EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT  AGREEMENT (the  "Agreement") is entered into as of the
28th day of October,  1999, by and between BASE TEN SYSTEMS,  INC., a New Jersey
corporation   (the   "Company")   and  Stephen  A.   Cloughley,   an  individual
("Cloughley").

         WHEREAS,  the Company  believes that given  Cloughley's  experience and
knowledge of Base Ten Systems technology and the software technology development
industry and his business and management  skills,  it would be to the benefit of
the Company for Cloughley to serve the Company as President and Chief  Executive
Officer; and

         WHEREAS,  Cloughley is willing to serve the Company in such  capacities
and enter into the obligations hereunder set forth.

         NOW, THEREFORE, in consideration of the premises,  mutual covenants and
agreements contained herein, the parties hereto,  intending to be legally bound,
do hereby agree as follows:

         1.  EMPLOYMENT  OF  CLOUGHLEY.  Effective as of October 28,  1999,  the
Company  hereby employs  Cloughley for the duration of the  Employment  Term and
Cloughley  agrees to serve the  Company  as its  President  and Chief  Executive
Officer for the duration of the Employment Term.

         2. EMPLOYMENT TERM. The term of Cloughley's employment pursuant to this
Agreement  shall be from  October 28, 1999 to and  including  October 27,  2000,
unless sooner terminated as provided in this Agreement (the "Employment  Term").
Cloughley's  employment with the Company pursuant to this Agreement shall expire
(an  "Expiration")  on  October  27,  2000,  its  natural  expiration  date (the
"Expiration Date"). In no event shall this Agreement remain in effect beyond the
Expiration Date, provided,  that certain provisions of this Agreement may remain
in effect beyond the Expiration Date, as expressly  provided  herein.  Cloughley
may remain an  employee-at-will of the Company after the Expiration Date, unless
and until such time as such  employment  terminates or Cloughley and the Company
execute a new employment agreement.

         3. DUTIES.  During the  Employment  Term,  Cloughley  shall  faithfully
perform the duties of President and Chief  Executive  Officer to the best of his
ability and shall  devote  substantially  all of his working time and efforts to
the affairs of the  Company;  provided,  however,  that he may also (a) serve on
such  boards  of  a  reasonable  number  of  other  business   entities,   trade
associations  and/or  charitable  organizations as the Board of Directors of the
Company  (the  "Board")  may  reasonably  approve,   (b)  engage  in  charitable
activities  and community  affairs and (c) manage his personal  investments  and
affairs,  provided  that  such  activities  do not  interfere  with  the  proper
performance of his duties and responsibilities under this Agreement; and further
provided that Cloughley may serve on the board of directors of Carels Innovative
Software  ("Carels") so long as such activities do not interfere with the proper
performance of his duties and responsibilities  under this Agreement and so long
as Cloughley is not involved in the day to day  activities of Carels.  Cloughley
shall report solely to the Board, shall have the authority and  responsibilities
customarily  associated  with the  positions  of President  and Chief  Executive
Officer of a publicly held  corporation,  and shall perform such duties relating
to the management and operations of the Company,  consistent with the foregoing,
as may from time to time be assigned to him by the Board. Cloughley shall not be
assigned duties or responsibilities  materially  inconsistent with the foregoing
duties and  responsibilities  provided  that in the event  Cloughley is assigned
duties which he believes are materially  inconsistent with such duties, he shall
provide to the Board written, detailed notice of such inconsistencies, whereupon
the Board,  without  causing a breach of this  Agreement  with respect  thereto,
shall have 10 days within which to make an  appropriate  adjustment to eliminate
any duties which it determines to be inconsistent with such duties.

         4.  Compensation.  As  compensation  for the services to be rendered by
Cloughley, the Company shall pay to Cloughley:

                  (a) During the Employment  Term, a salary at a rate of no less
than $180,000  annually  (the "Base  Salary"),  payable in  accordance  with the
customary  payroll  practices  applicable  to senior  executives of the Company,
which shall not be decreased at any time, or for any purpose  (including for the
purpose  of  determining   severance  benefits  under  Section  5),  during  the
Employment Term.

