Filed by Bowne Pure Compliance



 




Exhibit 10.3





THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING
SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES, REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.



OPTION TO PURCHASE COMMON STOCK

OF

NEUTRON ENTERPRISES, INC.




Void after October 14, 2012




This certifies that, for value received,                                          (“Holder”) is entitled, subject
to the terms set forth below, to purchase from NEUTRON ENTERPRISES, INC., a Nevada corporation (the
“Company”), shares of the common stock, $.001 par value per share, of the Company (“Common Stock”),
as constituted on October 15, 2007 (the “Option Issue Date”), with the Notice of Exercise attached
hereto duly executed, and simultaneous payment therefor in lawful money of the United States or as
otherwise provided in Section 3 hereof, at the Exercise Price then in effect. The number, character
and Exercise Price of the shares of Common Stock issuable upon exercise hereof are subject to
adjustment as provided herein.



1. Term of Option. This Option shall be exercisable, in whole or in part, on the date hereof
and ending at 5:00 p.m. EST on October 14, 2012 (the “Option Termination Date”) and shall be void
thereafter.




2. Number of Shares, Exercise Price and Restrictions.



2.1 Number of Shares. The number of shares of Common Stock which may be purchased pursuant to
this Option shall be                                         shares (the “Shares”), subject, however, to adjustment
pursuant to Section 11 hereof.



2.2 Exercise Price. The Exercise Price at which this Option, or portion thereof, may be
exercised shall be $0.65 per Share, subject, however, to adjustment pursuant to Section 11 hereof.



2.3 Restrictions. Transfer of the Shares issued upon exercise of this Option is subject to
the following restrictions:


 


 









 






(a) From the Option Issue Date through April 14, 2009, the Holder shall not offer to
sell, sell, or contract to sell or, lend, pledge, hypothecate or otherwise transfer or
dispose of, directly or indirectly, any Shares; and




(b) Subject to Section 2.4 below, from and including April 15, 2009 through October 14,
2009, the Holder shall not offer to sell, sell, or contract to sell or, lend, pledge,
hypothecate or otherwise transfer or dispose of, directly or indirectly, [50% of the number
of shares granted] Shares.




2.4 Repurchase Right.




(a) If, prior to October 15, 2008, Holder shall die while employed by or providing
services to the Company, or Holder’s employment with or services to the Company are
terminated by the Company without Cause, and Holder has exercised this Option, in whole or
in part, as of the date of such death or termination, or during the two year period
thereafter, the Company shall have the right, but not the obligation, to purchase up to all
of the Shares issued to Holder at a purchase price equal to the Exercise Price of the Shares
(the “Repurchase Price”). The Company shall exercise such right within two (2) years and
fifteen (15) days after such death or termination.




(b) If, prior to April 15, 2009, Holder’s employment with or services to the Company
are terminated by the Company for Cause, or Holder ceases to be employed by or provide
services to the Company due to Holder’s resignation, and Holder has exercised this Option,
in whole or in part, as of the date of such termination or resignation, or in the case of a
resignation, during the thirty (30) day period thereafter, the Company shall have the right,
but not the obligation, to purchase up to all of the Shares issued to Holder at the
Repurchase Price. The Company shall exercise such right within forty-five (45) days after
such termination or resignation.




(c) If, on or after April 15, 2009 and prior to October 15, 2009, Holder’s employment
with or services to the Company are terminated by the Company for Cause, or Holder ceases to
be employed by or provide services to the Company due to Holder’s resignation, and Holder
has exercised this Option, in whole or in part, as of the date of such termination or
resignation, or in the case of a resignation, during the thirty (30) day period thereafter,
the Company shall have the right, but not the obligation, to purchase that number of Shares
in excess of [50% of the number of shares granted] at the Repurchase Price. The Company
shall exercise such right within forty-five (45) days after such termination or resignation.




