Document:

Exhibit
      10.1

    

      CONSULTING
        AGREEMENT

      

      This
        Consulting Agreement (this “Agreement”) is made as of the 9th
        day of August, 2007 (the "Effective Date"), by and between
TraceGuard Technologies Ltd. (the “Company”) a
        company registered in Israel, having its principal place of business at 6
        Ravnitzky Street, P.O. Box 4708, Segula Industrial Park, Petach Tikva, Israel,
        and Akis Ltd., a company registered in Israel, having its principal place
        of
        business at 14Mishol Hakitron, Jerusalem, 97278,
        Israel, (the “Consultant”). Each of the
        Company and the Consultant may be referred to as a "Party" and collectively
        as
        the "Parties".

      

       

      
        	
                Whereas,
                  

              	
                the
                  Company is engaged in the business of development, manufacture
                  and
                  production of explosives trace detection devices based on technology
                  that
                  automatically extracts traces of suspect substances from the interior
                  and
                  exterior of checked items, for later analysis (the Company's
                  "Business"), in the field of homeland security (the
                  "Field"); and

                 

              
	
                Whereas,
                  

              	
                the
                  Company desires to obtain the Services (as defined below) of Consultant
                  solely through its employee Avi Kostelitz in connection with the
                  Company’s
                  business, and Consultant has agreed to provide such services to
                  the
                  Company all as more fully described
                  herein;

              

      

      

      Now,
        therefore, in consideration of the Parties' mutual covenants and other
        good and valuable consideration, the sufficiency of which is hereby
        acknowledged, the Parties agree as follows:

      

      
        	 	
                1.

              	
                Engagement

              

      

       

      
        	 	
                1.1.

              	
                Subject
                  to the receipt of all approvals required under applicable law,
                  the Company
                  hereby engages Consultant solely through its employee Avi Kostelitz,
                  and
                  Consultant hereby agrees to hold itself available (solely through
                  its
                  employee Avi Kostelitz) to render, at the request of Company, at
                  such
                  dates and times as shall be mutually agreed upon between the Parties
                  from
                  time to time, non-exclusive, advisory and consulting services,
                  to the best
                  of its and Avi Kostelitz's ability, in compliance with all applicable
                  laws, the Company's policies and the terms and condition set forth
                  herein.

              

      

       

      
        	 	
                1.2.

              	
                Until
                  otherwise agreed upon between the Parties, the Consultant through
                  its
                  employee, Avi Kostelitz, shall devote such time and attention as
                  may be
                  required for the performance of the Services. Neither the Consultant
                  nor
                  Avi Kostelitz shall, during the term of this Agreement, without
                  providing
                  the Company a prior written notice, be engaged, directly or indirectly,
                  in
                  any other business or professional activity that directly competes
                  with
                  the Company's Business as defined hereinabove, whether or not such
                  activities are pursued for gain, profit or other pecuniary
                  advantage.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      -
        2 -

       

      
        	 	
                1.3.

              	
                Consultant
                  shall have no authority and shall make no commitment or representation
                  on
                  behalf of the Company, without the Company’s prior written
                  approval.

              

      

       

      

       

      
        	 	
                2.

              	
                Services

              

      

       

      Within
        the framework of this Agreement, Consultant through its employee Avi Kostelitz
        undertakes to provide the following services to the Company (the
        "Services"):

       

      
        	 	
                2.1.

              	
                Serve
                  as an advisor with respect to regulatory
                  affairs.

              

      

       

      
        	 	
                2.2.

              	
                Aid
                  and consult the Company in connection with Company's business related
                  to
                  airport security.

              

      

       

      
        	 	
                2.3.

              	
                Assist
                  the Company in the process of receiving the approval of Israeli
                  Security
                  Agency (the "ISA") with respect to the CompactSafe Device
                  (the
                  "CompactSafe").

              

      

       

      
        	 	
                2.4.

              	
                Assist
                  in business development.

              

      

       

      
        	 	
                2.5.

              	
                Dedicate
                  time to attending meetings, consulting on an ad-hoc basis and rendering
                  the Services at such times and places to be reasonabley agreed
                  upon
                  between the Parties from time to time.

              

      

       

      
        	 	
                2.6.

              	
                Utilize
                  the highest professional skill, diligence, ethics and care to ensure
                  that
                  all the Services are performed to the full satisfaction of the
                  Company.
                  Consultant acknowledges and agrees that the performance of the
                  Services
                  may require domestic and international travel (although such expenses
                  incurred for such travel shall be borne solely by the Company).
                  

              

      

       

      
        	 	
                2.7.

              	
                In
                  rendering the Services, the Consultant shall comply with all policies
                  and
                  procedures of the Company, as may be in effect from time to time,
                  provided
                  he has been properly briefed ahead of time of such policies or
                  procedures.

              

      

       

       

       

      
        	 	
                3.

              	
                Compensation

              

      

       

      For
        and
        in consideration of the Services to be performed by Consultant under the
        terms
        and conditions of this Agreement, the Company agrees to pay Consultant as
        follows:

       

      
        	 	
                3.1.

              	
                A
                  monthly retainer’s fee of One Thousand US Dollars (US$1,000), payable on a
                  monthly basis no later than the 7th of each month with respect
                  to the preceding month, for a period of twelve (12) months commencing
                  as
                  of the Effective Date (respectively, the "Period", the
                  “Monthly Fee”).
                  

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      - 3
        -

       

      
        	 	
                3.2.

              	
                An
                  amount equal of Two Hundred Fifty US Dollars (US$ 250) per each
                  working
                  meeting in which Consultant participates, in the Company's matters,
                  including, but not limited to, Board of Directors meetings, presentations
                  and meetings with the ISA or similar entities (each, a "Meeting
                  Fee").

              

      

       

      
        	 	
                3.3.

              	
                In
                  addition, Company shall pay Consultant the following one-time payments
                  upon achievement of the following milestones (the
                  "Milestones"), as specified below (collectively, the
                  "Milestone Fees"):

              

      

       

      
        	 	
                3.3.1.

