EXHIBIT 10.5
OPTION AGREEMENT
This Option Agreement (this "Agreement") is entered into effective as of
November 30, 2001 (the "Effective Date"), between GeoAlert Incorporated
("GeoAlert") and RDS Tasks of Ohio, Inc. ("RDS" or the "Optionee").
WITNESSETH:
Whereas:
1. GeoAlert is a publicly traded Nevada corporation (the "Company");
2. The Company's wholly owned subsidiary, Moonlight R&D, Inc., an Ohio
corporation ("Moonlight") and RDS have been parties to a Software License
Agreement (the "SLA"), pursuant to which RDS is required to develop and license
to Moonlight certain software as more specifically described in the SLA;
3. As an inducement for RDS to provide to Moonlight the services specified
in the SLA, and pursuant to certain understandings in respect of the SLA,
GeoAlert has agreed to grant to RDS an option to purchase 6,420,000 shares of
the voting common stock of the Company.
Now, Therefore, in consideration of the mutual promises and covenants as
set forth herein, and other valuable consideration, the receipt, adequacy,
mutuality and sufficiency of which are hereby acknowledged, the Company and the
Optionee hereby agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth herein,
GeoAlert hereby grants to RDS the right and option to purchase up to an
aggregate of 6,420,000 of its Shares (the "Option Shares") at the price of Forty
Cents ($0.40) per Option Share (the "Exercise Price") (all of the foregoing
being the "Option").
2. Term of Option. The term of the Option shall be ten (10) years from
and after the Effective Date (the "Term"). The Option shall expire at the close
of regular business hours on the tenth (10th) anniversary of the Effective Date.
Upon such expiration, this Agreement and all rights of RDS to exercise the
Option shall automatically terminate.
3. Vesting. The Option shall vest and become exercisable upon execution
hereof.
4. Manner of Exercise. To exercise the Option, which may be done in whole
or in part at any time during the Term, RDS shall deliver to GeoAlert the
following:
(a) A duly completed and executed Notice of Exercise of Option in the form
of Exhibit A hereto, setting forth the number of Option Shares with
respect to which the Option is being exercised; and
(b) Payment in full of the aggregate Exercise Price for all of the Option
Shares being purchased upon such exercise, which shall be payable to
GeoAlert in cash.
RDS agrees to exercise the Option in increments of not less than 100,000 shares
each.
5. Issuance of Shares. Upon exercise of the Option prior to the
expiration, termination or cancellation thereof and in accordance with all of
the terms and conditions hereof, the Company shall issue that number of Option
Shares which are the subject of each such exercise and cause to be delivered to
RDS a certificate for the number of Option Shares so purchased. All certificates
representing shares purchased hereunder shall bear such restrictive legends as
are required by applicable law. RDS shall have no rights as a shareholder of the
Company with respect to any Option Shares unless and until such Option Shares
are actually issued in accordance with all of the terms and conditions of this
Agreement, including any rights to vote such Option Shares or to grant or
withhold any consent in respect of such Option Shares, or to receive any
dividends or other distributions that may be declared or paid on or in respect
of such Option Shares.
6. Successors-In-Interest; Non-Transferability. The Option shall not be
transferable by RDS and may be exercised by RDS and its successors. Any
purported assignment, transfer, pledge, hypothecation or other disposition of
the Option, and the levy of any execution, attachment, garnishment or similar
process upon the Option, shall be void and of no effect.
7. Amendments. This Agreement and the terms and conditions of the Option
may not be amended in any manner unless such amendment is in a writing signed by
the Company and RDS.
8. Construction. The captions and section headings used in this Agreement
are intended solely for convenience of reference. They do not form a part of
this Agreement and may not be considered in interpreting it. The use of the
singular or plural herein shall not be restrictive as to number and shall be
interpreted in all cases as the context shall require. The use of feminine,
masculine or neuter pronouns herein shall not be restrictive as to gender and
shall be interpreted in all cases as the context may require. The use of the
word "including", wherever it appears in this Agreement, shall not be construed
to imply exclusivity and shall be interpreted to mean "including, without
limitation", unless otherwise expressly stated herein.
9. Investment Representations and Warranties. RDS represents and warrants
to GeoAlert, and at the time of any exercise of the Option shall further
represent and warrant to GeoAlert, that any Option Shares it may acquire by
virtue of the exercise of the Option shall be acquired solely for Optionee's own
account, for investment purposes only and not with a view to or any present
intention of any resale or distribution of such shares or any part thereof, or
of dividing Optionee's participation with others, and no other person has any
interest in or right to such shares or has contributed or will contribute any
funds to RDS. RDS understands and agrees that the Option Shares have not been
registered under the Securities Act of 1933, as amended (the "Act"), or any
state securities laws, and may not be sold, transferred or otherwise disposed of
unless a registration statement with respect to such shares and qualification in
accordance with any applicable state securities laws has become effective, or
unless it is established to the satisfaction of the Company that an exemption
from such registration and qualification is available, and that all certificates
representing Option Shares purchased hereunder shall bear a restrictive legend
concerning such restrictions upon transfer.
