GATEWAY DISTRIBUTORS, LTD
STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of February 1, 2006 between GATEWAY DISTRIBUTORS
LTD, a Nevada corporation (the "Company"), and Xxxxxxx X. Xxxxx at 0000 Xxxxxx
Xxxx, Xxxxxx, XX 00000 (the Optionee").
THE PARTIES AGREE AS FOLLOWS:
1. Option Grant. The Company hereby grants to the Optionee an option
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(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: 800,000,000
Option Price per Share: $.0001
Grant Date: February 1, 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. This Option is granted in exchange for the $80,000
loan on the Company books owed to Xxxxxxxx X. Xxxxx.
2. Stockholder Rights. No rights or privileges of a stockholder in
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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
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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
4. Continuous Relationship with the Company. Except as otherwise
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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
Optionee")
5. Termination of Relationship with the Company. If the Optionee
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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 one (1) year 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.
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(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.
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(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 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.
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(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
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(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.
8. No Special Employment or Similar Rights. Nothing contained in this
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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
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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
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full, on
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February 1,2007 which date is on or prior to the third anniversary of the Grant
Date.
11. Miscellaneous. This Agreement sets forth the complete agreement of
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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:
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Xxxx Xxxxxx
Title: President/CEO
"Optionee"
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Xxxxxxx X. Xxxxx (the Optionee")
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