2.5 Escrow.




(a) If Holder exercises this Option, in whole or in part, prior to October 15, 2009, or
in the event Holder has resigned from the Company, prior to November 14, 2009, or in the
event Holder shall die or is terminated by the Company without Cause, prior to October 15,
2010, a certificate representing the Shares issuable upon such exercise shall be issued in
the name of Holder and shall be escrowed with the Secretary



 


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of the Company (the “Escrow Agent”). Each deposited certificate shall be accompanied
by a Stock Power duly endorsed in blank by Holder. The deposited certificates shall remain
in escrow until such time or times as the restrictions imposed under Section 2.3 and
repurchase rights under Section 2.4 have terminated. Upon delivery of the certificates to
the Escrow Agent, Holder shall be issued an instrument of deposit acknowledging the number
of Shares delivered in escrow to the Escrow Agent.




(b) The Shares shall be subject to the following terms and conditions relating to their
release from escrow or their delivery to the Company in connection with a repurchase:




(i) Subject to the termination of the repurchase rights set forth in Section 2.4, on
April 15, 2009, all restrictions shall be removed from the certificates representing up to
[50% of the number of shares granted] Shares and the Secretary of the Company shall deliver
to Holder certificates representing such Shares free and clear of all restrictions (except
for any applicable securities law restrictions) within 10 business days thereafter.




(ii) Subject to the termination of the repurchase rights set forth in Section 2.4, on
October 15, 2009, all restrictions shall be removed from the certificates representing the
Shares and the Secretary of the Company shall deliver to Holder certificates representing
such Shares free and clear of all restrictions (except for any applicable securities law
restrictions) within 10 business days thereafter.




(iii) Should Company repurchase any Shares pursuant to Section 2.4, then the escrowed
certificates representing such repurchased Shares shall be delivered to the Company for
cancellation concurrently with such repurchase. Upon such repurchase, Holder shall cease to
have any further rights or claims with respect to such Shares. To facilitate the
performance or observance by Holder of this Section 2.5(b)(iii), Holder hereby irrevocably
appoints (which appointment is coupled with an interest) the Secretary as the
attorney-in-fact of Holder to transfer any Shares so repurchased to the Company, and Holder
agrees that the transfer of stock certificates with respect to such repurchased Shares shall
be specifically performable by the Company in a court of equity or law.




3. Exercise of Option.



3.1 Payment of Exercise Price. Subject to the terms hereof, the purchase rights represented by
this Option are exercisable by the Holder in whole or in part, at any time, or from time to time,
by the surrender of this Option and the Notice of Exercise annexed hereto duly completed and
executed on behalf of the Holder, at the office of the Company (or such other office or agency of
the Company as it may designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company) accompanied by payment of the Exercise Price in full (i) in
cash or by bank or certified check for the Shares with respect to which this Option is exercised;
(ii) by delivery to the Company of shares of the Company’s Common Stock having a Fair Market Value
(as defined below) equal to the aggregate Exercise



 


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Price of the Shares being purchased which Holder is the record and beneficial owner of and
which have been held by the Holder for at least six (6) months; provided, however, that such method
of payment is then permitted under applicable law; (iii) if the sale of the Shares is covered by an
effective registration statement, by delivering to the Company a Notice of Exercise together with
an irrevocable direction to a broker-dealer registered under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), to sell a sufficient portion of the Shares and deliver the sales
proceeds directly to the Company to pay the Exercise Price; (iv) by reducing the number of shares
of the Company’s Common Stock otherwise issuable under this Option to Holder upon the exercise of
the Option by a number of shares of Common Stock having a Fair Market Value equal to such
aggregated exercise price; provided, however, that such method of payment is then permitted under
applicable law; or (v) by any combination of the procedures set forth in subsections (i), (ii),
(iii) and (iv) of this Section 3.1.



3.2 Fair Market Value. If previously owned shares of Common Stock are tendered as payment of
the Exercise Price, the value of such shares shall be the “Fair Market Value” of such shares on the
trading date immediately preceding the date of exercise. For the purpose of this Agreement, the
“Fair Market Value” shall be:



(a) If the Common Stock is admitted to quotation on the National Association of Securities
Dealers Automated Quotation System (“NASDAQ”), the Fair Market Value on any given date
shall be the average of the highest bid and lowest asked prices of the Common Stock as reported for
such date or, if no bid and asked prices were reported for such date, for the last day preceding
such date for which such prices were reported;



(b) If the Common Stock is admitted to trading on a United States securities exchange or the
NASDAQ National Market System, the Fair Market Value on any date shall be the closing price
reported for the Common Stock on such exchange or system for such date or, if no sales were
reported for such date, for the last day preceding such date for which a sale was reported;



