exv10w12



 






EXHIBIT
10.12




GLOBALSECURE HOLDINGS LTD.

DIRECTOR STOCK OPTION AGREEMENT




	 	 	 
	Name of Optionee:

	 	Michael E. Recca
	Address of Optionee:

	 	949 Edgewood Ave., Pelham Manor, NY 10803
	Date of Grant:

	 	August 24, 2004
	Exercise Price Per Share:

	 	$1.21
	Total Number of Shares Granted:

	 	800,000
	Expiration Date:

	 	August 23, 2009






     1. Grant of Option. The Optionee named above (“Optionee”) in consideration of
services rendered as a director of GlobalSecure Holdings Ltd. (“Company”) is hereby granted options
to purchase the number of shares of the Company’s Common Stock par value $0.0001 (“Shares”) set
forth above at the exercise price set forth above (“Exercise Price”). The number of Shares and the
Exercise Price are subject to adjustment as set forth herein. Except as may be set forth herein,
the options granted hereby may be exercised at any time, and from time to time, from the date
hereof until the Expiration Date set forth above (“Expiration Date”). In no event may Optionee
exercise this Option after the Expiration Date.



     2. Exercise of Option. The Options shall be exercisable by delivery of an Exercise
Notice in the form attached as Exhibit A which shall state the election to exercise the
Option, the number of Shares with respect to which the Option is being exercised, and such other
representations and agreements as may be required by the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all exercised Shares and, where
required, by applicable withholding taxes. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise
Price.



          No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such
exercise comply with applicable laws. 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.




     3. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:



          (a) cash or check;




          (b) consideration received by the Company under a formal cashless exercise program adopted by
the Company;




          (c) surrender of other Shares which, (i) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six (6) months on the date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the
exercised Shares;




 









 





          (d) With the approval of the Board of Directors (or if a compensation committee of the Board
of Directors has been appointed, and authorized to act in connection with options granted to the
members of Board of Directors, with the approval of such committee) in lieu of payment of the
Exercise Price in cash, the Optionee may elect to receive Shares of Common Stock by surrendering
Options having a Fair Market Value equal to the Exercise Price of the Shares being issued in
accordance with, and subject to, the terms of a cashless exercise (net issuance) procedure
established, or permitted, by the Board or committee.




          (e) such other method as the Board of Directors of the Company permits.




     4. Non-Transferability of Option. This 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 this Option Agreement shall be binding upon
the executors, administrators, heirs, successors and assigns of the Optionee.



     5. Optionee’s Representations. In the event the Shares have not been registered under
the Securities Act of 1933, as amended, at the time this Option is exercised, the Optionee shall,
if required by the Company, concurrently with the exercise of all or any portion of this Option,
deliver to the Company his or her Investment Representation Statement in the form attached hereto
as Exhibit B.



     6. Lock-Up Period. Optionee hereby agrees that, if so requested by the Company or any
representative of the underwriters (the “Managing Underwriter”) in connection with any registration
of the offering of any securities of the Company under the Securities Act or applicable law of any
other jurisdiction in which an offering is being made by the Company. Optionee shall not sell or
otherwise transfer any Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter agreed to in writing by the
Company) (the “Market Standoff Period”) following the effective date of a registration statement of
the Company filed under the Securities Act. Such restriction shall apply only to the first
registration statement of the Company to become effective under the Securities Act that includes
securities to be sold on behalf of the Company to the public in an underwritten public offering
under the Securities Act. The Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restrictions until the end of such Market Standoff Period.



     7. Adjustment of Exercise Price and Number of Shares Deliverable.



     The number of Shares purchasable upon the exercise of this Option Agreement (such shares being
referred to in this Section 6 as the “Option Shares”) and the Exercise Price with respect to the
Option Shares shall be subject to adjustment as follows:



          (a) If the Company at any time divides the outstanding shares of its Common Stock into a
greater number of shares (whether pursuant to a stock split, stock dividend or otherwise), and
conversely, if the outstanding shares of its Common Stock are combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such division or combination
proportionately adjusted to reflect the reduction or increase in the value of each such common
stock.




