Document:

INTELLECTUAL
      PROPERTY SECURITY AGREEMENT

     

    INTELLECTUAL
      PROPERTY SECURITY AGREEMENT (this
      “Agreement”
      dated as
      of May 25, 2007, by and among DealerAdvance, Inc., a Nevada corporation (the
      “Company”),
      and
      the secured parties signatory hereto and their respective endorsees, transferees
      and assigns (collectively, the “Secured
      Party”).

     

    WITNESSETH:

     

    WHEREAS,
      pursuant to a Securities Purchase Agreement, dated the date hereof, between
      Company and the Secured Party (the “Purchase
      Agreement”),
      Company has agreed to issue to the Secured Party and the Secured Party has
      agreed to purchase from Company certain of Company’s 8% Callable Secured
      Convertible Notes, due three years from the date of issue (the “Notes”),
      which
      are convertible into shares of Company’s Common Stock, par value $.0001 per
      share (the “Common
      Stock”).
      In
      connection therewith, Company shall issue the Secured Party certain Common
      Stock
      purchase warrants (the “Warrants”);
      and

     

    WHEREAS,
      in order to induce the Secured Party to purchase the Notes, Company has agreed
      to execute and deliver to the Secured Party this Agreement for the benefit
      of
      the Secured Party and to grant to it a security interest in certain Intellectual
      Property (defined below) of Company to secure the prompt payment, performance
      and discharge in full of all of Company’s obligations under the Notes and
      exercise and discharge in full of Company’s obligations under the Warrants;
      and

     

    NOW,
      THEREFORE, in consideration of the agreements herein contained and for other
      good and valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, the parties hereto hereby agree as follows:

     

    1.
      Defined
      Terms.
      Unless
      otherwise defined herein, terms which are defined in the Purchase Agreement
      and
      used herein are so used as so defined; and the following terms shall have the
      following meanings:

     

    “Software
      Intellectual Property”
shall
      mean:

     

    (a) all
      software programs (including all source code, object code and all related
      applications and data files), whether now owned, upgraded, enhanced, licensed
      or
      leased or hereafter acquired by the Company, above;

     

    (b) all
      computers and electronic data processing hardware and firmware associated
      therewith;

     

    (c) all
      documentation (including flow charts, logic diagrams, manuals, guides and
      specifications) with respect to such software, hardware and firmware described
      in the preceding clauses (a) and (b); and

     

    (d) all
      rights with respect to all of the foregoing, including, without limitation,
      any
      and all upgrades, modifications, copyrights, licenses, options, warranties,
      service contracts, program services, test rights, maintenance rights, support
      rights, improvement rights, renewal rights and indemnifications and
      substitutions, replacements, additions, or model conversions of any of the
      foregoing.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Copyrights”
shall
      mean (a) all copyrights, registrations and applications for registration, issued
      or filed, including any reissues, extensions or renewals thereof, by or with
      the
      United States Copyright Office or any similar office or agency of the United
      States, any state thereof, or any other country or political subdivision
      thereof, or otherwise, including, all rights in and to the material constituting
      the subject matter thereof, including, without limitation, any referred to
      in
Schedule
      B
      hereto,
      and (b) any rights in any material which is copyrightable or which is protected
      by common law, United States copyright laws or similar laws or any law of any
      State, including, without limitation, any thereof referred to in Schedule
      B
      hereto.

     

    “Copyright
      License”
shall
      mean any agreement, written or oral, providing for a grant by the Company of
      any
      right in any Copyright, including, without limitation, any thereof referred
      to
      in Schedule
      B
      hereto.

     

    “Intellectual
      Property”
shall
      means, collectively, the Software Intellectual Property, Copyrights, Copyright
      Licenses, Patents, Patent Licenses, Trademarks, Trademark Licenses and Trade
      Secrets.

     

    “Obligations”
means
      all of the Company’s obligations under this Agreement and the Notes, in each
      case, whether now or hereafter existing, voluntary or involuntary, direct or
      indirect, absolute or contingent, liquidated or unliquidated, whether or not
      jointly owed with others, and whether or not from time to time decreased or
      extinguished and later decreased, created or incurred, and all or any portion
      of
      such obligations or liabilities that are paid, to the extent all or any part
      of
      such payment is avoided or recovered directly or indirectly from the Secured
      Party as a preference, fraudulent transfer or otherwise as such obligations
      may
      be amended, supplemented, converted, extended or modified from time to
      time.

     

    “Patents”
shall
      mean (a) all letters patent of the United States or any other country or any
      political subdivision thereof, and all reissues and extensions thereof,
      including, without limitation, any thereof referred to in Schedule
      B
      hereto,
      and (b) all applications for letters patent of the United States and all
      divisions, continuations and continuations-in-part thereof or any other country
      or any political subdivision, including, without limitation, any thereof
      referred to in Schedule
      B
      hereto.

     

    “Patent
      License”
shall
      mean all agreements, whether written or oral, providing for the grant by the
      Company of any right to manufacture, use or sell any invention covered by a
      Patent, including, without limitation, any thereof referred to in Schedule
      B
      hereto.