(c) If the Common Stock is traded in the over-the-counter market and not on any national
securities exchange nor in the NASDAQ Reporting System, the Fair Market Value shall be the average
of the mean between the last bid and ask prices per share, as reported by the National Quotation
Bureau, Inc., or an equivalent generally accepted reporting service, or if not so reported, the
average of the closing bid and asked prices for a share as furnished to the Company by any member
of the National Association of Securities Dealers, Inc., selected by the Company for that purpose;
or



(d) If the Fair Market Value of the Common Stock cannot be determined on the basis previously
set forth in this definition on the date that the Fair Market Value is to be determined, the Board
of Directors of the Company shall in good faith determine the Fair Market Value of the Common Stock
on such date.



If the tender of previously owned shares would result in an issuance of a whole number of Shares
and a fractional Share of Common Stock, the value of such fractional share shall be paid to the
Company in cash or by check by the Holder.


 


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3.3 Termination of Employment or Service; Death.



(a) If, prior to October 15, 2008, Holder’s employment or services are terminated by the
Company for any reason, then this Option shall forthwith terminate.



(b) If, on or after October 15, 2008, Holder’s employment or services are terminated by the
Company for any reason, other than for Cause (as defined below), this Option may be exercised only
within two (2) years after the termination of employment or cessation of service and prior to the
Option Termination Date.



(c) If Holder’s employment or services are terminated by the Company
for Cause (as defined below), then this Option shall forthwith terminate.



For purposes of this Option, the term “Cause” shall mean (i) if Holder is a party to a
written agreement with the Company, or provides services to the Company pursuant to a services
agreement between the Company and a third party, which contains a definition of “cause” or “for
cause” or words of similar import for purposes of termination of employment or service thereunder
by the Company, “cause” or “for cause” as defined in such agreement; and (ii) in all other cases
(A) the Holder’s intentional and persistent failure, dereliction, or refusal to perform such duties
as are reasonably assigned to him or her by the officers or directors of the Company; (B) the
Holder’s fraud, dishonesty or other deliberate injury to the Company in the performance of his or
her duties on behalf of, or for, the Company; (C) the Holder’s conviction of a crime which
constitutes a felony involving moral turpitude, fraud or deceit in the jurisdiction in which the
Holder is employed, regardless of whether such crime involves the Company; or (D) the willful
commission by the Holder of a criminal or other act that causes substantial economic damage to the
Company or substantial injury to the business reputation of the Company. For purposes of this
Option, no act, or failure to act, on the part of any person shall be considered “willful” unless
done or omitted to be done by the person other than in good faith and without reasonable belief
that the person’s action or omission was in the best interest of the Company.



(d) If, prior to October 15, 2008, Holder shall die while employed by or providing services to
the Company, then this Option shall forthwith terminate.



(e) If, on or after October 15, 2008, Holder shall die while employed by or providing services
to the Company and prior to the Option Termination Date, this Option may be exercised only within
two (2) years after Holder’s death, prior to the Option Termination Date, and only by the Holder’s
personal representative or persons entitled thereto under the Holder’s will or the laws of descent
and distribution.



(f) If Holder ceases to be employed or provide services to the Company due to Holder’s
resignation, any part of this Option to which Holder is then entitled to exercise may be exercised
in accordance with the following schedule:



(i) If Holder resigns prior to April 15, 2009, then this Option shall forthwith terminate;


 


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(ii) If Holder resigns on or after April 15, 2009 and prior to October 15, 2009, then Holder
may exercise this Option to purchase [50% of the Shares] Shares within 30 days of the termination
of employment or cessation of services and prior to the Option Termination Date and the Option to
purchase the remaining [50% of the Shares] Shares shall forthwith terminate; and



(iii) If Holder resigns on or after October 15, 2009, then Holder may exercise this Option
within 30 days of the termination of employment or cessation of services and prior to the Option
Termination Date.



(g) This Option may not be exercised for more Shares (subject to adjustment as provided in
Section 11 hereof) after the termination of the Holder’s employment, cessation of services to the
Company, or death, as the case may be, than the Holder was entitled to purchase thereunder at the
time of the termination of the Holder’s employment, the cessation of services to the Company, or
death.



