Document:

ex-1_2.htm

Bonds.com Group, Inc. 8-K

 

 

Exhibit 10.1

 

SETTLEMENT AGREEMENT AND RELEASE

 

THIS SETTLEMENT AGREEMENT AND RELEASE ("Agreement") is made this 19th day of March, 2010, by and between (a) William Bass (“Bass”)
and (b) Bonds.com Group, Inc. and Bonds.com Holdings, Inc. f/k/a Bonds Financial, Inc. (together “the Company”).

 

WHEREAS, Bass has filed two lawsuits against the Company and Bonds.com Inc.: (a) William M. Bass v. Bonds Financial, Inc., et al, Palm Beach County Florida Case No. 502008CA026153; and (b) William M. Bass v. Bonds
Financial, Inc., et al, United States District Court, Southern District of Florida, Case No. 09-80631-CIV-COHN-SELTZER (“the Lawsuits”);

 

WHEREAS, the parties are entering into this Agreement for the purposes of settling, compromising and resolving any and all claims Bass may have against the Company and the Releasees (as defined below);

 

WHEREAS, the Releasees are intended third-party beneficiaries of this Agreement; and

 

WHEREAS, in exchange for the dismissal of the Lawsuits and the execution of this Agreement by Bass, the Company has agreed to provide Bass with certain consideration which it is not otherwise obligated to provide.

 

NOW, THEREFORE, in consideration of the execution of this Settlement Agreement, and for other good and valuable consideration, the parties hereto agree as follows:

 

1.           Recitals.  The above recitals are true and correct and are incorporated into this Agreement by reference.

  

  

  

2.           Settlement Package.  As consideration for this Agreement, the Company agrees to the following cash and stock option components (“Settlement
Package”):

 

a.           Cash Component. The Company agrees to pay the following as the cash component of this settlement (“Cash Component”):

 

i.           Non-Contingent Cash Payment.  The Company shall pay to Bass the gross amount of $315,000.00 (“Non-Contingent
Cash Payment”).  The first two payments shall be in the amount of $14,000.00 with the first payment to be made no later than March 15, 2010, and the second payment to be made no later than April 15, 2010.  Thereafter, the remainder of the payments shall be made in equal monthly installments of $7,000.00 over 41 months due on or before the 15th of each month.  The Company shall be entitled
to a 6% discount on the remaining balance in the event that the Company pays off the entire remaining balance before the final payment is due.  The Company shall not be in default of its obligation to pay any monthly payment to Bass unless either: (a) the Company fails, within twenty (20) days of its receipt of a Default Notice (as defined below), to cure such payment default; or (b) the Company fails to timely make a monthly payment after receipt of and curing pursuant to three Default Notices (“Company
Default”).  For purposes of this Section, a “Default Notice” shall mean a written notice setting forth the amount of the claimed payment default and its due date, and such notice is given to the Company by Bass in the manner set forth in Section 23 below.  In the event of a Company Default, the Company immediately owes Bass $415,000 less any payments made, and hereby consents to the entry of
a judgment in that amount in the event of a Company Default.  In addition, Bass may exercise any other right, power, or remedy, permitted to him by law, either by suit in equity or by action at law, or both.

ii.           Contingent Cash Payments.

 

1.           The Company shall pay $50,000.00 to Bass subject to the satisfaction of either of the following contingencies: (a) Bonds.com, Inc. achieves $5,000,000.00 or more in gross revenues for calendar year 2010 (which coincides with Bonds.com, Inc.’s
fiscal year); or (b) Bonds.com, Inc. achieves $500,000.00 or more in profit for calendar year 2010.  If applicable, said payment shall occur on or before March 1, 2011.

 

2.           The Company shall pay $50,000.00 to Bass subject to the satisfaction of either of the following contingencies: (a) Bonds.com, Inc. achieves $7,000,000.00 or more in gross revenues for calendar year 2011 (which coincides with Bonds.com, Inc.’s
fiscal year); or (b) Bonds.com, Inc. achieves $1,000,000.00 or more in profit for calendar year 2011.  If applicable, said payment shall occur on or before March 1, 2012.

 

3.           The gross revenue and profit figures in the above contingencies shall be determined based upon the audited financial statements for the Company for the applicable fiscal year.

 

4.           In the event of a Company Default, the Company shall not be obligated to make any of the contingent cash payments above.

  

  

  

b.           Tax Consequences of Cash Component.  The parties will treat the Cash Component of the Settlement Package with the following tax consequences:

 

i.           As for the Non-Contingent Cash Payment, the gross amount of $251,458 shall be considered payment for Bass’s lost wages claims, and, if any Contingent Cash Payment is made, the gross amount of $50,000 per payment shall be considered payment for
Bass’s lost wages claims (“Wage Payment”).  These entire amounts shall be subject to the usual taxes and withholdings on wages. The Company shall issue W-2 forms to Bass for these amounts.

 

ii.           As for the Non-Contingent Cash Payment, the gross amount of $50,000 shall be considered payment for Bass's claims for emotional distress and other compensatory damages, punitive damages, attorney’s fees, and costs and all other damages, debts,
and/or losses Bass is claiming. The Company shall issue separate 1099 tax forms to Bass for these amounts.