                  (b)  On the  date  hereof,  as an  inducement  to  Cloughley's
agreement and  willingness to accept this  position,  the Company shall award to
Cloughley ten-year  non-qualified  stock options (the  "Performance-Based  Stock
Options")  pursuant to the Base Ten  Systems,  Inc.  1998 Stock Option and Stock
Award Plan,  to  purchase a maximum of 55,000  shares of the  Company's  Class A
Common Stock at $1.00 per share. The Performance-Based Stock Options shall be in
substantially the form of the Performance-Based  Stock Option Agreement attached
as  Exhibit A and shall  vest and  become  exercisable  as  follows:  (i) 30,000
options  shall vest 45 days after the  Company  achieves  its first  "profitable
quarter"  (provided that the number of days shall be 90 days with respect to the
fourth quarter of a year)  following the execution of this  Agreement;  and (ii)
25,000  options  shall vest 45 days after the Company  achieves  its first "cash
flow positive  quarter"  (provided that the number of days shall be 90 days with
respect  to the  fourth  quarter  of a year)  following  the  execution  of this
Agreement. For purposes of this Agreement, (i) a "profitable quarter" shall mean
the first fiscal  quarter to occur after the date hereof in which the  Company's
net income from  continuing  operations is not less than $1,000 for such quarter
(excluding as an expense all non-cash  expenditures relating to the amortization
of capitalized software, acquired intangible assets and patents and depreciation
of fixed assets  which were  reflected on the books of account of the Company on
October 28, 1999,  estimated to then be  approximately  $989,591.50 per calendar
quarter),  as determined by the Company's  accounting  staff or by the Company's
independent  public  accountants,  and (ii) a "cash flow positive quarter" shall
mean the  first  fiscal  quarter  to occur  after  the date  hereof in which the
Company's  total revenue less its total expenses (not including in such expenses
amortization  and  depreciation)  is greater  than $1,000 for such  quarter,  as
determined by the  Company's  accounting  staff or by the Company's  independent
public  accountants.  However,  in  determining  whether  the  Company has had a
"profitable  quarter" or a "cash flow positive quarter," all expenses related to
the  termination  of Thomas E.  Gardner's  employment  with the Company shall be
excluded. The Performance-Based Stock Options shall remain exercisable after any
termination  of  Cloughley's  employment  with the  Company  only to the  extent
provided in Section 5 and in the Performance-Based Option Agreement.

                  (c) The  Company  shall  use its best  reasonable  efforts  to
assure that all shares received by Cloughley on any exercise of any stock option
awarded to him by the Company shall be, and shall remain,  (i) fully  registered
(at the Company's  expense)  under the  Securities  Act of 1933, as amended (the
"1933 Act"),  for resale,  (ii) fully  registered or qualified (at the Company's
expense) under such state  securities  laws as Cloughley may reasonably  request
for resale,  and (iii)  qualified  for trading on NASDAQ or listed on a national
securities exchange as the Company's Class A Common Stock is then so registered.

                  (d) In the  event  there is any  change  in the Class A Common
Stock   subject   to  the   above   options,   through   merger   consolidation,
reorganization, recapitalization, stock dividend, stock split or combination, an
appropriate  adjustment  shall  be made to such  stock  options  so as to  avoid
dilution or enlargement of Cloughley's rights under the options.

                  (e)  During  the  Employment  Term,  Cloughley  shall have the
right, by furnishing  written notice to the Company at least six months prior to
any exercise of any stock option, to elect to defer any gains realized upon such
exercise.  Any such  deferral,  including  the manner of  exercise  of the stock
option in  connection  with such  deferral,  shall be made in such manner as may
reasonably be required by the Company,  including such requirements as may apply
in  order to  defer  such  gains  for  Federal  income  tax  purposes  or as the
independent  public  accountants  for the Company advises are necessary in order
that the stock option gains not be a charge against the earnings of the Company.
At the time Cloughley  elects to defer such gains,  such gains shall be deferred
into any non-qualified  deferral plan of the Company that accepts such deferrals
on terms that satisfy the requirements of the preceding sentence. If such a plan
is not available,  Cloughley may during the Employment  Term make an irrevocable
election to defer such gains into Share Units (with a "Share Unit"  representing
a share of Class A Common Stock of the Company  including any dividends that may
be declared  thereon during the period of the deferral).  Amounts deferred under
this Section 4(e) shall be paid out as required  under the terms of  Cloughley's
election to defer.