3.4 Exercise Date; Delivery of Certificates. This Option shall be deemed to have been
exercised immediately prior to the close of business on the date of its surrender for exercise as
provided above, and Holder shall be treated for all purposes as the holder of record of such Shares
as of the close of business on such date. As promptly as practicable on or after such date and in
any event within ten (10) days thereafter, the Company at its expense shall issue and deliver to
the Holder a certificate or certificates for the number of Shares issuable upon such exercise. In
the event that this Option is exercised in part, the Company at its expense will execute and
deliver a new Option of like tenor exercisable for the number of shares for which this Option may
then be exercised.



4. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Option. In lieu of any fractional share to which
the Holder would otherwise be entitled, the Company shall make a cash payment equal to the Exercise
Price multiplied by such fraction.



5. Replacement of Option. On receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Option and, in the case of loss, theft or
destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to
the Company or, in the case of mutilation, on surrender and cancellation of this Option, the
Company at its expense shall execute and deliver, in lieu of this Option, a new Option of like
tenor and amount.



6. Rights of Stockholder. Except as otherwise contemplated herein, the Holder shall not be
entitled to vote or receive dividends or be deemed the holder of Common Stock or any other
securities of the Company that may at any time be issuable on the exercise hereof for any purpose,
nor shall anything contained herein be construed to confer upon the Holder, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of directors or upon
any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock,
change of par value, or change of stock to no par value, consolidation,
merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Option shall have been exercised as provided herein.


 


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7. Transfer of Option.



7.1. Non-Transferability. This Option shall not be assigned, transferred, pledged or
hypothecated in any way, nor subject to execution, attachment or similar process, otherwise than by
will or by the laws of descent and distribution. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of this Option contrary to the provisions hereof, and the levy
of an execution, attachment, or similar process upon the Option, shall be null and void and without
effect.



7.2. Compliance with Securities Laws; Restrictions on Transfers. In addition to restrictions
on transfer of this Option and Shares set forth in Section 7.1 above.



(a) The Holder of this Option, by acceptance hereof, acknowledges that this Option and the
Shares to be issued upon exercise hereof are being acquired solely for the Holder’s own account and
not as a nominee for any other party, and for investment (unless such shares are subject to resale
pursuant to an effective prospectus), and that the Holder will not offer, sell or otherwise dispose
of any Shares to be issued upon exercise hereof except under circumstances that will not result in
a violation of applicable federal and state securities laws. Upon exercise of this Option, the
Holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the Shares of Common Stock so purchased are being acquired solely for the Holder’s
own account and not as a nominee for any other party, for investment (unless such shares are
subject to resale pursuant to an effective prospectus), and not with a view toward distribution or
resale.



(b) Neither this Option nor any share of Common Stock issued upon exercise of this Option may
be offered for sale or sold, or otherwise transferred or sold in any transaction which would
constitute a sale thereof within the meaning of the 1933 Act, unless (i) such security has been
registered for sale under the 1933 Act and registered or qualified under applicable state
securities laws relating to the offer and sale of securities; or (ii) exemptions from the
registration requirements of the 1933 Act and the registration or qualification requirements of all
such state securities laws are available and the Company shall have received an opinion of counsel
that the proposed sale or other disposition of such securities may be effected without registration
under the 1933 Act and would not result in any violation of any applicable state securities laws
relating to the registration or qualification of securities for sale, such counsel and such opinion
to be satisfactory to the Company. The Holder of this Option, by acceptance hereof, acknowledges
that the Company has no obligation to file a registration statement with the Securities and
Exchange Commission or any state securities commission to register the issuance of the Shares upon
exercise hereof or the sale or transfer of the Shares after issuance.



(c) All Shares issued upon exercise hereof shall be stamped or imprinted with a legend in
substantially the following form (in addition to any legend required by state securities laws).


 


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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES REPRESENTED HEREBY HAVE BEEN TAKEN BY
THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY
NOT BE SOLD, TRANSFERRED OR DISPOSED OF WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR PURSUANT TO AN EXEMPTION THEREFROM.



THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO ADDITIONAL TRANSFER RESTRICTIONS AND REPURCHASE
RIGHTS AS SET FORTH IN THAT CERTAIN OPTION TO PURCHASE COMMON STOCK OF NEUTRON ENTERPRISES, INC.,
DATED OCTOBER 12, 2007.



