Exhibit 10.17
 

 

 
Suspect Detection Systems Inc.
 
2009 GLOBAL INCENTIVE OPTION PLAN
OPTION AGREEMENT
(US)

By and between

Suspect Detection Systems Inc.
 
A Delaware Corporation
(the “Company”)
 
 
Of the first part

and

Gil Boosidan

(The “Optionee”)

Chief Executive Officer of
 
Suspect Detection Systems Inc.
 
6,000,000 Options of Common Stock

of the second part
 
 
 
 

--------------------------------------------------------------------------------

 

Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option Agreement (the “Option Agreement”).

I.           NOTICE OF OPTION GRANT

Name:               Gil Boosidan
Address:          3333 Henry Hudson Parkway, Apartment 1G, Bronx, New York 10463
 
The undersigned Optionee has been granted an Option to purchase Shares, subject
to the terms and conditions of the 2009 Global Incentive Option Plan and this
Option Agreement, as follows:

Date of
Grant                                                                  June 21,
2011
Purchase Price per Share                                              $0.10
Total Number of Options Granted                              6,000,000
Total Purchase
Price                                                     $600,000
 

 
Type of Option:
x
Option intended to qualify as an incentive stock option ("ISO") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended
("Code").
           
o
Option not intended to qualify as an Incentive Stock Option ("NSO").
         
Term/Expiration Date:
Ten (10) years from Date of Grant, unless terminated earlier in accordance with
Section 10 of the Plan

 
Vesting Dates:

 
The Options shall be exercisable in numbers of whole shares, subject to
Optionee’s continuing to be a Service Provider on such dates, according to the
following vesting schedule:

· The Options shall vest as follows:  2,666,680 shares shall vest upon the
Optionee’s execution of his Amended and Restated Employment Agreement with the
Company and the balance of 3,333,320 shares shall vest in equal monthly amounts
of 166,667 shares during each and every calendar month during the twenty (20)
month period commencing on July 1, 2011.
 
 
1

--------------------------------------------------------------------------------

 
 
II.              AGREEMENT

1.              Grant of Option

 
(a)
Subject to the terms and conditions set forth herein and in the Plan, the
Company hereby grants to the Optionee named in the Notice of Grant (the
“Optionee”), an option (the “Option”) to purchase the number of Shares set forth
in the Notice of Grant, at the Purchase Price per Share set forth in the Notice
of Grant (the “Purchase Price”).

 
(b)
In accordance with the Plan, unless specifically stated otherwise herein, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.

 
(c)
In the case of an ISO, the Option shall not be considered an ISO to the extent
that the Fair Market Value of the Shares, which may be purchased on exercise of
the Option for the first time during any calendar year (under all plans of the
Company and any Parent or Subsidiary of the Company), exceeds $100,000.  For
purposes of this Section 1(c), ISOs shall be taken into account in the order in
which they were granted.  The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

 
(d)
The Optionee is aware that: (i) the Company intends to issue additional shares
and options in the future to various entities and individuals, as the Company in
its sole discretion shall determine; and (ii) the Company may increase its share
capital by new securities in such amount as it finds expedient; and the Optionee
hereby waives any claim and/or demand it has or may have regarding such issuance
or increase.

 
(e)
The Optionee further represents, it is familiar with the Company’s business and
financial condition, and has acquired sufficient information regarding the
Company in order to reach an informed and knowledgeable decision to participate
in the Option Plan and to be allocated with the Options.

2.              Exercise of Option

 
(a)
Right to Exercise.  This Option shall be exercisable at any time from the Date
of Grant and prior to the Expiration Date of the Term in accordance with the
Vesting Schedule set forth in the Notice of Grant and subject to the applicable
provisions of the Plan and this Option Agreement.

 
(b)
Method of Exercise.  This Option shall be exercisable by delivery of an exercise
notice in the form attached as Exhibit B hereto (the “Exercise Notice”), and
such other representations and agreements, as may be required by the
Company.  The Exercise Notice shall be accompanied by (1) payment of the
aggregate Purchase Price for the number of Shares to be purchased and (2)
payment of the aggregate withholding taxes due with respect to the exercised
Shares, if applicable.  This Option shall be deemed to be exercised upon receipt
by the Company of such fully executed Exercise Notice accompanied by the
aggregate Purchase Price and withholding taxes due with respect to the exercised
Shares, if applicable.