 

iii.           As for the Non-Contingent Cash Payment, $13,542 is reimbursement of business expenses advanced by Bass.  The Company shall treat this payment for reporting purposes according to its usual practice.

iv.           The Non-Contingent Cash payments will be allocated as follows:

 

2010           $70,733 Wage Payment

 

$13,267 Business Expense Reimbursement

 

2011           $84,000 Wage Payment

 

2012           $84,000 Wage Payment

 

2013           $13,000 Wage Payment

 

$50,000 Non-Wage Payment

 

Total          $315,000

 

v.           All  Contingent Cash Payments will be Wage Payments.

 

vi.           Bass will provide a completed W-4 form with this Agreement.

 

vii.           If there is any change in the Internal Revenue Code, Treasury Regulations, instructions to IRS forms or other applicable IRS authority that requires reporting to the IRS in a matter different from that set forth above, the Company shall report payments
to the IRS in compliance with the changed reporting requirements.

 

c.           Stock Option Component.  The Company will issue to Bass options to purchase 1,500,000 shares of the Company's Common Stock at an exercise price of $0.375 per share, pursuant to and on
the terms and conditions of a Stock Option Agreement in the form of Exhibit A attached hereto.

  

  

  

d.           Logistics for Cash Component Payments.  All cash component payments made under this Agreement shall be sent via regular U.S. Mail to Bass at the address shown in Section 23 of this Agreement
and shall be made by check payable to “William Bass”.  All payments by the Company shall be considered timely if postmarked on or before the applicable deadline for such payment.

 

3.           Release.

 

a.           As a material inducement to the Company to provide the Settlement Package, Bass, for himself and his heirs, executors, personal representatives, administrators, assigns and anyone claiming by or through him/her (hereinafter collectively referred to
as “the Releasors”), hereby irrevocably and unconditionally forever releases, waives and forever discharges the Company, Bonds.com Inc., Bonds.com, LLC, and Insight Capital Management, LLC, and each of their respective predecessors, successors, parents, subsidiaries, affiliates, members, insurers, benefits plans, assigns, directors, officers, shareholders, trustees, administrators, employees, representatives, agents, and insurers
(hereinafter collectively referred to as "the Releasees") from any and all actual or potential claims, complaints, liabilities, obligations, promises, actions, causes of action, liabilities, agreements, damages, costs, debts, and expenses of any kind, whether known or unknown, that the Releasors have ever had or now have, from the beginning of time through the date Bass executes this Agreement (collectively, “the
Released Claims”).  The Released Claims include, but are not limited to, all claims arising out of or related to Bass’s employment with the Company, termination of employment, continued or future employment; all claims related to the payment of wages, salary or any other remuneration or payment; all claims under Title VII of the Civil Rights Act of 1964, as amended; (42 U.S. C. § 2000e, et seq.);
the Civil Rights Acts of 1866, 1871 and 1991, all as amended; 42 U.S.C. § 1981; the Family and Medical Leave Act of 1993, as amended (29 U.S.C. § 2601, et seq.); the Americans With Disabilities Act, as amended (42 U.S.C. § 12101, et seq.); the Rehabilitation Act of 1973, as amended (29 U.S.C. § 793-94); the Fair Labor Standards Act, as amended (29 U.S.C. § 201, et. seq.); the Equal Pay Act of 1963, as amended (29 U.S.C. § 206); §725.07, Florida Statutes; the Employee Retirement
Income Security Act, as amended (29 U.S.C. § 1001, et seq.); the Consolidated Omnibus Budget Reconciliation Act of 1985 (29 U.S.C. § 1161, et seq.); the Age Discrimination in Employment Act (29 U.S.C. § 621 et seq.); the National Labor Relations Act (NLRA); the Occupational Safety and Health Act (OSHA); and any other federal or state whistle-blower statute or regulation; the Florida Civil Rights Act of 1992 (Chapter 760, Florida Statutes, as amended); any provision of Chapters 250, 440, 443, 447,
448, and 760 of Florida Statutes; the Florida General Labor Regulations, as amended; any local ordinance, law, rule or regulation; workers’ compensation statutes; and any other federal, state or local statute, rule, regulation or ordinance; common law claims, including but not limited to claims of intentional or negligent infliction of emotional distress, negligent hiring, retention, training or supervision, defamation, invasion of privacy, breach of a covenant of good faith and fair dealing, breach of
fiduciary duty, breach of express or implied contract, promissory estoppel, negligence or wrongful termination of employment; any claims for or to past or future unpaid salary, commissions, bonuses, incentive payments, expense reimbursements, health care benefits, life insurance, disability insurance and any other income or benefits the Releasees received or claim they should receive; and all other claims of any kind, including
but not limited to any claims for attorneys’ fees and costs.

 

b.       All rights in this Agreement and any agreement applicable to any of Bass’s stock options or stock are excluded from this release, except as referenced within this subsection.  The parties hereby acknowledge and agree that, of the options to purchase 1,652,899 shares
of Common Stock (after taking into account the stock split in December 2007) that were originally granted under Bass’s original Stock Option Agreement dated February 1, 2007 (“the Original Option Agreement”), only options to purchase 413,225 shares of Common Stock have vested, and the options for the remaining 1,239,674 shares of Common Stock terminated prior to such shares becoming vested.  Notwithstanding
anything contained herein or in the Original Option Agreement to the contrary, Bass hereby releases and waives any and all rights he may have with respect to the option to purchase such 1,239,674 shares of Common Stock.  The parties further acknowledge and agree that Bass’s existing vested options to purchase 413,225 shares of Common Stock shall continue to be governed by the Original Option Agreement, including the original purchase price of $0.50 per share.

