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

    TRACEGUARD
      TECHNOLOGIES, INC.

    


    For
      VALUE
      RECEIVED, TraceGuard Technologies, Inc., a Nevada corporation (“Company”), is
      entitled to purchase, subject to the provisions of this Stock Option, from
      Dr.
      Fredy Ornath (“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
      Ornath 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 Ganani; 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 Ornath’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, Ornath 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 Ornath.

    


    Section
      5. Representations
      of Ornath.
      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, Ornath 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 Ornath 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.
      Ornath
      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:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    


    
      	
              If
                to the Company:

            	
              TraceGuard
                Technologies, Inc.

            
	 	
              #6
                Ravnitzki Street

            
	 	
              Petach
                Tikva 49277 Israel 

            
	 	
              Fax
                No.: 011-972-3-542-3710

            
	 	
              Attn:
                David Ben-Yair, CFO

            
	 	 
	
              With
                a copy to:

            	
              Moses
                & Singer LLP

            
	 	
              The
                Chrysler Building

            
	 	
              405
                Lexington Avenue

            
	 	
              New
                York, NY 10174-1299

            
	 	
              Fax
                No.: 917-206-4381

            
	 	
              Attn:
                Allan Grauberd, Esq.

            


    

     

    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, Ornath has caused this Stock Option to be duly executed, as
      of
      the 29th day of May, 2007.

    
      	 	 	 
	 
 	 
 	 
 
	
            	By:  	/s/ Dr. Fredy Ornath
	 	
              
Name:
              Dr. Fredy Ornath


    

     

    The
      Company hereby accepts and agrees to the terms and conditions of this Stock
      Option Agreement.

     

    
      	 	 	 
	 	TRACEGUARD TECHNOLOGIES, INC.
	 
 	 
 	 
 
	Date: May 29, 2007	By:  	/s/ Dr. Ehud Ganani
	 	
              
Name:
              Dr. Ehud Ganini
	 	Title: Chief Executive
              Officer




     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    APPENDIX
      A

    STOCK
      OPTION EXERCISE FORM

    


    TO:
      Dr.
      Fredy Ornath:

    


    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.
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

            
	 	 
	 	
              
Name
              (please print)
	 	 
	 	 
	 	
              
 
	 	
              
Address