     

    “Security
      Agreement”
shall
      mean the a Security Agreement, dated the date hereof between Company and the
      Secured Party.

     

    “Trademarks”
shall
      mean (a) all trademarks, trade names, corporate names, company names, business
      names, fictitious business names, trade styles, service marks, logos and other
      source or business identifiers, and the goodwill associated therewith, now
      existing or hereafter adopted or acquired, all registrations and recordings
      thereof, and all applications in connection therewith, whether in the United
      States Patent and Trademark Office or in any similar office or agency of the
      United States, any state thereof or any other country or any political
      subdivision thereof, or otherwise, including, without limitation, any thereof
      referred to in Schedule
      B
      hereto,
      and (b) all reissues, extensions or renewals thereof.

     

    
      
         

      

      
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    “Trademark
      License”
shall
      mean any agreement, written or oral, providing for the grant by the Company
      of
      any right to use any Trademark, including, without limitation, any thereof
      referred to in Schedule
      B
      hereto.

     

    “Trade
      Secrets”
shall
      mean common law and statutory trade secrets and all other confidential or
      proprietary or useful information and all know-how obtained by or used in or
      contemplated at any time for use in the business of the Company (all of the
      foregoing being collectively called a “Trade
      Secret”),
      whether or not such Trade Secret has been reduced to a writing or other tangible
      form, including all documents and things embodying, incorporating or referring
      in any way to such Trade Secret, all Trade Secret licenses, including each
      Trade
      Secret license referred to in Schedule
      B
      hereto,
      and including the right to sue for and to enjoin and to collect damages for
      the
      actual or threatened misappropriation of any Trade Secret and for the breach
      or
      enforcement of any such Trade Secret license.

     

    2. Grant
      of Security Interest.
      In
      accordance with Section 3(m) of the Security Agreement, to secure the complete
      and timely payment, performance and discharge in full, as the case may be,
      of
      all of the Obligations, the Company hereby, unconditionally and irrevocably,
      pledges, grants and hypothecates to the Secured Party, a continuing security
      interest in, a continuing lien upon, an unqualified right to possession and
      disposition of and a right of set-off against, in each case to the fullest
      extent permitted by law, all of the Company’s right, title and interest of
      whatsoever kind and nature in and to the Intellectual Property (the
“Security
      Interest”).
      In
      the event that the security interest referred to on Schedule
      D
      is
      released, the Company shall at all times maintain the Security Interest as
      a
      valid and perfected first priority security interest in the Collateral in
      accordance with the terms and conditions of this Agreement.

     

    3. Representations
      and Warranties.
      The
      Company hereby represents and warrants, and covenants and agrees with, the
      Secured Party as follows:

     

    (a) The
      Company has the requisite corporate power and authority to enter into this
      Agreement and otherwise to carry out its obligations thereunder. The execution,
      delivery and performance by the Company of this Agreement and the filings
      contemplated therein have been duly authorized by all necessary action on the
      part of the Company and no further action is required by the Company. This
      Agreement constitutes a legal, valid and binding obligation of the Company
      enforceable in accordance with its terms, except as enforceability may be
      limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
      affecting the enforcement of creditor’s rights generally.

     

    (b) The
      Company represents and warrants that it has no place of business or offices
      where its respective books of account and records are kept (other than
      temporarily at the offices of its attorneys or accountants) or places where
      the
      Intellectual Property is stored or located, except as set forth on Schedule
      A
      attached
      hereto;

     

    
      
         

      

      
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    (c) Except
      as
      set forth in Schedule
      D,
      the
      Company is the sole owner of the Intellectual Property (except for non-exclusive
      licenses granted by the Company in the ordinary course of business), free and
      clear of any liens, security interests, encumbrances, rights or claims, and
      is
      fully authorized to grant the Security Interest in and to pledge the
      Intellectual Property. Except as set forth on Schedule
      D,
      there
      is not on file in any governmental or regulatory authority, agency or recording
      office an effective financing statement, security agreement, license or transfer
      or any notice of any of the foregoing (other than those that have been filed
      in
      favor of the Secured Party pursuant to this Agreement) covering or affecting
      any
      of the Intellectual Property. So long as this Agreement shall be in effect,
      the
      Company shall not execute and shall not knowingly permit to be on file in any
      such office or agency any such financing statement or other document or
      instrument (except to the extent filed or recorded in favor of the Secured
      Party
      pursuant to the terms of this Agreement), except for a financing statement
      covering assets acquired by the Company after the date hereof, provided that
      the
      value of the Intellectual Property covered by this Agreement along with the
      Collateral (as defined in the Security Agreement) is equal to at least 150%
      of
      the Obligations.

     

    (d) The
      Company shall at all times maintain its books of account and records relating
      to
      the Intellectual Property at its principal place of business and its
      Intellectual Property at the locations set forth on Schedule
      A
      attached
      hereto and may not relocate such books of account and records unless it delivers
      to the Secured Party at least thirty (30) days prior to such relocation (i)
      written notice of such relocation and the new location thereof (which must
      be
      within the United States) and (ii) evidence that the necessary documents
      have been filed and recorded and other steps have been taken to perfect the
      Security Interest to create in favor of the Secured Party valid, perfected
      and
      continuing liens in the Intellectual Property to the extent they can be
      perfected through such filings.