 

4.           Dismissal of the Lawsuits.  Bass agrees that he will authorize and direct his attorney to sign the Stipulations of Dismissal with Prejudice that are attached hereto as Exhibits
B and C requesting that the Lawsuits be dismissed with prejudice and to take no further action in prosecution of the cases.  Said Stipulations of Dismissal shall be filed with the Courts within seven (7) days after the Company has delivered the first payment referenced in paragraph 2 of this Agreement to Bass.

  

  

  

5.           Other Claims and Charges.  With the exception of the Lawsuits and the Charge of Discrimination Bass filed with the Equal Employment Opportunity Commission, Florida Commission
on Human Relations, and the Broward County Civil Rights Division on October 1, 2008, Bass represents that he has not filed any complaint, claim or charge against the Company or any of the Releasees or with the Equal Employment Opportunity Commission, the Florida Commission on Human Relations, the Federal or Florida Department of Labor, or with any other local, state or federal agency or court.  Bass agrees that, if any such agency or court assumes the prosecution or jurisdiction of any complaint or
charge against the Company or any of the Releasees, Bass will immediately dismiss the complaint or charge and/or will immediately request such agency or court to dismiss and withdraw from the matter.  In the event Bass should fail or refuse to undertake these obligations, Bass agrees that this Agreement shall operate to effectuate Bass's dismissal or withdrawal of such complaint, charge or claim and that Bass will forward to the Company any monies Bass receives from such complaint, charge or claim.

 

6.           Tax Considerations. The Company and the Releasees make no representations of any character regarding the character of the Severance Package or any of its components for purposes of local,
state or federal tax purposes, including income tax.    Each party to this Agreement is responsible for its own tax obligations.

7.           Necessary Action.  At all times after the execution of this Agreement, each party hereto agrees to take or cause to be taken all such necessary action including, without limitation,
the execution and delivery of such further instruments and documents, as may be reasonably requested by any party for such purposes or otherwise necessary to complete or perfect the transaction contemplated hereby.

 

8.           Adequacy of Consideration; No Obligations.  Bass understands that the Settlement Package provided hereunder by the Company is discretionary in nature, is not an admission of
liability, is not required of the Company in the absence of this Agreement and constitutes adequate and the sole consideration for the Agreement, including Bass’s releasing and dismissing any and all of his claims (actual or potential) against the Company and the Releasees.  For avoidance of doubt, Bass also acknowledges and agrees that none of the Releasees (including but not limited to Bonds.com, Inc.) other than the Company has any obligations under this Agreement

 

9.           Complete Bar.  Bass agrees that the Releasees may plead this Agreement as a complete bar to any action or suit before any court or administrative body with respect to any claim
released herein.

 

10.           Confidentiality.  The parties agree to keep the terms and amount of the settlement and the terms of this Agreement (collectively, “the Confidential
Information”) in strict confidence and shall not disclose the Confidential Information to any person or entity, including but not limited to (a) any current or former employee of the Company or (b) any member of the news media.  Either party may disclose Confidential Information as required by any government agency or pursuant to subpoena.  Once Confidential Information is disclosed by the Company in a filing with the SEC or the
equivalent it is no longer Confidential Information and is no longer subject to any restriction other than that Bass will not affirmatively publicize the terms of this Agreement by issuing a press release, holding a press conference or the equivalent.  Bass may discuss the Confidential Information with his wife, attorney, government agency representative, and/or accountant, but only if Bass requires and warrants that his wife, attorney and/or accountant will maintain this strict confidentiality.  The
Company may discuss the Confidential Information with any Company employee or advisor, or investor or potential investor, reasonably entitled to know.  Bass warrants and represents that, from the time Mediation began through his execution of this Agreement, he has not disclosed to any person or entity (other than his wife, attorneys and/or accountant) any settlement offers made by either party or the Confidential Information to any third person other than his wife, attorney and/or accountant.

 

11.           Non-Disparagement.

 

a.            Bass agrees to refrain from making any disparaging statements, written or oral, to any person or entity regarding the Company or its policies, practices, processes, operations, facilities, former or current directors, officers, management, or
employees, except pursuant to court order or validly issued subpoena.  Both parties agree that the damages to the Company that would result from a breach by Bass of this non-disparagement provision are not reasonably capable of measurement.  In the event that a Court finds Bass to have breached this non-disparagement provision after Bass executes this Agreement, the parties agree that the Court shall award the Company the minimum sum of $10,000.00 per occurrence as liquidated damages.

  

  

  

b.            John Barry IV, John Barry III, and Christopher Loughlin (“Corporate Individuals”) agree to refrain from making any disparaging statements, written or oral,
to any person or entity regarding Bass, except pursuant to court order or validly issued subpoena.  Both parties agree that the damages to Bass that would result from a breach by any of the Corporate Individuals of this non-disparagement provision are not reasonably capable of measurement.  In the event that a Court finds any of the Corporate Individuals to have breached this non-disparagement provision after they execute this Agreement, the parties agree that the Court shall award Bass the
minimum sum of $10,000.00 per occurrence as liquidated damages.  The Corporate Individuals are signing this Agreement for the limited purpose of binding themselves to this non-disparagement provision.

 

12.           No Admission of Liability.  Bass understands and agrees that the Company and the Releasees admit no liability with respect to any claim related to or arising out of his employment
or any other matters.

 

13.           Entire Agreement.  This Agreement contains the entire agreement between the parties and may be modified only in a writing executed in the same manner as the original Agreement.  No
agreements, representations, or statements of any party not contained herein shall be binding on such party; and, to that end, Bass acknowledges and agrees that there are no prior or contemporaneous agreements or representations of any character, written or oral, relating to the subject matter of this Agreement.

