EXHIBIT 10.56

                         GRANT OF INCENTIVE STOCK OPTION

         THIS  GRANT,  dated  this 21st day of  December,  2001,  (the  "Date of
Grant"), is delivered by Vertical Computer Systems, Inc., a Delaware corporation
(the "Corporation") to Basil Nikas (the "Grantee").

         WHEREAS,  the Board of Directors of the  Corporation  (the  "Board") on
December 16, 1999, adopted,  the Incentive Stock Option Plan for the Corporation
(the "Plan");

         WHEREAS,  the plan  provides  for the  granting  of stock  options by a
committee  to be  appointed  by the Board (the  "Committee")  to  officers,  key
employees of the  Corporation or any subsidiary of the  Corporation to purchase,
or to exercise certain rights with respect to, shares of the Common Stock of the
Corporation, par value $.00001 per share (the "Stock"), in accordance with terms
and provisions thereof; and

         WHEREAS,  the Committee  considers the Grantee to be a person  eligible
for a grant of stock options under the plan, and has determined that it would be
in the best interest of the  Corporation  to grant the stock options  documented
herein.

         NOW,  THEREFORE,  the parties  hereto,  intending  to be legally  bound
hereby, agree as follows:

         1. GRANT OF OPTION.

         Subject  to  the  terms  and  conditions  hereinafter  set  forth,  the
Corporation, with the approval and the direction of the Committee, hereby grants
to the Grantee, as of the Date of Grant, an option to purchase up to One Million
Five Hundred Thousand (1,500,000) shares of Stock at a price of $0.01 per share.
Such option is hereinafter  referred to as the "Option" and the shares of Common
Stock  purchasable  upon exercise as the "Option Shares." If, from time to time,
Grantee  acquires any shares of stock pursuant to this Grant of Incentive  Stock
Option,  Grantee  accepts  and  agrees  to the  terms of the Lock Up  Agreement,
attached hereto as Exhibit A, and incorporated herein by this reference.

         2. TERMINATION OF OPTION.

         (a) The Option and all rights  hereunder with respect  thereto,  to the
extent such rights shall not have been  exercised,  shall  terminate  and become
null and void  after the  expiration  of Three (3) years  from the Date of Grant
(the "Option Term").

         (b) In the  event  of the  death  of the  Grantee,  the  Option  may be
exercised by the Grantee's legal representative(s),  but only to the extent that
the Option would otherwise have been exercisable by the Grantee.

         (c) If applicable, a transfer of the Grantee's employment,  between the
Corporation  and any subsidiary or other affiliate of the Corporation or between
any  subsidiaries or affiliates of the  Corporation  shall not be deemed to be a
termination of the Grantee's employment.



<PAGE>

         3. EXERCISE OF OPTION.

         (a) The Grantee may exercise the Option with respect to all or any part
of the  number  of Option  Shares  then  exercisable  hereunder  by  giving  the
Secretary of the Corporation written notice of intent to exercise. The notice of
exercise  shall specify the number of Option Shares as to which the Option is to
be exercised  and the date of exercise and the date of exercise  thereof,  which
date shall be at least five (5) days after the giving of such  notice  unless an
earlier time shall have been mutually agreed upon.

         (b) Full  payment (in U.S.  dollars) by the Grantee of the option price
for the Option  Shares  Purchased  shall be made on or before the exercise  date
specified in the notice of exercise in cash, or, with the prior written  consent
of the  Committee,  in whole or in part  through  the  surrender  of  previously
acquired  shares of Stock at their fair  market  value on the  exercise  date or
through the execution of a Promissory Note collateralized by the Option Shares.

         On the  exercise  date  specified  in the  Grantee's  notice or as soon
thereafter as is practicable, the Corporation shall cause to be delivered to the
Grantee,  a  certificate  or  certificates  for the  Option  Shares  then  being
purchased  (out of  theretofore  unissued  Stock  or  reacquired  Stock,  as the
Corporation may elect) upon full payment for such Option Shares.  The obligation
of the Corporation to deliver Stock shall,  however, be subject to the condition
that if at any time the Committee  shall  determine in its  discretion  that the
listing,  registration or  qualification of the Option or the Option Shares upon
any  securities  exchange  or under any state or federal  law, or the consent or
approval of any  governmental  regulatory  body,  is necessary or desirable as a
condition of, or in connection  with,  the Option or the issuance or purchase of
Stock  thereunder,  the Option may not be  exercised  in whole or in part unless
such listing, registration,  qualification,  consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee.

         (c) If the Grantee fails to pay for any of the Option Shares  specified
in such  notice or fails to accept  delivery  thereof,  the  Grantee's  right to
purchase  such Option  Shares may be  terminated  by the  Corporation.  The date
specified in the  Grantee's  notice as the date of exercise  shall be deemed the
date of  exercise of the Option,  provided  that  payment in full for the Option
Shares to be purchased upon such exercise shall have been received by such date.

