OPTIONABLE, INC.

NONSTATUTORY STOCK OPTION AGREEMENT

 

THIS NONSTATUTORY STOCK OPTION AGREEMENT (the “Agreement”) is made and entered
into as of November 26, 2007 (the “Grant Date”) by and between Optionable, Inc.,
a Delaware corporation (the “Company”), and Dov Rauchwerger (the “Optionee”).

WHEREAS, the Company desires to grant the Optionee a stock option under the
Company’s 2004 Stock Option Plan (the “Plan”) to acquire shares of the Company’s
Common Stock, $0.001 par value per share (the “Common Stock”).

WHEREAS, Section 5 of the Plan provides that each option is to be evidenced by
an award agreement, setting forth the terms and conditions of the option.

NOW THEREFORE, in consideration of the premises and of the mutual covenants and
agreements contained herein, the Company and the Optionee hereby agree as
follows:

1.         Grant of Option. The Company hereby grants to the Optionee, under the
Plan and subject to the terms and conditions of the Plan, a stock option (the
“Option”) to purchase all or any part of the number of shares of Common Stock
(the “Shares”) set forth below the Optionee’s name on the signature page hereto,
on the terms and conditions hereinafter set forth. The Option granted hereunder
shall be treated as a nonstatutory stock option and is not intended to
constitute an incentive stock option under section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”).

2.          Exercise Price. The exercise price per share (“Exercise Price”) for
the Shares covered by the Option shall be the closing price per share of the
Company’s stock upon grant, as quoted on the Over-the-Counter Bulletin Board,
subject to adjustment pursuant to Section 10.

 

3.

Vesting.

 

The right to exercise the Option shall be 50,000 vested upon the Grant Date. The
“Vested Percentage” of the Option shall be as follows:

50,000 six month after the date of grant

50,000 twelve months after the date of grant

50,000 eighteen-months after the date of grant

50,000 twenty-four months after the date of grant

 

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The right to exercise this Option shall immediately vest in the event of a
“Change of Control” of the Company. For this purpose, a “Change of Control”
means the acquisition after the date hereof, directly or indirectly, by any
Person of ownership of, or the power to direct the exercise of voting power with
respect to, a majority of the issued and outstanding voting shares of the
Company. For this purpose, a“Person” means an individual or a corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.

 

4.

Term of Options.

 

(a)        Cancellation and Forfeiture. The Option shall be cancelled and shall
be null and void, and the Optionee shall forfeit all rights pursuant to the
Option, (i) if the Optionee does not execute and return this Agreement to the
Company within sixty (60) days of the Grant Date, (ii) unless otherwise agreed
to in writing by the Board, upon the Optionee’s bankruptcy, and (iii) upon the
Optionee’s attempted assignment or transfer of the Option in violation of
Section 9.

(b)        Termination. The Option shall terminate and shall no longer be
exercisable, even if vested, upon the earliest to occur of the following events:

(i)        if the Optionee dies, the first anniversary of the date of death; and

(ii)       ninety days upon the termination of the Optionee’s services as a
Board member

 

(iii)

five years from the date of grant.

 

5.

Exercise of Option.

 

(a)        Exercisability. The Option shall be exercisable at any time prior to
its termination pursuant to Section 4(b) only to the extent of the Vested
Percentage as of that time. Notwithstanding termination of the Option pursuant
to Section 4(b), the Board, in its discretion, may extend the period of
exercisability of the Option for such time period as it deems appropriate.

(b)        Method of Exercise. To the extent the Option is exercisable pursuant
to Section 5(a), the Optionee may exercise the Option in full or in part by
giving written notice to the Company, signed by the Optionee (or his legal
representative or heir, in the event of the Optionee’s death), stating the
Optionee’s election to exercise the Option and the number of whole Shares for
which the Option is being exercised. The written notice must be accompanied by
(i) full payment of the exercise price for the number of Shares being purchased,
and (ii) an executed copy of the form of investor representation letter referred
to in Section 6(b), if required pursuant to such Section 6(b).

 

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(c)        Payment of Exercise Price. Payment of the exercise price for the
number of Shares for which the Option is being exercised shall be made:

 

(i)

In cash or by check payable to the order of the Company;

(ii)       at the discretion of the Board, by tender to the Company of shares of
Common Stock owned by the Optionee, acceptable to the Board, having a Fair
Market Value (as defined in the Plan) on the date of exercise at least equal to
the exercise price;

(iii)      at the discretion of the Board, by a combination of the methods
described above; or

 

(iv)

by such other method as may be approved by the Board.

