EXHIBIT 10.11




EXHIBIT 10.11



ARS
Networks, Incorporated



 


2002 NON-QUALIFIED STOCK COMPENSATION PLAN


1.            Purpose of Plan


            1.1            This 2002 NON-QUALIFIEDSTOCK COMPENSATION PLAN (the "Plan")
of ARS Networks, Incorporated, a New Hampshire incorporated company,  (the "Company") for employees, directors,
officers, consultants, advisors and other persons associated with the Company,
is intended to advance the best interests of the Company by providing those
persons who have a substantial responsibility for its management and growth
with additional incentive and by increasing their proprietary interest in the
success of the Company, thereby encouraging them to maintain their
relationships with the Company. 
Further, the availability and offering of stock options and common stock
under the Plan supports and increases the Company's ability to attract and
retain individuals of exceptional talent upon whom, in large measure, the
sustained progress, growth and profitability of the Company depends.


2.            Definitions


            2.1            For Plan purposes, except where the
context might clearly indicate otherwise, the following terms shall have the
meanings set forth below:


            "Board"
shall mean the Board of Directors of the Company.


            "Committee"
shall mean the Compensation Committee, or such other committee appointed by the
Board, which shall be designated by the Board to administer the Plan, or the
Board if no committees have been established. 
The Committee shall be composed of three or more persons as from
time to time are appointed to serve by the Board.  Each member of the Committee, while serving as such, shall be a
disinterested person with the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934.


            "Common
Shares" shall mean the Company's Common Shares, $.0001 par value per share, or,
in the event that the outstanding Common Shares are hereafter changed into or
exchanged for different shares of securities of the Company, such other shares
or securities.


            "Company"
shall mean ARS Networks, Incorporated a New Hampshire corporation, and any subsidiary corporation of ARS Networks,
Incorporated, as such terms are defined in Sections 425(e) and 425(f),
respectively, of the Code.


            "Fair
Market Value" shall mean, with respect to the date a given stock option is
granted or exercised, the average of the highest and lowest reported sales
prices of the Common Shares, as reported by such responsible reporting service
as the Committee may select, or if there were not transactions in the Common
Shares on such day, then the last preceding day on which transactions took
place.  The above withstanding, the
Committee may determine the Fair Market Value in such other manner as it may
deem more equitable for Plan purposes or as is required by applicable laws or
regulations.





 


            "Optionee"
shall mean an employee of, director of or consultant to the company who has
been granted one or more Stock Options under the Plan.


            "Common
Stock" shall mean shares of common stock which are issued by the Company
pursuant to Section 5, below.


            "Common Stockholder"means the employee of, consultant to,
or director of the Company or other person to whom shares of Common Stock are
issued pursuant to this Plan.


            "Common
Stock Agreement" means an agreement executed by a Common Stockholder and the
Company as contemplated by Section 5, below, which imposes on the shares of
Common Stock held by the Common Stockholder such restrictions as the Board or
Committee deem appropriate.


            "Stock
Option" or "Non-Qualified Stock Option" or "NQSO" shall mean a stock option
granted pursuant to the terms of the Plan.


            "Stock
Option Agreement" shall mean the agreement between the Company and the Optionee
under which the Optionee may purchase Common Shares hereunder.


3.            Administration of the Plan


            3.1            The Committee shall administer the
Plan and accordingly, it shall recommend to the Board the grant Stock Options
and Common Stock, provide interpretations of the Plan, establish rules and
regulations and perform all other acts, including the delegation of
administrative responsibilities, it believes reasonable and proper.


            3.2            The determination of those eligible
to receive Stock Options and Common Stock, and the amount, type and timing of
each grant and the terms and conditions of the respective stock option
agreements and Common Stock Agreements shall rest in the sole discretion of the
Board, subject to Committee recommendations under the provisions of the Plan.


            3.3            The Board may cancel any Stock
Options awarded under the Plan if an Optionee conducts himself in a manner
which the Committee in its sole discretion determines to be willful, harmful or
detrimental to the best interest of the Company, as set forth more fully in
paragraph 8 of Article 11 of the Plan.