                  (f) During the  Employment  Term,  in the event that,  for the
calendar  year 2000,  the Company  either (i) reaches  "top line sales" of $12.5
million or (ii) reaches  "break-even," then the Company shall pay to Cloughley a
bonus equal to 40% of the Base Salary (the "Performance Bonus"). For purposes of
this  Agreement,  (a) "top line sales" shall mean the total revenue from license
fees and  services  for the  Company  for a calendar  year,  as set forth in the
Company's audited financial  statements,  and (b) the Company shall be deemed to
"break even" when the  Company's  net income from  continuing  operations is not
less than $1,000 for the calendar  year, as set forth in the  Company's  audited
financial  statements for such year. If applicable,  the Performance Bonus shall
be paid to  Cloughley  on the date which is 120 days after the end of the fiscal
year or the date which is thirty (30) days after the Company's audited financial
statements  (or, if applicable,  such  independent  accountants'  determination)
first become  available for the fiscal year 2000,  whichever is later, but in no
event later than 120 days after the end of such fiscal year.



<PAGE>


                  (g)  For so long  as  Cloughley  remains  an  employee  of the
Company,  in the event that a person or entity that  beneficially owns less than
5% of the  Company's  outstanding  Class A Common  Stock  as of the date  hereof
acquires  the  beneficial  ownership  of  greater  than  90%  of  the  Company's
outstanding   Class  A   Common   Stock  (a   "Sale   of  the   Company"),   the
Performance-Based  Stock Options shall immediately vest upon the consummation of
such Sale of the Company.  The provisions of this Section 4(g) shall survive any
termination or Expiration of this Agreement.

                  (h) During the  Employment  Term,  the Company  shall  provide
Cloughley with disability  insurance in accordance  with the Company's  existing
plan from time to time  applicable to senior  executives of the Company,  on the
same cost basis as for such other senior executives.

                  (i) During the Employment Term, Cloughley shall be entitled to
four weeks paid vacation each  calendar  year, in accordance  with the Company's
standard  vacation  policy,  as if  Cloughley's  initial date of employment  was
February  1, 1994.  Cloughley  shall also be  entitled  to all  regular  Company
holidays and personal days.

                  (j) During the Employment Term, Cloughley shall be entitled to
participate in any medical, dental, hospitalization, disability, life insurance,
vision, prescription,  accidental death and dismemberment,  travel accident, and
other  employee  welfare  benefit  plan,  program  or  arrangement  that is made
available  generally to senior executives of the Company on terms and conditions
that are commensurate with such other senior  executives.  During the Employment
Term, no such benefit,  coverage, term or condition shall be changed in a manner
that is materially  adverse to Cloughley  without his consent unless such change
is part of a change applying generally to senior executives of the Company.

                  (k) During the Employment Term, Cloughley shall be entitled to
such other benefits as are made available  generally to senior executives of the
Company,  including (without limitation) any pension,  profit sharing,  savings,
employee stock  purchase,  401(k) or retirement  plan,  program or  arrangement,
whether funded or unfunded and whether qualified or unqualified.

                  (l) During the Employment Term, Cloughley shall be entitled to
participate in all fringe benefits and perquisites that are available  generally
to senior executives of the Company,  at an appropriate level  commensurate with
such other senior executives.

                  (m) During the  Employment  Term,  Cloughley is  authorized to
incur reasonable expenses in carrying out his duties and responsibilities  under
this  Agreement,  and the  Company  shall  promptly  reimburse  him for all such
expenses,  subject to reasonable  documentation in accordance with the Company's
policies.

         5.       TERMINATION OF EMPLOYMENT

                  (a)      The Employment Term

                           (1) shall terminate in the event of Cloughley's death
                           or "permanent disability" (as hereinafter defined);

                           (2) may be  terminated by the Company for "cause" (as
                           hereinafter   defined)   or   "without   cause"   (as
                           hereinafter defined);

                           (3) may be  "voluntarily"  terminated (as hereinafter
                           defined) by Cloughley; or

                           (4)  shall  Expire  on the  Expiration  Date,  if not
                           terminated  prior to such  time as  provided  in this
                           Agreement.

                  On any  termination  by the  Company  "without  cause"  or any
"voluntary" termination by Cloughley, such party will give the other at least 90
days prior written notice of such termination.

                  (b)   Cloughley's   obligation  to  perform  and  observe  the
obligations,  terms and conditions of Sections 7 and 8 of this  Agreement  shall
survive any termination or Expiration of this Agreement.