(d) Holder recognizes that investing in the Option and the Shares involves a high degree of
risk, and Holder is in a financial position to hold the Option and the Shares indefinitely and is
able to bear the economic risk and withstand a complete loss of its investment in the Option and
the Shares. The Holder is a sophisticated investor and is capable of evaluating the merits and
risks of investing in the Company. The Holder has had an opportunity to discuss the Company’s
business, management and financial affairs with the Company’s management, has been given full and
complete access to information concerning the Company, and has utilized such access to its
satisfaction for the purpose of obtaining information or verifying information and has had the
opportunity to inspect the Company’s operation. Holder has had the opportunity to ask questions
of, and receive answers from the management of the Company (and any person acting on its behalf)
concerning the Option and the Shares and the agreements and transactions contemplated hereby, and
to obtain any additional information as Holder may have requested in making its investment
decision.



(e) Holder acknowledges and represents: (i) that he has been afforded the opportunity to
review and is familiar with the business prospects and finances of the Company and has based his
decision to invest solely on the information contained therein and has not been furnished with any
other literature, prospectus or other information except as included in such reports; (ii) Holder
is acquiring the Options and Shares for investment purposes only and not with a view toward
distribution; (iii) he understands that no federal or state agency has approved or disapproved the
Option or Shares or made any finding or determination as to the fairness of the Option and Common
Stock for investment; and (iv) that the Company has made no representations, warranties, or
assurances as to (A) the future trading value of the Common Stock, (B) whether there will be a
public market for the resale of the Common Stock or (C) the filing of a registration statement with
the Securities and Exchange Commission or any state securities commission to register the issuance
of the Shares upon exercise hereof or the sale or transfer of the Shares after issuance.



8. Reservation and Issuance of Stock; Payment of Taxes.



(a) The Company covenants that during the term that this Option is exercisable, the Company
will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Shares upon the exercise of
this Option, and from time to time will take all steps necessary to amend its Articles of
Incorporation to provide sufficient reserves of shares of Common Stock issuable upon the exercise
of the Option.


 


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(b) The Company further covenants that all shares of Common Stock issuable upon the due
exercise of this Option will be free and clear from all taxes or liens, charges and security
interests created by the Company with respect to the issuance thereof, however, the Company shall
not be obligated or liable for the payment of any taxes, liens or charges of Holder, or any other
party contemplated by Section 7, incurred in connection with the issuance of this Option or the
Common Stock upon the due exercise of this Option. The Company agrees that its issuance of this
Option shall constitute full authority to its officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for the shares of Common Stock
upon the exercise of this Option. The Common Stock issuable upon the due exercise of this Option,
will, upon issuance in accordance with the terms hereof, be duly authorized, validly issued, fully
paid and non-assessable.



(c) Upon exercise of the Option, the Company shall have the right to require the Holder to
remit to the Company an amount sufficient to satisfy federal, state and local tax withholding
requirements prior to the delivery of any certificate for Shares of Common Stock purchased pursuant
to the Option, if in the opinion of counsel to the Company such withholding is required under
applicable tax laws.



(d) If Holder is obligated to pay the Company an amount required to be withheld under
applicable tax withholding requirements may pay such amount (i) in cash; (ii) in the discretion of
the Board of Directors of the Company, through the delivery to the Company of previously-owned
shares of Common Stock having an aggregate Fair Market Value equal to the tax obligation provided
that the previously owned shares delivered in satisfaction of the withholding obligations must have
been held by the Holder for at least six (6) months; (iii) in the discretion of the Board of
Directors of the Company, through the withholding of Shares of Common Stock otherwise issuable to
the Holder in connection with the Option exercise; or (iv) in the discretion of the Board of
Directors of the Company, through a combination of the procedures set forth in subsections (i),
(ii) and (iii) of this Section 8(d).



9. Notices.



(a) Whenever the Exercise Price or number of shares purchasable hereunder shall be adjusted
pursuant to Section 11 hereof, the Company shall issue a certificate signed by its Chief Financial
Officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the Exercise Price and number
of shares purchasable hereunder after giving effect to such adjustment, and shall cause a copy of
such certificate to be mailed (by first-class mail, postage prepaid) to the Holder of this Option.