              	
                The
                  receipt during the term of this Agreement of a formal letter from
                  the ISA
                  defining the ISA's technical specifications related to the CompactSafe
                  and
                  its operational performance (the "Security Requirements"
                  and the "First Milestone", respectively) - the Company
                  shall pay Consultant an amount equal to Ten Thousand US Dollars
                  (US$10,000).

              

      

       

      
        	 	
                3.3.2.

              	
                The
                  receipt during the term of this Agreement of the ISA's written
                  principle
                  approval to perform trials of the CompactSafe along with a definitive
                  timetable for doing so (the "Trials" and the
                  "Second Milestone", respectively) - the Company shall pay
                  Consultant an amount equal to Ten Thousand US Dollars
                  (US$10,000).

              

      

       

      
        	 	
                3.3.3.

              	
                Upon
                  commencement of the Trials (the "Third Milestone") - the
                  Company shall pay Consultant an amount equal to Thirty Thousand
                  US Dollars
                  (US$30,000).

              

      

       

      
        	 	
                3.3.4.

              	
                The
                  receipt of the written confirmation of the ISA that the CompactSafe
                  meets
                  the Security Requirements and is qualified for operational use
                  (the
                  "Fourth Milestone") - the Company shall pay Consultant an
                  amount equal to Sixty Thousand US Dollars
                  (US$60,000).

              

      

       

      
        	 	
                3.3.5.

              	
                Consummation
                  of an agreement with a Business Partner, introduced, pursuant to
                  Company's
                  written request, by Consultant or with respect to which Consultant
                  provided active assistance pursuant to the Company's written request
                  (the
                  "Fifth Milestone") - the Company shall pay Consultant an
                  amount equal to Twenty Thousand US Dollars
                  (US$20,000).

              

      

       

      For
        the
        pupose hereof, a "Business Partner" shall mean a partner with
        whom the Company enters into an agreement (of any sort or kind) in order
        to
        promote its business in the Field.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      - 4
        -

       

      Notwithstanding
        the aforesaid, the right of the Consultant for the payment of Milestone Fees
        concerning the Third Milestone, the Fourth Milestone and the Fifth Milestone
        shall be in effect during the later of (i) the term of this Agreement or
        (ii)
        the final termination of Consultant’s activities in the service of the Company,
        and twelve (12) months thereafter.

       

      
        	 	
                3.4.

              	
                Payment
                  of the Fee, the Meeting
                  Fee and the Milestone Fees, as
                  applicable, shall be made against the Consultant's itemized invoice,
                  and
                  shall be exclusive of VAT as may be applicable (subject to withholding
                  tax, unless Consultant provides the Company with an appropriate
                  exemption
                  of withholding tax).

              

      

       

      
        	 	
                3.5.

              	
                The
                  Company will grant Consultant options to purchase shares of Common
                  Stock
                  of TraceGuard Technologies, Inc. (hereinafter, "TG US"
                  and together with the Company and any of their affiliates "TG
                  Group"), par value US$0.001 each (the "Shares"),
                  upon the achievement of the Milestones, as specified in the Grant
                  Letter
                  attached hereto as Exhibit A
                  and in accordance with the terms and conditions specified therein
                  (the
                  "Options"). The Options shall be subject to the receipt
                  of any legal and/or regulartory approvals, registrations or exemptions
                  from registration required under
                  law.

              

      

       

      
        	 	
                3.6.

              	
                The
                  Company agrees to reimburse the Consultant for out of pocket expenses
                  incurred by it in connection with the rendering of the Services
                  hereunder,
                  against valid receipts, but only if approved by the Company in
                  advance and
                  in writing (the “Expenses”). Subject to the foregoing,
                  unless otherwise agreed upon by the Parties, such Expenses of exceptional
                  proportion, e.g. international travel and hotel expenses, at the
                  election
                  of the Consultant, shall be borne directly by the Company and not
                  by the
                  Consultant.

              

      

       

      
        	 	
                3.7.

              	
                For
                  the avoidance of any doubt, the Fee, the Meeting Fee, the Milestone
                  Fees
                  and the Options specified above (subject to their terms) constitute
                  the
                  full and final consideration for the Services, and Consultant shall
                  not be
                  entitled to any additional consideration, of any sort, for the
                  Services.

              

      

       

      
        	 	
                4.

              	
                 Reports 

              

      

       

      
        	 	
                4.1.

              	
                The
                  Consultant shall submit to the Chief Executive Officer or the Board
                  of
                  Directors of the Company, as reasonably requested from time to
                  time, oral
                  reports upon request, subject to the provisions of sec. 4.2
                  hereunder.

              

      

       

      
        	 	
                4.2.

              	
                In
                  the event that Consultant participates in a conference or meeting
                  on
                  behalf of the Company with a party external to TG Group, the Consultant
                  shall submit to the Company an oral report on the subject matter
                  of such
                  conference or meeting as soon as practicable thereafter, unless
                  otherwise
                  instructed by the Company, subject to the ISA’s or Israeli Airport
                  Authority’s expectation of Kostelitz’s discretion and
                  confidentiality.

              

      

       

       

      
        	 	
                5.

              	
                Confidentiality

              

      

       

      
        
          	 	
                  5.1.

                	
                  
                    The
                      Consultant shall not disclose or put to its own use, or to
                      the use of any
                      third party, any Proprietary Information (as hereinafter defined)
                      of the
                      Company and/or TG US ("TG US" and together with the
                      Company and any of their affiliates "TG Group") which has
                      been divulged to the Consultant, whether or not developed by
                      the
                      Consultant. For the sake of avoiding any doubt, this Article
                      5 also binds
                      Avi Kostelitz individually.