            3.4            The Board, or the Committee, may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan, or in any granted Stock Option, in the manner and to the extent it shall
deem necessary to carry it into effect.





 


            3.5            Any decision made, or action taken,
by the Board arising out of or in connection with the interpretation and administration
of the Plan shall be final and conclusive.


            3.6            The Committee
shall, in its discretion, have the power to issue Common Shares to holders of
non-qualified incentive stock option agreements which are outstanding as of the
date hereof, pursuant to the terms of those option agreements.                  


            3.7            Meetings of the Committee shall be
held at such times and places as shall be determined by the Committee.  A majority of the members of the Committee
shall constitute a quorum for the transaction of business, and the vote of a
majority of those members present at any meeting shall decide any question
brought before that meeting.  In
addition, the Committee may take any action otherwise proper under the Plan by
the affirmative vote, taken without a meeting, of a majority of its members.


            3.8            No member of the Committee shall be
liable for any act or omission of any other member of the Committee or for any
act or omission on his own part, including, but not limited to, the exercise of
any power or discretion given to him under the Plan, except those resulting
from his own gross negligence or willful misconduct.


            3.9            The Company, through its management,
shall supply full and timely information to the Committee on all matters
relating to the eligibility of Optionees, their duties and performance, and
current information on any Optionee's death, retirement, disability or other
termination of association with the Company, and such other pertinent
information as the Committee may require. 
The Company shall furnish the Committee with such clerical and other
assistance as is necessary in the performance of its duties hereunder.


4.         Shares Subject to the Plan


            4.1            The total number of shares of the
Company available for grants of Stock Options and Common Stock under the Plan
shall be 5,000,000 Common Shares, subject to adjustment in accordance with
Article 7 of the Plan, which shares may be either authorized but unissued or
reacquired Common Shares of the Company.


            4.2            If a Stock Option or portion thereof
shall expire or terminate for any reason without having been exercised in full,
the unpurchased shares covered by such NQSO shall be available for future
grants of Stock Options.


5.         Award
Of Common Stock


            5.1            The
Board or Committee from time to time, in its absolute discretion, may (a) award
Common Stock to employees of, consultants to, and directors of the Company, and
such other persons as the Board or Committee may select, and (b) permit Holders
of Options to exercise such Options prior to full vesting therein and hold the
Common Shares issued upon exercise of the Option as Common Stock.  In either such event, the owner of such
Common Stock shall hold such stock subject to such vesting schedule as the
Board or Committee may impose or such vesting schedule to which the Option was
subject, as determined in the discretion of the Board or Committee.





 


            5.2            Common
Stock shall be issued only pursuant to a Common Stock Agreement, which shall be
executed by the Common Stockholder and the Company and which shall contain such
terms and conditions as the Board or Committee shall determine consistent with
this Plan, including such restrictions on transfer as are imposed by the Common
Stock Agreement.


            5.3            Upon
delivery of the shares of Common Stock to the Common Stockholder, below, the
Common Stockholder shall have, unless otherwise provided by the Board or
Committee, all the rights of a stockholder with respect to said shares, subject
to the restrictions in the Common Stock Agreement, including the right to
receive all dividends and other distributions paid or made with respect to the
Common Stock.


            5.4.            Notwithstanding anything in this Plan or any Common Stock
Agreement to the contrary, no Common Stockholders may sell or otherwise
transfer, whether or not for value, any of the Common Stock prior to the date
on which the Common Stockholder is vested therein.


            5.5            All
shares of Common Stock issued under this Plan (including any shares of Common
Stock and other securities issued with respect to the shares of Common Stock as
a result of stock dividends, stock splits or similar changes in the capital
structure of the Company) shall be subject to such restrictions as the Board or
Committee shall provide, which restrictions may include, without limitation,
restrictions concerning voting rights, transferability of the Common Stock and
restrictions based on duration of employment with the Company, Company
performance and individual performance; provided that the Board or Committee
may, on such terms and conditions as it may determine to be appropriate, remove
any or all of such restrictions. 
Common Stock may not be sold or encumbered until all applicable
restrictions have terminated or expire. 
The restrictions, if any, imposed by the Board or Committee or the Board
under this Section 5 need not be identical for all Common Stock and the
imposition of any restrictions with respect to any Common Stock shall not
require the imposition of the same or any other restrictions with respect to
any other Common Stock.