 


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(b) All notices, advices and communications under this Option shall be deemed to have been
given, (i) in the case of personal delivery, on the date of such delivery and
(ii) in the case of mailing, on the third business day following the date of such mailing,
addressed as follows:




If to the Company:




Neutron Enterprises, Inc.

3500 De Maisonneuve West

2 Place Alexis Nihon Suite 1650

Montreal, Quebec, Canada H3Z 3C1

Attn: Chief Executive Officer




With a copy to:

Fox Rothschild LLP

P.O. Box 5231

Princeton, NJ 08543-5231

Attn.: Vincent A. Vietti, Esquire




and to the Holder:

at the address set forth in the records of the Company.



Either of the Company or the Holder may from time to time change the address to which notices
to it are to be mailed hereunder by notice in accordance with the provisions of this Paragraph 9.



10. Amendments.



(a) The Company may amend, modify or terminate this Option, including but not limited to,
substituting therefor another Option of the same or a different type and changing the date of
exercise or realization, provided that the Holder’s consent to such action shall be required unless
the Company determines that the action, taking into account any related action, would not
materially and adversely affect the Holder.



(b) No waivers of, or exceptions to, any term, condition or provision of this Option, in any
one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of
any such term, condition or provision.



11. Adjustments. The number of Shares of Common Stock purchasable hereunder and the Exercise
Price is subject to adjustment from time to time upon the occurrence of certain events, as follows:



11.1. Split, Subdivision, Combination of Shares, Reclassification or Recapitalization. In the
event of any stock split, reverse stock split, stock dividend, recapitalization, combination of
shares, reclassification of shares, spin-off or other similar change in capitalization or event,
applicable to securities as to which purchase rights under this Option exist or any distribution to
holders of the securities as to which purchase rights under this Option exist other than an
ordinary cash dividend, the Exercise Price and the number and kind of securities issuable upon
exercise of this Option shall be proportionately adjusted. Any



 


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adjustment under this Section 11.1 shall become effective at the close of business on the date
the subdivision or combination becomes effective, or as of the record date of such dividend, or in
the event that no record date is fixed, upon the making of such dividend. If this Section 11.1
applies and Section 11.3 also applies to any event, Section 11.3 shall be applicable to such event,
and this Section 11.1 shall not be applicable.



11.2 Liquidation or Dissolution. In the event the shareholders of the Company approve a plan
of complete liquidation or dissolution of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company’s assets, this Option will: (i) become
exercisable in full as of a specified time at least 10 business days prior to the effective date of
such liquidation, dissolution, sale or disposition, and (ii) terminate effective upon such
liquidation, dissolution, sale or disposition, except to the extent exercised before such effective
date




11.3 Reorganization and Change in Control Events.



(1) Definitions.




(a) A “Reorganization Event” shall mean:



(i) any merger or consolidation of the Company with or into another entity as a result of
which all of the outstanding shares of Common Stock are converted into or exchanged for the right
to receive cash, securities or other property; or



(ii) any exchange of all of the outstanding shares of Common Stock for cash, securities or
other property pursuant to a share exchange transaction.




(b) A “Change in Control Event” shall mean:



(i) the acquisition by an individual, entity or group within the meaning of Section 13(d)(3)
or 14(d)(2) of the Exchange Act (each, a “Person”) of beneficial ownership of any capital stock of
the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule
13d-3 promulgated under the Exchange Act) 30% or more of either (x) the then-outstanding shares of
common stock of the Company (the “Outstanding Common Stock”) or (y) the combined voting power of
the then-outstanding securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Voting Securities”); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute a Change in Control Event: (A) any
acquisition directly from the Company (excluding an acquisition pursuant to the exercise,
conversion or exchange of any security exercisable for, convertible into or exchangeable for common
stock or voting securities of the Company, unless the Person exercising, converting or exchanging
such security acquired such security directly from the Company or an underwriter or agent of the
Company), (B) any acquisition by any employee benefit plan or related trust sponsored or maintained
by the Company or any corporation controlled by the Company, or (C) any acquisition by any
corporation pursuant to a Business Combination (as defined in Section 11.3(1)(b)(iii) below) that
complies with clauses (x) and (y) of subsection (iii) of this definition;


 