                     

                    
                      “Proprietary
                        Information” shall mean confidential and proprietary information
                        concerning the business and financial activities of TG Group,
                        including,
                        inter alia, TG Group’s product research and development, the
                        Company’s banking, investments, investors, properties, employees,
                        marketing plans, customers, trade secrets, and test results,
                        processes,
                        data, know-how, improvements, inventions, techniques and
                        products (actual
                        or planned), whether documentary, written, oral or computer
                        generated.
                        However, excluded from the above definition with respect
                        to Consultant's
                        confidentiality undertaking is any information that (i) is
                        or later
                        becomes part of the public knowledge except as a result of
                        the breach of
                        Consultant's undertakings towards the Company; (ii) reflects
                        information
                        and data generally known in the industries or trades in which
                        the Company
                        operates; (iii) as shown by written records, is received
                        by Consultant
                        from a third party exempt from confidentiality undertakings
                        towards the
                        Company; (iv) the Consultant is compelled to disclose by
                        court or
                        government action pursuant to applicable law, provided, however,
                        that
                        Consultant provides the Company prompt notice thereof so
                        that it may seek
                        a protective order or other appropriate remedy prior to the
                        compelled
                        disclosure.

                    

                  

                

        

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        - 5
          -

         

        
          	 	
                  5.2.

                	
                  
                    
                      The
                        Consultant will use the Proprietary Information solely for
                        the performance
                        of the Services for the benefit of the Company. The Consultant
                        shall use
                        best efforts to protect all Proprietary
                        Information.

                    

                  

                

          	 	
                	
                   

                

          	 	5.3	
                  Upon
                    termination of its engagement with the Company, the Consultant
                    will
                    promptly deliver to the Company all documents and materials of
                    any nature
                    pertaining to the Company's Proprietary Information.

                   

                

          	 	5.4	
                  Consultant
                    recognizes that TG Group received and will receive confidential
                    and/or
                    proprietary information from third parties subject to a duty
                    on the part
                    of TG Group to maintain the confidentiality of such information
                    and to use
                    it only for certain limited purposes. At all times, both during
                    its
                    engagement and after its termination, Consultant undertakes to
                    keep and
                    hold all such information in strict confidence and trust, and
                    not to use
                    or disclose any of such information without the prior written
                    consent of
                    the Company, except as may be necessary to perform its duties
                    hereunder
                    and consistent with TG Group agreement with such third party.
                    Upon
                    termination of its engagement with the Company, the Consultant
                    shall act,
                    with respect to such information, as set forth in Section 5.2
                    and 5.3,
                    mutatis mutandis.

                

          	 	 	 

          	 	5.5	
                  Consultant’s
                    undertakings under this Section 5 shall remain in full force
                    and effect
                    after termination or expiration of this Agreement or of any renewal
                    thereof.

                

        

      

       

      
        	 	
                6.

              	
                Intellectual
                  Property Rights

              

      

       

      N/A

       

      7. Term
        and Termination

       

      
         

        
          	 	
                  7.1.

                	
                  
                    
                      The
                        term of this Agreement shall be twelve (12) months, commencing
                        upon the
                        Effective Date (the "Original Engagement Period"), unless
                        terminated at any earlier date as provided in Section 7.3
                        hereunder.

                    

                  

                

          	 	
                	
                   

                

          	 	7.2.	
                  Following
                    the Original Engagement Period, the Parties shall be entitled
                    to extend
                    this Agreement for an additional twelve (12) months period (the
                    "Option Period"), under terms and conditions to be agreed
                    upon by and between the Parties.

                   

                

          	 	7.3.	
                  This
                    Agreement may be terminated by either Party, at any time, without
                    any
                    further obligation to the other Party under this Agreement (other
                    than
                    those obligations surviving termination or expiration hereof
                    or
                    compensatory rights to which Consultant is already entitled at
                    such time),
                    by ninety (90) days prior written notice to the other Party,
                    unless
                    terminated as a result of a material breach, in which case this
                    Agreement
                    may be terminated by either Party upon fourteen (14) days prior
                    written
                    notice to the other party if such a breach was not cured during
                    the
                    aforesaid fourteen (14) days
                    period. 

                

          	 	 	 

          	 	
                	
                   

                

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      -
        6 -

       

      8. Assurances;
        No Conflict

       

      
        
          	 	
                  8.1.

                	
                  
                    Consultant
                      hereby warrants, represents and confirms to the Company that
                      on the date
                      hereof it is free to be engaged by the Company upon the terms
                      contained in
                      this Agreement and that there are no engagements, contracts,
                      consulting
                      contracts or restrictive covenants preventing full performance
                      of its
                      duties hereunder.

                  

                

          	 	 	 

          	 	8.2.	Consultant
                  hereby further represents warrants and confirms that nothing in
                  this
                  Agreement conflicts with any of Consultant's current affiliations
                  or other
                  current relationships with any other entity. If such conflict shall
                  occur
                  during the term of this Agreement, Consultant shall promptly notify
                  the
                  Company in writing of such conflict.

          	 	 	 

          	 	8.3.	The
                  Services performed hereunder will not be conducted during the same
                  time
                  that is required to be devoted by Consultant to any other third
                  party.
                  Consultant shall not use the funding, facilities and resources
                  of any
                  third party to perform the Services hereunder and shall not perform
                  the
                  Services hereunder in any manner that would give any third party
                  rights to
                  produce such work. Nothing done in the Consultant work for any
                  third party
                  shall be considered part of the Services performed
                  hereunder.

        

         

      

       

       

      
        	 	
                9.

              	
                Competitive
                  Activity;
                  Non-Solicitation

              

      

       

      
        
          	 	
                  9.1.

                	
                  
                    Consultant
                      will not, as long as Consultant provides services to the Company
                      hereunder
                      and for a period of twelve (12) months thereafter, directly
                      or indirectly,
                      as owner, partner, joint venturer, stockholder, employee, broker,
                      agent,
                      principal, corporate officer, director, consultant, licensor
                      or in any
                      other capacity whatsoever engage in, become financially interested
                      in
                      (except for any form of mutual fund, insurance company investment
                      portfolio, pension plan investment portfolio etc. with respect
                      to which
                      Consultant has no direct or indirect material influence), be
                      employed by,
                      or have any connection with any business or venture that is
                      engaged in any
                      activities which are in direct competition with the Company's
                      Business as
                      defined hereinabove without TG Group prior
                      consent.

                  

                

          	 	 	 

          	 	9.2.	During
                  the Term of this Agreement and for a period of twelve (12) months
                  thereafter, Consultant will not solicit or induce any employee,
                  advisor,
                  contractor or customer of TG Group to terminate or breach any employment,
                  contractual or other relationship with TG
                  Group.