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          (b) If any capital reorganization or reclassification of the capital stock of the Company or
consolidation or merger of the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be effected in such a way that holders
of the Company’s Common Stock shall be entitled to receive stock, securities or assets with respect
to or in exchange for such Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, the Optionee shall have the right to purchase and
receive upon the basis and upon the terms and conditions specified herein and in lieu of the shares
of the Common Stock immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such shares of stock, other securities or assets as would have been
issued or delivered to the Optionee if Optionee had exercised this Warrant and had received such
shares of Common Stock immediately prior to such reorganization, reclassification, consolidation,
merger or sale. The Company shall not effect any such consolidation, merger or sale unless prior
to the consummation thereof the successor corporation (if other than the Company) resulting from
such consolidation or merger or the corporation purchasing such assets shall assume by written
instrument executed and mailed to the Optionee at the last address of the Optionee appearing on the
books of the Company the obligation to deliver to the Optionee such shares of stock, securities or
assets as, in accordance with the foregoing provisions, the Optionee may be entitled to purchase.




          (c) If the Company takes any other action, or if any other event occurs, which does not come
within the scope of the provisions of Section (a) or (b) above, but which should result in an
adjustment in the Exercise Price and/or the number of shares subject to this Option Agreement in
order to fairly protect the purchase rights of the Optionee, an appropriate adjustment in such
purchase rights shall be made by the Company.




          (d) Upon each adjustment of the Exercise Price, the Optionee shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.




          (e) No adjustment in the number of Option Shares purchasable under this Option Agreement, or
in the Exercise Price with respect to the Option Shares, shall be required unless such adjustment
would require an increase or decrease of at least 1% in the number of Option Shares issuable upon
the exercise of this Option Agreement, or in the Exercise Price thereof; provided, however, that
any adjustments which by reason of this Section 6 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All final results of adjustments to
the number of Option Shares and the Exercise Price thereof shall be rounded to the nearest one
thousandth of a share or the nearest cent, as the case may be. Anything in this Section 6 to the
contrary notwithstanding, the Company shall be entitled, but shall not be required, to make such
changes in the number of Option Shares purchasable upon the exercise of the Option , or in the
Exercise Price thereof, in addition to those required by such Section, as it in its discretion
shall determine to be advisable in order that any dividend or distribution in shares of Common
Stock, subdivision, reclassification or combination of shares of Common Stock, issuance of rights,
warrants or options to purchase Common Stock, or distribution of shares of stock other than Common
Stock, evidences of indebtedness or assets (other than distributions of cash out of retained
earnings) or convertible or exchangeable




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securities hereafter made by the Company to the holders of its Common Stock shall not result
in any tax to the holders of its Common Stock or securities convertible into Common Stock.




          (f) Whenever the number of Option Shares purchasable upon the exercise of hereof or the
Exercise Price of such Option Shares is adjusted, as herein provided, the Company shall mail to the
Optionee, at the address of the Optionee shown on the books of the Company, a notice of such
adjustment or adjustments, prepared and signed by the Chief Financial Officer or Secretary of the
Company, which sets forth the number of Option Shares purchasable upon the exercise of each Warrant
and the Exercise Price of such Option Shares after such adjustment, a brief statement of the facts
requiring such adjustment and the computation by which such adjustment was made.




          (g) The form of this Option Agreement need not be changed because of any change in the
Exercise Price, the number of Option Shares issuable upon the exercise or the number of Option
Shares pursuant to this Section 6.




     8. Entire Agreement; Governing Law. 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. This agreement is governed by the laws of the State of
New York.



	 	 	 	 	 	 	 
	OPTIONEE:	 	 	 	GlobalSecure Holdings Ltd.
	 
	 	 	 	 	 	 
	/s/ Michael Recca

	 	 	 	By:
	 	/s/ Craig R. Bandes
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Address:
	 	 	 	 	 	 






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EXHIBIT A




EXERCISE NOTICE




GlobalSecure Holdings Ltd,

2600 Virginia Ave. NW

Suite 600

Washington, DC

Attention: President



     1. Exercise of Option. Effective as of today,___, 20_, the undersigned Optionee
hereby elects to exercise Optionee’s option to purchase Shares of the Common Stock of GlobalSecure
Holdings Ltd. (the “Company”) under and pursuant to the Director Stock Option Agreement dated
August 24, 2004 (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 and any other required payments. If
payment of the Exercise Price is made pursuant to Section 3(d) of the Option Agreement, the number
of Shares to be issued is___for which___Options are being surrendered, which amounts, in each
case, has been determined in accordance with such section



     3. Representations of Optionee. Optionee acknowledges that Optionee has received,
read and the Option Agreement and agrees to abide by and be bound by their terms and conditions.