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(ii) an event that results in the Continuing Directors (as defined below) not constituting a
majority of the Board (or, if applicable, the board of directors of a successor corporation to the
Company). “Continuing Director” means, at any date, a member of the Board: (x) who was a member
of the Board on the date of the initial issuance of this Option, or (y) who was nominated or
elected subsequent to such date by at least a majority of the directors who were Continuing
Directors at the time of such nomination or election or whose election to the Board was recommended
or endorsed by at least a majority of the directors who were Continuing Directors at the time of
such nomination or election; provided, however, that there shall be excluded from this clause (y)
any individual whose initial assumption of office occurred as a result of an actual or threatened
election contest with respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the Board; or



(iii) the consummation of a merger, consolidation, reorganization, recapitalization or share
exchange involving the Company or a sale or other disposition of all or substantially all of the
assets of the Company (a “Business Combination”), unless, immediately following such Business
Combination, each of the following two conditions is satisfied: (x) all or substantially all of the
individuals and entities who were the beneficial owners of the Outstanding Common Stock and
Outstanding Voting Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding securities entitled to vote generally in the election
of directors, respectively, of the resulting or acquiring corporation in such Business Combination,
which shall include, without limitation, a corporation that as a result of such transaction owns
the Company or all or substantially all of the Company’s assets either directly or through one or
more subsidiaries (such resulting or acquiring corporation is referred to herein as the “Acquiring
Corporation”) in substantially the same proportions as their ownership of the Outstanding Common
Stock and Outstanding Voting Securities, respectively, immediately prior to such Business
Combination, and (y) no Person (excluding the Acquiring Corporation or any employee benefit plan or
related trust maintained or sponsored by the Company or by the Acquiring Corporation) beneficially
owns, directly or indirectly, 30% or more of the then-outstanding shares of common stock of the
Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such
corporation entitled to vote generally in the election of directors (except to the extent that such
ownership existed prior to the Business Combination).




(2) Effect on Option.



(a) Reorganization Event. Upon the occurrence of a Reorganization Event (regardless of
whether such event also constitutes a Change in Control Event), or the execution by the Company of
any agreement with respect to a Reorganization Event (regardless of whether such event will result
in a Change in Control Event), this Options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate thereof); provided,
however, that if such Reorganization Event also constitutes a Change in Control Event, such
assumed or substituted options shall be immediately exercisable in full upon the occurrence of such
Reorganization Event. For purposes hereof, this Option shall be considered to be assumed if,
following consummation of the Reorganization Event, this Option confers the right



 


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to purchase, for each share of Common Stock subject to this Option immediately prior to the
consummation of the Reorganization Event, the consideration (whether cash, securities or other
property) received as a result of the Reorganization Event by holders of Common Stock for each
share of Common Stock held immediately prior to the consummation of the Reorganization Event (and
if holders were offered a choice of consideration, the type of consideration chosen by the holders
of a majority of the outstanding shares of Common Stock); provided, however, that if the
consideration received as a result of the Reorganization Event is not solely common stock of the
acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of
the acquiring or succeeding corporation (or an affiliate thereof), provide for the consideration to
be received upon the exercise of this Option to consist solely of common stock of the acquiring or
succeeding corporation (or an affiliate thereof) equivalent in fair market value to the per share
consideration received by holders of outstanding shares of Common Stock as a result of the
Reorganization Event.



Notwithstanding the foregoing, if the acquiring or succeeding corporation (or an affiliate
thereof) does not agree to assume, or substitute for, this, then the this Options shall become
exercisable in full as of a date at least thirty (30) days prior to the Reorganization Event and
will terminate immediately prior to the consummation of such Reorganization Event, except to the
extent exercised by Holder before the consummation of such Reorganization Event; provided, however,
that in the event of a Reorganization Event under the terms of which holders of Common Stock will
receive upon consummation thereof a cash payment for each share of Common Stock surrendered
pursuant to such Reorganization Event (the “Acquisition Price”), then this Option shall terminate
upon consummation of such Reorganization Event and Holder shall receive, in exchange therefor, a
cash payment equal to the amount (if any) by which: (A) the Acquisition Price multiplied by the
number of shares of Common Stock issuable upon exercise of this Option (whether or not then
exercisable), exceeds (B) the aggregate exercise price of such Options.