     

    (e) This
      Agreement creates in favor of the Secured Party a valid security interest in
      the
      Intellectual Property securing the payment and performance of the Obligations
      and, upon making the filings required hereunder, a perfected security interest
      in such Intellectual Property to the extent that it can be perfected through
      such filings.

     

    (f) 
      Upon
      request of the Secured Party, the Company shall execute and deliver any and
      all
      agreements, instruments, documents, and papers as the Secured Party may request
      to evidence the Secured Party’s security interest in the Intellectual Property
      and the goodwill and general intangibles of the Company relating thereto or
      represented thereby, and the Company hereby appoints the Secured Party its
      attorney-in-fact to execute and file all such writings for the foregoing
      purposes, all acts of such attorney being hereby ratified and confirmed; such
      power being coupled with an interest is irrevocable until the Obligations have
      been fully satisfied and are paid in full.

     

    (g) The
      execution, delivery and performance of this Agreement does not conflict with
      or
      cause a breach or default, or an event that with or without the passage of
      time
      or notice, shall constitute a breach or default, under any agreement to which
      the Company is a party or by which the Company is bound. No consent (including,
      without limitation, from stock holders or creditors of the Company) is required
      for the Company to enter into and perform its obligations
      hereunder.

     

    
      
         

      

      
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    (h) The
      Company shall at all times maintain the liens and Security Interest provided
      for
      hereunder as valid and perfected liens and security interests in the
      Intellectual Property to the extent they can be perfected by filing in favor
      of
      the Secured Party until this Agreement and the Security Interest hereunder
      shall
      terminate pursuant to Section 11. The Company hereby agrees to defend the same
      against any and all persons. The Company shall safeguard and protect all
      Intellectual Property for the account of the Secured Party. Without limiting
      the
      generality of the foregoing, the Company shall pay all fees, taxes and other
      amounts necessary to maintain the Intellectual Property and the Security
      Interest hereunder, and the Company shall obtain and furnish to the Secured
      Party from time to time, upon demand, such releases and/or subordinations of
      claims and liens which may be required to maintain the priority of the Security
      Interest hereunder. 

     

    (i) The
      Company will not transfer, pledge, hypothecate, encumber, license (except for
      non-exclusive licenses granted by the Company in the ordinary course of
      business), sell or otherwise dispose of any of the Intellectual Property without
      the prior written consent of the Secured Party.

     

    (j) The
      Company shall, within ten (10) days of obtaining knowledge thereof, advise
      the
      Secured Party promptly, in sufficient detail, of any substantial change in
      the
      Intellectual Property, and of the occurrence of any event which would have
      a
      material adverse effect on the value of the Intellectual Property or on the
      Secured Party’s security interest therein.

     

    (k) The
      Company shall permit the Secured Party and its representatives and agents to
      inspect the Intellectual Property at any time, and to make copies of records
      pertaining to the Intellectual Property as may be requested by the Secured
      Party
      from time to time.

     

    (l) The
      Company will take all steps reasonably necessary to diligently pursue and seek
      to preserve, enforce and collect any rights, claims, causes of action and
      accounts receivable in respect of the Intellectual Property.

     

    (m) The
      Company shall promptly notify the Secured Party in sufficient detail upon
      becoming aware of any attachment, garnishment, execution or other legal process
      levied against any Intellectual Property and of any other information received
      by the Company that may materially affect the value of the Intellectual
      Property, the Security Interest or the rights and remedies of the Secured Party
      hereunder.

     

    (n) All
      information heretofore, herein or hereafter supplied to the Secured Party by
      or
      on behalf of the Company with respect to the Intellectual Property is accurate
      and complete in all material respects as of the date furnished.

     

    (o) Schedule
      A
      attached
      hereto contains a list of all of the subsidiaries of Company.

     

    
      
         

      

      
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    (p) Schedule
      B
      attached
      hereto includes all Licenses, and all Patents and Patent Licenses, if any,
      owned
      by the Company in its own name as of the date hereof. Schedule
      B
      hereto
      includes all Trademarks and Trademark Licenses, if any, owned by the Company
      in
      its own name as of the date hereof. Schedule
      B
      hereto
      includes all Copyrights and Copyright Licenses, if any, owned by the Company
      in
      its own name as of the date hereof. Schedule
      B
      hereto
      includes all Trade Secrets and Trade Secret Licenses, if any, owned by the
      Company as of the date hereof. To the best of the Company’s knowledge, each
      License, Patent, Trademark, Copyright and Trade Secret is valid, subsisting,
      unexpired, enforceable and has not been abandoned. Except as set forth in
Schedule
      B,
      none of
      such Licenses, Patents, Trademarks, Copyrights and Trade Secrets is the subject
      of any licensing or franchise agreement. To the best of the Company’s knowledge,
      no holding, decision or judgment has been rendered by any Governmental Body
      which would limit, cancel or question the validity of any License, Patent,
      Trademark, Copyright and Trade Secrets. No action or proceeding is pending
      (i)
      seeking to limit, cancel or question the validity of any License, Patent,
      Trademark, Copyright or Trade Secret, or (ii) which, if adversely determined,
      would have a material adverse effect on the value of any License, Patent,
      Trademark, Copyright or Trade Secret. The Company has used and will continue
      to
      use for the duration of this Agreement, proper statutory notice in connection
      with its use of the Patents, Trademarks and Copyrights and consistent standards
      of quality in products leased or sold under the Patents, Trademarks and
      Copyrights.

