Contract
Exhibit
10.1
THIS
STOCK OPTION SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME (U.S.) ON THE SEVENTH
ANNIVERSARY OF THE DATE HEREOF (the “EXPIRATION DATE”).
STOCK
OPTION TO PURCHASE 1,450,000 SHARES OF
COMMON
STOCK, PAR VALUE $0.001 PER SHARE OF
For
VALUE
RECEIVED, TraceGuard Technologies, Inc., a Nevada corporation (“Company”), is
entitled to purchase, subject to the provisions of this Stock Option, from
Xx.
Xxxxx Xxxxxx (“Ornath”), at any time not later than 5:00 P.M., Eastern time
(U.S.), on the Expiration Date (as defined above) but subject to the vesting
schedule described below, at an exercise price per share equal to US $0.35
(the
exercise price in effect being herein called the “Option Price”), 1,450,000
shares (“Option Shares”) of the common stock, par value $0.001 per share
(“Common Stock”) of the Company. The number of Option Shares purchasable upon
exercise of this Stock Option and the Option Price shall be subject to
adjustment from time to time as described herein.
Section
1. Transfers.
This
Stock Option may not be transferred or assigned by the Company.
Section
2. Exercise
of Stock Option.
(a)
Subject to the provisions hereof, the Company may exercise this Stock Option
at
any time prior to its expiration upon surrender of this Stock Option, together
with delivery of the duly executed Stock Option exercise form attached hereto
as
Appendix A (the “Exercise Agreement”) and payment by cash, certified check or
wire transfer of funds, for the aggregate Option Price for that number of Option
Shares then being purchased, to Ornath during normal business hours on any
business day. Certificates representing the Option Shares together with duly
executed stock powers with respect to the Option Shares, shall be delivered
by
Xxxxxx to the Company to be held in escrow, within thirty (30) days of the
date
hereof.
(b) This
Option shall be exercisable in accordance with the following vesting schedule:
(i) at any time on or after September 1, 2007, up to 290,000 Option Shares;
(ii)
at any time on or after April 1, 2008, up to an additional 300,000 Option
Shares; (iii) at any time on or after July 1, 2008, up to an additional 135,000
Option Shares; and (iv) at any time on or after April 1, 2009, up to an
additional 725,000 Option Shares; provided,
however,
that
this Stock Option may only be exercised if, and to the extent that, that certain
stock option between the Company and Ganani (the “Ganani Option”), dated as of
the date hereof, is exercised by Xxxxxx; and further,
provided,
that
this Stock Option shall terminate immediately upon termination of the Ganani
Option with respect to the Option Shares which remain subject to vesting as
set
forth in this Section 2(b).
(c) The
vesting provisions of this Section 2 shall apply to any securities received
in
replacement of the Option Shares, as a stock dividend or as a result of any
stock split, recapitalization, merger, reorganization, exchange or the like
and
all new, substituted or additional securities or property distributed to Ornath
by reason of Xxxxxx’s ownership of the Option Shares (such securities or
property shall be included in the definition of Option Shares for the purposes
hereof).
Section
3. Payment
of Taxes.
Each of
Ornath and the Company shall be responsible for their respective tax obligations
arising out of the transactions contemplated by this Stock Option.
Section
4. Mutilated
or Missing Stock Option.
In case
this Stock Option shall be mutilated, lost, stolen, or destroyed, Xxxxxx shall
issue in exchange and substitution of and upon cancellation of the mutilated
Stock Option, or in lieu of and substitution for the Stock Option lost, stolen
or destroyed, a new Stock Option of like tenor and for the purchase of a like
number of Option Shares, but only upon receipt of evidence reasonably
satisfactory to Ornath of such loss, theft or destruction of the Stock Option,
and with respect to a lost, stolen or destroyed Stock Option, reasonable
indemnity or bond with respect thereto, if requested by Xxxxxx.
Section
5. Representations
of Xxxxxx.
Ornath
represents to the Company that (i) he is the sole record and beneficial owners
of the Option Shares and has good and marketable title to the Option Shares,
(ii) except expressly provided herein, the Option Shares are not, and will
not
be, subject to any mortgage, pledge, lien, charge, security interest,
encumbrance, restrictive lease, license, easement, liability or adverse claim
of
any nature whatsoever, direct or indirect, whether accrued, absolute, contingent
or otherwise, and (iii) all Option Shares have been, and will be, at the time
of
the exercise of this Stock Option, duly authorized, validly issued, fully paid
and non-assessable shares of Common Stock of the Company.