            5.6            Each
Common Stock Agreement shall provide that the Company shall have the right to
repurchase from the Common Stockholder the Common Stock or from the Optionee
any unvested options upon a termination of employment, termination of
directorship or termination of a consultancy arrangement, as applicable, at a
cash price per share equal to the purchase price paid by the Common Stockholder
for such Common Stock.


            5.7            In
the discretion of the Board or Committee, the Common Stock Agreement may
provide that the Company shall have the a right of first refusal at Fair Market
Value with respect to the Common Stock and a right to repurchase the Common
Stock upon a termination of the Common Stockholder's employment with the
Company, the termination of the Common Stockholder's consulting arrangement with
the Company, the termination of the Common Stockholder's service on the
Company's Board, or such other events as the Board or Committee may deem
appropriate.





 


            5.8            The
Board or Committee shall cause a legend or legends to be placed on certificates
representing shares of Common Stock that are subject to restrictions under
Common Stock Agreements, which legend or legends shall make appropriate
reference to the applicable restrictions.


6.         Stock Option Terms and Conditions


            6.1            Consistent with the Plan's purpose,
Stock Options may be granted to non-employee directors of the Company or other
persons who are performing or who have been engaged to perform services of
special importance to the management, operation or development of the Company.


            6.2            All Stock Options granted under the
Plan shall be evidenced by agreements which shall be subject to applicable
provisions of the Plan, and such other provisions as the Committee may adopt,
including the provisions set forth in paragraphs 2 through 11 of this Section 6.


            6.3            All Stock Options granted hereunder
must be granted within ten years from the earlier of the date of this Plan is
adopted or approved by the Company's shareholders.


            6.4            No Stock Option granted to any
employee or 10% Shareholder shall be exercisable after the expiration of ten
years from the date such NQSO is granted. 
The Committee, in its discretion, may provide that an Option shall be
exercisable during such ten year period or during any lesser period of time.


                        The Committee may establish installment
exercise terms for a Stock Option such that the NQSO becomes fully exercisable
in a series of cumulating portions.  If
an Optionee shall not, in any given installment period, purchase all the Common
Shares which such Optionee is entitled to purchase within such installment
period, such Optionee's right to purchase any Common Shares not purchased in
such installment period shall continue until the expiration or sooner
termination of such NQSO.  The Committee
may also accelerate the exercise of any NQSO. 
However, no NQSO, or any portion thereof, may be exercisable until
thirty (30) days following date of grant ("30-Day Holding Period.").


            6.5            A Stock Option, or portion thereof,
shall be exercised by delivery of (i)  a
written notice of exercise of the Company specifying the number of common
shares to be purchased, and (ii) 
payment of the full price of such Common Shares, as fully set forth in
paragraph 6 of this Section 6.


                        No NQSO or installment thereof shall
be exercisable except with respect to whole shares, and fractional share
interests shall be disregarded.  Not
less than 100 Common Shares may be purchased at one time unless the number
purchased is the total number at the time available for purchase under the
NQSO.  Until the Common Shares represented
by an exercised NQSO are issued to an Optionee, he shall have none of the
rights of a shareholder.





 


            6.6            The exercise price of a Stock
Option, or portion thereof, may be paid:


                        A.            In
United States dollars, in cash or by cashier's check, certified check, bank
draft or money order, payable to the order of the Company in an amount equal to
the option price;  or


                        B.            At
the discretion of the Committee, through the delivery of fully paid and
nonassessable Common Shares, with an aggregate Fair Market Value on the date
the NQSO is exercised equal to the option price, provided such tendered Shares
have been owned by the Optionee for at least one year prior to such
exercise;  or


                        C.            By
a combination of both A and B above.


                        The Committee shall determine
acceptable methods for tendering Common Shares as payment upon exercise of a
Stock Option and may impose such limitations and prohibitions on the use of
Common Shares to exercise an NQSO as it deems appropriate.