                  (c) Upon  any  termination  of the  Employment  Term  "without
cause,"  Cloughley  shall  be  entitled  to  (i)  salary  through  the  date  of
termination; (ii) any bonus or other incentive compensation award earned but not
yet paid;  (iii) the  continued  right to exercise the  Performance-Based  Stock
Option,  to the extent that such option is, or becomes,  vested and  exercisable
under the terms of this Agreement,  until the second  anniversary of the date of
termination of Cloughley's employment;  (iv) the continued right to exercise any
other  outstanding  stock option,  to the extent that such option had vested and
was  exercisable  on the  date of  termination,  until  the end of the  90th day
following such date; (v) any amounts earned or accrued,  but not yet paid, under
Sections  4(j) through  4(l);  (vi) a lump sum payment in respect of accrued but
unused vacation days at his salary rate on the date of termination; (vii) prompt
payout when due of all amounts due and payable under the terms of this Agreement
as a result of his termination;  (viii) a lump sum payment of an amount equal to
one month's Base Salary for each full month of  Cloughley's  service  under this
Agreement prior to termination,  with a minimum of three months;  and (ix) other
or additional  benefits,  if any, in accordance with the terms and conditions of
applicable  plans,  programs and  arrangements  of the Company.  If Cloughley is
terminated by the Company "without cause," and the Company's accounting staff or
the Company's independent public accountants subsequently determine that, in the
calendar  year 2000,  the Company  either  reached (a) "top line sales" of $12.5
million or (b) "break even," as set forth in Section 4(f) hereof,  and Cloughley
was employed by the Company  pursuant to this  Agreement  for at least three (3)
months,  the Company shall pay to Cloughley a pro-rated share of the Performance
Bonus provided for in Section 4(f) equal to the product of the Performance Bonus
multiplied  by the  percentage  of the year that  Cloughley  was employed by the
Company.  The Company shall withhold from any such amounts  payable to Cloughley
all federal,  state,  municipal or other  deductions as are required by any law,
regulation  or ruling.  This  Section  5(c) shall be the maximum  liability  and
obligation of the Company  (including the officers and directors of the Company)
in the event of any such  termination of Cloughley  "without cause" at any time.
The  provisions of this Section 5(c) which by their terms require the passage of
time beyond the termination of this Agreement shall survive such termination for
the purposes thereof.

                  (d) Upon  termination of the Employment  Term by reason of the
death or "permanent disability" of Cloughley, Cloughley shall be entitled to (i)
all rights and  benefits  provided  under  Section  5(c);  and (ii) the right to
exercise  any  outstanding  stock option  (including,  without  limitation,  the
Performance-Based  Stock Option),  to the extent that such option had vested and
is  exercisable on the date of his  termination,  at any time through the second
anniversary of such date.

                  (e) Upon termination of the Employment Term at any time during
the  Employment  Term by the Company for "cause" or by Cloughley  "voluntarily,"
Cloughley shall be entitled to (i) salary through the date of termination;  (ii)
any bonus or other incentive  compensation  award earned but not yet paid; (iii)
the  continued  right to exercise  any  outstanding  stock option other than the
Performance-Based  Stock Options,  to the extent that such option had vested and
was  exercisable  on the  date of  termination,  until  the end of the  90th day
following such date; (iv) any amounts earned or accrued, but not yet paid, under
Sections  4(j)  through  4(l);  (v) a lump sum payment in respect of accrued but
unused vacation days at his salary rate on the date of termination;  (vi) prompt
payout when due of all amounts due and payable under the terms of this Agreement
as a result of his termination; and (viii) other or additional benefits, if any,
in accordance  with the terms and conditions of applicable  plans,  programs and
arrangements  of the Company.  Notwithstanding  the  foregoing,  if  Cloughley's
employment   is   terminated   by  the  Company  for  "cause"  or  by  Cloughley
"voluntarily,"  Cloughley shall receive no severance  payments from the Company.
If  Cloughley's  employment  is  terminated  for  "cause"  or is  terminated  by
Cloughley  "voluntarily,"  Cloughley shall not receive the Performance  Bonus or
any portion thereof and all Performance-Based  Stock Options which have not been
exercised prior to the date upon which Cloughley is terminated shall be canceled
as of the date of termination.  The Company shall withhold from any such amounts
payable to Cloughley all federal,  state,  municipal or other  deductions as are
required  by any law,  regulation  or  ruling.  This  Section  5(e) shall be the
maximum  liability  and  obligation of the Company  (including  the officers and
directors of the Company) in the event of any such  termination of Cloughley for
"cause" or by Cloughley "voluntarily" at any time.

