EXHIBIT 10.5
NON-PLAN STOCK OPTION AGREEMENT
-------------------------------
THIS STOCK OPTION AGREEMENT (this "Agreement") is made as of the 7th
day of August, 2006 between DATA SYSTEMS & SOFTWARE INC., a Delaware corporation
(the "Company"), and Andy Roesch (the "Optionee").
RECITALS
--------
WHEREAS, in connection with that certain (i) Employment Agreement,
dated as of the date hereof between Paketeria GmbH ("Paketeria") and the
Optionee, and (ii) Common Stock Purchase Agreement, dated as of the date hereof
(the "Purchase Agreement"), between Paketeria and the Company, and the
transactions contemplated thereby, the parties hereto are entering into this
Agreement;
WHEREAS, the Purchase Agreement states that, as a condition to its
effectiveness, the Company and the Optionee enter into this Agreement; and
WHEREAS the Board of Directors of the Company (the "Board"), authorized
the grant to Optionee, an option to purchase 150,000 shares of the Company's
common stock, par value $.01 per share (the "Common Stock").
WHEREAS, the parties hereto desire to enter into this Agreement in
order to set forth the terms of such option.
Accordingly, the parties hereto agree as follows:
1. Grant of Option; Exercise Price.
(a) Subject to the terms and conditions of this Agreement, the
Company hereby grants to Optionee the option (the "Option") to purchase, from
the Company, up to 150,000 shares of Common Stock ("Option Shares") at a price
per share of $______ (the "Exercise Price"). The Option Shares and the Exercise
Price are subject to adjustment in accordance with the provisions set forth in
Section 5 below.
(b) The Optionee shall deliver a fully executed Form W-8 to the
Company, dated as of the date hereof, in the form of Exhibit A hereto.
2. Non-Incentive Stock Option. The Option is not intended to qualify as
an "incentive stock option" within the meaning of Section 422A of the Internal
Revenue Code of 1986, as amended.
3. Vesting of Option. This Option shall vest and thereby become
exercisable in three equal parts, of which (a) one-third of the Option Shares
(50,000 shares) shall vest upon Complete Execution (as defined below) of a
licence agreement for the sixtieth (60th) Paketeria store, (b) one-third of the
Option Shares (50,000 shares) shall vest upon Complete Execution of a licence
agreement for the seventy-fifth (75th) Paketeria store, and (c) the remaining
one-third of the Option Shares (50,000 shares) shall vest upon Complete
Execution of a licence agreement for the one-hundred and fifteenth (115th)
Paketeria store. For purposes of this Agreement, "Complete Execution" shall
mean, with respect to each license agreement executed by the Paketeria, (i) a
fully executed license agreement between Paketeria and a licensee, (ii) the
licensee shall pay the Paketeria, and/or provide the Paketeria with evidence of
sufficient financing to fund the payment of, both the license fee required
pursuant to the license agreement and the reasonable "build-out" costs of such
licensee's store, and (iii) if necessary, acceptance of such [licensee/license
agreement] by the Kreditanstalt fur Wiederaufbau.
4. Termination of Option. This Option shall terminate (x) to the extent
vested, upon the earlier of (i) August 7, 2011 (the "Expiration Date"), and (ii)
the date ninety (90) days from the date on which Optionee ceases to be an
employee of Paketeria for any reason, and (y) to the extent unvested, upon the
earlier of (i) the Expiration Date, and (ii) the date on which Optionee ceases
to be an employee of the Company for any reason.
5. Adjustments.
(a) In the event of a stock split, stock dividend, combination of
shares, or any other similar change in the Common Stock as a whole, the Board
shall make equitable, proportionate adjustments in the number and kind of shares
covered by the Option and in the Exercise Price.
(b) In the event of any reclassification or reorganization of the
outstanding shares of Common Stock other than a change covered by subsection (a)
hereof or that solely affects the par value of such shares of Common Stock, or
in the case of any merger or consolidation of the Company with or into another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and that does not result in any reclassification or
reorganization of the outstanding shares of Common Stock), the Optionee shall
have the right thereafter (until the expiration of the right of exercise of this
Option) to receive upon the exercise hereof after such event, for the same
aggregate Exercise Price payable hereunder immediately prior to such
reclassification, reorganization, merger or consolidation, the amount and kind
of consideration receivable by a holder of the number of shares of Common Stock
obtainable upon exercise of this Option immediately prior to such event. The
provisions of this subsection (b) shall similarly apply to successive
reclassifications, reorganizations, mergers or consolidations, sales or other
transfers.
6. Manner of Exercise. This Option may be exercised by the delivery to
the Company of a written notice signed by the Optionee in the form of Exhibit B
hereto, together with either (i) full payment of the purchase price therefor in
cash or by certified check payable to the order of the Company, or (ii)
irrevocable instructions to a broker designated or approved by the Company to
sell shares of Common Stock equal to the Option Shares and promptly deliver to
the Company a portion of the proceeds thereof equal to the Exercise Price and
any applicable withholding taxes. The Optionee may be required to remit to the
Company an amount sufficient to satisfy any federal, state or local withholding
tax requirements prior to delivering to Optionee the Option Shares. This Option
may not be exercised with respect to a fractional share.