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      -
        7 -

       

      
        	 	
                10.

              	
                Independent
                  Contractor

              

      

       

      
        
          	 	
                  10.1.

                	
                  
                    Consultant
                      agrees and acknowledges that it is performing the Services
                      hereunder as an
                      independent contractor and that no employer-employee relationship
                      exists
                      or will exist between the Consultant and/or any one on its
                      behalf
                      (including its employee Avi Kostelitz) and the
                      Company.

                  

                

          	 	 	 

          	 	
                  10.2.

                	If,
                  despite the parties' explicit intent as reflected in this agreement,
                  a
                  competent court determines the existence of an employer-employee
                  relationship between the Company and the Consultant and decides
                  that the
                  Consultant, or any one on its behalf, is entitled to payments and/or
                  other
                  benefits in connection with such employment relationship, then
                  Consultant
                  shall indemnify the Company and hold it harmless from any loss
                  or damage
                  incurred by the Company as a result of, or in connection with,
                  such court
                  decision, including reasonable expenses and legal fees.
                  

        

      

       

      
        	 	
                11.

              	
                Resolution
                  of Disputes 

              

      

       

      
        	
              	
                11.1.

              	
                
                  
                    All
                      disputes between the parties related to this Agreement shall
                      be resolved
                      amicably by the Parties within fourteen (14) days. In the event
                      the
                      Parties fail to settle such dispute, the dispute shall be resolved
                      exclusively by arbitration proceedings to be held in Tel Aviv
                      before a
                      mutually agreed upon arbitrator, or in the event that the parties
                      cannot
                      reach such mutual agreement within 14 days of an initial request
                      to this
                      effect, an arbitrator named by the Chairman of the Tel Aviv
                      District
                      Council of the Israeli Bar Association (the
                      "Arbitrator").

                  

                

              

        	 	
              	
                 

              

        	 	11.2	
                The
                  Arbitrator shall decide the matters in dispute in accordance with
                  the
                  substantive laws of the State of Israel, without reference to the
                  conflict
                  of laws rules thereof, and in accordance with the provisions of
                  this
                  Agreement, but will not be subject to the procedures and evidence
                  law and
                  the Arbitrator must substantiate his decision, including interim
                  decisions
                  within forty five (45) days with an option to extend this period
                  by
                  additional forty five (45) days. In addition to the provisions
                  of sec. 24
                  of the Arbitration Law, 5728-1968, the Arbitrator’s final decision shall
                  be subject to full judicial appellate review as if such decision
                  was the
                  decision of the Court of Peace (Beit Mishpat Hashalom) in Tel Aviv.
                  This
                  Section constitutes an arbitration agreement in terms of the Arbitration
                  Law, 5728-1968. 

                 

              

        	 	11.3	
                The
                  cost of arbitration shall be borne by the Party whose contention
                  was not
                  upheld by the arbitration proceedings, unless otherwise provided
                  in the
                  arbitration award.

              

        	 	 	 

        	 	11.4	
                Nothing
                  in this section shall prevent the Parties from applying to court
                  for
                  interim orders at any time. 

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      -
        8 -

       

      
        	 	
                12.

              	
                Miscellaneous

              

      

       

      
        
          	
                	
                  12.1.

                	
                  
                    
                      The
                        Consultant shall not assign this Agreement or any of its
                        rights and
                        privileges hereunder, whether voluntarily or by operation
                        of law, to any
                        person, firm or corporation without the prior written consent
                        of the
                        Company. 

                    

                  

                

          	 	
                	
                   

                

          	 	12.2	
                  The
                    Consultant shall be solely responsible for the payment of any
                    taxes,
                    including all business taxes arising out of the Consultant's
                    activities.

                   

                

          	 	12.3	
                  Except
                    as otherwise provided herein, this Agreement constitutes the
                    entire
                    agreement between the Parties with respect to the matters referred
                    to
                    herein, and no other arrangement, understanding or agreement,
                    verbal or
                    otherwise, shall be binding upon the parties hereto. This Agreement
                    may
                    not be amended, modified or supplemented in any respect, except
                    by a
                    subsequent writing executed by the
                    Parties.

                

          	 	 	 

          	 	12.4	
                  No
                    failure, delay or forbearance of either party in exercising any
                    power or
                    right hereunder shall in any way restrict or diminish such Party's
                    rights
                    and powers under this Agreement, or operate as a waiver of any
                    breach or
                    non-performance by either Party of any of the terms or conditions
                    hereof.

                

          	 	 	 

          	 	12.5	If
                  any term or provision of this Agreement shall be declared invalid,
                  illegal
                  or unenforceable, then such term or provision shall be enforceable
                  to the
                  extent that a court shall deem it reasonable to enforce such term
                  or
                  provision and if such term or provision shall be unreasonable to
                  enforce
                  to any extent, such term or provision shall be severed and all
                  remaining
                  terms and provisions shall be unaffected and shall continue in
                  full force
                  and effect.

          	 	 	 

          	 	12.6	Any
                  notice from one party to the other shall be effectively served
                  if sent in
                  writing by recorded delivery to the address of the receiving Party
                  as
                  stated in the preamble of this Agreement, unless said Party informs
                  the
                  other Party in writing on a change of
                  address.

        

      

       

      IN
        WITNESS WHEREOF, the parties hereto have executed this Agreement the day
        and
        year first hereinabove written.

      

      

       

      
        	
                 

                TRACEGUARD
                  TECHNOLOGIES LTD.

              	
                 

                AKIS
                  LTD.

              
	
                /s/
                  David Ben-Yair

                By:
                  David Ben-Yair   

                Its:
                  Chief Financial Officer

              	
                /s/
                  Avi Kostelitz

                Name:
                  Avi Kostelitz 

                Date:
                  August 9, 2007

              

      

      

      I,
        the
        undersigned, Avi Kostelitz, residing at 14 Mishol Hakitron, Jerusalem, hereby
        represent, warrant and undertake that I fully agree to this Agreement
        (including, but not limited to, Sections 1, 5, 6, 9-11 therein), as if I
        entered
        into this Agreement myself and I undertake to fully comply with all such
        provisions.