14.           No Reliance.  The parties agree that no inducements, statements or representations have been made that are not set forth in this Agreement and that they did not rely on any
inducements, statements or representations not set forth herein.  Bass further declares that he is of sound mind and body to enter into this Agreement, that he is aware that this Agreement has significant legal meaning, and that he enters into this Agreement freely and voluntarily.

 

15.           Enforcement.  Bass, the Company, and the Releasees shall have the right specifically to enforce this Agreement, except for provisions which subsequently may be held invalid
or unenforceable.

 

16.           Controlling Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, as they are applied to contracts made and to be wholly
performed in this state, regardless of choice of law principles to the contrary.

 

17.           Construction and Interpretation.  The parties agree that this Agreement is the product of negotiations between both parties and their counsel.  The language of all
parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against either party.  As used in this Agreement, the singular or plural shall be deemed to include the other whenever the context so indicates or requires.

 

18.           Forum Selection.  In the event of a breach of this Agreement by either party, the other party shall be entitled to seek enforcement of this Agreement exclusively before a state
or federal court of competent jurisdiction located in Broward County, 

Florida.  This Agreement shall not be construed to waive any right of removal that may apply to any action filed in state court by either party to this Agreement.

 

19.           Attorney's Fees.  In the event a breach of the Agreement is proven, the non-breaching party may recover, in addition to damages, the reasonable costs and fees, including attorney’s
fees, incurred in establishing the breach and securing judicial relief.  In the event that the provisions of this Agreement are breached, the non-breaching party may recover damages for the breach without waiving the right to insist on the breaching party’s continued fulfillment of all other obligations under the Agreement.

 

20.           Savings Provision.  Should any provision of this Agreement be declared or be determined by any court to be illegal or invalid, the remaining parts, terms or provisions shall
remain valid unless declared otherwise by the court.  Any part, term or provision which is determined to be illegal or invalid shall be deemed not to be a part of this Agreement.

 

21.           No Assignment.  Bass represents that Bass has not assigned or transferred, or purported to assign or transfer, to any person or entity, any claim against the Company or any
portion thereof or interest therein.  All rights and obligations of this Agreement are binding on and benefit the Company’s successors and Bass’s heirs and estate.

 

22.           Binding Nature. This Agreement shall be binding upon Bass and the Company and their heirs, administrators, representatives, executors, successors and assigns, and shall inure to the
benefits of the Company and the Releasees.

 

23.           Notices.   All notices and other communications required or permitted hereunder shall be in writing and shall be deemed to have been given when either: (a) hand delivered,
in person or by a recognized courier or delivery service; (b) when telefaxed to the recipient's correct telefax number (with receipt confirmed); or (c) when mailed by registered or certified mail, return receipt requested, as follows (provided that notice of change of address shall be deemed given only when received):

 

 

 

 

 

	  	
If to the Company to:  
	
President

	  	  	
Bonds.com Group, Inc.

	  	  	
1515 South Federal Highway, Suite 212

	  	  	
Boca Raton, Florida

	  	
With a copy to:  
	
S. Gordon Hill, Esq.

	  	  	
Hill, Ward & Henderson, P.A.

	  	  	
3700 Bank of America Plaza

101 East Kennedy Boulevard

	  	  	
Tampa, Florida 33629

	  	  	
Fax: (813) 221-2900

	  	
If to Bass, to:  
	
William E. Bass

	  	  	
7813 Pinecrest Ct.

	  	  	
Fairview, TN  37062

	  	
With a copy to:  
	
James P. Golden, Esq.

	  	  	
Golden Hamburg & Golden, P.C.

	  	  	
1601 Market Street, Suite 3310

	  	  	
Philadelphia, PA  19103-1443

  

  

  

24.           Acknowledgements.  Bass represents that he has carefully read and fully understands all the provisions of this Agreement, that he is entering into this Agreement voluntarily,
and that he has consulted with an attorney of his choice and at his expense before executing it.

 

25.           Further Assurances.  The parties will execute whatever documents are necessary to effectuate the intent of this Agreement.

 

NOW, THEREFORE, Bass and the Company have executed this Settlement Agreement, freely and voluntarily, as of the date first written above.

	/s/ William M. Bass	  	March 12, 2010
	
WILLIAM M. BASS
	  	
DATE

	
BONDS.COM GROUP, INC.
	  	  
	  	  	  	  
	
By:
	/s/ Michael Sanderson	  	March 18, 2010
	  	  	  	
DATE

	
Title: 
	Chief Executive Officer	  	  

  

  

  

	
BONDS.COM HOLDINGS, INC. F/K/A BONDS FINANCIAL, INC.

	  	  	  	  
	
By:
	/s/ Michael Sanderson	  	March 18, 2010
	  	  	  	
DATE

	
Title:  
	Chief Finanical Officer	  	  

The individuals below are signing for purposes of Section 11(b):

	/s/ John Barry, IV	  	March 18, 2010
	
JOHN BARRY, IV
	  	
DATE

	/s/ John Barry, III	  	March 17, 2010
	
JOHN BARRY, III
	  	
DATE

	/s/ Christopher Loughlin	  	March 19, 2010
	
CHRISTOPHER LOUGHLIN
	  	
DATE

  

  

  

Exhibit A

Stock Option Agreement

[See Attached]ex-1_1.htm

Bonds.com Group, Inc. 8-K

 

 

Exhibit 10.2

 

 

 

STOCK OPTION AGREEMENT

 

This STOCK OPTION AGREEMENT (this “Agreement”), effective as of March 19, 2010, is made by and between Bonds.com Group, Inc., a Delaware corporation (the “Company”), with
its principal office at 1515 Federal Highway, Suite 212, Boca Raton, Florida 33432, and William M. Bass, an individual (the “Optionee”), residing at 7813 Pinecrest Court, Fairview, TN  37062.

