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Stock Option
THIS OPTION AGREEMENT ("Agreement") is granted this 31st day of May 2000,
by Kari Cunningham a Utah resident (the "Optionor"), and Tracy Hernandez, a
Utah Resident ("Optionee").
GRANT
1. Grant of Option. Optionor hereby irrevocably grants Optionee the right
and option but not the obligation ("Option") to purchase from Optionee,
Nineteen Million Nine Hundred Eighty Thousand (19,980,000) shares of the
Common Stock of Replacement Financial, Inc. (the "Company") currently
owned by Optionor.
2. Exercise Price. The exercise price of the shares of Common Stock which
are subject to this Option (the "Option Shares") shall be $10,000 for
all of the Option Shares subject to the terms herein.
3. Term of Option. This Option may be exercised, in whole or in part, at
any time prior to 12:00 Midnight, Mountain Standard Time, on the date
that is two years from the date of this Option provided the Company has
generated a minimum of $100,000 in revenues from the date hereof.
4. Persons Entitled to Exercise. During the Optionee's lifetime, this
Option can only be exercised by the Optionee, and neither this Option
nor any right hereunder can be transferred other than by testamentary
disposition or the laws of descent and distribution. Neither this
Option nor any right hereunder shall be subject to lien, attachment,
execution, or similar process. In the event of any alienation,
assignment, pledge, hypothecation, of other transfer of this Option or
any right hereunder or in the event of any levy, attachment, execution,
or similar process, this Option and all rights granted hereunder shall
be immediately null and void.
5. Method of Exercising. This Option may be exercised by delivery of a
notice of exercise a form of which is attached hereto as "Exhibit A" and
incorporated herein by this reference, with certified funds payable by
wire transfer to the order of Kari Cunningham in the amount of the full
exercise price of the Option Shares being purchased;
6. Adjustments to Number of Shares. The number of shares of Common Stock
subject to this Option shall be adjusted to take into account any stock
splits, stock dividends, recapitalizations of the Common Stock of the
Company.
7. Restrictions on Transfer. Neither the Option nor the underlying shares
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws. Optionee acknowledges
that unless a registration statement with respect to the Option is
filed and declared effective by the Securities and Exchange Commission
and the appropriate state governing agency, the Option has or will be
issued in reliance on specific exemptions from such registration
requirements for transactions by an issuer not involving a public
offering and specific exemptions under the state statutes. Any
disposition of the Option may, under certain circumstances, be
inconsistent with such exemption therefrom. In some states, specific
conditions must be met or approval of the securities regulatory
authorities required before any such offer or sale.
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9. Shareholder's Rights. The Optionee shall have shareholder rights with
respect to the Option shares only when it has exercised this Option to
purchase those shares and fully paid the exercise price for such shares.
Until such time of exercise, Optionor shall maintain all shareholder
rights to the Option Shares.
10. Representation and Warranties of Optionee. Optionee represents and
warrants that:
a. Optionee is acquiring the Shares for its own account and not with
a view to any distribution within the meaning of the Act.
b. Optionee has received all of the information it considers
necessary or appropriate for determining whether to purchase the
Shares. Optionee is familiar with the business, affairs, risks
and properties of the Company. Optionee has had an opportunity to
ask questions of and receive answers from, the Company, and its
officers, directors and other representatives regarding the
Company and the terms and conditions of the offering of the
Shares. Optionee has had the opportunity to obtain any additional
information the Company possesses or could acquire without
unreasonable effort or expense, necessary to verify the accuracy
of the information furnished.
c. Optionee has such knowledge and expertise in financial and
business matters that it is capable of evaluating the merits and
substantial risks of an investment in the Shares and is able to
bear the economic risks relevant to the purchase of the Shares
hereunder.
d. Optionee recognizes that an investment in the securities of the
Company involves substantial risk and understands all of the risk
factors related to the purchase of the Shares.
e. Optionee understands that there may be no market for the Shares.
f. Optionee's financial condition is such that Optionee is under no
present or contemplated future need to dispose of any portion of
the Shares to satisfy any existing or contemplated undertaking,
need or indebtedness.
g. Optionee is relying solely upon independent consultation with its
professional, legal, tax and accounting advisors and such others
as Optionee deems to be appropriate in purchasing the Shares;
Optionee has been advised to, and has consulted with, its
professional tax and legal advisors with respect to any tax
consequences of investing in the Company.
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11. Representations and Warranties of the Optionor. The Optionor represents
and warrants that:
a. The Shares have been duly authorized, validly issued, fully paid
and non-assessable. The Shares and the delivery to Optionee will
be free and clear of any liens, encumbrances, or claims of any
kind whatsoever. Optionor is the true owner of the Shares and
warrant free, clear and marketable title to said shares to
Optionee.
b. Optionor has no knowledge of any restrictions by contract,
operation of law or otherwise prohibiting this sale or the
transfer of these shares into the names of Optionee, subject only
to the Securities Laws governing the sale of securities.
c. Optionor makes no representations or warranties as to the past,
present or future operations of the Company, or the price or
activity of the Company's stock.
12. Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants made by the Optionor and
Optionee in this Agreement shall survive the purchase and sale of the
Shares hereby for so long as the applicable statute of limitations shall
remain open. The Optionee and Optionor hereby agree, jointly and
severally, to indemnify, defend, and hold the other harmless from and
against any damage, loss, liability, or expense (including, without
limitation, reasonable expenses of investigation and reasonable
attorney's fees) arising out of any material breach of any
representation, warranty, covenant, or agreement made by them in this
Agreement.
13. Notices. Any notice or other communication required or permitted by
this Agreement must be in writing and shall be deemed to be properly
given when delivered in person to Optionee or to an officer of Optionor
when deposited in the United States mails for transmittal by certified,
registered or express mail, postage prepaid, or when sent by facsimile
transmission, provided that the communication is addressed to the
addresses of the parties first above appearing herein.
14. Validity and Construction. The Validity and construction of this
Agreement shall be governed by the laws of the State of Utah.
IN WITNESS WHEREOF, the parties have executed this Option Agreement on
the date first appearing above.
Optionor Optionee
/s/ Kari Cunningham /s/ Tracy Hernandez
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Kari Cunningham Tracy Hernandez
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EXHIBIT A
NOTICE OF PURCHASE
(To be signed only upon exercise of Option)
TO: Kari Cunningham
7432 South Carling Circle
Salt Lake City, Utah 84121
The undersigned, the owner of the Attached Option, hereby irrevocably
elects to exercise the rights to purchase thereunder Nineteen Million Nine
Hundred Eighty Thousand (19,980,000) shares of the Common Stock of Replacement
Financial, Inc. (the "Company") currently owned by Optionor. The undersigned
requests that the certificates for such shares as well as applicable stock
powers be delivered to them as per instructions indicated below.
DATED this ________ day of ______________, 20__.
By:_____________________________
Instructions for delivery:
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