     

    (q) With
      respect to any Intellectual Property:

     

    
      	 	
              (i)

            	
              such
                Intellectual Property is subsisting and has not been adjudged invalid
                or
                unenforceable, in whole or in part;

            

    

     

    
      	 	
              (ii)

            	
              such
                Intellectual Property is valid and
                enforceable;

            

    

     

    
      	 	
              (iii)

            	
              the
                Company has made all necessary filings and recordations to protect
                its
                interest in such Intellectual Property, including, without limitation,
                recordations of all of its interests in the Patents, Patent Licenses,
                Trademarks and Trademark Licenses in the United States Patent and
                Trademark Office and in corresponding offices throughout the world
                and its
                claims to the Copyrights and Copyright Licenses in the United States
                Copyright Office and in corresponding offices throughout the
                world;

            

    

     

    
      	 	
              (iv)

            	
              other
                than as set forth in Schedule
                B,
                the Company is the exclusive owner of the entire and unencumbered
                right,
                title and interest in and to such Intellectual Property and no claim
                has
                been made that the use of such Intellectual Property infringes on
                the
                asserted rights of any third party;
                and

            

    

     

    
      	 	
              (v)

            	
              the
                Company has performed and will continue to perform all acts and has
                paid
                all required fees and taxes to maintain each and every item of
                Intellectual Property in full force and effect throughout the world,
                as
                applicable.

            

    

     

    
      
         

      

      
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    (r) Except
      with respect to any Trademark or Copyright that the Company shall reasonably
      determine is of negligible economic value to the Company, the Company
      shall:

     

    (i) maintain
      each Trademark and Copyright in full force free from any claim of abandonment
      for non-use, maintain as in the past the quality of products and services
      offered under such Trademark or Copyright; employ such Trademark or Copyright
      with the appropriate notice of registration; not adopt or use any mark which
      is
      confusingly similar or a colorable imitation of such Trademark or Copyright
      unless the Secured Party shall obtain a perfected security interest in such
      mark
      pursuant to this Agreement; and not (and not permit any licensee or sublicensee
      thereof to) do any act or knowingly omit to do any act whereby any Trademark
      or
      Copyright may become invalidated;

     

    (ii) not,
      except with respect to any Patent that it shall reasonably determine is of
      negligible economic value to it, do any act, or omit to do any act, whereby
      any
      Patent may become abandoned or dedicated; and

     

    (iii) notify
      the Secured Party immediately if it knows, or has reason to know, that any
      application or registration relating to any Patent, Trademark or Copyright
      may
      become abandoned or dedicated, or of any adverse determination or development
      (including, without limitation, the institution of, or any such determination
      or
      development in, any proceeding in the United States Patent and Trademark Office,
      United States Copyright Office or any court or tribunal in any country)
      regarding its ownership of any Patent, Trademark or Copyright or its right
      to
      register the same or to keep and maintain the same.

     

    (s) Whenever
      the Company, either by itself or through any agent, employee, licensee or
      designee, shall file an application for the registration of any Patent,
      Trademark or Copyright with the United States Patent and Trademark Office,
      United States Copyright Office or any similar office or agency in any other
      country or any political subdivision thereof or acquire rights to any new
      Patent, Trademark or Copyright whether or not registered, report such filing
      to
      the Secured Party within five (5) business days after the last day of the fiscal
      quarter in which such filing occurs.

     

    (t) The
      Company shall take all reasonable and necessary steps, including, without
      limitation, in any proceeding before the United States Patent and Trademark
      Office, United States Copyright Office or any similar office or agency in any
      other country or any political subdivision thereof, to maintain and pursue
      each
      application (and to obtain the relevant registration) and to maintain each
      registration of the Patents, Trademarks and Copyrights, including, without
      limitation, filing of applications for renewal, affidavits of use and affidavits
      of incontestability.

     

    (u) In
      the
      event that any Patent, Trademark or Copyright included in the Intellectual
      Property is infringed, misappropriated or diluted by a third party, promptly
      notify the Secured Party after it learns thereof and shall, unless it shall
      reasonably determine that such Patent, Trademark or Copyright is of negligible
      economic value to it, which determination it shall promptly report to the
      Secured Party, promptly sue for infringement, misappropriation or dilution,
      to
      seek injunctive relief where appropriate and to recover any and all damages
      for
      such infringement, misappropriation or dilution, or take such other actions
      as
      it shall reasonably deem appropriate under the circumstances to protect such
      Patent, Trademark or Copyright. If the Company lacks the financial resources
      to
      comply with this Section 3(t), the Company shall so notify the Secured Party
      and
      shall cooperate fully with any enforcement action undertaken by the Secured
      Party on behalf of the Company.

