faith by the Board of
Directors of the Company.
(c) Delivery of Shares Tendered in Payment of Purchase Price. If
the Optionee exercises this option by delivery of shares of Common
Stock of the Company, the certificate or certificates representing the
shares of Common Stock of the Company to be delivered shall be duly
executed in blank by the Optionee or shall be accompanied by a stock
power duly executed in blank suitable for purposes of transferring
such shares to the Company. Fractional shares of Common Stock of the
Company will not be accepted in payment of the purchase price of
shares acquired upon exercise of this option.
(d) Restrictions on Use of Option Stock. Notwithstanding the
foregoing, no shares of Common Stock of the Company may be tendered in
payment of the purchase price of shares purchased upon exercise of
this option if the shares to be so tendered were acquired within
twelve (12) months before the date of such tender through the exercise
of an option granted under the Plan or any other stock option or
restricted stock plan of the Company.
Delivery of Shares: Compliance With Securities Laws. Etc
--------------------------------------------------------
(a) General. The Company shall, upon payment of the option price
for the number of shares purchased and paid for, make prompt delivery
of such shares to the Optionee, provided that if any law or regulation
requires the Company to take any action with respect to such shares
before the issuance thereof, then the date of delivery of such shares
shall be extended for the period necessary to complete such action.
(b) Listing, Qualification Etc. This option shall be subject to
the requirement that if at any time, counsel to the Company shall
determine that the listing, registration or qualification of the
shares subject hereto upon any securities exchange or under any state
or federal law, or the consent or approval of any governmental or
regulatory body, or that the disclosure of non-public information or
the satisfaction of any other condition is necessary as a condition
of, or in connection with, the issuance or purchase of shares
hereunder, this option may not be exercised, in whole or in part,
unless such listing, registration, qualification, consent or approval,
disclosure or satisfaction of such other condition shall have been
effected or obtained on terms acceptable to the Board of Directors.
Nothing herein shall be deemed to require the Company to apply for,
effect or obtain such listing, registration, qualification or
disclosure, or to satisfy such other condition.
3
8. NO SPECIAL EMPLOYMENT OR SIMILAR RIGHTS. Nothing contained in this
-----------------------------------------
option shall be construed or deemed by any person under any circumstances to
bind the Company to continue the employment or other relationship of the
Optionee with the Company for the period within which this option may be
exercised.
9. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a
--------------------------
shareholder with respect to any shares which may be purchased by exercise of
this option (including, without limitation, any rights to receive dividends or
non-cash distributions with respect to such shares) unless and until a
certificate representing such shares is duly issued and delivered to the
Optionee. No adjustment shall be made for dividends or other right for which
the record date is prior to the date such stock certificate is issued.
10. TERMINATION. This Option will expire, unless previously
-----------
exercised in full, on FEBRUARY 3, 2009 which date is on or prior to the third
anniversary of the Grant Date unless both parties agree to extend the option in
writing thirty days prior to the Termination.
This Agreement sets forth the complete agreement of the parties concerning the
subject matter hereof, superseding all prior agreemen1s, negotiations and
understandings. This Agreement will be governed by the substantive law of the
State of Nevada, and may be executed in counterparts.
The parties hereby have entered into this Agreement as of the date set
forth above.
GATEWAY DISTRIBUTORS, LTD
By:
-------------------------------------
Title:
----------------------------------
"Optionee"
Xxxx Xxxxx
----------------------------------------
Address:
--------------------------------
----------------------------------------
----------------------------------------
4