(b) Change in Control Event that is not a Reorganization Event. Upon the occurrence of a
Change in Control Event that does not also constitute a Reorganization Event, this Option shall
automatically become immediately exercisable in full.



12. Intentionally Omitted.



13. Severability. Whenever possible, each provision of this Option shall be interpreted in
such manner as to be effective and valid under applicable law, but if any provision of this Option
is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision of this Option in such jurisdiction or affect the
validity, legality or enforceability of any provision in any other jurisdiction, but this Option
shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.



14. Governing Law. The corporate law of the State of Nevada shall govern all issues and
questions concerning the relative rights of the Company and its stockholders. All other questions
concerning the construction, validity, interpretation and enforceability of this Option and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Nevada, without giving effect to any choice of law or conflict
of law rules or provisions (whether of the State of Nevada or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of Nevada.


 


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15. Jurisdiction. The Holder and the Company agree to submit to personal jurisdiction and to
waive any objection as to venue in the federal or state courts of Nevada. Service of process on
the Company or the Holder in any action arising out of or relating to this Option shall be
effective if mailed to such party at the address listed in Section 9 hereof.



16. Arbitration. If a dispute arises as to interpretation of this Option, it shall be decided
finally by three arbitrators in an arbitration proceeding conforming to the Rules of the American
Arbitration Association applicable to commercial arbitration. The arbitrators shall be appointed
as follows: one by the Company, one by the Holder and the third by the said two arbitrators, or, if
they cannot agree, then the third arbitrator shall be appointed by the American Arbitration
Association. The third arbitrator shall be chairman of the panel and shall be impartial. The
arbitration shall take place in Las Vegas, Nevada. The decision of a majority of the arbitrators
shall be conclusively binding upon the parties and final, and such decision shall be enforceable as
a judgment in any court of competent jurisdiction. Each party shall pay the fees and expenses of
the arbitrator appointed by it, its counsel and its witnesses. The parties shall share equally the
fees and expenses of the impartial arbitrator.



17. Corporate Power; Authorization; Enforceable Obligations. The execution, delivery and
performance by the Company of this Option: (i) are within the Company’s corporate power; (ii) have
been duly authorized by all necessary or proper corporate action; (iii) are not in contravention of
the Company’s articles of incorporation or bylaws; (iv) will not violate in any material respect,
any law or regulation, including any and all Federal and state securities laws, or any order or
decree of any court or governmental instrumentality; and (v) will not, in any material respect,
conflict with or result in the breach or termination of, or constitute a default under any
agreement or other material instrument to which the Company is a party or by which the Company is
bound.



18. Successors and Assigns. This Option shall inure to the benefit of and be binding on the
respective successors, assigns and legal representatives of the Holder and the Company.



* * * * *



 


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IN WITNESS WHEREOF, the Company has caused this Option to be executed as of the
 _____ 
day of
October, 2007.



	 	 	 	 	 
	 	NEUTRON ENTERPRISES, INC.

 	 
	 	By:  	 	 
	 	 	Mitchell Rosen 	 
	 	 	Executive Vice President and

Chief Financial Officer 	 
	 




AGREED AND ACCEPTED:



	 	 	 
	 


	 	 
	 
	 	 
	 
	 	 
	 

Signature

	 	 





 


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NOTICE OF EXERCISE





			
	To:	 	Chief Financial Officer

Neutron Enterprises, Inc.






(1) The undersigned hereby elects to purchase                      shares of Common Stock of Neutron
Enterprises, Inc., pursuant to the terms of the attached Option, and tenders herewith payment of
the purchase price for such shares in full in the following manner (please check one of the
following choices):




o In Cash




o Cashless exercise through a broker;




o Delivery of previously owned shares; or




o Net Exercise



(2) In exercising this Option, the undersigned hereby confirms and acknowledges that the
shares of Common Stock to be issued upon conversion thereof are being acquired solely for the
account of the undersigned and not as a nominee for any other party, and for investment (unless
such shares are subject to resale pursuant to an effective prospectus), and that the undersigned
will not offer, sell or otherwise dispose of any such shares of Common Stock except under
circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any
state securities laws.



(3) Please issue a certificate or certificates representing said shares of Common Stock in the
name of the undersigned.



	 	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	(Date)

	 	(Signature)







 


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