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 Stephen F. Owens
at 1951
Tavern
Road, Alpine, CA 91901 (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:
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 Stephens F. Owens.
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
4.
Continuous
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
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
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.
1
<PAGE>
(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 o