(d)        Maintenance of Shares. The Company shall at all times during the term
of the Option reserve and keep available such number of shares of its Common
Stock as will be sufficient to satisfy the requirements of the Option.

 

6.

Securities Law Restrictions.

 

(a)       The grant of the Option and the issuance of Shares upon exercise of
the Option shall be subject to compliance with all applicable requirements of
federal, state or foreign law with respect to such securities. The Option may
not be exercised if the issuance of Shares upon such exercise would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations. In addition, the Option may not be exercised unless (i) a
registration statement under the Securities Act of 1933, as amended (the
“Securities Act”), shall at the time of exercise of the Option be in effect with
respect to the Shares to be issued upon exercise of the Option or (ii) in the
opinion of legal counsel to the Company, the Shares to be issued upon exercise
of the Option may be issued in accordance with the terms of an applicable
exemption from the registration requirements of the Securities Act. THE OPTIONEE
IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISABLE UNLESS THE FOREGOING
CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE
THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. As a condition to the
exercise of the Option, the Company may require the Optionee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.

(b)       In the event that, as of the date on which the Option is exercised in
whole or in part, the Shares to be issued upon exercise of the Option shall not
be effectively registered under the Securities Act, the person exercising the
Option shall give a written representation to the Company in the form attached
hereto as Exhibit A and the Company shall place an “investment legend,” as
described in Exhibit A, upon any certificate for the Shares issued by reason of
such exercise.

 

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(c)       The Company shall be under no obligation to cause a registration
statement or a post-effective amendment to any registration statement to be
prepared for the purposes of covering the issue of Shares.

7.          Tax Withholding. Upon exercise of the Option, in whole or in part,
and as a condition thereto, the Optionee shall remit to the Company an amount
sufficient to satisfy the Optionee’s share of all United States federal, state
and local withholding tax requirements, in such manner and amount as shall be
specified by the Board. With respect to an Optionee that is an employee or
consultant of Company, the Company shall have the right to withhold (or to cause
one of the Company’s subsidiaries to withhold), from compensation otherwise
payable to the Optionee, an amount sufficient to satisfy all federal, state and
local withholding tax requirements prior to the issuance of such Shares and the
delivery of any certificate or certificates for such Shares, and from time to
time thereafter to the extent such withholding obligations arise in connection
with the Option, including, without limitation, obligations arising upon (i) the
exercise, in whole or in part, of the Option, (ii) the transfer, in whole or in
part, of any Shares acquired on exercise of the Option, (iii) the operation of
any law or regulation providing for the imputation of interest, or (iv) the
lapsing of any restriction with respect to any Shares acquired on exercise of
the Option. The Optionee acknowledges that the Company may issue a Form W-2,
W-2c, 1099 or substitute therefore, as appropriate, to the Optionee with respect
to any United States income recognized by the Optionee with respect to the
Option.

 

8.

Non Transferability.

 

(a)       Unless otherwise approved by the Board in its discretion, the Option
may be exercised during the lifetime of the Optionee only by the Optionee and
may not be assigned or transferred in any manner, except by will or by the laws
of descent and distribution. Upon the Optionee’s death, the Optionee’s legal
representative, or any person empowered under the Optionee’s will or under
applicable laws of descent and distribution, may exercise the Option to the
extent unexercised and exercisable by the Optionee as of the date of death.

(b)       Except as provided in Section 9(a), without the prior written consent
of the Board, no right or benefit under this Agreement shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and
any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge
the same without such consent, if applicable, shall be void. Except with such
consent, no right or benefit under this Agreement shall in any manner be liable
for or subject to the debts, contracts, liabilities or torts of the Optionee.

9.          Change in Stock Subject to Option. In the event of a
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, or other change in corporate structure affecting the Common Stock, the
Board may adjust the terms of the Option in accordance with Section 3 of the
Plan.

 

10.

No Special Rights; Duties of Optionee.

 

(a)       The Optionee shall have no rights as a stockholder with respect to any
Shares covered by the Option until the date of the issuance of a certificate or
certificates for the Shares for which the Option has been exercised. No
adjustment shall be made for dividends or

 

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distributions or other rights for which the record date is prior to the date
such certificate or certificates are issued, except as provided pursuant to
Section 10.