      

      
        	
                /s/
                  Avi Kostelitz

                Avi
                  Kostelitz

              
	
                Date:
                  August 9, 2007

              

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      -
        9 -

      

      

      

      EXHIBIT
        "A"

       

      GRANT
        LETTER

       

      [
        SEE EXHIBIT 10.2 ]Exhibit
        10.2

       

      Date:
        August 9, 2007

    

    

    To:
      Akis
      Ltd.  

    

     

    THIS
      STOCK OPTION AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
      AND
      THIS OPTION CANNOT BE EXERCISED BY/ON BEHALF OF ANY U.S. PERSON UNLESS
      REGISTERED UNDER THE ACT OR EXEMPTION FROM SUCH REGISTRATION IS AVIALABLE.
      THE
      TRANSFER OF THIS OPTION IS PROHIBITED EXCEPT IN ACCORDANCE WITH THE PROVISIONS
      OF REGULATION S, OR IF REGISTERED OR EXEMPT FROM REGISTRATION; AND BY ACCEPTING
      THIS STOCK OPTION, THE HOLDER HEREOF AGREES NOT TO ENGAGE IN HEDGING
      TRANSACTIONS WITH REGARD TO THIS OPTION AND THE UNDERLYING SECURITIES UNLESS
      IN
      COMPLIANCE WITH THE ACT. IN
      ADDITION, BY ACCEPTING THIS STOCK OPTION, THE HOLDER HEREOF CERTIFIES THAT
      IT IS
      NOT A U.S. PERSON AND IS NOT ACQUIRING THE SECURITIES FOR THE ACCOUNT OR BENEFIT
      OF ANY U.S. PERSON.

     

     

    

    

    Re:
      Grant
      Letter

    

    Whereas,
      TraceGuard
      Technologies Ltd.,
      (the
“Subsidiary”),
      a
      company fully owned and controlled by TraceGuard Technologies Inc. (the
      "Company"),
      a
      company duly formed in Nevada with its principal offices at 330 Madison Avenue,
      9th
      fl., New
      York, NY 10017 and Akis Ltd. 
      (“Consultant”
or
      “Optionee”)
      are
      parties to that certain Consulting Agreement dated
      July 12, 2007 (the “Consulting
      Agreement”),
      to
      which this Grant Letter is attached, and pursuant
      to which the Subsidiary engaged the Consultant to provide certain services
      to
      the Subsidiary (the “Services”);
      and

     

    Whereas,
      pursuant to Section 3 of the Consulting Agreement a grant letter (this
      "Grant
      Letter")
      was to
      be granted to the Consultant; and

     

    Whereas,
      it was
      agreed that the options granted to the Consultant shall be governed by the
      terms
      and conditions of this Grant Letter subject to the receipt of all approvals
      or
      exemptions required by law.

     

    Now,
      therefore,
      in
      consideration of the Parties' mutual covenants and other good and valuable
      consideration, the sufficiency and receipt of which is hereby acknowledged,
      it
      is agreed as follows: 

     

    
      	1.	
              Definitions:

            

    

     

    Unless
      otherwise defined herein, all capitalized terms shall have the meanings ascribed
      to them in the Consulting Agreement, except the following terms, which, when
      capitalized, shall have the following meanings:

    

    
      	
            	1.1.	
              “Board”
                means the Board of Directors of the Company and/or Subsidiary, as
                applicable.

            

    

    

    
      	
            	1.2.	
              "Cause"
                means any of the following (i) conviction of any felony involving
                moral
                turpitude or affecting the Company or its affiliates; (ii) any refusal
                to
                carry out a reasonable directive of the Subsidiary's Chief Executive
                Officer, Board or the Optionee's direct supervisor, which involves
                the
                business of the Subsidiary or its affiliates and was capable of being
                lawfully performed; (iii) embezzlement of funds of the Subsidiary
                or its
                affiliates; (iv) any clear breach of the Optionee's fiduciary duties
                or
                gross breach of its duties of care to the Subsidiary; including without
                limitation disclosure of confidential information of the Subsidiary
                or its
                affiliates; and (v) any conduct (other than conduct in good faith)
                reasonably determined by the Board to be materially detrimental to
                the
                Subsidiary or its affiliates.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
            	1.3.	
              "Ordinance"
                means the Israeli Income Tax Ordinance, as now in effect or as hereafter
                amended. 

            

    

    

    
      	
            	1.4.	
              “Date
                of Grant”
                means the date of the grant of each Option, as set forth
                hereinbelow.

            

    

    

    
      	
            	1.5.	
              “Exercise
                Price”
                shall mean Seventy US Cents (US$0.70) per Share, which price has
                been
                determined in good faith by the Board, after consultation with the
                Company’s independent auditors, in accordance with the Ordinance or other
                applicable law.

            

    

    

    
      	
            	1.6.	
              “Option
                Shares”
                means the Shares of the Company issued or issuable upon the exercise
                of
                the Options.

            

    

     

    
      	
            	1.7.	
              “Options”
                means options to purchase the Shares as granted hereunder.
                

            

    

    

    
      	
            	1.8.	
              “Options
                Termination Date”
                means the date occurring at the end of the period of three (3) years
                commencing as of the Date of Grant of each Option, as
                applicable.

            

    

    

    
      	
            	1.9.	
              “Optionee”
                and “you”
                shall mean and refer to the
                Consultant.

            

    

    

    
      	
            	1.10.	
              "Shares"-
                shares of common stock of the Company having a par value of US$0.001
                each.

            

    

    

    
      	
            	1.11.	
              “Other Subsidiary”
                means any company (other than the Subsidiary) in an unbroken chain
                of
                companies beginning with the Company if, at the time of granting
                an
                option, each of the companies other than the last company in the
                unbroken
                chain owns shares possessing fifty percent (50%) or more of the total
                combined voting power of all classes of shares in one of the other
                companies in such chain.

            

    

    

    
      	
            	1.12.	
              “Successor
                Company”
                means any entity the Company is merged to or is acquired by, in which
                the
                Company is not the surviving
                entity.