                  (f) In the event that Cloughley's  employment with the Company
is terminated by reason of and at the time of the Expiration of this  Agreement,
Cloughley  shall  receive  no  severance  payments  from  the  Company.  If this
Agreement  Expires  and  Cloughley's  employment  is  then  terminated,  and the
Company's  accounting  staff or the  Company's  independent  public  accountants
subsequently  determine  that,  in the calendar  year 2000,  the Company  either
reached (i) "top line sales" of $12.5 million or (ii) "break even," as set forth
in Section 4(f) hereof, the Company shall pay the Performance Bonus to Cloughley
as provided in Section  4(f).  If  Cloughley's  employment  is  terminated  upon
Expiration,   all   Performance-Based   Options  which  have  not  vested  shall
immediately be canceled,  and shall be null and void. The Company shall withhold
from any such amounts  payable to Cloughley  all  federal,  state,  municipal or
other deductions as are required by any law,  regulation or ruling. This Section
5(f) shall be the maximum liability and obligation of the Company (including the
officers and directors of the Company) in the event of any such  termination  of
Cloughley due to the Expiration of this Agreement.



<PAGE>


                  (g) Except as  otherwise  provided  herein,  Performance-Based
Stock  Options  shall remain  exercisable,  with respect to any shares for which
they have vested and become exercisable,  until the earlier of (i) the date upon
which they are exercised  for such shares,  (ii) the second  anniversary  of the
date  of  Cloughley's  termination  of  employment  with  the  Company,  if such
termination was "without  cause," due to the Expiration of the Employment  Term,
or by reason of Cloughley's death or "permanent  disability" (iii) the date upon
which Cloughley's employment is terminated for "cause" or "voluntarily" and (iv)
the tenth anniversary of the date of grant.

                  (h)  As  used  herein,  "permanent  disability"  shall  mean a
disability which renders Cloughley  mentally or physically unable to perform his
usual and regular  duties and  responsibilities  for a continuous  period of 120
days or for a  non-continuous  period  of 180  days in any  365 day  period,  as
determined by a medical doctor selected by the Company and reasonably acceptable
to Cloughley.

                  (i) As used  herein,  "cause"  shall  mean (i) the  continuing
willful failure by Cloughley to  substantially  perform his duties  hereunder as
provided in Section 3 (other than any such failure  resulting  from  Cloughley's
death or incapacity  due to physical or mental  illness) and the  continuance of
such  failure  for a period of  thirty  (30) days  after a  written  demand  for
substantial   performance   is   delivered  to  Cloughley  by  the  Board  which
specifically  identifies  the manner in which the Board  believes that Cloughley
has not substantially  performed such duties;  (ii) the engaging by Cloughley in
willful  gross  misconduct  or willful  gross neglect in carrying out his duties
under this Agreement,  resulting,  in either case, in material  economic harm to
the Company;  (iii) Cloughley  engages in any activity that constitutes a felony
involving  moral  turpitude;  or (iv)  Cloughley  engages in any  activity  that
constitutes  embezzlement,  theft,  fraud (as  determined  by the  Board) or any
conduct of a similar  criminal  nature.  The Board shall give  Cloughley 90 days
prior  written  notice of its  intention to terminate  him for "cause," and such
notice shall state in detail the particular  circumstances  that  constitute the
grounds on which the proposed termination for "cause" is based.

                  (j) As used herein,  "without cause" is any termination by the
Company  that is not for  "cause,"  other than the  termination  of  Cloughley's
employment  with the Company by reason of the  Expiration of this Agreement or a
"voluntary" termination by Cloughley, as set forth herein.

                  (k) As used herein, "voluntary" termination by Cloughley shall
mean any termination by Cloughley that is not by death, by "disability,"  due to
the  Expiration  of this  Agreement,  or by the  Company for "cause" or "without
cause." A "voluntary"  termination by Cloughley  shall not be deemed a breach of
this Agreement.

                  (l) Notwithstanding anything to the contrary elsewhere in this
Agreement, in no event may any stock option be exercised after the expiration of
its maximum stated term.

                  (m) In the event of any termination of his employment with the
Company,  Cloughley  shall be under no obligation to seek other  employment  and
there shall be no offset against amounts due him under this Agreement on account
of any remuneration or other benefit  attributable to any subsequent  employment
that he may obtain.

                  (n)  Cloughley  and the Company  agree that  amounts due under
this  Section  5 are  in the  nature  of  severance  payments  considered  to be
reasonable by the Company and are not in the nature of a penalty.

                  (o) At no time during the Employment Term or thereafter  shall
either party make any public statement that intentionally  disparages or defames
the goodwill or reputation  of the other party;  provided that it shall not be a
violation of this Section 5(o) for either party to make truthful statements when
required  to do so by law or by a  court,  governmental  agency,  administrative
body, or legislative body with apparent jurisdiction to require such statements.