         4. ADJUSTMENT OF AND CHANGES IN STOCK OF CORPORATION.

         In the event or a reorganization,  recapitalization,  change of shares,
stock  split,  spin-off,  stock  dividend,   reclassification,   subdivision  or
combination of shares,  merger,  consolidation,  rights  offering,  or any other
change in the corporate structure or shares of capital stock or the Corporation,
the Committee shall make such  adjustment as it deems  appropriate in the number
and kind of shares  of Stock  subject  to the  Option  or in the  option  price;
Provided, however, that no such adjustment shall give the Grantee any additional
benefits under the Option.


<PAGE>


         5. RIGHTS OF STOCKHOLDERS.

         Neither the Grantee nor any legal  representative  shall be or have any
of the rights and privileges of a stockholder of the Corporation with respect to
any shares of Stock  purchasable or issuable upon the exercise of the Option, in
whole or in part, unless and until the  certificate(s)  representing such shares
shall have been delivered pursuant to the terms hereof.

         6. NON-TRANSFERABILITY OF OPTION.

         During  the  Grantee's   lifetime,   the  Option   hereunder  shall  be
exercisable only by the Grantee or any legal  representative of the Grantee, and
the  Option  shall  not be  transferable  except,  in case of the  death  of the
Grantee,  by will or the laws of descent and distribution,  nor shall the Option
be subject to attachment, execution or other similar process. In no event of (a)
any attempt by the Grantee to alienate, assign, pledge, hypothecate or otherwise
dispose of the  Option,  except as provided  for herein;  or (b) the levy of any
attachment,  execution  or similar  process  upon the rights or interest  hereby
conferred,  then the  Corporation  may  terminate  the  Option  by notice to the
Grantee and it shall thereupon become null and void.

         7. EMPLOYMENT NOT AFFECTED.

         The granting of the Option nor its  exercise  shall not be construed as
granting to the Grantee any right with respect to  continuance  of employment of
the Employer.  Except as may otherwise be limited by a written agreement between
the Employer and the Grantee, the right of the Employer to terminate at will the
Grantee's  employment  with it at any time  (whether  by  dismissal,  discharge,
retirement or otherwise) is  specifically  reserved by the  Corporation,  as the
Employer  or on  behalf  of the  Employer  (whichever  the  case  may  be),  and
acknowledged by the Grantee.

         8. AMENDMENT OF OPTION.

         The Option may be amended by the Board or the Committee at any time (i)
if the Board or the Committee determines, in its sole discretion, that amendment
is  necessary  or  advisable  in the light of any  addition  to or change in the
Internal Revenue Code of 1986 or in the regulations  issued  thereunder,  or any
federal or state securities law or other law or regulation,  which change occurs
after the Date of Grant and by its terms  applies to the  Option;  or (ii) other
than in the  circumstances  described  in clause  (i),  with the  consent of the
Grantee.

         9. NOTICE.

         Any notice to the Corporation  provided for in this instrument shall be
addressed to it in care of its Secretary at its executive offices at:

                           Vertical Computer Systems, Inc.
                           6336 Wilshire Boulevard
                           Los Angeles, CA  90048

and any notice to  Grantee  shall be  addressed  to the  Grantee at the  current
address shown on the payroll records of the Employer. Any notice shall be deemed
to be duly given if and when  properly  addressed  and posted by  registered  or
certified mail postage prepaid.


<PAGE>

         10. INCORPORATION OF PLAN BY REFERENCE.

         The Option is granted  pursuant to the terms of the Plan, the terms and
conditions of which are incorporated  herein by reference,  and the Option shall
in all respects be  interpreted  and construed in accordance  with the Plan. The
Committee  shall  interpret and Construe the Plan and this  instrument,  and its
interpretations  and  determinations  shall be  conclusive  and  binding  on the
parties hereto and any other person claiming an interest hereunder, with respect
to any issue arising hereunder or thereunder.

         11. GOVERNING LAW.

         The  validity,   construction,   interpretation   and  effect  of  this
instrument  shall  exclusively by governed by and determined in accordance  with
the law of the State of Delaware, except to the extent preempted by federal law,
which shall to the extent govern.

         IN WITNESS  WHEREOF,  the  Corporation  has caused its duly  authorized
officers to execute  and attest this grant of  Incentive  Stock  Option,  and to
apply the  corporate  seal  hereto,  and the  Grantee  has placed his  signature
hereon, effective as of the Date of Grant.