Section
6. Adjustments.
Subject
and pursuant to the provisions of this Section 6, the Option Price and number
of
Option Shares subject to this Stock Option shall be subject to adjustment from
time to time as set forth hereinafter.
(a) If
the
Company shall, at any time or from time to time while this Stock Option is
outstanding, pay a dividend or make a distribution on its Common Stock in shares
of Common Stock, subdivide its outstanding shares of Common Stock into a greater
number of shares or combine its outstanding shares of Common Stock into a
smaller number of shares, then the number of Option Shares purchasable upon
exercise of the Stock Option immediately prior to the date upon which such
change shall become effective, shall be adjusted so that the Company thereafter
exercising the Stock Option shall be entitled to receive the number of shares
of
Common Stock which, if the Stock Option had been exercised immediately prior
to
such event, (i) the Company would have owned upon such exercise and been
entitled to receive by virtue of such dividend, distribution or subdivision,
or
(ii) in the case of a combination, such number of shares into which the number
of shares the Company would have owned upon such exercise would have been
reduced to as a result of such combination. Whenever the number of shares of
Common Stock purchasable upon exercise of this Stock Option is adjusted as
provided in this Section 6(a), then the Option Price shall also be adjusted
by
multiplying the Option Price in effect immediately prior to such adjustment,
by
a fraction, the numerator of which shall equal to the number of shares subject
to this Stock Option immediately prior to such adjustment, and the denominator
of which shall equal to the number of shares subject to this Stock Option
immediately after such adjustment. Such adjustments shall be made successively
whenever any event listed above shall occur.
(b) Subject
to Section 6(c) below, in case the Company shall reorganize its capital,
reclassify its capital stock (other than as provided in Section 6(a)),
recapitalize, consolidate with, or merge with or into, another corporation,
and
pursuant to the terms of such reorganization, reclassification,
recapitalization, merger, or consolidation, stock, securities, property or
other
assets is to be received by or distributed to the holders of Common Stock in
lieu of or with respect to shares of Common Stock, then in each such case,
the
Company, upon exercise of this Stock Option, shall be entitled to receive in
lieu of the Option Shares or other securities and property receivable upon
exercise of this Stock Option prior to the consummation of such reorganization,
reclassification, recapitalization, consolidation or merger, or if the Common
Stock is not changed, exchanged or extinguished in such transaction then in
addition to the rights specified herein, the stock or other securities, property
or assets to which the Company would have been entitled to had it exercised
this
Stock Option immediately prior to such consumation, by a holder of the number
of
shares of Common Stock for which this Stock Option is exercisable immediately
prior to such event. Subject to Section 6(c) below the foregoing provisions
of
this Section 6(b) shall similarly apply to successive reorganizations,
reclassifications, recapitalizations, mergers or consolidations.
(c) In
the
event of (i) a proposed dissolution or liquidation of the Company, or
(ii) a proposed sale of all or substantially all of the assets or
outstanding equity of the Company, or (iii) the merger or consolidation of
the Company with or into another entity or any other corporate reorganization
if
persons who were not shareholders of the Company immediately prior to such
merger, consolidation or other reorganization own immediately after such merger,
consolidation or other reorganization fifty percent (50%) or more of the voting
power of the outstanding securities of each of (A) the continuing or
surviving entity and (B) any direct or indirect parent corporation of such
continuing or surviving entity, Company
must, if at all, exercise this Stock Option at least 5 days prior to the
consummation of such event, but only to the extent that Ganani exercises or
has
exercised the Ganani Option, which exercise may be conditioned upon the
consummation of such event, and this Stock Option shall terminate upon
consummation of such event. In such an event, the vesting of this Stock Option
shall accelerate and the entire Stock Option shall be exercisable in full
immediately prior to the consummation of such event, but conditioned upon the
event occurring.
(d) An
adjustment to the Option Price or the number or type of securities issuable
upon
exercise of this Stock Option shall become effective immediately after the
payment date in the case of each dividend or distribution and immediately after
the effective date of each other event which requires an
adjustment.
(e) In
the
event that, as a result of an adjustment made pursuant to this Section 6, the
Company shall become entitled to receive any shares of capital stock of the
Company other than shares of Common Stock, the number of such other shares
so
receivable upon exercise of this Stock Option shall be subject thereafter to
adjustment from time to time in a manner and on terms as nearly equivalent
as
practicable to the provisions with respect to the Option Shares contained in
this Stock Option.
