STOCK OPTION AGREEMENT
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AGREEMENT, dated as of May 25, 2004 by and between Lunettes, Etal Inc,
Las Vegas Inc, a Nevada Company with its principal place of business at 0000 X
Xx Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, XX 00000 (the "Company") and , Fort Street
Equity Inc, (the "Optionee").
W I T N E S S E T H:
WHEREAS, the parties have agreed, under a subscription agreement dated
May 25, 2004 to grant this option (the "Option") to the Optionee to purchase up
to 500,000 shares of the Company's common stock, par value $.001 per share (the
"Common Stock") at an exercise price and upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Grant of Option. Subject to all the terms and conditions hereof, the
Company hereby grants to Optionee the right to purchase all or any part of an
aggregate of 500,000 shares of Common Stock of the Company (the "Option Shares")
at an exercise price (the "Exercise Price") per share equal to the greater of:
(a) a 40% discount from the average closing bid price of the Common Stock on a
public exchange during the ten (10) trading days immediately prior to exercise
of the Option, or (b) $0.50 per share.
2. Exercisability of Option. The Option Shares subject to the Option shall
become purchasable by the Optionee, in whole or in part, at any time prior to
the expiration of the Option, which expiration shall occur on December 31, 2005
(the "Expiration Date"). On the Expiration Date, this Option and all rights
hereunder shall expire and any Option Shares not purchased on or before the
Expiration Date may not thereafter be purchased hereunder. In the event Optionee
fails to exercise the Option on or prior to the Expiration Date, then the Option
as to all Option Shares not exercised shall expire and Optionee shall have no
rights with respect to such remainder of the Option or the Option Shares.
3. Method of Exercise of Option; Payment of Exercise Price. This Option
shall be exercisable at any time and from time to time, prior to the Expiration
Date, by surrender to the Company of the notice (the "Notice") attached hereto
as Exhibit "A". The Notice shall state the Optionee's election to exercise this
Option and the number of Option Shares in respect of which it is being
exercised, and shall be accompanied by a check in the amount of the Exercise
Price. Within a reasonable time following payment of the full Exercise Price by
Optionee, the Company shall deliver to the Optionee a certificate or
certificates representing those shares. A certificate or certificates for the
shares as to which this Option shall have been so exercised shall be registered
in the name of the Optionee and shall be delivered to Optionee at the address of
Optionee specified in the Notice or at such other address as Optionee shall set
forth in its Notice.
4. Non-Assignability of Option. This Option may be exercised only by the
Optionee and shall not be sold, transferred, assigned, pledged, hypothecated or
otherwise disposed of in any way (whether by operation of law or otherwise)
without the Company's prior written consent except that Optionee may, solely in
connection with a transfer of all or substantially all of its assets to an
entity or entities controlled by Optionee ("Affiliate"), sell, transfer or
assign all its interest in this Agreement to such Affiliate but only after
giving the Company at least ten (10) days notice in writing of the proposed
sale, transfer or assignment. Any buyer, transferee, or assignee of this Option
shall be bound by and subject to each and every provision of this Agreement and
shall not sell, transfer, assign, pledge, hypothecate or otherwise dispose of
the Option in any way (whether by operation of law or otherwise).
5. Limitation of Optionee's Rights. Except as otherwise provided in
Section 6, Optionee shall not have any of the rights or privileges of a
shareholder of the Company in respect of any Option Shares issuable upon
exercise of this Option unless and until those shares have been paid for in full
and upon such payment in full Optionee shall be deemed to be the record
Optionee.
6. Anti-Dilution Provisions. If the Company shall pay a dividend in shares
of its Common Stock, subdivide (split) its outstanding shares of Common Stock,
combine (reverse split) its outstanding shares of Common Stock, issue by
reclassification of its shares of Common Stock any shares or other securities of
the Company, or distribute to holders of its Common Stock any securities of the
Company or of another entity, the number of shares of Common Stock or other
securities the Optionee is entitled to purchase pursuant to this Option
immediately prior thereto shall be adjusted so that the Optionee shall be
entitled to receive upon exercise the number of shares of Common Stock or other
securities which it would have owned or would have been entitled to receive
after the happening of any of the events described above had this Option been
exercised immediately prior to the happening of such event, and the Exercise
Price shall be correspondingly adjusted; provided, however, that no adjustment
in the number of shares and/or the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least one percent (1%) in
such number and/or price; and provided further, however, that any adjustments
which by reason of this Section 6 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. An adjustment made
pursuant to this Section 6 shall become effective immediately after the record
date in the case of the stock dividend or other distribution and shall become
effective mmediately after the effective date in the case of a subdivision,
combination or reclassification. The Optionee shall be entitled to participate
in any subscription or other rights offering made to holders of the Company's
Common Stock to the extent it would have been entitled had this Option been
exercised in the full number of shares as to which this Option remains
unexercised immediately prior to the record date for such rights offering. If
the Company is consolidated or merged with or into another Company or if all or
substantially all of its assets are conveyed to another Company, this Option
shall thereafter be exercisable for the purchase of the kind and number of
shares of stock or other securities or property, if any, receivable upon such
consolidation, merger or conveyance by an Optionee of the number of shares of
Common Stock of the Company which could have been purchased on the exercise of
this Option immediately prior to such consolidation, merger or conveyance; and,
in any such case, appropriate adjustment (as determined by the Board of
Directors) shall be made in the application of the provisions herein set forth
with respect to the rights and interests thereafter of the Optionee to the end
that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the number of shares of Common Stock the
Optionee is entitled to purchase) shall thereafter be applicable, as nearly as
possible, in relation to any shares of Common Stock or other securities or other
property thereafter deliverable upon the exercise of this Option. Upon any
adjustment of the number of shares of Common Stock or other securities the
Optionee is entitled to purchase, and of any change in Exercise Price, then in
each such case the Company shall give written notice thereof to the then
registered holder of this Option at the address of such Optionee as shown on the
books of the Company, which notice shall state such change and set forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Each such notice shall be accompanied by a statement of
the firm of independent certified public accountants retained to audit the
financial statements of the Company to the effect that such firm concurs in the
Company's calculation of the change.