 

WHEREAS, pursuant to the terms of a Settlement Agreement and Release (the “Settlement Agreement”) dated March 19, 2010 by and between the Company and the Optionee, the Company is required to grant to the Optionee a stock option to purchase 1,500,000
shares of the common stock, $.0001 par value per share, of the Company (the “Common Stock”) at an exercise price of $0.375 per share, and on the other terms and conditions set forth herein. Such grant is to be dated the same date as the “Settlement Agreement.”

NOW, THEREFORE, in consideration of the covenants and promises hereinafter contained and contained in the Settlement Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Optionee represent, covenant and agree as follows:

 

1.           Grant of Option.  Effective on the date of this
Agreement (the “Date of Grant”), the Company hereby grants to Optionee a stock option (the “Option”) to purchase 1,500,000 shares of Common Stock (collectively, the “Shares”) at an exercise price of $0.375 per Share (the “Exercise
Price”) subject to the terms, definitions and provisions of this Agreement.

 

2.           Designation of Option.  The Option is not intended
to qualify as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), and is a nonqualified stock option subject to Section 83 of the Code and Treasury Regulation Section 1.83-7 promulgated thereunder (a “Nonqualified Stock Option”).

 

3.           Exercise/Vesting of Option.

 

(a)           Vesting; Expiration. The Option shall be fully vested and exercisable on the Date of Grant. Notwithstanding anything
to the contrary herein, the Option shall automatically expire and shall no longer be exercisable effective on the earlier of (the “Expiration Date”) (i) 5:00 P.M., New York time, on January 31, 2017, or (ii) the Optionee’s breach of either Section 4 or Section 5 of the Settlement Agreement. The Option may be exercised before the Expiration Date only in accordance with the terms hereof. The Option shall not be exercised for a fraction
of a share.

 

(b)           Method of Exercise.

 

(i)           The Option shall be exercisable by execution and delivery of an Exercise Notice in the form attached hereto as Exhibit A (the “Exercise
Notice”) or any other form of written notice approved for such purpose by the Company which shall state the Optionee’s election to exercise the Option, the number of Shares in respect of which the Option is being exercised, and such other representations and agreements as to the Optionee’s investment intent with respect to such Shares as may be reasonably required by the Company pursuant to the provisions of
this Agreement or required by Applicable Law (as defined below).  The Exercise Notice shall be signed by the Optionee and shall be delivered to the Company to the attention of the Chief Financial Officer.  The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price for the Shares being purchased or a statement indicating that the Optionee is making a Net Issuance Election pursuant to Section 7 below.  The
Option shall be deemed to be exercised upon receipt by the Company of such written Exercise Notice accompanied by the aggregate Exercise Price or statement of Net Issuance Election (as applicable).

  

1

  

 

(ii)           As a condition to the exercise of the Option and as further set forth in Section 10 below, the Optionee agrees to make adequate provision for federal, state or other tax withholding
obligations, if any, which arise upon the vesting or exercise of the Option, or disposition of Shares, whether by direct payment to the Company or otherwise.

 

(iii)           As a condition to the exercise of the Option, the Company may require the Optionee to make such representations and warranties to the Company as may be required by any Applicable Law.  For the purposes hereof, the term “Applicable
Law” means the legal requirements relating to the administration of share options and grants, including under applicable U.S. state corporate laws, U.S. federal and applicable state securities laws, other U.S. federal and state laws, the Code, any stock exchange rules or regulations as such laws, rules, regulations and requirements shall be in place from time to time.

 

(iv)           If, at the time of any valid exercise of the Option, the Company has an effective registration statement on Form S-3 pursuant to which the Shares may be offered and sold, then the Company shall use its reasonable efforts to offer and sell the Shares
pursuant to such registration statement and, if the Shares are offered and sold pursuant to such registration statement, they shall be issued free of any restrictive legends and shall be freely tradeable at the time of issuance (unless the Optionee is an affiliate of the Company).

 

(v)           If, at any time, there is not an effective registration statement covering the resale of the Shares, and Company shall prepare and file with the Securities and Exchange Commission a new registration statement relating to the resale of shares of the Company’s
common stock by stockholders other than the Optionee, then the Company shall send the Optionee a written notice of such registration.  If, within ten (10) Business Days after receipt of such notice by the Optionee, the Company receives a written request from the Optionee that the Company include all or a portion of the Shares in such registration, the Company shall use its reasonable efforts to include all or such portion of the Shares in such registration.  Such registration shall be at no
cost to the Optionee (other than the Optionee’s pro rata share of underwriting discounts, fees and commissions).  Notwithstanding the foregoing, if a registration for selling stockholders involves an underwritten offering, and the lead managing underwriter shall advise the Company or the selling stockholders that the amount of securities to be included in the offering exceeds the amount which can be sold in the offering, the number of Shares included in the registration shall be eliminated or
reduced as required by the managing underwriter.  Notwithstanding anything contained herein to the contrary, the Shares shall cease to be eligible for registration when (A) they have been disposed of by the Optionee or (B) they may be freely sold pursuant to Rule 144 under the Securities Act of 1933, as amended.  If the Shares are registered for resale in such a registration statement, they shall be issued free of any restrictive
legends and freely tradeable at the time of issuance  (unless the Optionee is an affiliate of the Company).