(f) In
the
event of an adjustment made pursuant to this Section 6, Xxxxxx shall cause
the
appropriate certificates, stock, securities, property or assets to be delivered
to the Company, together with any required instruments of transfer, to be held
in escrow in the same manner as the Option Shares.
Section
7. Benefits.
Nothing
in this Stock Option shall be construed to give any person, firm or corporation
(other than the Company and Ornath) any legal or equitable right, remedy or
claim, it being agreed that this Stock Option shall be for the sole and
exclusive benefit of the Company and Ornath.
Section
8. Notices
to Ornath.
Upon
the happening of any event requiring an adjustment of the Option Price, the
Company shall promptly give written notice thereof to Xxxxxx at the address
set
forth herein, stating the adjusted Option Price and the adjusted number of
Option Shares resulting from such event and setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.
Failure to give such notice or any defect therein shall not affect the legality
or validity of the event giving rise to, or the, subject
adjustment.
Section
9. Securities
Act of 1933.
Xxxxxx
and the Company acknowledge and agree that the issuance of this Stock Option
and
the purchase, if any, of the Option Shares, upon exercise, is exempt from
registration under the Securities Act of 1933, as amended by virtue of Section
4(1) of such Act.
Section
10. Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified
in
this Section prior to 6:30 p.m. (New York City time) on a business day,
(b) the next business day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified
in
this Section on a day that is not a business day or later than 6:30 p.m.
(New York City time) on any business day, (c) the business day following
the date of mailing, if sent by U.S. nationally recognized overnight courier
service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall
be
as follows:
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If
to the Company:
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#0
Xxxxxxxxx Xxxxxx
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Petach
Tikva 49277 Israel
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Fax
No.: 000-000-0-000-0000
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Attn:
Xxxxx Xxx-Xxxx, CFO
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With
a copy to:
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Xxxxx
& Singer LLP
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The
Chrysler Building
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000
Xxxxxxxxx Xxxxxx
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New
York, NY 00000-0000
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Fax
No.: 000-000-0000
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Attn:
Xxxxx Xxxxxxxx, Esq.
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If
to
Ornath:
or
such
other address or facsimile number as may be designated in writing hereafter,
in
the same manner, by such Person.
Section
11. Successors.
All the
covenants and provisions hereof by or for the benefit of the Optionholder shall
bind and inure to the benefit of its respective successors and assigns
hereunder.
Section
12. Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Stock Option shall be governed by and construed and enforced in
accordance with the internal laws of the State of Nevada, without regard to
the
principles of conflicts of law thereof to the extent such principles would
require the application of the laws of another jurisdiction.
Section
13. Amendment;
Waiver.
Any
term of this Stock Option may be amended or waived upon the written consent
of
the Company and Ornath.
Section
14. Section
Headings.
The
section headings in this Stock Option are for the convenience of the Company
and
Ornath and in no way alter, modify, amend, limit or restrict the provisions
hereof.
IN
WITNESS WHEREOF, Xxxxxx has caused this Stock Option to be duly executed, as
of
the 29th day of May, 2007.
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| By: | /s/ Xx. Xxxxx Xxxxxx | |
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Name: Xx. Xxxxx Xxxxxx |
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The
Company hereby accepts and agrees to the terms and conditions of this Stock
Option Agreement.
| TRACEGUARD TECHNOLOGIES, INC. | ||
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| Date: May 29, 2007 | By: | /s/ Xx. Xxxx Xxxxxx |
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Name: Xx. Xxxx Xxxxxx |
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| Title: Chief Executive Officer | ||
APPENDIX
A
STOCK
OPTION EXERCISE FORM
TO:
Xx.
Xxxxx Xxxxxx:
The
undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Stock Option (“Stock Option”) for, and to purchase
thereunder by the payment of the Option Price and surrender of the Stock Option,
shares
of Common Stock (“Option Shares”) provided for therein.
and,
if
the number of Option Shares shall not be all the Option Shares purchasable
upon
exercise of the Stock Option, that a new Stock Option for the balance of the
Option Shares purchasable upon exercise of this Stock Option be registered
in
the name of TraceGuard Technologies, Inc. (the “Company”) and delivered to the
address stated below.
| Dated: ___________________, ____ | TRACEGUARD TECHNOLOGIES, INC. | |
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Name (please print) |
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Address |
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