No Shares shall be issued pursuant to the exercise of an Option unless such
issuance and such exercise comply with Applicable Laws.  If any law or
regulation requires the Company to take any action with respect to the Shares
specified in such notice before the issuance thereof, then the date of their
issuance shall be extended for the period necessary to take such action.
Assuming such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Option is exercised with
respect to such Shares.

 
2

--------------------------------------------------------------------------------

 

II.           AGREEMENT (CONT.)

2.              Exercise of Option (cont.)
 
 
(c)
The Options may be exercised only to purchase whole Shares, and in no case may a
fraction of a Share be purchased.  If any fractional Shares would be deliverable
upon exercise, such fraction shall be rounded up or down, to the nearest whole
number.  Half of a share will be rounded down.

 
 

 
(d)
Voting Rights.  Pursuant to the terms set forth in the Plan, and, when
applicable, subject to the provisions of Section 422 of the Code, any Shares
issued at grant of Options or exercise of Options (and securities of the Company
issued with respect thereto) shall be voted by an irrevocable proxy, attached as
Exhibit C hereto (the “Proxy”) in the same manner as the votes of the majority
of other shareholders of the Company present and voting at the applicable
meeting, such Proxy to be assigned to the person or persons designated by the
Board and to provide for the power of such designated person(s) to act, instead
of the Optionee and on its behalf, with respect to any and all aspects of the
Optionee’s shareholdings in the Company. The proxy shall be used to vote in
compliance with the vote of the majority of the other members of the board,
subject to Applicable Laws and the Company’s Certificate of Incorporation, as
amended.

3.              Method of Payment

Payment of the aggregate Purchase Price shall be made in U.S. dollars, by any of
the following, as shall be determined by the Administrator in its sole
discretion: (1) cash, (2) check, (3) a combination thereof.

4.              Restrictions on Exercise

This Option may not be exercised until such time the Plan has been approved by
the shareholders of the Company or if the issuance of Shares upon such exercise
or the method of payment of consideration for such Shares would constitute a
violation of Applicable Laws.

5.              Non-Transferability of Options and Shares
 
 
 
(a)
Option may not be transferred in any manner otherwise than by will or by the
laws of descent or distribution and may be exercised during the lifetime of
Optionee only by Optionee.  The terms of the Plan and this Option Agreement
shall be binding upon the executors, administrators, heirs, successors and
assigns of Optionee.

 
(b)
Shares sales would be subject to the Company’s Certificate of Incorporation, as
amended; Shares shall not be sold or transferred directly or indirectly to a
competitor of the Company.  The Administrator shall determine, in its sole
discretion, whether a certain transfer of Shares is not allowed according to
this Section.

6.              Term of Option

This Option may be exercised only during the period commencing on the Date of
Grant and terminating on the Expiration Date of the Term (the “Term”) set out in
the Notice of Grant, unless terminated earlier in accordance with the provisions
of the Option Agreement or the Plan, and may be exercised during such term only
in accordance with the Plan and the terms of this Option Agreement.  In the case
of an ISO granted to a Ten Percent Shareholder the term of the Option shall be
no more than five (5) years from the date of grant.

 
3

--------------------------------------------------------------------------------

 

II.           AGREEMENT (CONT.)

7.              Tax Consequences

Any tax consequences arising from the grant or exercise of any Option or from
the disposition of the Shares or from any other event or act (whether of the
Optionee or of the Company or of its Trustee) hereunder, shall be borne solely
by the Optionee.  The Company and/or the Trustee shall withhold taxes according
to the requirements under the applicable laws, rules, and regulations, including
withholding taxes at source.

Furthermore, such Optionee shall agree to indemnify the Company and/or the
Trustee, and/or the Company’s shareholders and/or directors and/or officers if
applicable, and hold them harmless against and from any and all liability for
any such tax or interest or penalty thereon, including without limitation,
liabilities relating to the necessity to withhold, or to have withheld, any such
tax from any payment made to the Optionee, provided that they acted in due
care.  Except as otherwise required by law, the Company shall not be obligated
to honor the exercise of any Option by or on behalf of an Optionee until all tax
consequences (if any) arising from the exercise of such Options are resolved in
a manner reasonably acceptable to the Company.

Set forth below is a brief summary as of the date of the grant of this Option of
some of the tax consequences of the grant and exercise of this Option and the
disposition of the Shares.

THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE.  THEREFORE, OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

 
(a)
Exercise of ISO.  In the case of an ISO, the exercise of the Option will not be
subject to U.S. federal income tax, although the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the Purchase Price will
be treated as an adjustment to the alternative minimum tax for federal income
tax purposes and may subject the Optionee to the alternative minimum tax in the
year of exercise.

 
(b)
Exercise of NSO.  The exercise of an NSO may be subject to U.S. federal income
tax liability (at ordinary tax rates) upon the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the Purchase Price.  If
Optionee is an Employee or a former Employee, the Company will be required to
withhold from Optionee's compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.

 
(c)
Disposition of Shares.  In the case of an NSO, if Shares are held for at least
one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for U.S. federal income tax purposes.  In the case of an
ISO, if Shares transferred pursuant to the Option are held for at least one year
after exercise and for at least two years after the date of grant, any gain
realized on disposition of the Shares will also be treated as long-term capital
gain for federal income tax purposes.  If Shares purchased under an ISO are
disposed of within one year after exercise or two years after the date of grant,
any gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the difference between the
Purchase Price and the lesser of (1) the Fair Market Value of the Shares on the
date of exercise, or (2) the sale price of the Shares.  Any additional gain will
be taxed as capital gain.

 
 
4

--------------------------------------------------------------------------------

 
 
II.           AGREEMENT (CONT.)

               7.       Tax Consequences (Cont.)

 
(d)
Notice of Disqualifying Disposition of ISO Shares. In the case of an ISO, if
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
the ISO on or before the later of (1) the date two years after the date of
grant, or (2) the date one year after the date of exercise, Optionee shall
immediately notify the Company in writing of such disposition.  Optionee agrees
that Optionee may be subject to income tax withholding by the Company on the
compensation income recognized by Optionee.

 
8.
Governing Law; Severability

This agreement shall be governed by, and interpreted in accordance with, the
laws of the State of Delaware, U.S.A., notwithstanding the conflicts of laws
principles of any jurisdiction.

 
9.
Entire Agreement

The Plan is incorporated herein by reference.  The Plan and this Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee.

 
10.
No Guarantee of Continued Service

Optionee acknowledges and agrees that the vesting of shares pursuant to the
Vesting Schedule hereof is earned only by continuing as a Service Provider at
the will of the Company. Optionee further acknowledges and agrees that this
Agreement, the transactions contemplated hereunder and the Vesting Schedule set
forth herein do not constitute an express or implied promise of continued
engagement as a Service Provider and shall not interfere in any way with
Optionee's right or the Company’s right to terminate Optionee’s relationship as
a Service Provider at any time, with or without cause.

 
11.
Confidentiality

The Optionee agrees and acknowledges that the terms and conditions of this
Option Agreement, including without limitation the number of Shares for which
Options have been granted, are confidential.  The Optionee agrees that he will
not disclose these terms and conditions to any third party, except to the
Optionee’s financial or legal advisors, tax advisors or family members, unless
such disclosure is required by law.

 
5

--------------------------------------------------------------------------------

 

II.           AGREEMENT (CONT.)

By affixing his signature hereunder, Optionee acknowledges receipt of a copy of
the Plan and represents that Optionee is familiar with the terms and provisions
thereof, and hereby accepts this Option subject to all of the terms and
provisions thereof.  Optionee has reviewed the Plan and this Option in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option and fully understands all provisions of the
Option.  Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions arising
under the Plan or this Option.  Optionee further agrees to notify the Company
upon any change in the residence address indicated below.

OPTIONEE
SUSPECT DETECTION SYSTEMS INC.
 
/s/ Gil Boosidan
 
 
/s/ Yoav Krill
 
Signature
By
 
Gil Boosidan
 
 
Yoav Krill, Chairman of the Board of Directors
 
Print Name
Title
 
3333 Henry Hudson Parkway, Bronx, NY 10463
 
 
Residence Address
   

 
Attachments:

 
●  
Exhibit A: Suspect Detection Systems Inc. 2009 Global Incentive plan

 
 ●  
Exhibit B: Exercise Notice

 
●  
Exhibit C: Proxy

 
 
6

--------------------------------------------------------------------------------

 
 
EXHIBIT B

Suspect Detection Systems Inc.
 