(b)       Nothing contained in this Agreement shall be construed or deemed by
any person under any circumstances to bind the Company to commence or continue
the employment or consulting relationship of the Optionee for the period within
which this Option may be exercised, nor shall this Agreement be construed to
create any duty of the Company or any of its affiliates or any of its other
shareholders to the Optionee, or any duty of the Optionee to the Company or any
of its affiliates or other shareholders, comparable to the duties which partners
or joint venturers may owe to each other. However, during the period that the
Optionee provides employment or consulting services to the Company, the Optionee
shall render diligently and faithfully the services which are assigned to the
Optionee from time to time by the Board or by the executive officers of the
Company. The Optionee shall at no time take any action which directly or
indirectly would be inconsistent with the best interests of the Company.

11.        Notices. Any notices or other communications required to be given
hereunder shall be given by hand delivery or by certified or registered mail,
return receipt requested, with all fees prepaid and addressed, if to the
Company, to it at 465 Columbus Avenue, Suite 290, Valhalla, New York 10595, and
if to the Optionee, at the address set forth on the signature page hereto, or to
such other address as either party may specify in writing from time to time.

12.        Termination or Amendment. The Board may terminate or amend the Plan
and/or the Option at any time; provided, however, that no such termination or
amendment may adversely affect the Option or any unexercised portion thereof
without the written consent of the Optionee.

13.        Integrated Agreement. This Agreement constitutes the entire
understanding and agreement of the Optionee and the Company with respect to the
subject matter contained herein and supersedes any prior understanding or
agreement between the parties, whether or not in writing, including, but not
limited to, any prior grant by the Company or any of its officers or authorized
representatives to the Optionee of an option or warrant to purchase Common
Stock. There are no agreements, understandings, restrictions, representations,
or warranties among the Optionee and the Company other than those as set forth
or provided for herein. To the extent contemplated herein, the provisions of
this Agreement shall survive any exercise of the Option and shall remain in full
force and effect.

14.        Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrations, successors and assigns.

15.        Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of Delaware, without
regard to principles of conflicts of laws.

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IN WITNESS WHEREOF, the parties hereto have executed this Nonstatutory Stock
Option Agreement as of the Grant Date.

 

 

OPTIONABLE, INC.

By: 

 

 

/s/ Edward J. O’Connor

 

Name:

Edward J. O’Connor

 

Title:

President

 

The undersigned Optionee represents that the Optionee is familiar with the terms
and provisions of this Nonstatutory Stock Option Agreement and the Plan, and
hereby accepts the Option subject to all of the terms and provisions thereof.
The Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board upon any questions arising under this
Nonstatutory Stock Option Agreement and the Plan. The undersigned acknowledges
receipt of a copy of the Plan.

 

 

 

 

 

 

 

/s/ Dov Rauchwerger

 

 

Signature of Optionee

 

 

____________________

Address:

80 Lawrence Avenue

Lawrence, NY 11559

 

 

Social Security Number:

Number of Shares Subject to Option:   250,000

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EXHIBIT A

Date:___________________

 

Optionable, Inc.

465 Columbus Avenue, Suite 280

Valhalla, New York 10595

 

Ladies and Gentlemen:

In connection with the acquisition by me of [________________] shares of common
stock, $0.0001 par value per share (the “Shares”), of Optionable, Inc., a
Delaware corporation (the “Company”), I hereby represent to the Company as
follows:

(a)       I hereby confirm that: (i) the Shares to be received by me will be
acquired for investment only, for my own account, not as a nominee or agent and
not with a view to the sale or distribution of any part thereof; and (ii) I have
no current intention of selling, granting participation in or otherwise
distributing the Shares. I further represent that I do not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person, or to any third person, with respect to any of the
Shares.

(b)       I understand that the Shares have not been registered under the
Securities Act of 1933, as amended (the “1933 Act”) on the basis that the
acquisition of the Shares by me and the issuance of securities by the Company to
me is exempt from registration under the 1933 Act and that the Company’s
reliance on such exemption is predicated on my representations set forth herein.