     

    
      
         

      

      
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    4. Defaults.
      The
      following events shall be “Events
      of Default”:

     

    (a) The
      occurrence of an Event of Default (as defined in the Notes) under the
      Notes;

     

    (b) Any
      representation or warranty of the Company in this Agreement or in the Security
      Agreement shall prove to have been incorrect in any material respect when made;
      

     

    (c) The
      failure by the Company to observe or perform any of its obligations hereunder
      or
      in the Security Agreement for ten (10) days after receipt by the Company of
      notice of such failure from the Secured Party; and

     

    (d) Any
      breach of, or default under, the Warrants.

     

    5. Duty
      To Hold In Trust.
      Upon
      the occurrence of any Event of Default and at any time thereafter, the Company
      shall, upon receipt by it of any revenue, income or other sums subject to the
      Security Interest, whether payable pursuant to the Notes or otherwise, or of
      any
      check, draft, note, trade acceptance or other instrument evidencing an
      obligation to pay any such sum, hold the same in trust for the Secured Party
      and
      shall forthwith endorse and transfer any such sums or instruments, or both,
      to
      the Secured Party for application to the satisfaction of the
      Obligations.

     

    6. Rights
      and Remedies Upon Default.
      Upon
      occurrence of any Event of Default and at any time thereafter, the Secured
      Party
      shall have the right to exercise all of the remedies conferred hereunder and
      under the Notes, and the Secured Party shall have all the rights and remedies
      of
      a secured party under the UCC and/or any other applicable law (including the
      Uniform Commercial Code of any jurisdiction in which any Intellectual Property
      is then located). Without limitation, the Secured Party shall have the following
      rights and powers:

     

    (a) The
      Secured Party shall have the right to take possession of the Intellectual
      Property and, for that purpose, enter, with the aid and assistance of any
      person, any premises where the Intellectual Property, or any part thereof,
      is or
      may be placed and remove the same, and the Company shall assemble the
      Intellectual Property and make it available to the Secured Party at places
      which
      the Secured Party shall reasonably select, whether at the Company’s premises or
      elsewhere, and make available to the Secured Party, without rent, all of the
      Company’s respective premises and facilities for the purpose of the Secured
      Party taking possession of, removing or putting the Intellectual Property in
      saleable or disposable form.

     

    
      
         

      

      
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    (b) The
      Secured Party shall have the right to operate the business of the Company using
      the Intellectual Property and shall have the right to assign, sell, lease or
      otherwise dispose of and deliver all or any part of the Intellectual Property,
      at public or private sale or otherwise, either with or without special
      conditions or stipulations, for cash or on credit or for future delivery, in
      such parcel or parcels and at such time or times and at such place or places,
      and upon such terms and conditions as the Secured Party may deem commercially
      reasonable, all without (except as shall be required by applicable statute
      and
      cannot be waived) advertisement or demand upon or notice to the Company or
      right
      of redemption of the Company, which are hereby expressly waived. Upon each
      such
      sale, lease, assignment or other transfer of Intellectual Property, the Secured
      Party may, unless prohibited by applicable law which cannot be waived, purchase
      all or any part of the Intellectual Property being sold, free from and
      discharged of all trusts, claims, right of redemption and equities of the
      Company, which are hereby waived and released.

     

    7. Applications
      of Proceeds.
      The
      proceeds of any such sale, lease or other disposition of the Intellectual
      Property hereunder shall be applied first, to the expenses of retaking, holding,
      storing, processing and preparing for sale, selling, and the like (including,
      without limitation, any taxes, fees and other costs incurred in connection
      therewith) of the Intellectual Property, to the reasonable attorneys’ fees and
      expenses incurred by the Secured Party in enforcing its rights hereunder and
      in
      connection with collecting, storing and disposing of the Intellectual Property,
      and then to satisfaction of the Obligations, and to the payment of any other
      amounts required by applicable law, after which the Secured Party shall pay
      to
      the Company any surplus proceeds. If, upon the sale, license or other
      disposition of the Intellectual Property, the proceeds thereof are insufficient
      to pay all amounts to which the Secured Party is legally entitled, the Company
      will be liable for the deficiency, together with interest thereon, at the rate
      of 15% per annum (the “Default
      Rate”),
      and
      the reasonable fees of any attorneys employed by the Secured Party to collect
      such deficiency. To the extent permitted by applicable law, the Company waives
      all claims, damages and demands against the Secured Party arising out of the
      repossession, removal, retention or sale of the Intellectual Property, unless
      due to the gross negligence or willful misconduct of the Secured
      Party.