     4. 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 vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Shares shall
be issued to the 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 under the terms of the Option Agreement.



     5. Company’s Right of First Refusal. Before any Shares held by Optionee may be sold
or otherwise transferred (including transfer by gift or operation of law), the Company or its
assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions
set forth in this Section (the “Right of First Refusal”).



          (a) Notice of Proposed Transfer. The Optionee of the Shares shall deliver to the
Company a written notice (the “Notice”) stating: (i) the Optionee’s bona fide intention to sell or
otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee
(“Proposed Transferee”); (iii) the number of Shares to be transferred to each Proposed Transferee;
and (iv) the bona fide cash price or other consideration for which the Optionee proposes to
transfer the Shares (the “Offered Price”), and the Optionee shall offer the Shares at the Offered
Price to the Company or its assignee(s).




          (b) Exercise of Right of First Refusal. At any time within 30 days after receipt of
the Notice, the Company and/or its assignee(s) may, by giving written notice to the Optionee,




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elect to purchase all, but not less than all, of the Shares proposed to be transferred to any
one or more of the Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.




          (c) Purchase Price. The purchase price (“Purchase Price”) for the Shares purchased by
the Company or its assignee(s) under this Section shall be the Offered Price. If the Offered Price
includes consideration other than cash, the cash equivalent value of the non-cash consideration
shall be determined by the Compensation (Remuneration) Committee of the Board of Directors of the
Company in good faith.




          (d) Payment. Payment of the Purchase Price shall be made, at the option of the
Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any
outstanding indebtedness of the Optionee to the Company (or, in the case of repurchase by an
assignee, to the assignee), or by any combination thereof within 30 days after receipt of the
Notice or in the manner and at the times set forth in the Notice.




          (e) Optionee’s Right to Transfer. If all of the Shares proposed in the Notice to be
transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s)
as provided in this Section, then the Optionee may sell or otherwise transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other
transfer is consummated within 120 days after the date of the Notice, that any such sale or other
transfer is effected in accordance with any applicable securities laws and that the Proposed
Transferee agrees in writing that the provisions of this Section shall continue to apply to the
Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not
transferred to the Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right of First Refusal
before any Shares held by the Optionee may be sold or otherwise transferred.




          (f) Exception for Certain Family Transfers. Anything to the contrary contained in
this Section notwithstanding, the transfer of any or all of the Shares during the Optionee’s
lifetime or on the Optionee’s death by will or intestacy to the Optionee’s immediate family or a
trust for the benefit of the Optionee’s immediate family shall be exempt from the provisions of
this Section. “Immediate Family” as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or other recipient
shall receive and hold the Shares so transferred subject to the provisions of this Section, and
there shall be no further transfer of such Shares except in accordance with the terms of this
Section.




          (g) Termination of Right of First Refusal. The Right of First Refusal shall terminate
as to any Shares upon the first sale of Common Stock of the Company to the general public pursuant
to a registration statement filed with and declared effective by the Securities and Exchange
Commission under the Securities Act of 1933, as amended.




     6. Tax Consultation. Optionee understands that Optionee may suffer adverse tax
consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents
that Optionee 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 for any
tax advice.



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     7. Restrictive Legends and Stop-Transfer Orders. If the issuance of shares upon
exercise of the Option Agreement has not been registered under the Securities Act of 1933, as
amended, Optionee as a condition of and at the time of exercise shall deliver the Investment
Representation Statement attached as Exhibit B and the provisions of this Section 7 shall be
applicable.



          (a) Legends. Optionee understands and agrees that the Company shall cause the legends
set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s)
evidencing ownership of the Shares together with any other legends that may be required by the
Company or by state or federal Securities laws:





THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR ANY STATE
SECURITIES LAWS. SUCH SECURITES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE
TRANSFERRED,                      OR. HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR                     
OF COUNSEL SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE ACT AND ANY STATE SECURITIES LAWS.




THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET
FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE
SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE
SHARES.