2009 GLOBAL INCENTIVE OPTION PLAN

EXERCISE NOTICE

Suspect Detection Systems Inc.
150 West 56th Street, Suite 4005, New York, New York 10019

1.
Exercise of Option.  Effective as of today, I, _______________, the undersigned
(“Optionee”) hereby elects to exercise Optionee’s option to purchase
_________________ Shares under and pursuant to the 2009 Global Incentive Option
Plan (the “Plan”) and the Option Agreement dated June 21, 2011 (the “Option
Agreement”).

2.
Delivery of Payment.  Purchaser herewith delivers to the Company the full
purchase price of the Shares, as set forth in the Option Agreement.

3.
Rights as Shareholder.  Until the issuance of the Shares (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Shares, notwithstanding the
exercise of the Option.  The Shares shall be issued to Optionee as soon as
practicable after the Option is exercised. No adjustment shall be made for a
dividend or other right for which the record date is prior to the date of
issuance except as provided in the Plan.

4.
Tax Consultation.  Optionee understands that he/she may suffer adverse tax
consequences as a result of Optionee's purchase or disposition of the
Shares.  Optionee represents that he/she has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company or any Parent or
Subsidiary for any tax advice.

5.
Additional Representations.  The Optionee hereby acknowledges that he has been
informed that nothing herein shall obligate the Company to register its shares
or any portion of its shares on a stock exchange.

6.
Successors and Assigns.  The Company may assign any of its rights under this
Agreement to single or multiple assignees, and this Agreement shall inure to the
benefit of the successors and assigns of the Company.  Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, Board of Directors, successors and
assigns.

 
Signed by the Company and Optionee.

Submitted by:
 
 
Accepted by:
Suspect Detection Systems Inc.
   
Signature
By:
   
Print Name:
Title:
   
Address:
Address:
   

Date Received: ____________________
 
 
7

--------------------------------------------------------------------------------

 
 
EXHIBIT C – PROXY
 

The undersigned, as record holder of securities of Suspect Detection Systems
Inc. (the “Company”), hereby irrevocably appoints _____________ and/or
___________, each individually, and/or their successors and assigns, as my
proxy, instead of myself and on my behalf, with respect to any and all aspects
of my shareholdings in the Company, including, without limiting the foregoing
generality (i) receiving any notices the Company may deliver to its
shareholders, pursuant to the Company’s Certificate of Incorporation, as
amended, any shareholders agreement, applicable law or otherwise, (ii) attending
all meetings of the shareholders of the Company and voting such securities at
any meeting of the shareholders of the Company (and at any postponements or
adjournments thereof) and waiving all minimum notice requirements for such
meetings of shareholders, (iii) executing any consents or dissents in writing
without a meeting of the shareholders of the Company to any corporate action
thereof, (iv) waiving any preemptive right, right of first refusal, right of
first offer, co-sale right or any other similar right or restriction to which I
will be entitled by virtue of the securities, (v) giving or withholding consent
or agreement to any matter which requires my consent or agreement in my capacity
as a shareholder of the Company (whether such is required under the Certificate
of Incorporation, as amended of the Company, any agreement to which I am a party
as a shareholder or otherwise), and/or (vi) joining in making a request to
convene a general meeting or class meeting of the shareholders of the Company or
to otherwise exercise any and all powers and authorities vested within me in my
capacity as a shareholder of the Company (in each of the foregoing cases, to the
fullest extent that I will be entitled to act so, and in the same manner and
with the same effect as if the undersigned were personally present at any such
meeting or voting such securities or personally acting on any matters submitted
to shareholders for approval or consent.

This proxy is made pursuant the Suspect Detection Systems Inc. 2009 Global
Incentive plan dated __________ (the “Plan”).

The securities shall be voted by the proxy holder in the same manner as the
votes of the majority of other shareholders of the Company present and voting at
the applicable meeting.

This proxy is irrevocable as it may affect rights of third parties.  The proxy
holder will have the full power of substitution and revocation.  All authority
herein conferred shall survive the death or incapacity of the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.

The irrevocable proxy will remain in full force and effect until the
consummation of an IPO (as defined in the Plan), or the fourth anniversary of
the Date of Grant (as defined in the Plan), upon which it will terminate
automatically.

This proxy shall be signed exactly as the shareholder’s name appears on his
share certificate.  Joint shareholders must each sign this proxy.  If signed by
an attorney in fact, the Power of Attorney must be attached.
 

 

     
Name & Signature
 
Date

 
 
 
 
 
 8

--------------------------------------------------------------------------------