  

2

  

 

(c)           No Shareholder Rights.  No rights or privileges
of a shareholder in the Company are conferred by reason of the granting of the Option. The Optionee will not become a shareholder in the Company with respect to the Shares unless and until the Option has been properly exercised and the Shares issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).

 

4.           Method of Payment.  Payment of the Exercise Price
shall be by cash, personal check or bank cashiers check, or Net Issuance Election.

 

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

 

6.           Tax Consequences; Acceptance of Agreement; Other Options.  The
Optionee acknowledges that the Option shall be treated as a Nonqualified Stock Option and has consulted his own tax and legal advisors and is not relying on any representation or other information provided by the Company or any of its representatives with respect to the tax treatment of the Option.  The Optionee represents that he is familiar with the terms and provisions of this Agreement (and has had an opportunity to consult counsel regarding the Option terms), and hereby accepts the Option and agrees
to be bound by its contractual terms as set forth herein. The Optionee further represents and warrants that, except for the Option set forth herein and the vested options under the “Original Option Agreement” (as set forth in the Settlement Agreement), he currently holds no other stock options in the Company. Nothing herein shall modify any of the terms and conditions of the vested options under such Original Option Agreement (including, without limitation, the exercise price thereof), which shall
continue to be governed by such Original Option Agreement.

 

7.           Net Issuance Election. In lieu of paying the Exercise Price in cash, the Optionee may elect, and the Company must
accept, to satisfy all or any portion of the Exercise Price by a net exercise pursuant to this Section 7 (such election, the “Net Issuance Election”). To make a Net Issuance Election, the Optionee must deliver a validly executed Exercise Notice with a statement indicating that the Optionee wishes to make a Net Issuance Election and the number of Shares for which such Net
Issuance Election is being made.  Thereupon, assuming the other requirements of exercise set forth in Section 3 above are satisfied, the Company shall issue to the Optionee such number of Shares as is computed using the following formula:

 

X = Y * (A-B)

               A

where

 

X =           the number of Shares to be issued to the holder pursuant to this Section 7.

 

Y =           the number of Shares covered by this Option in respect of which the Optionee has made a Net Issue Election pursuant to this Section 7.

  

3

  

A =           the Fair Market Value (as hereinafter defined) of one Share determined at the time the Net Issuance Election is made pursuant to this Section 7 (the “Determination
Date”).

 

B =           the Exercise Price in effect at the time the Net Issuance Election is made pursuant to this Section 7.

 

For purposes of the above calculation, the “Fair Market Value” of one Share as of the Determination Date shall mean:

 

(a)           (i) if the Common Stock of the Company is not then traded on a national securities exchange, the average of the arithmetic means of the last bid and asked prices of the Common Stock quoted in the
over-the-counter-market for the twenty (20) trading days immediately preceding the Determination Date, or (ii) if the Common Stock is then traded on a national securities exchange, the average of the arithmetic means of the high and low prices of the Common Stock listed on the principal national securities exchange on which the Common Stock is so traded for the twenty (20) trading days immediately preceding the Determination Date;

 

(b)           in the event of a Net Issuance Election made in connection with the merger or consolidation of the Company into or with another corporation or other entity, or the sale, transfer or other disposition
of all or substantially all of the assets or capital stock of the Company, in each case under circumstances in which the holders of a majority in voting power of the outstanding capital stock of the Company, immediately prior to such merger, consolidation or sale own less than a majority in voting power of the outstanding capital stock of the Company or the surviving or resulting corporation or acquirer, as the case may be, immediately following such merger, consolidation, sale, transfer or other disposition
(any such transaction, a “Change in Control”), the value per share of Common Stock received or receivable by each holder thereof (assuming for purposes of this determination, in the case of a sale of assets, the Company is liquidated immediately following such sale and the consideration paid to the Company is immediately distributed to its stockholders); and

 

(c)           in all other circumstances, the fair market value per share of Common Stock as determined by the Company’s Board of Directors in good faith after taking into consideration all factors it deems
appropriate, including, without limitation, recent sale and offer prices of the capital stock of the Company in private transactions negotiated at arm’s length.

 

The closing of any Net Issuance Election shall take place at the offices of the Company on the date specified in the Notice of Exercise, which shall not be less than five and not more than 30 days after the delivery of such notice. At such closing, if such Net Issuance Election shall not have been for all Shares underlying
the Option, a new Option, registered in the name of the holder, of like tenor to this Option for the number of shares still subject to this Option following such Net Issuance Election shall be delivered by the Company.

 

8.           Taxes. The Optionee acknowledges that he may incur tax liability by exercising the Option and that the Company may
to the extent required under Applicable Law report such exercise to the Internal Revenue Service and other applicable federal and state agencies or foreign government authorities. As a condition of the grant or exercise of the Option, the Optionee (or in the case of the Optionee’s death, the person exercising the Option) shall make such arrangements as the Company may require for the satisfaction of any applicable federal, state,
local or foreign withholding tax obligations that may arise in connection with such grant, or exercise of the Option or the issuance of Shares.  The Company shall not be required to issue any Shares under this Agreement until such obligations are satisfied.  The amount of such obligations shall be determined by the Company’s independent accounting firm. Such opinion shall be deemed acceptable by the Company and the Optionee.