            6.7            With the Optionee's consent, the Committee
may cancel any Stock Option issued under this Plan and issue a new NQSO to such
Optionee.


            6.8            Except by will or the laws of
descent and distribution, no right or interest in any Stock Option granted
under the Plan shall be assignable or transferable, and no right or interest of
any Optionee shall be liable for, or subject to, any lien, obligation or
liability of the Optionee.  Stock
Options shall be exercisable during the Optionee's lifetime only by the Optionee
or the duly appointed legal representative of an incompetent Optionee.


            6.9            If the Optionee shall die while
associated with the Company or within three months after termination of such
association, the personal representative or administrator of the Optionee's
estate or the person(s) to whom an NQSO granted hereunder shall have been
validly transferred by such personal representative or administrator pursuant
to the Optionee's will or the laws of descent and distribution, shall have the
right to exercise the NQSO for one year after the date of the Optionee's death,
to the extent (i)  such NQSO was
exercisable on the date of such termination of employment by death, and (ii)
such NQSO was not exercised, and (iii)  the
exercise period may not be extended beyond the expiration of the term of the
Option.


                        No transfer of a Stock Option by the
will of an Optionee or by the laws of descent and distribution shall be
effective to bind the Company unless the Company shall have been furnished with
written notice thereof and an authenticated copy of the will and/or such other
evidence as the Committee may deem necessary to establish the validity of the
transfer and the acceptance by the transferee or transferee of the terms and
conditions by such Stock Option.





 


                        In the event of death following
termination of the Optionee's association with the Company while any portion of
an NQSO remains exercisable, the Committee, in its discretion, may provide for
an extension of the exercise period of up to one year after the Optionee's
death but not beyond the expiration of the term of the Stock Option.


 


7.            Adjustments or Changes in
Capitalization


            7.1            In the event that the outstanding
Common Shares of the Company are hereafter changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of merger, consolidation, other reorganization, recapitalization,
reclassification, combination of shares, stock split-up or stock dividend:


                        A.            Prompt,
proportionate, equitable, lawful and adequate adjustment shall be made of the
aggregate number and kind of shares subject to Stock Options which may be
granted under the Plan, such that the Optionee shall have the right to purchase
such Common Shares as may be issued in exchange for the Common Shares
purchasable on exercise of the NQSO had such merger, consolidation, other
reorganization, recapitalization, reclassification, combination of shares,
stock split-up or stock dividend not taken place;


                        B.            Rights
under unexercised Stock Options or portions thereof granted prior to any such
change, both as to the number or kind of shares and the exercise price per
share, shall be adjusted appropriately, provided that such adjustments shall be
made without change in the total exercise price applicable to the unexercised
portion of such NQSO's but by an adjustment in the price for each share covered
by such NQSO's;  or


                        C.            Upon
any dissolution or liquidation of the Company or any merger or combination in
which the Company is not a surviving corporation, each outstanding Stock Option
granted hereunder shall terminate, but the Optionee shall have the right,
immediately prior to such dissolution, liquidation, merger or combination, to
exercise his NQSO in whole or in part, to the extent that it shall not have
been exercised, without regard to any installment exercise provisions in such
NQSO.


            7.2            The foregoing adjustments and the
manner of application of the foregoing provisions shall be determined solely by
the Committee, whose determination as to what adjustments shall be made and the
extent thereof, shall be final, binding and conclusive.  No fractional Shares shall be issued under
the Plan on account of any such adjustments.


8.            Merger, Consolidation or Tender
Offer


            8.1            If the Company shall be a party to a
binding agreement to any merger, consolidation or reorganization or sale of
substantially all the assets of the Company, each outstanding Stock Option
shall pertain and apply to the securities and/or property which a shareholder
of the number of Common Shares of the Company subject to the NQSO would be
entitled to receive pursuant to such merger, consolidation or reorganization or
sale of assets.