(c)       I represent that I have, either alone or together with the assistance
of a “purchaser representative” (as that term is defined in Regulation D
promulgated under the 1933 Act), such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of my
investment in the Company. I further represent that I am familiar with the
business and financial condition, properties, operations and prospects of the
Company. I further represent that I have had, prior to my acquisition of the
Shares, the opportunity to ask questions of, and receive answers from, the
Company concerning the terms and conditions of the issuance and to obtain
information (to the extent the Company possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify the
accuracy of any information furnished to me or to which I have had access. I am
satisfied that there is no material information concerning the condition,
properties, operations and prospects of the Company of which I am unaware. I
have made, either alone or together with my advisors, such independent
investigation of the Company as I deem to be, or my advisors deem to be,
necessary or advisable in correction with this investment.

(d)       I understand that the Shares may not be sold, transferred or otherwise
disposed of without registration under the 1933 Act and applicable state
securities laws, or an exemption there from, and that in the absence of an
effective registration statement covering the Shares or an available exemption
from registration tinder the 1933 Act or applicable state

 

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securities laws, the Shares must be held indefinitely. In particular, I
acknowledge that I am aware that the Shares may not be sold pursuant to Rule 144
promulgated under the 1933 Act unless all of the conditions of that Rule are
met. Among the current conditions for use of Rule 144 by certain holders is the
availability to the public of current information about the Company. Such
information is not now available, and the Company has no current plans to make
such information available. I represent that, in the absence of an effective
registration statement covering the Shares or an available exemption from
registration under the 1933 Act or applicable state securities laws, I will not
sell, transfer or otherwise dispose of the Shares.

(e)       I represent that I (i) am capable of bearing the economic risk of
holding the unregistered Shares for an indefinite period of time and have
adequate means for providing for my current needs and contingencies, (ii) can
afford to suffer a complete loss of my investment in the Shares, and (iii)
understand and have taken cognizance of all risk factors related to the
acquisition of the Shares.

(f)        I understand that the acquisition of the Shares involves a high
degree of risk and there is no established market for the Company’s capital
stock and it is not likely that any public market for such stock will develop in
the near future.

(g)       I represent that neither I nor anyone acting on my behalf has paid any
commission or other remuneration to any person in connection with the
acquisition of the Shares.

(h)       Independent of the additional restrictions on the transfer of the
Shares contained herein, I agree that I will not make a transfer, disposition or
pledge of any of the Shares other than pursuant to an effective registration
statement under the 1933 Act and applicable state securities laws, unless and
until: (i) I shall have notified the Company of the proposed disposition and
shall have furnished the Company with a statement of the circumstances
surrounding the disposition and (ii) if requested by the Company and at my
expense or at the expense of my transferee, I shall have furnished to the
Company an opinion of counsel, reasonably satisfactory (as to counsel and as to
substance) to the Company and its counsel, to the effect that such transfer may
be made without registration of the Shares under the 1933 Act, and applicable
state securities laws.

(i)        I acknowledge that all certificates evidencing the Shares shall bear
a legend in substantially the following form:

“TRANSFER RESTRICTED”

The shares represented by this certificate have not been registered under the
Securities Act of 1933 and applicable state securities laws. These shares have
been acquired for investment and not with a view to distribution or resale, and
may not be sold, mortgaged, pledged, hypothecated or otherwise transferred
without an effective registration statement for such shares under the Securities
Act of 1933 and applicable state securities laws, or an opinion of counsel
satisfactory to the Company that registration is not required under such Act and
applicable state securities laws.

 

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The shares of stock represented by this certificate are subject to certain
restrictions on transfer, repurchase rights and lock-up provisions as set forth
in the certain Stock Option Agreement pursuant to which such shares were
acquired. Such Agreement is available for inspection without charge at the
office of the Secretary of the Company.

(j)        The certificates evidencing the Shares shall also bear any legend
required by any applicable state securities law.

(k)       In addition, the Company shall make a notation regarding the
restrictions on transfer of the Shares in its stock books, and the Shares shall
be transferred on the books of the Company only if transferred or sold pursuant
to an effective registration statement under the 1933 Act and applicable state
securities laws covering such Shares or pursuant to and in compliance with the
provisions of the Stock Option Agreement referenced above. A copy of this
Agreement, together with any amendments thereto, shall remain on file with the
Secretary of the Company and shall be available for inspection to any properly
interested person without charge within five (5) days after the Company’s
receipt of a written request therefore.

 

 

 

Sincerely yours,

 

 

 

 

 

Signature of Optionee