10. Notices. All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be deemed to have been duly
given if delivered by hand or sent by prepaid telegram, or mailed first class,
posted prepaid, by registered or certified mail (notices sent by telegram or
mailed shall be deemed to have been given and shall be effective on the date of
dispatch or mailing, as the case may be) to the intended recipient at his
address as set forth in the records of the Company from time to time.
11. Counterparts; Signature Pages. This Agreement may be executed and
delivered in multiple counterparts, each of which shall be deemed an original,
and all of which together shall constitute one and the same instrument. This
Agreement may be executed and delivered with separate signature pages with the
same effect as though GeoAlert and RDS had executed and delivered the same
signature page.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without regard to the conflict-
of-laws or choice-of-laws provisions thereof, and any applicable federal law.
In Witness Whereof, GeoAlert and RDS have caused this Option Agreement to
be executed and delivered as of the Effective Date.
GEOALERT INCORPORATED
By /s/ Xxxxxxx X. Xxxxxxxx
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RDS TASKS OF OHIO, INC.
By /s/ Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx, its President
EXHIBIT A
NOTICE OF EXERCISE OF OPTION
Under a certain Option Agreement dated as of November 30, 2001 (the "Option
Agreement"), the undersigned RDS Tasks of Ohio, Inc., an Ohio corporation
("RDS") has been granted an option to purchase from GeoAlert Incorporated, a
Nevada corporation ("GeoAlert"), a certain number of Common Shares at _____
Cents ($0.__) Exercise Price per share (the "Shares"), of GeoAlert Incorporated
subject to the terms and conditions of the Option Agreement. Capitalized terms
that are used but that are not otherwise defined in this Notice shall have the
same meanings herein as ascribed in the Option Agreement.
In order to induce GeoAlert to sell and issue the Shares to RDS, RDS hereby
notifies, represents and warrants to and agrees with GeoAlert as follows:
1. Notice of Exercise. RDS elects to exercise the Option and purchase
__________ of the total of ______________ Shares that it is entitled to purchase
under the Option Agreement. At the same time that RDS is delivering this Notice
to GeoAlert, RDS will also deliver to GeoAlert a certified or bank cashier's
check in the amount of $____________, which is the full amount of the Option
Price payable by RDS for the Shares being purchased, payable to the order of
"GeoAlert Incorporated". RDS is delivering this Notice and the foregoing
payment to GeoAlert.
2. Restricted Securities. RDS understands and acknowledges that none of
the Shares will be registered or qualified under the Securities Act of 1933, as
amended, and the rules of and regulations thereunder (the "Act"), or under any
state securities laws, in reliance upon specific exemptions thereunder for
transactions not involving any public offering, and may not be sold, transferred
or otherwise disposed of unless a registration statement under the Act and
qualification in accordance with any applicable state securities laws with
respect to such Shares has become effective, or unless it is established to the
satisfaction of GeoAlert that an exemption from such registration and
qualification is available. RDS understands and agrees that all certificates
representing the Shares will bear a restrictive legend concerning the foregoing
restrictions on transferability; that no market presently exists for the Shares,
and there can be no assurance that any such market will develop, and that RDS
may be required to bear the economic risk of its investment in the Shares for an
indefinite period of time.
3. Representations and Warranties. RDS represents and warrants to
GeoAlert that:
(a) RDS is acquiring the Shares solely for its own account, for
investment purposes only, and not with a view to, or with any present
intention of, any resale or distribution of the Shares or any part
thereof or to divide its participation with others, and no person
other than RDS has any interest in or right to the Shares.
(b) RDS has sufficient knowledge and experience in financial and business
matters in general and its is capable of evaluating the merits and
risks of an investment in the Shares.
(c) RDS has been informed and understands that the investment in the
Shares is a speculative investment and involves a high degree of
risk, and that the amount realized on such investment may be less
than the amount invested. In evaluating its investment in the Shares,
RDS has consulted with its own investment, legal and tax advisors and
has concluded that such investment is not inconsistent with, and is
appropriate in light of its
overall investment objectives, financial condition and liquidity
requirements. RDS is familiar with the nature of and risks inherent
to an investment of the type contemplated hereby, the tax aspects of
an investment of such type and is financially and otherwise capable
of bearing the economic risk of such an investment and can afford the
loss of the total amount of such investment.
(d) RDS understands and acknowledges that (i) the Shares have not been
registered under the provisions of the Act or any state securities
laws in reliance upon specific exemptions thereunder for transactions
not involving any public offering, and the availability of such
exemptions depends in part upon the accuracy of its representations
and warranties herein, (ii) the Act and applicable state securities
laws impose substantial restrictions on the transferability of the
Shares, (iii) no market presently exists for the Shares and there can
be no assurance that any such market will develop, and (iv) RDS may
be unable to liquidate its investment in the Shares and, as a result,
may have to hold the Shares and bear the economic risk of its
investment for an indefinite period of time.
In Witness Whereof, the undersigned has executed and delivered this Notice
of Option to Exercise to GeoAlert Incorporated on the date set forth below.
RDS TASKS OF OHIO, INC.
By__________________________________
Xxxxxx X. Xxxxxxx, its President
Date:________________________________