                                       VERTICAL COMPUTER SYSTEMS,INC.
                                       A Delaware corporation



                                       By:
                                          --------------------------------
                                             Richard Wade, President



                                       ACCEPTED AND AGREED TO:



                                       By:
                                          -------------------------------
                                             Basil Nikas


<PAGE>


                                    Exhibit A

                                LOCK-UP AGREEMENT

         The undersigned employee hereby agrees, for a period of four (4) months
from December 21, 2001 (the "LOCK-UP PERIOD"), not to offer to sell, contract to
sell,  or  otherwise  sell,  dispose of,  loan,  pledge or grant any rights with
respect to  (collectively,  a  "DISPOSITION")  any shares of  VERTICAL  COMPUTER
SYSTEMS,  INC.  ("Company"),  Common  Stock  ("Common  Stock"),  any  options or
warrants to purchase  any shares of Common Stock or any  securities  convertible
into or exchangeable  for shares of Common Stock  (collectively,  "SECURITIES"),
now owned or hereafter  acquired  directly by the  undersigned  employee or with
respect to which  undersigned  employee has or  hereafter  acquires the power of
disposition pursuant to the Grant of Incentive Stock Option, dated, December 21,
2001 (the "Option"), otherwise than:

         (i) as a bona fide gift or gifts,  provided the donee or donees thereof
             agree to be bound by these Lock-Up provisions;
         (ii)as a  distribution  to  limited  partners  or  shareholders  of the
             undersigned,  provided  that  the  distributees  thereof  agree  in
             writing to be bound by the terms of these Lock-Up Provisions;
         (iii) in a  brokerage  transaction,  for  all  persons  holding  shares
             subject to these Lock-Up Provisions,  of no more on any trading day
             than (a) 56,250  shares (which amount is calculated by dividing the
             number  of  shares,   1,500,000   shares   currently  held  by  the
             undersigned  employee  pursuant  to the  Option  by the  number  of
             trading days in a 4 month period [80 days],  and  multiplying  that
             resultant by three), and no more during any calendar month than (b)
             375,000   shares  (which  amount  is  calculated  by  dividing  the
             1,500,000  shares  currently  held  by  undersigned  employee  by 4
             months);  however,  in the event that these shares are subject to a
             stock split or a reverse stock split, the restrictions set forth in
             this paragraph shall be adjusted proportionately; or
         (iv) with the prior written consent of the Company.

The  foregoing  restriction  is  expressly  agreed to preclude the holder of the
Securities from engaging in any hedging or other  transaction  which is designed
to or reasonably  expected to lead to or result in a  Disposition  of Securities
during the  Lock-Up  Period,  even if such  Securities  would be  disposed of by
someone  other  than  undersigned  employee.  Such  prohibited  hedging or other
transactions  would include  without  limitation  any short sale (whether or not
against the box) or any purchase,  sale or grant of any right (including without
limitation  any put or call  option)  with  respect  to any  Securities  or with
respect to any security  (other than a broad-based  market basket or index) that
includes,  relates  to or  derives  any  significant  part of its value from the
Securities.

         The undersigned  employee hereby agrees and consents:  (i) to the entry
of stop  transfer  instructions  with the Company's  transfer  agent against the
transfer of the Securities  held by the  undersigned  except in compliance  with
this Agreement,  and (ii) to furnish the Company brokerage account statements or
trade confirmations which evidence compliance with this Agreement.


Dated:   December 21, 2001
                                                        ------------------------
                                                        Basil Nikas


<PAGE>

                        EXPLANATION OF LOCK-UP PROVISIONS

The Company is requesting all employees,  advisors and other  pertinent  parties
(collectively "Insiders") to execute the attached Lock-Up Provisions Document in
order to protect the  Company's  share price on its trading  market  (NASDAQ OTC
Bulletin Board) from being unduly depressed by sales transactions by insiders.

The provisions  are designed to allow  Insider-shareholders  to sell  reasonable
amounts of Company  shares  without  disrupting  the market for Company  shares.
Obviously,  if a significant number of shares are sold within a relatively short
period of time, the effect is to lower the Company's  market price. It is in the
best interest of the Company and all of its  shareholders  to assist in creating
an "orderly" market, where sales will not, in general,  significantly impact the
Company's share price. It is very difficult, indeed, to sustain the market price
of the Company's shares,  let alone increase the market price after an ill-timed
sell-off of Company shares by Insiders or others.

The attached provisions allow an Insider to sell shares (i.e., those eligible to
be sold in the stock  market) in equal monthly  amounts over a 24-month  period.
The provisions  further limit any  single-day  sale equal to 3 times the average
"permitted daily sale" of 1/20th of the permitted  monthly amount.  For example:
an Insider holding 1,000,000 shares eligible for sale would be permitted to sell
up to a total of 41,667 shares per month (1,000,000  shares/24 months),  limited
to an average daily sale of 2,083 shares (41,667  shares/20  days).  The highest
permitted daily sale in any month would be 6,250 shares (2,083 shares x 3).

Note that the provisions allow an Insider to sell more shares than are permitted
under the  formulae  with written  Company  permission  in order to  accommodate
emergency and hardship situations.




                                  Page 6 of 6