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7. Piggyback Registration Rights. If the Company at any time from the ate
of the issuance of this Option through the Expiration Date, proposes to register
any of its securities under the ecurities Act for sale to the public, whether
for its own account or for the account of other security holders or both (except
with respect to registration statements on Forms X-0, X-0 and any successor
forms thereto), each such time it will give written notice to such effect to the
Optionee at least 30 days prior to such filing. Upon the written request of the
Optionee received by the Company within 20 days after the giving of any such
notice by the Company to register any of shares of Common Stock, the Company
will cause the shares of Common Stock as to which registration shall have been
so requested to be included in the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent required to
permit the sale or other disposition by the Optionee of such shares of Common
Stock so registered. Notwithstanding the foregoing, in the event that any
registration pursuant to this Section 7 shall be, in whole or in part, an
underwritten public offering of Common Stock, the number of shares of Common
Stock to be included in such an underwriting may be reduced (pro rata among the
requesting Optionees) and the other selling stockholders (based upon the number
of shares of Common Stock requested to be registered by them) if and to the
extent that the managing underwriter shall be of the good faith opinion that
such inclusion would adversely affect the success of such an underwriting,
provided, that such number of shares of Common Stock shall not be reduced if any
shares of Common Stock are to be included in such underwriting for the account
of any person other than the Company or requesting Optionees of shares of Common
Stock. In the event of such a reduction, the Company agrees to file a
registration statement for the resale of the shares underlying this Option not
included in such underwritten offering within ninety (90) days of the date that
the underwritten offering is declared effective by the Securities and Exchange
Commission. Notwithstanding the foregoing provisions, the Company may withdraw
any registration statement referred to in this Section 7 without thereby
incurring any liability to the Optionees of shares of Common Stock.
8. Purchase for Investment. The Optionee represents and agrees that if the
Optionee exercises this Option, in whole or in part, then those Option Shares so
acquired will be acquired for the purpose of investment and not with a view to
their resale or distribution and upon each exercise of this Option, the Optionee
will furnish to the Company a written statement to that effect,satisfactory in
form and substance to the Company and its counsel. Optionee understands and
acknowledges that the shares to be acquired pursuant to this Option will be
"restricted securities" as such term is defined under the Securities Act of
1933, as amended (the "Act") and accordingly will bear a legend indicating such
restrictions.
9. Representations and Warranties of Optionee. As a condition to receipt
of the Option and for other good and valuable consideration, receipt of which is
hereby acknowledge, the Optionee represents and warrants to the Company as
follows:
(I) Optionee acknowledges that the Company is a evelopment stage
company with no significant operating history and that there are significant
risks associated with the Company's business. Accordingly, the value of the
Option and the Option Shares will be based upon the Company's development of its
business which is subject to significant risks; and
(II) Optionee understands that the Option and the Option Shares
(issuable upon exercise of the Option) are being offered and sold under an
exemption from registration provided by Section 4 of the Act and the regulations
promulgated thereunder, as well as applicable State law exemptions, and warrants
and represents that the Option and the Option Shares are being or will be (in
the case of the Option Shares) acquired by the undersigned solely for the
undersigned's own account, for investment purposes only, and are not being
purchased with the intent or view to resell the Option or the Option Shares or
for the resale, distribution, subdivision or fractionalization thereof.
Consequently, the undersigned must bear the economic risk of the investment for
an indefinite period of time because the Option and the Option
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Shares cannot be resold or otherwise transferred unless subsequently registered
under the Act and qualified under applicable State law or an opinion of
qualified counsel that indicates an exemption from registration and/or
qualification is available.
10. Notices. Any notice to be given under the terms of this Option shall be
in writing and addressed to the Company at the Company's then-present address or
to Optionee at the address provided herein, or at such other address as either
party may hereafter designate in writing to the other. Any notice or other
communication given hereunder shall have been deemed duly given when enclosed in
a properly sealed envelope addressed as aforesaid, registered or certified, and
deposited postage prepaid in a post office or branch post office or, in person,
when so delivered, or by overnight courier providing evidence of receipt.
11. Representations of Company. The Company represents: (i) the execution,
delivery and performance of this Agreement has been duly authorized by the Board
of Directors of the Company; (ii) the consummation of the transactions
contemplated by this Agreement will not violate any provision of the Company's
Certificate of Incorporation or Bylaws; and (iii) no consent of any third party
including, without limitation, federal or state regulatory agencies is required
for execution and performance of this Agreement by the Company.
12. Governing Law. This Agreement shall be deemed to be made under and
shall be construed in accordance with the laws of the State of New York and
applicable Federal law without regard to conflict of law principles.
13. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their legal successors and permitted
assigns.
14. Entire Understanding; Masculine / Feminine. This Agreement constitutes
the entire understanding of the parties and shall not be amended except by
written agreement between the parties. As used herein, the masculine form shall
include the feminine and vice-versa, as the context shall require.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Lunettes Etal Inc
By:
__________________________
Fort Street Equity.
By:
__________________________