 


            8.2            In the event that:


                        A.            Any
person other than the Company shall acquire more than 20% of the Common Shares
of the Company through a tender offer, exchange offer or otherwise;


                        B.            A
change in the "control" of the Company occurs, as such term is defined in Rule
405 under the Securities Act of 1933;


                        C.            There
shall be a sale of all or substantially all of the assets of the Company;


any then outstanding Stock Option held by an
Optionee, who is deemed by the Committee to be a statutory officer ("Insider")
for purposes of Section 16 of the Securities Exchange Act of 1934 shall be
entitled to receive, subject to any action by the Committee revoking such an
entitlement as provided for below, in lieu of exercise of such Stock Option, to
the extent that it is then exercisable, a cash payment in an amount equal to
the difference between the aggregate exercise price of such NQSO, or portion
thereof, and, (i)  in the event of an
offer or similar event, the final offer price per share paid for Common Shares,
or such lower price as the Committee may determine to conform an option to
preserve its Stock Option status, times the number of Common Shares covered by
the NQSO or portion thereof, or (ii)  in
the case of an event covered by B or C above, the aggregate Fair Market Value
of the Common Shares covered by the Stock Option, as determined by the
Committee at such time.


            8.3            Any payment which the Company is
required to make pursuant to paragraph 8.2 of this Section 8 shall be made
within 15 business days, following the event which results in the Optionee's
right to such payment.  In the event of
a tender offer in which fewer than all the shares which are validly tendered in
compliance with such offer are purchased or exchanged, then only that portion
of the shares covered by an NQSO as results from multiplying such shares by a
fraction, the numerator of which is the number of Common Shares acquired pursuant
to the offer and the denominator of which is the number of Common Shares
tendered in compliance with such offer shall be used to determine the payment
thereupon.  To the extent that all or
any portion of a Stock Option shall be affected by this provision, all or such
portion of the NQSO shall be terminated.


            8.4            Notwithstanding paragraphs 8.1 and
8.3 of this Section 8, the Committee may, by unanimous vote and resolution,
unilaterally revoke the benefits of the above provisions;  provided, however, that such vote is taken
no later than ten business days following public announcement of the intent of
an offer or the change of control, whichever occurs earlier.





9.            Amendment and Termination of Plan


            9.1            The Board may at any time, and from
time to time, suspend or terminate the Plan in whole or in part or amend it
from time to time in such respects as the Board may deem appropriate and in the
best interest of the Company.


            9.2            No amendment, suspension or
termination of this Plan shall, without the Optionee's consent, alter or impair
any of the rights or obligations under any Stock Option theretofore granted to
him under the Plan.


            9.3            The Board may amend the Plan,
subject to the limitations cited above, in such manner as it deems necessary to
permit the granting of Stock Options 
meeting the requirements of future amendments or issued regulations, if
any, to the  Code.


            9.4            No NQSO may be granted during any
suspension of the Plan or after termination of the Plan.


10.            Government and Other Regulations


            10.1            The obligation of the Company to
issue, transfer and deliver Common Shares for Stock Options exercised under the
Plan shall be subject to all applicable laws, regulations, rules, orders and
approval which shall then be in effect and required by the relevant stock
exchanges on which the Common Shares are traded and by government entities as
set forth below or as the Committee in its sole discretion shall deem necessary
or advisable.  Specifically, in
connection with the Securities Act of 1933, as amended, upon exercise of any
Stock Option, the Company shall not be required to issue Common Shares unless
the Committee has received evidence satisfactory to it to the effect that the
Optionee will not transfer such shares except pursuant to a registration statement
in effect under such Act or unless an opinion of counsel satisfactory to the
Company has been received by the Company to the effect that such registration
is not required.  Any determination in
this connection by the Committee shall be final, binding and conclusive.  The Company may, but shall in no event be
obligated to, take any other affirmative action in order to cause the exercise
of a Stock Option or the issuance of Common Shares pursuant thereto to comply
with any law or regulation of any government authority.