         6. WITHHOLDING.  The Company shall withhold all amounts required by law
to be withheld from any payments made pursuant to this Agreement,  including any
and all amounts  required to be withheld by any applicable  Federal,  state,  or
foreign  country's  income  tax  act,  and  any  applicable  city,   county,  or
municipality's  earnings  or  income  tax act.  Notwithstanding  the  foregoing,
Cloughley  shall be liable for the  payment,  if any, of any  federal,  state or
local taxes  incurred by him as a result of the Company's  provision of benefits
hereunder.

         7.  CONFIDENTIAL  INFORMATION  AND  DUTY  OF  NONDISCLOSURE.  Cloughley
acknowledges  and agrees that his employment  with the Company  pursuant to this
Agreement   necessarily   involves  his  access  to  secrets  and   confidential
information  pertaining  to the  business of the  Company and its  subsidiaries.
Accordingly,  Cloughley  agrees that at all times during his Employment Term and
thereafter,  he will not,  directly or indirectly,  without the express  written
authority of the Company,  except as reasonably  appropriate in connection  with
the  performance  of his services  under this  Agreement  or unless  directed by
applicable  legal  authority  having  jurisdiction  over  Cloughley,   knowingly
disclose  or use for the  benefit of any  person,  firm,  corporation,  or other
business  entity  or  himself,  any  trade  secrets,   confidential  information
concerning  the Company or any  subsidiary  of the Company,  including,  without
limitation,  any  information  concerning  the  past,  present,  or  prospective
clients,  creditors,   customers,   operations,  systems,  software  or  methods
(collectively,  the "Confidential Information").  Notwithstanding the foregoing,
the term Confidential  Information shall not include any information which is or
becomes in the public domain without breach by Cloughley of this Section 7.

         Cloughley agrees that he will return to the Company upon termination of
the Employment Term all Confidential Information then in Cloughley's possession.

         8.       COVENANT NOT TO COMPETE

                  (a) If the  Employment  Term is terminated  (i) by the Company
for "cause," or (ii) by Cloughley  "voluntarily," or (iii) due to the Expiration
of this  Agreement,  Cloughley  shall not,  directly  or  indirectly,  acting as
employee, investor, officer, partner, principal or otherwise, of any corporation
or other  entity,  engage in any activity  within the United  States of America,
Canada or the European  Economic  Community  that involves  products or services
which compete materially with products and services of the Company or any of its
subsidiaries,  as such  products  and  services  exist as of the date hereof and
during the Employment Term. The provisions of this Section 8(a) shall apply upon
the Expiration of this Agreement only if Cloughley  rejects an offer made by the
Company at or before the  Expiration of this  Agreement to either (1) renew this
Agreement,  or (2) enter  into an  agreement  with  Cloughley  on  substantially
similar terms as, or on terms more favorable to Cloughley than, this Agreement.

                  (b) The parties hereto agree that in the event that either the
length of time or the  geographical  areas set forth in  Section  8(a)  above is
deemed  too  restrictive  in any court  proceeding,  the court may  reduce  such
restrictions to those which it deems reasonable under the circumstances.

                  (c) Cloughley agrees and acknowledges that the Company and any
of its  subsidiaries  do not  have  adequate  remedy  at law for the  breach  or
threatened  breach by Cloughley of the covenants under this Section 8 and agrees
that the Company or any subsidiary of the Company shall be entitled to apply for
injunctive relief to restrain Cloughley from such breach or threatened breach in
addition to any other  remedies  which might be  available to the Company or any
subsidiary of the Company at law or equity.

                  For purposes of this Agreement, the term "subsidiary" includes
any limited liability  company  (including uPACS LLC) or other business directly
affiliated with the Company.

         9.       INDEMNIFICATION

                  (a) The  Company  agrees that (i) if the  Executive  is made a
party, or is threatened to be made a party, to any "proceeding" by reason of the
fact that he is or was a director, officer, employee, agent, manager, consultant
or  representative  of the  Company or is or was  serving at the  request of the
Company as a director,  office, member, employee, agent, manager,  consultant or
representative  of  another  "person,"  or (ii) if any  "claim"  is made,  or is
threatened to be made,  that arises out of or relates to Cloughley's  service in
any of the foregoing  capacities,  then  Cloughley  shall be  indemnified by the
Company to the fullest  extent  permitted by the laws of the State of New Jersey
against any and all costs, expenses,  liabilities and losses (including, without
limitation,  attorney's fees,  judgments,  interest,  expenses of investigation,
fines,  ERISA  excise  taxes  or  penalties  and  amounts  paid or to be paid in
settlement)  incurred or suffered by Cloughley in  connection  therewith  (other
than an action by Cloughley against the Company), and such indemnification shall
continue  as to  Cloughley  even  if he has  ceased  to be a  director,  member,
employee,  agent, manager,  consultant or representative of the Company or other
"person," and shall inure to the benefit of Cloughley's  successors and assigns.
The Company shall provide to Cloughley all costs and expenses incurred by him in
connection with any such proceeding or claim within 30 days of receiving written
notice  requesting  such  payment,  provided  that such notice  includes  proper
documentation verifying that such costs were incurred by Cloughley.