          (b) Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with
the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions
to its transfer agent ,if any, and that, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.




          (c) Refusal to Transfer. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of any of the provisions
of this Exercise Notice or (ii) to treat as owner of such Shares or to accord the right to vote or
pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.




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



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     9. Interpretation. Any dispute regarding the interpretation of this Exercise Notice
shall be submitted by Optionee or by the Company forthwith to the Board of Directors of the Company
which shall review such dispute at its next regular meeting. The resolution of such a dispute by
the Board of Directors shall be final and binding on all parties.



     10. Governing Law; Severability. This Exercise Notice is governed by the laws of the
State of New York, without applicability of the doctrine of conflicts of law.



     11. Entire Agreement. The Option Agreement is incorporated herein by reference. This
Exercise Notice, the Option Agreement and the Investment Representation Statement constitute the
entire agreement of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements oldie Company and Optionee with respect to the
subject matter hereof, and may not be modified adversely to the Optionees interest except by means
of a writing signed by the Company and Optionee.



	 	 	 	 	 	 	 
	Submitted by:	 	 	 	Accepted by:
	OPTIONEE	 	 	 	GLOBALSECURE HOLDINGS LTD.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	  By:
	 	 	 	 	 
	Signature

	 	 	 	 	 	  Title: President
	Print Name:
	 	 	 	 	 
	 

	 	 	 	 	 	 
	Address:
	 	 	 	 	 	 







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EXHIBIT B




INVESTMENT REPRESENTATION STATEMENT




	 	 	 
	OPTIONEE:
	 	 
	COMPANY:

	 	GlobalSecure Holdings Ltd.
	SECURITY:
	 	 
	AMOUNT:
	 	 
	DATE:
	 	 





In connection with the purchase of the above-listed Securities, the undersigned Optionee represents
to the Company the following:




          (a) Optionee is aware of the Company’s business affairs and financial condition and has
acquired sufficient information about the Company to reach an informed and knowledgeable decision
to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee’s
own account only and not with a view to, or for resale in connection with, any “distribution”
thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).




          (b) Optionee acknowledges and understands that the Securities constitute “restricted
securities” under the Securities Act and have not been registered under the Securities Act in
reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the
bona fide nature of Optionee’s investment intent as expressed herein. In this connection, Optionee
understands that, in the view of the Securities and Exchange Commission, the statutory basis for
such exemption may be unavailable if Optionee’s representation was predicated solely upon a present
intention to hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the market price of the
Securities, or for a period of one year or any other fixed period in the future. Optionee further
understands that the Securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register the Securities.
Optionee understands that the certificate evidencing the Securities will be imprinted with a legend
which prohibits the transfer of the Securities unless they are registered or such registration is
not required in the opinion of counsel satisfactory to the Company, and any other legend required
under applicable state securities laws.




          (c) Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under
the Securities Act, which, in substance, permit limited public resale of “restricted securities”
acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions- Rule 701 provides that if the issuer qualifies under Rule 701
at the time of the grant of the Option to the Optionee, the exercise will be exempt from
registration under the Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, 90 days
thereafter (or such longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions
specified by Rule 144, including: (1) the resale being made through a broker in




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an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934, as amended); and, in the case of an
affiliate, (2) the availability of certain public information about the Company, (3) the amount of
Securities being sold during any three-month period not exceeding limitations specified in Rule
144(e), and (4) the timely filing of a Form 144, if applicable. In the even that the Company does
not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in
certain limited circumstances subject to the provisions of Rule 144, which requires the resale to
occur not less than one year after the later of the date the Securities were sold by the Company or
the date the Securities were sold by an affiliate of the company, within the meaning of Rule 144;
and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two years, the satisfaction of the conditions set forth
in Section (1), (2), (3), (4) of the paragraph immediately above.




          (d) Optionee further understands that in the event all of the applicable requirements of Rule
701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A,
or some other registration exemption will be required; and that, notwithstanding the fact that
Rules 144 and 70.1 are not exclusive, the staff of the Securities and Exchange Commission has
expressed its opinion that persons proposing ___securities other than in a registered offering
and otherwise than pursuant to Rule 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.
Optionee understands that no assurances can be given that any such other registration exemption
will be available in such event.




	 	 	 
	 

	 	Signature of Optionee:







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