     

    8. Costs
      and Expenses. The
      Company agrees to pay all out-of-pocket fees, costs and expenses incurred in
      connection with any filing required hereunder, including without limitation,
      any
      financing statements, continuation statements, partial releases and/or
      termination statements related thereto or any expenses of any searches
      reasonably required by the Secured Party. The Company shall also pay all other
      claims and charges which in the reasonable opinion of the Secured Party might
      prejudice, imperil or otherwise affect the Intellectual Property or the Security
      Interest therein. The Company will also, upon demand, pay to the Secured Party
      the amount of any and all reasonable expenses, including the reasonable fees
      and
      expenses of its counsel and of any experts and agents, which the Secured Party
      may incur in connection with (i) the enforcement of this Agreement, (ii) the
      custody or preservation of, or the sale of, collection from, or other
      realization upon, any of the Intellectual Property, or (iii) the exercise or
      enforcement of any of the rights of the Secured Party under the Notes. Until
      so
      paid, any fees payable hereunder shall be added to the principal amount of
      the
      Notes and shall bear interest at the Default Rate.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    9. Responsibility
      for Intellectual Property.
      The
      Company assumes all liabilities and responsibility in connection with all
      Intellectual Property, and the obligations of the Company hereunder or under
      the
      Notes and the Warrants shall in no way be affected or diminished by reason
      of
      the loss, destruction, damage or theft of any of the Intellectual Property
      or
      its unavailability for any reason. 

     

    10. Security
      Interest Absolute.
      All
      rights of the Secured Party and all Obligations of the Company hereunder, shall
      be absolute and unconditional, irrespective of: (a) any lack of validity or
      enforceability of this Agreement, the Notes, the Warrants or any agreement
      entered into in connection with the foregoing, or any portion hereof or thereof;
      (b) any change in the time, manner or place of payment or performance of, or
      in
      any other term of, all or any of the Obligations, or any other amendment or
      waiver of or any consent to any departure from the Notes, the Warrants or any
      other agreement entered into in connection with the foregoing; (c) any exchange,
      release or nonperfection of any of the Intellectual Property, or any release
      or
      amendment or waiver of or consent to departure from any other Intellectual
      Property for, or any guaranty, or any other security, for all or any of the
      Obligations; (d) any action by the Secured Party to obtain, adjust, settle
      and
      cancel in its sole discretion any insurance claims or matters made or arising
      in
      connection with the Intellectual Property; or (e) any other circumstance which
      might otherwise constitute any legal or equitable defense available to the
      Company, or a discharge of all or any part of the Security Interest granted
      hereby. Until the Obligations shall have been paid and performed in full, the
      rights of the Secured Party shall continue even if the Obligations are barred
      for any reason, including, without limitation, the running of the statute of
      limitations or bankruptcy. The Company expressly waives presentment, protest,
      notice of protest, demand, notice of nonpayment and demand for performance.
      In
      the event that at any time any transfer of any Intellectual Property or any
      payment received by the Secured Party hereunder shall be deemed by final order
      of a court of competent jurisdiction to have been a voidable preference or
      fraudulent conveyance under the bankruptcy or insolvency laws of the United
      States, or shall be deemed to be otherwise due to any party other than the
      Secured Party, then, in any such event, the Company’s obligations hereunder
      shall survive cancellation of this Agreement, and shall not be discharged or
      satisfied by any prior payment thereof and/or cancellation of this Agreement,
      but shall remain a valid and binding obligation enforceable in accordance with
      the terms and provisions hereof. The Company waives all right to require the
      Secured Party to proceed against any other person or to apply any Intellectual
      Property which the Secured Party may hold at any time, or to marshal assets,
      or
      to pursue any other remedy. The Company waives any defense arising by reason
      of
      the application of the statute of limitations to any obligation secured
      hereby.

     

    11. Term
      of Agreement.
      This
      Agreement and the Security Interest shall terminate on the date on which all
      payments under the Notes have been made in full and all other Obligations have
      been paid or discharged. Upon such termination, the Secured Party, at the
      request and at the expense of the Company, will join in executing any
      termination statement with respect to any financing statement executed and
      filed
      pursuant to this Agreement. 

     

    12. Power
      of Attorney; Further Assurances.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (a) The
      Company authorizes the Secured Party, and does hereby make, constitute and
      appoint it, and its respective officers, agents, successors or assigns with
      full
      power of substitution, as the Company’s true and lawful attorney-in-fact, with
      power, in its own name or in the name of the Company, to, after the occurrence
      and during the continuance of an Event of Default, (i) endorse any notes,
      checks, drafts, money orders, or other instruments of payment (including
      payments payable under or in respect of any policy of insurance) in respect
      of
      the Intellectual Property that may come into possession of the Secured Party;
      (ii) to sign and endorse any UCC financing statement or any invoice, freight
      or
      express bill, bill of lading, storage or warehouse receipts, drafts against
      debtors, assignments, verifications and notices in connection with accounts,
      and
      other documents relating to the Intellectual Property; (iii) to pay or discharge
      taxes, liens, security interests or other encumbrances at any time levied or
      placed on or threatened against the Intellectual Property; (iv) to demand,
      collect, receipt for, compromise, settle and sue for monies due in respect
      of
      the Intellectual Property; and (v) generally, to do, at the option of the
      Secured Party, and at the Company’s expense, at any time, or from time to time,
      all acts and things which the Secured Party deems necessary to protect, preserve
      and realize upon the Intellectual Property and the Security Interest granted
      therein in order to effect the intent of this Agreement, the Notes and the
      Warrants, all as fully and effectually as the Company might or could do; and
      the
      Company hereby ratifies all that said attorney shall lawfully do or cause to
      be
      done by virtue hereof. This power of attorney is coupled with an interest and
      shall be irrevocable for the term of this Agreement and thereafter as long
      as
      any of the Obligations shall be outstanding.