                  (b) The Company shall at all times during the Employment  Term
and for six years thereafter keep in place a directors' and officers'  liability
insurance policy (or policies) covering Cloughley to the extent that the Company
provides such coverage for other senior executives.



<PAGE>


                  (c)  As  used  in  this  Agreement  "person"  shall  mean  any
individual,  corporation,  partnership,  joint venture,  trust,  estate,  board,
committee,  agency, body, or other person or entity; "proceeding" shall mean any
threatened or actual action, suit, or other proceeding, whether civil, criminal,
administrative,  investigative,  appellate, or other; and "claim" shall mean any
claim, demand, request, investigation,  dispute, controversy,  threat, discovery
request, or request for testimony or information.

         10.      REPRESENTATIONS

                  (a) The Company  represents  and warrants that (i) it is fully
authorized  by action of its Board (and of any other  "person"  whose  action is
required) to enter into this Agreement and to perform its obligations  under it;
(ii) the  execution,  delivery and  performance of this Agreement by the Company
does  not  violate  any  law,  regulation,  order,  judgment  or  decree  or any
agreement,  plan or corporate governance document of the Company; and (iii) upon
the execution and delivery of this Agreement by Cloughley and the Company,  this
Agreement shall be a valid and binding obligation of the Company, enforceable in
accordance with its terms, except to the extent enforceability may be limited by
applicable  bankruptcy,  insolvency or similar laws affecting the enforcement of
creditors' rights generally.

                  (b)  Cloughley  represents  and warrants that (i) delivery and
performance  of this  Agreement  by him does not  violate  any law,  regulation,
order, judgment or decree or any agreement to which he is a party or by which he
is  bound,  and (ii)  upon the  execution  and  delivery  of this  Agreement  by
Cloughley  and  the  Company,  this  Agreement  shall  be a  valid  and  binding
obligation of Cloughley, enforceable in accordance with its terms, except to the
extent  enforceability  may be limited by applicable  bankruptcy,  insolvency or
similar laws affecting the enforcement of creditors' rights generally.

         11. NO  EMPLOYMENT  GUARANTEE.  This  Agreement  shall not be deemed to
entitle  Cloughley to continued  employment with the Company,  and the rights of
the Company to terminate the employment of Cloughley  shall continue as fully as
if this  Agreement  were not in effect,  subject to the  provisions in Section 5
above.

         12.  NOTICES.   Any  notice,   consent,   demand,   request,  or  other
communication  given  by  Cloughley  or the  Company  in  connection  with  this
Agreement  shall be in  writing  and shall be deemed to have been given (a) when
delivered  personally to the party  specified or (b) three days after mailing by
certified or registered mail, return receipt  requested,  or (c) provided that a
written  acknowledgment  of receipt is obtained,  upon  delivery by a nationally
recognized  overnight  courier,  to the  address  set forth  below for the party
specified  (or to such other address for such party as shall be specified by ten
days advance notice given pursuant to this Section 12).

                  If to the Company:        Base Ten Systems, Inc.
                                            One Electronics Drive
                                            Trenton, NJ 08619
                          Attention:        Board of Directors


                  with a copy to:           Pitney, Hardin, Kipp & Szuch LLP

                                            If by Delivery
                                            --------------
                                            200 Campus Drive
                                            Florham Park, New Jersey  07962-1945
                                            Attn:  Joseph Lunin

                                            If by Mail
                                            ----------
                                            P.O. Box 1945
                                            Morristown, New Jersey 07962-1945
                                            Attn:  Joseph Lunin
                                            Facsimile: 201-966-1550

                  If to Cloughley:          Stephen A. Cloughley
                                            929 Gainesway Road
                                            Yardley, Pennsylvania 19067

                  with a copy to:           Kwasny and Fegley
                                            993 Lenox Drive
                                            Suite 200
                                            Lawrenceville, New Jersey 08648
                                            Attn: Richard J. Kwasny