  

4

  

 

9.           Adjustments Upon Changes in Capitalization; Anti-Dilution.

 

(a)           Subject to any action required under any Applicable Law by the shareholders of the Company, the number of Shares covered by the Option, as well as the exercise price per Share of Shares covered by
the Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a share split, reverse share split, share dividend, combination, or reclassification of the Common Stock.  Such adjustment shall be made by the Company, and its determination in that respect shall be final, binding and conclusive.  Except as expressly provided herein, no issuance by the Company of shares of any class, or securities convertible into shares
of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or exercise price of Shares subject to the Option.

 

(b)           The Optionee will have the same protection against dilution for his options and shares as has been granted or is granted at any time to John Barry, III, or John Barry, IV.  For these purposes
“dilution” is any action involving the issuance of shares, options or warrants, or the equivalent, that at the time of issuance reduces the value of existing shares, options or warrants, or the equivalent.  For avoidance of doubt, the following shall not be considered dilution or require protection against dilution: (i) a grant of stock options for compensatory purposes if such grant is approved by the Company’s independent directors, has an exercise price no less than the fair market
value of the Company’s common stock on the date of grant and in compliance with applicable law, and (ii) a grant of restricted stock for compensatory purposes if such grant is in lieu of cash compensation, approved by the Company’s independent directors, valued at the fair market value of the Company’s common stock on the date of grant and in compliance with applicable law.  The Optionee’s rights under this Section 9(b) shall
terminate on the earlier of (x) the date on which he no longer owns any of the Company’s options or common stock, or (y) January 31, 2017.

 

(c)           The Company represents and warrants to Optionee that (i) as of September 1, 2009, there were 63,983,590 shares of Common Stock issued and outstanding and rights to purchase 37,740,508 shares of Common
Stock, (ii) as of September 1, 2009, John J. Barry, IV owned, directly or indirectly, 20,500,000 shares of Common Stock and rights to acquire 2,500,000 shares of Common Stock, (iii) as of September 1, 2009, John Barry III owned, directly or indirectly, 20,724,388 shares of Common Stock and rights to acquire 0 shares of Common Stock, (iv) as of the date hereof, there are 76,567,487 shares of Common Stock issued and outstanding and rights to purchase 140,304,332 shares of Common Stock, (v) as of the date hereof,
John J. Barry, IV owns, directly or indirectly, 20,500,000 shares of Common Stock and rights to acquire 8,500,000 shares of Common Stock, (vi) the rights to purchase 6,000,000 additional shares of Common Stock owned by John J. Barry, IV as of the date hereof as compared to September 1, 2009 were issued to him for compensatory purposes, approved by a majority of the independent directors on the Company’s Board of Directors and have
an exercise price which is at least equal to the fair market value of the Common Stock on the date of grant, and (vii) as of the date hereof, John Barry III owns, directly or indirectly, 20,724,388 shares of Common Stock and rights to acquire 0 shares of Common Stock.

  

5

  

 

10.           Amendment of Option Shares.  In addition to any
changes or adjustments that may be made pursuant to Section 9 above, the Company’s Board of Directors shall have the authority to make the following determinations with respect to, and amendments to, the Option without the consent of Optionee:  (a) waiver of any restriction applicable to the Option or the Shares; (b) settlement in cash of the Option; and (c) any other amendment or adjustment that does not materially and adversely
affect the Optionee’s rights hereunder. In addition, in the event the Option is not exercised in connection with a Change in Control, the Company’s Board of Directors shall have the right in its discretion to cancel the Option and make a cash payment to the Optionee (less required withholdings) equal to the product of the number of Shares then subject to the Option multiplied by the amount, if any, by which (x) the Fair Market Value of one
Share determined in accordance with Section 7(b) above, exceeds (y) the Exercise Price then in effect.

 

11.           Miscellaneous.

 

(a)           Governing Law.  This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law.

 

(b)           Entire Agreement; Enforcement of Rights.  This
Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions between them.  No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement.  The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

 

(c)           Severability.  If one or more provisions of this
Agreement are held to be unenforceable under the Applicable Laws, the parties agree to renegotiate such provision in good faith.  In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance
of the Agreement shall be enforceable in accordance with its terms.

 

(d)           Construction.  This Agreement is the result of
negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.

 

  

6

  

(e)           Notices.  Any notice required or permitted by
this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by overnight or 
international courier, telegram or fax or two (2) days after being deposited in the U.S. mail, as certified or registered mail or air mail, with postage prepaid, and addressed to the party to be notified at such party’s address as set forth in the first paragraph of this Agreement or as subsequently modified by written notice.

 

(f)           Counterparts.  This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

 

(g)           Successors and Assigns. Subject to Section
5 above, the rights and benefits of this Agreement shall inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.

 

[Signature Page Follows]

  

7

  

SIGNATURE PAGE TO

 

STOCK OPTION AGREEMENT

 

The parties have executed this Agreement to be effective as of the date first set forth above.