            

    

    

    
      	
            	1.13.	
              "Milestones"
                means the milestones to be achieved by Consultant, as set forth in
                Section
                3 of the Consulting Agreement.

            

    

     

    
      	
            	1.14.	
              “Transaction”
                means (i) merger, acquisition or reorganization of the Company, with
                one
                or more other entities in which the Company, is not the surviving
                entity
                and the shareholders of the Company hold less than fifty percent
                (50%) in
                the merged entity, (ii) a sale of all or substantially all of the
                assets
                and/or the shares of the Company.

            

    

    

    
      	2.	
              Grant
                of Options

            

    

    

    The
      Company hereby grants you, effective as of the date of the successful
      achievement of the applicable Milestone (as set forth in the Consulting
      Agreement), subject to the receipt of all approvals required by law, Options
      exercisable upon payment of the Exercise Price, as follows:

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
            	2.1.	
              Upon
                the achievement of the First Milestone - an Option to purchase twenty
                thousand (20,000) Shares.

            

    

    

    
      	
            	2.2.	
              Upon
                the achievement of the Second Milestone - an Option to purchase twenty
                thousand (20,000) Shares.

            

    

    

    
      	
            	2.3.	
              Upon
                the achievement of the Third Milsetone no later than 12 months following
                the later of (i) the termination of the Consulting Agreement or (ii)
                the
                final termination of Consultant’s activities in the service of the Company
                - an Option to purchase forty thousand (40,000)
                Shares.

            

    

    

    
      	
            	2.4.	
              Upon
                the successful achievement of the Fourth Milestone no later than
                12 months
                following the later of (i) the termination of the Consulting Agreement
                or
                (ii) the final termination of Consultant’s activities in the service of
                the Company - an Option to purchase seventy thousand (70,000)
                Shares.

            

    

    

    
      	
            	2.5.	
              Upon
                the successful achievement of the Fifth Milestone no later than 12
                months
                following the later of (i) the termination of the Consulting Agreement
                or
                (ii) the final termination of Consultant’s activities in the service of
                the Company - an Option to purchase fifty thousand (50,000)
                Shares.

            

    

     

    
      	3.	
              Tax
                Effects.
                The Options hereunder will be granted to Consultant under Section
                3(i) of
                the Ordinance. You should consult with your own tax advisors regarding
                the
                tax effects of receiving or exercising these Options or disposing
                of the
                Options Shares. 

            

    

    

    
      	4.	
              Administration.
                N/A. 

            

    

    

    
      	5.	
              Vesting
                of the Options.

            

    

    

    Each
      Option granted to Consultant shall vest immediately upon its grant (as
      applicable) and shall be in effect for a period of three (3) years commencing
      as
      of the date of its grant and shall expire immediately thereafter (the
“Termination
      Date”).

     

    
      	6.	
              Exercise
                of the Options

            

    

    

    
      	
            	6.1.	
              Method
                of Exercise.
                Options shall be exercised by the Optionee by giving written notice
                to the
                Company and/or to any third party designated by the Company (the
                “Representative”),
                in such form and method as may be determined by the Company, which
                exercise shall be effective upon receipt of such notice by the Company
                and/or the Representative and the payment of the Exercise Price at
                the
                Company’s or the Representative’s principal office. The notice shall
                specify the number of Option Shares with respect to which the Options
                are
                being exercised. 

            

    

    

    
      	
            	6.2.	
              Form
                of Payment of Exercise Price.
                Such payment shall be made to the Company in cash, check or cash
                equivalent or in any other form as may be permitted by the Board
                in its
                discretion.

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
 

    
      	
            	6.3.	
              Execution
                of Documents.
                In order for the Company to issue Option Shares upon the exercise
                of any
                of the Options, you hereby agree and undertake to sign any and all
                documents required by any applicable law and/or by the incorporation
                documents of the Company.

            

    

    

    
      	
            	6.4.	
              As
                a condition to the exercise of the Options, the Company may require
                you to
                satisfy any qualifications that may be necessary, to evidence compliance
                with any appli-cable law or regulation and to make any representation
                or
                warran-ty with respect thereto as may be requested by the
                Company.

            

    

    

    
      	
            	6.5.	
              Fractional
                Shares.
                the Company shall not be required to issue fractional shares upon
                the
                exercise of the Options.

            

    

    

    
      	
            	6.6.	
              Offering.
                In connection with a public offering (an "Offering")
                of Shares of the the Company, (i) you may not sell, make short sale
                of,
                loan grant any options for the purchase of, or otherwise dispose
                of any
                Option Shares obtained by you (other than those shares included in
                the
                Offering) without the prior written consent of the Company or the
                underwriters managing such offering of the Company’s securities for a
                period of one hundred and eighty (180) days from the effective date
                of the
                applicable registration statement, (ii) you may be required to execute
                any
                agreement reflecting Subsection (i) above as may be requested by
                the
                Company or the managing underwriters at the time of such offering,
                and
                (iii) the Option Shares issued to you shall be subject to such
                restrictions as required by the appropriate securities’
                law.

            

    

    

    
      	7.	
              Non-Transferability
                of the Options.
                Subject to Article 5, the Options may be exercised during the lifetime
                of
                the Optionee only by the Optionee and may not be assigned or transferred
                in any manner except to Mr. Avi Kostelitz or any entity fully controlled
                by Mr. Kostelitz, directly or indirectly, by will or by the laws
                of
                descent and distribution unless otherwise agreed by the Company in
                writing. . 

            

    

    

    
      	8.	
              Termination
                of Service; Termination of Options.

            

    

    

    
      	
            	8.1.	
              The
                Options shall terminate and shall no longer be exercisable upon the
                first
                to occurance of (a) the Options Termination Date, (b) the date of
                termination of the Consulting Agreement by the Company for Cause
                as
                described in Section 8.2 below; or (c) the last date for exercising
                the
                Options in connection with the consummation of a Transaction pursuant
                to
                the provisions of Section 9.2 or in connection with liquidation or
                dissolution pursuant to the provisions of Section 9.4 below.
                