11.            Miscellaneous Provisions


            11.1            No person shall have any claim or
right to be granted a Stock Option or Common Stock under the Plan, and the
grant of an NQSO or Common Stock under the Plan shall not be construed as
giving an Optionee or Common Stockholder the right to be retained by the
Company.  Furthermore, the Company
expressly reserves the right at any time to terminate its relationship with an
Optionee with or without cause, free from any liability, or any claim under the
Plan, except as provided herein, in an option agreement, or in any agreement
between the Company and the Optionee.


            11.2            Any expenses of administering this
Plan shall be borne by the Company.





 


            11.3            The payment received from Optionee
from the exercise of Stock Options under the Plan shall be used for the general
corporate purposes of the Company.


            11.4            The place of administration of the
Plan shall be in the State of New York, and the validity, construction,
interpretation, administration and effect of the Plan and of its rules and
regulations, and rights relating to the Plan, shall be determined solely in
accordance with the laws of the State of New Hampshire.


            11.5            Without amending the Plan, grants
may be made to persons who are foreign nationals or employed outside the United
States, or both, on such terms and conditions, consistent with the Plan's
purpose, different from those specified in the Plan as may, in the judgment of
the Committee, be necessary or desirable to create equitable opportunities
given differences in tax laws in other countries.


            11.6            In addition to such other rights of
indemnification as they may have as members of the Board or the Committee, the
members of the Committee shall be indemnified by the Company against all costs
and expenses reasonably incurred by them in connection with any action, suit or
proceeding to which they or any of them may be party by reason of any action
taken or failure to act under or in connection with the Plan or any Stock
Option granted thereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except a judgment based upon a finding of bad
faith;  provided that upon the
institution of any such action, suit or proceeding a Committee member shall, in
writing, give the Company notice thereof and an opportunity, at its own
expense, to handle and defend the same, with counsel acceptable to the
Optionee,  before such Committee member
undertakes to handle and defend it on his own behalf.


            11.7            Stock Options may be granted under
this Plan from time to time, in substitution for stock options held by
employees of other corporations who are about to become employees of the
Company as the result of a merger or consolidation of the employing corporation
with the Company or the acquisition by the Company of the assets of the
employing corporation or the acquisition by the Company of stock of the employing
corporation as a result of which it becomes a subsidiary of the Company.  The terms and conditions of such substitute
stock options so granted may vary from the terms and conditions set forth in
this Plan to such extent as the Board of Directors of the Company at the time
of grant may deem appropriate to conform, in whole or in part, to the
provisions of the stock options in substitution for which they are granted, but
no such variations shall be such as to affect the status of any such substitute
stock options as a stock option under Section 422A of the Code.


            11.8            Notwithstanding anything to the
contrary in the Plan, if the Committee finds by a majority vote, after full
consideration of the facts presented on behalf of both the Company and the Optionee,
that the Optionee has been engaged in fraud, embezzlement, theft, insider
trading in the Company's stock, commission of a felony or proven dishonesty in
the course of his association with the Company or any subsidiary corporation
which damaged the Company or any subsidiary corporation, or for disclosing
trade secrets of the Company or any subsidiary corporation, the Optionee shall
forfeit all unexercised Stock Options and all exercised NQSO's under which the
Company has not yet delivered the certificates and which have been earlier
granted to the Optionee by the Committee. 
The decision of the Committee as to the cause of an Optionee's discharge
and the damage done to the Company shall be final.  No decision of the Committee, however, shall affect the finality
of the discharge of such Optionee by the Company or any subsidiary corporation
in any manner.





 


12.            Written Agreement


            12.1            Each Stock Option granted hereunder
shall be embodied in a written Stock Option Agreement which shall be subject to
the terms and conditions prescribed above and shall be signed by the Optionee
and by the President or any Vice President of the Company, for and in the name
and on behalf of the Company.  Such
Stock Option Agreement shall contain such other provisions as the Committee, in
its discretion shall deem advisable.