     

    (b) On
      a
      continuing basis, the Company will make, execute, acknowledge, deliver, file
      and
      record, as the case may be, in the proper filing and recording places in any
      jurisdiction, including, without limitation, the jurisdictions indicated on
      Schedule
      C,
      attached hereto, all such instruments, and take all such action as may
      reasonably be deemed necessary or advisable, or as reasonably requested by
      the
      Secured Party, to perfect the Security Interest granted hereunder and otherwise
      to carry out the intent and purposes of this Agreement, or for assuring and
      confirming to the Secured Party the grant or perfection of a security interest
      in all the Intellectual Property.

     

    (c) The
      Company hereby irrevocably appoints the Secured Party as the Company’s
      attorney-in-fact, with full authority in the place and stead of the Company
      and
      in the name of the Company, from time to time in the Secured Party’s discretion,
      to take any action and to execute any instrument which the Secured Party may
      deem necessary or advisable to accomplish the purposes of this Agreement,
      including the filing, in its sole discretion, of one or more financing or
      continuation statements and amendments thereto, relative to any of the
      Intellectual Property without the signature of the Company where permitted
      by
      law.

     

    13. Notices.
      All
      notices, requests, demands and other communications hereunder shall be in
      writing, with copies to all the other parties hereto, and shall be deemed to
      have been duly given when (i) if delivered by hand, upon receipt, (ii) if sent
      by facsimile, upon receipt of proof of sending thereof, (iii) if sent by
      nationally recognized overnight delivery service (receipt requested), the next
      business day or (iv) if mailed by first-class registered or certified mail,
      return receipt requested, postage prepaid, four days after posting in the U.S.
      mails, in each case if delivered to the following addresses:

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    
      	
            	If
              to the Company:	
              DealerAdvance,
                Inc.

            

      	 	 	
              16801
                Addison Road, Suite 310,

              Addison,
                TX 75001 

              Telephone:
                908-903-1195

              Facsimile:
                908-903-1197

              Attention:
                President and Chief Executive
                Officer 

            

      	 	 	 

      	 	With copies
              to: 	
              Anslow
                & Jaclin, LLP

              195
                Route 9 South, Suite 204

              Manalapan,
                NJ 07726

              Attention:
                Richard I. Anslow, Esq.

              Telephone:
                (732) 409-1212

              Facsimile:
                (732) 577-1188 

            

      	 	 	 

      	 	If to the Secured
              Party: 	
              AJW
                Partners, LLC

              AJW
                Offshore, Ltd.

              AJW
                Qualified Partners, LLC

              New
                Millennium Capital Partners II, LLC

              1044
                Northern Boulevard

              Suite
                302

              Roslyn,
                New York 11576

              Attention:
                Corey Ribotsky

              Telephone:
                516-739-7110

              Facsimile:
                516-739-7115 

            

      	 	 	 

      	 	With copies
              to: 	
              Ballard
                Spahr Andrews & Ingersoll, LLP

              1735
                Market Street, 51st
                Floor

              Philadelphia,
                Pennsylvania 19103

              Attention:
                Gerald J. Guarcini, Esquire

              Telephone:
                215-864-8625

              Facsimile:
                215-864-8999 

            

    

    

    14. Other
      Security.
      To the
      extent that the Obligations are now or hereafter secured by property other
      than
      the Intellectual Property or by the guarantee, endorsement or property of any
      other person, firm, corporation or other entity, then the Secured Party shall
      have the right, in its sole discretion, to pursue, relinquish, subordinate,
      modify or take any other action with respect thereto, without in any way
      modifying or affecting any of the Secured Party’s rights and remedies
      hereunder.

     

    15. Miscellaneous.

     

    (a) No
      course
      of dealing between the Company and the Secured Party, nor any failure to
      exercise, nor any delay in exercising, on the part of the Secured Party, any
      right, power or privilege hereunder or under the Notes shall operate as a waiver
      thereof; nor shall any single or partial exercise of any right, power or
      privilege hereunder or thereunder preclude any other or further exercise thereof
      or the exercise of any other right, power or privilege.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    (b) All
      of
      the rights and remedies of the Secured Party with respect to the Intellectual
      Property, whether established hereby or by the Notes or by any other agreements,
      instruments or documents or by law shall be cumulative and may be exercised
      singly or concurrently.

     

    (c) This
      Agreement and the Security Agreement constitute the entire agreement of the
      parties with respect to the subject matter hereof and is intended to supersede
      all prior negotiations, understandings and agreements with respect thereto.
      Except as specifically set forth in this Agreement, no provision of this
      Agreement may be modified or amended except by a written agreement specifically
      referring to this Agreement and signed by the parties hereto.