 

 

	  	  	
THE COMPANY:

 

Bonds.com Group, Inc., a Delaware corporation

	  	  	  
	  	  	
By:
	/s/ Michael Sanderson
	  	  	
Name:
	Michael Sanderson
	  	  	
Title:
	Chief Executive Officer

 

	  	  	
OPTIONEE:

	  	  	  
	  	  	/s/ William Bass
	  	  	
William M. Bass

 

  

8

  

EXHIBIT A

 

EXERCISE NOTICE

 

1.           Exercise of Option.  Subject to the terms and conditions
hereof and the Stock Option Agreement dated December ___, 2009 by and between Bonds.com Group, Inc., a Delaware corporation (the “Company”), and William M. Bass (the “Option Agreement”), the “Purchaser” set forth on the signature page hereto (the “Purchaser”) hereby elects
to exercise his option to purchase _______________ shares of Common Stock (the “Shares”) of the Company under and pursuant to the Option Agreement. The purchase price for the Shares shall be $0.375 per Share for a total purchase price of $ __________.  The term “Shares” refers to the purchased Shares and all securities received in replacement of the
Shares or as stock dividends or splits, all securities received in replacement of the Shares in a merger, reorganization, exchange or the like, and all new, substituted or additional securities or other properties to which Purchaser is entitled by reason of Purchaser’s ownership of the Shares.

 

2.           Time and Place of Exercise. The purchase and sale of the
Shares under this Exercise Notice shall occur at the principal office of the Company simultaneously with the execution and delivery of this Exercise Notice in accordance with the provisions of Section 3 of the Option Agreement.  On such date or as soon as reasonably practicable, the Company will deliver to Purchaser, or Purchaser’s agent, a certificate representing the Shares to be purchased by Purchaser (which shall be issued in Purchaser’s name) against payment of the exercise price therefor
by Purchaser by a method listed in Section 4 of the Option Agreement.

 

3.           Investment and Taxation Representations.  In connection
with the purchase of the Shares, Purchaser represents to the Company the following:

 

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

 

(b)           Subject to Section 3(b)(iv) and (v) of the Option Agreement, Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.

 

(c)           Subject to Section 3(b)(iv) and (v) of the Option Agreement, Purchaser further acknowledges and understands that the Shares may only be resold in compliance with state and federal securities laws,
including pursuant to Rule 144 promulgated under the Securities Act which provides, among other things, for the resale of securities by non-affiliates.

 

(d)           Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares.  Purchaser represents that Purchaser has
consulted any tax consultants Purchaser deems advisable in connection with the exercise, purchase and/or disposition of the Shares and that Purchaser is not relying on the Company for any tax advice. Neither the Company nor any of its employees or agents have made any warranty or representation to the Purchaser with respect to the tax consequences of the undersigned’s purchase of shares under the Agreement

 

 

9

 

 

4.           Restrictive Legends and Stop-Transfer Orders.

 

(a)           Legends.  Subject to Section 3(b)(iv) and (v)
of the Option Agreement, the certificate or certificates representing the Shares shall bear the following legends (as well as any legends required by applicable state and federal corporate and securities laws):

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

 

(b)           Removal of Legend. Certificates evidencing the Shares shall
not contain any legend (including the legend set forth in Section 4(a) above): (i) if such Securities are and will be eligible for sale under Rule 144, or (ii) such legend is otherwise not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission).  The Company agrees that at such time as such legend is no longer required under this Section 4(d),
it will, no later than three trading days following the delivery by Purchaser to the Company or the Company’s transfer agent of a certificate representing the Shares, as applicable, issued with a restrictive legend (such third trading day, the “Legend Removal Date”) deliver or cause to be delivered to the Purchaser a certificate representing the Shares free from all restrictive and other legends.

 

5.           Taxation.  The Purchaser acknowledges that he may
incur tax liability by exercising the Option and that the Company may to the extent required under Applicable Law report such exercise to the Internal Revenue Service and other applicable federal and state agencies or foreign government authorities. As a condition to exercising the Option, the Purchaser (or in the case of the Purchaser’s death, the person exercising the Option) shall make such arrangements as the Company may reasonably require for the satisfaction of any applicable federal, state, local
or foreign withholding tax obligations that may arise in connection with the exercise of such Option or the issuance of Shares.

 

6.           Miscellaneous.

 

(a)           Governing Law.  This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law.

 

(b)           Entire Agreement; Enforcement of Rights.  This
Agreement and the Option Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions between them.  No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement.  The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such
party.

  

10

  

(c)           Severability.  If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.  In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.

 

(d)           Construction.  This Agreement is the result of
negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.

 

(e)           Notices.  Any notice required or permitted by
this Agreement shall be in writing and shall be deemed sufficient when delivered in accordance with the notice provisions of the Option Agreement.

 

(f)           Counterparts.  This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

 

(g)           Successors and Assigns.  The rights and benefits
of this Agreement shall inure to the benefit of, and be enforceable by, the Company’s successors and assigns.  The rights and obligations of Purchaser under this Agreement may only be assigned with the prior written consent of the Company.

 

[Signature Page Follows]

  

11

  

SIGNATURE PAGE TO

 

EXERCISE NOTICE

 

The parties have executed this Exercise Notice as of the date first set forth above.

 

 

 

	  	  	
THE COMPANY:

 

Bonds.com Group, Inc., a Delaware corporation

	  	  	  
	  	  	
By:
	  
	  	  	  	
(Signature)

	  	  	
Name:
	  
	  	  	
Title:
	  

 

	  	  	
PURCHASER:

	  	  	  
	  	  	  
	  	  	
William M. Bass

I, ______________________, spouse of William M. Bass, have read and hereby approve the foregoing Agreement.  In consideration of the Company’s granting my spouse the right to purchase the Shares as set forth in the Agreement, I hereby agree to be irrevocably bound by the Agreement and further agree that any
community property or other such interest shall hereby by similarly bound by the Agreement.  I hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement.

	  	  	  
	  	  	
[Spouse of William M. Bass] (if applicable)

 

 

 

12

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