            

    

    

    
      	
            	8.2.	
              Notwithstanding
                anything to the contrary herein, if the Consulting Agreement is terminated
                for Cause, any outstanding unexercised (vested and/or unvested) Options
                will immediately expire, and the Optionee shall not have any rights
                in
                respect of such outstanding
                Options.

            

    

     

    
      	9.	
              Adjustment.

            

    

    

    
      	
            	9.1.	
              In
                the event of a Transaction, the unexercised Option Shares then outstanding
                shall be assumed or substituted for an appropriate number of shares
                of
                each class of shares or other securities of the Successor Company
                (or a
                parent or subsidiary of the Successor Company) as were distributed
                to the
                shareholders of the Company in connection and with respect to the
                Transaction. In the case of such assumption and/or substitution of
                the
                Options, appropriate adjustments shall be made to the Exercise Price
                so as
                to reflect such action and all other terms and conditions of this
                Grant
                Letter shall remain unchanged, including but not limited to the Company’s
                obligation to grant Options upon achievement of each Milestone, all
                subject to the determination of the Board, which determination shall
                be in
                their sole discretion and final.

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
 

    
      	
            	9.2.	
              Notwithstanding
                the provisions of Section 9.1 above and subject to any applicable
                law, in
                the event of a Transaction, in which the Successor Company does not
                agree
                to assume or substitute the Option Shares, any unexercised Option
                Shares
                not exercised prior to the closing of the Transaction shall terminate
                upon
                the closing of the Transaction, provided,
                however,
                that the vesting dates set forth in Section 5 above shall be accelerated
                so that any unvested Option Shares shall be immediately vested as
                of the
                date which is fifteen (15) days prior to the effective date of the
                Transaction and the Board shall notify the Optionee that the Options
                are
                fully exercisable for a period of fifteen (15) days from the date
                of such
                notice, and the Options shall terminate upon the expiration of such
                period. Notwithstanding the aforesaid, any Options that are conditioned
                upon Milestones not yet achieved at the date of the Closing of the
                Transaction, shall not be granted thereafter, in which case the Consultant
                shall be free to discontinue the Services upon 15 days
                notice.

            

    

    

    
      	
            	9.3.	
              For
                the purposes of Section 9.1 above, an Option shall be considered
                assumed
                or substituted if, following the Transaction, the Option confers
                the right
                to purchase or receive, for each Option Share underlying the Option
                immediately prior to the Transaction, the consideration (whether
                shares,
                options, cash, or other securities or property) received in the
                Transaction by holders of Shares held on the effective date of the
                Transaction (and if such holders were offered a choice of consideration,
                the type of consideration chosen by the holders of a majority of
                the
                outstanding Shares); provided,
                however,
                that if such consideration received in the Transaction is not solely
                common stock (or their equivalent) of the Successor Company or its
                parent
                or subsidiary, the Board may, with the consent of the Successor Company,
                provide for the consideration to be received upon the exercise of
                the
                Option to be solely common stock (or their equivalent) of the Successor
                Company or its parent or subsidiary equal in fair market value to
                the per
                share consideration received by holders of a majority of the outstanding
                Shares in the Transaction, times the number of Option Shares subject
                to
                the Options.

            

    

    

    
      	
            	9.4.	
              If
                the Company is liquidated or dissolved while unexercised Option Shares
                remain outstanding, the Board, in its own discretion, may determine
                that
                all such outstanding Option Shares may be exercised in full by the
                Optionee as of the effective date of any such liquidation or dissolution
                of the Company without regard to the vesting provisions set forth
                above.
                If the Board determines that the outstanding Option Shares may be
                exercised, all such outstanding Option Shares may be exercised in
                full by
                the Optionee giving notice in writing to the Company of his intention
                to
                such exercise. If the Options becomes fully vested and exercisable
                under
                this Section, the Board shall notify the Optionee in writing or
                electronically that the Options shall be fully exercisable for a
                period of
                fifteen (15) days from the date of such notice, and the Options shall
                terminate upon the expiration of such period.

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
 

    
      	
            	9.5.	
              If
                the outstanding Shares of the Company shall at any time be changed
                or
                exchanged by declaration of a stock dividend (bonus shares), stock
                split,
                combination or exchange of shares, recapitalization, or any other
                like
                event by or of the Company, and as often as the same shall occur,
                then the
                number, class and kind of the Option Shares therefore granted and
                the
                Exercise Price, shall be appropriately and equitably adjusted so
                as to
                maintain the proportionate number of Option Shares, without changing
                the
                aggregate Exercise Price, provided,
                however,
                that no adjustment shall be made by reason of the distribution of
                subscription rights (rights offering) on outstanding Shares.
                

            

    

    

    
      	10.	
              Rights
                as a Shareholder.
                You shall not have any of the rights or privileges of shareholders
                of the
                Company in respect of any Option Shares purchasable upon the exercise
                of
                the Options, until your registration as holder of such Option Shares
                in
                the Company’s register of shareholders upon exercise of the Options and
                payment of the Exercise Price.

            

    

    

    
      	11.	
              Option
                Shares Subject to Right of First
                Refusal

            

    

    

    Any
      transfer or sale of Option Shares shall be subject to the provisions of the
      incorporation documents of the Company and applicable law, including, but not
      limited to, US Securities Law and the regulations promulgated thereunder.

     

    
      	12.	
              Restrictions
                on Transfer of Options and Option
                Shares.

            

    

    

    
      	
            	12.1.	
              You
                acknowledge that since the shares of the Company are registered for
                trading in a public market, your right to sell Shares is and may
                be
                subject to limitations and restrictions (including a lock-up period),
                as
                will be requested by the Company or its underwriters, and you hereby
                unconditionally agree and accept any such limitations. In order to
                enforce
                any of the restrictions set forth herein, the Company may impose
                stop-transfer instructions with respect to the exercised
                Shares.

            

    

    

    
      	
            	12.2.	
              You
                shall not dispose of any Option Shares in transactions which violate,
                in
                the opinion of the Company, any applicable laws, rules and regulations.
                