     

    (d) In
      the
      event that any provision of this Agreement is held to be invalid, prohibited
      or
      unenforceable in any jurisdiction for any reason, unless such provision is
      narrowed by judicial construction, this Agreement shall, as to such
      jurisdiction, be construed as if such invalid, prohibited or unenforceable
      provision had been more narrowly drawn so as not to be invalid, prohibited
      or
      unenforceable. If, notwithstanding the foregoing, any provision of this
      Agreement is held to be invalid, prohibited or unenforceable in any
      jurisdiction, such provision, as to such jurisdiction, shall be ineffective
      to
      the extent of such invalidity, prohibition or unenforceability without
      invalidating the remaining portion of such provision or the other provisions
      of
      this Agreement and without affecting the validity or enforceability of such
      provision or the other provisions of this Agreement in any other
      jurisdiction.

     

    (e) No
      waiver
      of any breach or default or any right under this Agreement shall be considered
      valid unless in writing and signed by the party giving such waiver, and no
      such
      waiver shall be deemed a waiver of any subsequent breach or default or right,
      whether of the same or similar nature or otherwise.

     

    (f) This
      Agreement shall be binding upon and inure to the benefit of each party hereto
      and its successors and assigns.

     

    (g) Each
      party shall take such further action and execute and deliver such further
      documents as may be necessary or appropriate in order to carry out the
      provisions and purposes of this Agreement.

     

    (h) This
      Agreement shall be construed in accordance with the laws of the State of New
      York, except to the extent the validity, perfection or enforcement of a security
      interest hereunder in respect of any particular Intellectual Property which
      are
      governed by a jurisdiction other than the State of New York in which case such
      law shall govern. Each of the parties hereto irrevocably submit to the exclusive
      jurisdiction of any New York State or United States Federal court sitting in
      Manhattan county over any action or proceeding arising out of or relating to
      this Agreement, and the parties hereto hereby irrevocably agree that all claims
      in respect of such action or proceeding may be heard and determined in such
      New
      York State or Federal court. The parties hereto agree that a final judgment
      in
      any such action or proceeding shall be conclusive and may be enforced in other
      jurisdictions by suit on the judgment or in any other manner provided by law.
      The parties hereto further waive any objection to venue in the State of New
      York
      and any objection to an action or proceeding in the State of New York on the
      basis of forum non conveniens.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    (i) EACH
      PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRAIL OF
      ANY
      CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SCOPE
      OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY DISPUTES THAT MAY
      BE
      FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF THIS AGREEMENT,
      INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS
      AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES
      THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A
      BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN
      ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON THIS
      WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
      REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
      SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL
      FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT,
      NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER
      ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
      RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF
      A
      LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
      THE
      COURT. 

     

    (j) This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

     

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

       

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed on the day and year first above written.

     

    
      	 	
              DEALERADVANCE,
                INC.

              

              By: 
                ______________________________

              Steven
                E. Humphries

              President
                and Chief Executive Officer

              

              

              AJW
                PARTNERS, LLC

              By:
                SMS Group, LLC

              

              By: 
                ______________________________

              Corey
                S. Ribotsky

              Manager

              

              

              AJW
                OFFSHORE, LTD.

              By:
                First Street Manager II, LLC

              

              By: 
                ______________________________

              Corey
                S. Ribotsky

              Manager

              

              

              AJW
                QUALIFIED PARTNERS, LLC

              By:
                AJW Manager, LLC

              

              By: 
                ______________________________

              Corey
                S. Ribotsky

              Manager

              

              

              NEW
                MILLENNIUM CAPITAL PARTNERS
                II, LLC

              By:
                First Street Manager II, LLC

              

              By: 
                ______________________________

              Corey
                S. Ribotsky

              Manager 

            

    

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    

    SCHEDULE
      A

     

    Principal
      Place of Business of the Company:

     

    Locations
      Where Intellectual Property is Located or Stored:

     

    List
      of Subsidiaries of the Company:

     

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

    SCHEDULE
      B

     

    
      	A.	
              Licenses,
                Patents and Patent Licenses

            

    

     

    
      	 	 	 	
              Registration
                or 

            
	
              Patent

            	
              Application
                or Registration No.

            	
              Country 

            	
              Filing
                Date 

            

    

     

    
      	B.	
              Trademarks
                and Trademark Licenses

            

    

     

    
      	 	 	 	
              Registration
                or 

            
	
              Patent

            	
              Application
                or Registration No.

            	
              Country 

            	
              Filing
                Date 

            

    

     

    
      	C.	
              Copyrights
                and Copyright Licenses

            

    

     

    
      	 	 	 	
              Registration
                or 

            
	
              Patent

            	
              Application
                or Registration No.

            	
              Country 

            	
              Filing
                Date 

            

    

     

    
      	D.	
              Trade
                Secrets and Trade Secret Licenses

            

    

     

    
      	 	 	 	
              Registration
                or 

            
	
              Patent

            	
              Application
                or Registration No.

            	
              Country 

            	
              Filing
                Date 

            

    

     

    
      
         

      

      
        B-1

        
          

        

      

      
         

      

    

     
SCHEDULE
      C

     

    Jurisdictions:

     

    
      
         

      

      
        C-1Exhibit
      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

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