7. Restriction on Transfer.
(a) This Option may not be assigned or transferred and during the
Optionee's lifetime may be exercised only by Optionee.
(b) Notwithstanding anything in this Agreement to the contrary, the
Optionee hereby agrees that he shall not sell, transfer by any means or
otherwise dispose of the Options Shares acquired by him without registration
under the Securities Act of 1933, as amended (the "Securities Act"), or that in
the event that they are not so registered, unless (i) an exemption from the
Securities Act requirements is available thereunder, and (ii) the Optionee has
furnished the Company with notice of such proposed transfer and the Company's
legal counsel, in its reasonable opinion, shall deem such proposed transfer to
be so exempt.
8. Miscellaneous.
(a) Notices. Any notice or communication hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, or
by United States mail, to the following address (or to such other address as
either party shall from time to time specify):
If to the Company: Data Systems & Software Inc.
200 Route 17
Mahwah, New Jersey 07340
Attention: Secretary
If to the Optionee: Mr. Andy Roesch
Kornblumenring 3
12357 Berlin
(b) Stockholder Rights. The Optionee shall not have any of the
rights of a stockholder with respect to the Option Shares until such shares have
been issued after the due exercise of the Option.
(c) Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
(d) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof. This
Agreement may not be amended except by writing executed by the Optionee and the
Company.
(e) Counterparts; Facsimile. This Agreement may be executed and
delivered by facsimile signature and in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Execution and delivery of this Agreement by facsimile
transmission (including the delivery of documents in Adobe PDF format) shall
constitute execution and delivery of this Agreement for all purposes, with the
same force and effect as execution and delivery of an original manually signed
copy hereof.
(f) Binding Effect; Successors. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives, any rights, remedies,
obligations or liabilities.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York (without regard to choice
of law provisions); provided, however, that all matters relating to or involving
corporate law shall be governed by the Delaware General Corporation Law.
(h) Headings. The headings contained herein are for the sole purpose
of convenience of reference and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
(i) Severability. If any one or more provisions of this Agreement
shall be found to be illegal or unenforceable in any respect, the validity and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
(j) Dispute Resolution. The parties (a) hereby irrevocably and
unconditionally submit to the jurisdiction of the state courts of New York and
to the jurisdiction of the United States District Court for the Southern
District of New York for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement, (b) agree not to commence any suit,
action or other proceeding arising out of or based upon this Agreement except in
the state courts of New York or the United States District Court for the
Southern District of New York, and (c) hereby waive, and agree not to assert, by
way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that its property is exempt or immune from attachment or
execution, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced in or by such court.
(k) Waiver of Jury Trial. Each party hereto waives any right it may
have to a trial by jury in any action or proceeding directly or indirectly
arising out of or relating to this Agreement or the transactions contemplated
hereby (whether based on contract, tort, equity or any other theory). Each party
certifies that no representative, agent or attorney of the other party has
represented, expressly or otherwise, that the other party to this Agreement
would not, in the event of litigation, seek to enforce the foregoing waiver and
acknowledges that all parties hereto have been induced to enter into this
Agreement by, among other things, the waivers and certifications contained in
this Section 8(k).
[Signature Page(s) Follow(s)]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
DATA SYSTEMS & SOFTWARE INC.
By:
-------------------------
Name:
Title
OPTIONEE
By:
-------------------------
Andy Roesch
Roesch Option Agreement Signature Page
EXHIBIT A
FORM W-8
--------
EXHIBIT B
OPTION EXERCISE FORM
--------------------
DATA SYSTEMS & SOFTWARE INC.
200 ROUTE 17
MAHWAH, NJ 07430
Gentlemen:
I hereby exercise the following portion of the stock options
that have heretofore been granted to me under the Non-Plan Stock Option
Agreement by and between myself and Data Systems & Software Inc. dated as of
August [ ], 2006:
Date of grant August 7, 2006
--------------
Exercise price per share $
--------
Number of options originally granted 150,000
---------
Number of options currently held
Number of options being exercised hereby
In connection with this exercise [check one]:
_____ I enclose my check in the amount of $
_____ I am delivering to a broker designated or approved by
the Company irrevocable instructions to (i) sell shares of Common Stock acquired
upon exercise and (ii) promptly deliver to the Company a portion of the proceeds
thereof equal to the Exercise Price and any applicable withholding taxes.
I hereby agree to execute whatever other documents are
necessary in order to comply with the Agreement and any applicable legal
requirements in connection with the issuance of the stock to me pursuant to the
Agreement.
Optionee (Signature)
- -------------------------
Please print name
Date Address