            

    

    

    
      	
            	12.3.	
              You
                agree that the Company shall have the authority to endorse upon the
                certificate or certificates representing the Option Shares such legends
                referring to the foregoing restrictions, and applicable US federal
                or
                state secu-rities law restriction on all certificates representing
                shares
                of Shares subject to the provisions of this Option Agreement and
                any other
                applicable restrictions as it may deem appropriate (which do not
                violate
                your rights under this Grant
                Letter).

            

    

     

    
      	13.	
              Purchase
                for Investment.

            

    

    

    The
      Company's obligation to issue or allocate Option Shares upon exercise of the
      Options is expressly conditioned upon: (a) the Company's completion of any
      registration or other qualifications of such Shares under any state and/or
      federal law, ruling or regulations, or otherwise obtaining an exemption in
      regard to the same, and/or (b) representations and undertakings by the Optionee
      (or his legal representative, heir or legatee, in the event of the Optionee’s
      death) to assure that the sale of the Option Shares complies with any
      registration exemption requirements which the Company in its sole discretion
      shall deem necessary or advisable. Such required representations and
      undertakings may include representations and agreements that such Optionee
      (or
      his legal representative, heir, or legatee): (a) is purchasing such Option
      Shares for investment and not with any present intention of selling or otherwise
      disposing thereof; and (b) agrees to have placed upon the face and reverse
      of
      any certificates evidencing such Shares a legend setting forth (i) any
      representations and undertakings which such Optionee has given to the Company
      or
      a reference thereto and (ii) that, prior to effecting any sale or other
      disposition of any such Shares, the Optionee must furnish to the Company an
      opinion of counsel, satisfactory to the Company, that such sale or disposition
      will not violate the applicable laws, rules, and regulations, whether of the
      State of Israel or of the United States or any other State having jurisdiction
      over the Company and the Optionee.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
 

    
      	14.	
              Taxes.

            

    

    

    
      	
            	14.1.	
              The
                Company and/or the Subsidiary shall withhold taxes according to the
                requirements under the applicable laws, rules, and regulations, including
                withholding taxes at source. 

            

    

    

    
      	
            	14.2.	
              the
                Company shall not be required to release any share certificate to
                the
                Optionee until all its statutory payments have been fully
                made.

            

    

    

    
      	15.	
              Government
                Regulations, Law &
Jurisdiction.

            

    

    

    
      	15.1.	
              The
                granting and exercise of the Options hereunder, and the Company'
                obligation to sell and deliver Shares under the Options, are subject
                to
                all applicable laws, rules and regulations, whether of the United
                States
                or the State of Israel or any other state having jurisdiction over
                the
                Company and/or the Subsidiary and you, including the registration
                of the
                Shares under the United States Securities Act of 1933, and to such
                approvals by any governmental agencies or national securities exchanges
                as
                may be required. Nothing herein shall be deemed to require the Company
                to
                register the Shares under the securities laws of any
                jurisdiction.

            

    

    

    
      	15.2.	
              This
                Grant Letter shall be governed by and construed and enforced in accordance
                with the laws of the State of Israel as applicable to contracts made
                and
                to be performed therein, without giving effect to the principles
                of
                conflict of laws, and to the applicable laws of the USA as respects
                securities laws matters that are pertinent to the Shares and/or Options.
                The competent courts of the State of Israel shall have sole jurisdiction
                in any matters pertaining to this Grant
                Letter.

            

    

     

    
      	16.	
              Miscellaneous.

            

    

     

    
      	
            	16.1.	
              No
                Obligation to Exercise Options.
                The grant and acceptance of these Options imposes no obligation on
                you to
                exercise it.

            

    

    

    
      
        	
              	16.2.	
                Confidentiality.
                  You shall regard the information in this Grant Letter and any document
                  related to the Grant Letter as confidential information and you
                  shall not
                  reveal its contents to anyone except when required by law or for
                  the
                  purpose of gaining legal or tax
                  advice.

              

      

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
            	16.3.	
              No
                Obligation of Employment or Service.
                This Grant Letter does not impose any obligation on the Company or
                the
                Subsidiary to employ you or contract your services and nothing in
                this
                Grant Letter shall confer upon you any right to be in the employ
                or
                service of the Company and/or the Subsidiary or restrict the right
                of the
                Company, or the Subsidiary to terminate such employment or service
                at any
                time.

            

    

    

    
      	
            	16.4.	
              Entire
                Agreement.
                This Grant Letter together with the exhibits hereto constitute the
                entire
                agreement between the Company and yourself with respect to Options
                granted
                hereunder, and supersedes all prior agreements, understandings and
                arrangements, oral or written, between you and the Company with respect
                to
                the subject matter hereof.

            

    

    

    
      	
            	16.5.	
              Failure
                to Enforce - Not a Waiver.
                The failure of any party to enforce at any time any provisions of
                this
                Grant Letter shall in no way be construed to be a waiver of such
                provision
                or of any other provision hereof.

            

    

    

    
      	
            	16.6.	
              Binding
                Effect.
                This Grant Letter shall inure to the benefit of and be binding upon
                the
                parties hereto and their respective heirs, executors, administrators,
                successors and assigns.

            

    

    

    
      	
            	16.7.	
              Termination
                or Amendment.
                The Board may terminate or amend this Grant Letter at any time;
                provided,
                however,
                that no such termination or amendment may adversely affect the Options
                or
                any unexercised portion hereof without the consent of the
                Optionee.

            

    

    

     

    Kindly
      indicate your acceptance of the terms and conditions of this Grant Letter by
      executing it at the space provided below.

     

     

    TraceGuard
      Technologies, Inc.

     

    By: /s/
      David
      Ben-Yair  

     

    Title: Chief
      Financial Officer

     

    Date: August
      9,
      2007

     

    

    The
      Optionee represents that the Optionee is familiar with the terms and provisions
      of this letter, and hereby accepts the Option subject to all of the terms and
      provisions hereof. 

    
 

    Akis
      Ltd.

    

    /s/Avi
      Kostelitz

    

    By: Avi
      Kostelitz 

     

    Title: Chief
      Executive Officer

     

    Date: August
      9,
      2007

     

    
      
         

      

      
        8

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