         13. ASSIGNMENT/BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of Cloughley,  the Company, and their respective successors
and assigns. No rights or obligations of the Company under this Agreement may be
assigned or  transferred  by the Company  except that such rights or obligations
may be assigned or transferred  pursuant to a merger or  consolidation  in which
the Company is not the continuing  entity,  or the sale or liquidation of all or
substantially  all of the assets of the Company,  provided  that the assignee or
transferee  is the  successor to all or  substantially  all of the assets of the
Company and such assignee or transferee  expressly  assumes all the liabilities,
obligations  and duties of the  Company,  as  contained  in this  Agreement.  In
connection with any transfer or assignment of its rights, duties, or obligations
under this  Agreement,  the Company shall take whatever action it legally can to
cause  such  assignee  or  transferee  to  expressly   assume  the  liabilities,
obligations  and duties of the  Company  hereunder.  No rights,  obligations  or
duties of  Cloughley  under this  Agreement  may be assigned or  transferred  by
Cloughley,  other than his rights to  compensation  and  benefits,  which may be
transferred  only by will or  operation of law,  except as  otherwise  expressly
provided.

         14. DISPUTE  RESOLUTION.  Except as otherwise provided in Section 8(c),
any dispute or controversy  between Cloughley and the Company that arises out of
or relates to this  Agreement  (or any amendment  thereof)  shall be resolved in
courts in the  State of New  Jersey,  and for the  purposes  thereof,  Cloughley
hereby submits to the jurisdiction of all courts in the State of New Jersey.

         15. INTEGRATION.  This Agreement represents the entire understanding of
the parties with respect to the subject matter hereof. This Agreement supersedes
all other agreements, contracts,  understandings and other arrangements, written
or oral,  between the parties with respect to the subject matter hereof,  all of
which  are  hereby  terminated  and  shall be of no  further  force  or  effect,
including  without  limitation,   any  employment  contracts,   agreements,   or
understandings  in effect as of the date hereof.  No  compensation  or any other
amounts are due from the Company to Cloughley under any prior agreement with the
Company.

16.      MISCELLANEOUS.

         (a) During the Employment Term, Cloughley shall be authorized to attend
all  meetings  of the  Board,  subject  to the  right of the  Board  to  exclude
Cloughley  from any  meetings of the Board,  or portions  thereof,  from time to
time, at the sole discretion of the Board.

         (b)  No  provision  of  this  Agreement  may  be  modified,  waived  or
discharged unless such modification, waiver or discharge is agreed to in writing
signed by  Cloughley  and such  officer of the  Company  as may be  specifically
designated by the Board.

         (c) No waiver by either  party  hereto at any time of any breach by the
other  party  hereto of any  condition  or  provision  of this  Agreement  to be
performed  by such  other  party  shall be  deemed a waiver  of any  similar  or
dissimilar provision or condition at the same or any prior or subsequent time.

         (d) No  representations,  oral or otherwise,  express or implied,  with
respect the subject  matter  hereof have been made by either party which are not
set forth expressly in this Agreement.

         (e) In the event that any provision or portion of this Agreement  shall
be  determined  to be invalid or  unenforceable  for any reason,  in whole or in
part,  the remainder of this  Agreement  shall be  unaffected  thereby and shall
remain in full force and effect to the fullest extent  permitted by law so as to
achieve the purposes of this Agreement.

         (f) Except as  otherwise  expressly  set forth in this  Agreement,  the
respective  rights and obligations of Cloughley and the Company  hereunder which
by their terms extend beyond the termination of this Agreement shall survive any
termination of the Executive's employment or the Employment Term.

         (g) This Agreement itself (as distinguished from Cloughley's employment
with the Company or the  Employment  Term) may not be terminated by either party
without the written consent of the other party.

         (h) The headings of the Sections  contained in this  Agreement  are for
convenience  only and shall not be deemed to control  or affect  the  meaning or
construction of any provision of this Agreement.

         (i) The validity, interpretation,  construction and performance of this
Agreement  shall be  governed  by the laws of the  State of New  Jersey  without
regard  to  conflict  of law  principles.  This  Agreement  may be  executed  in
counterparts,  each of which shall be deemed a duplicate  original  all of which
shall be deemed to be one and the same instrument.


<PAGE>

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the date and year first set forth above.

                                           Base Ten Systems, Inc.



                                        By:  ___________________________________
                                      Name:
                                     Title:



                                                     ___________________________
                                                     STEPHEN A. CLOUGHLEY


<PAGE>





                                    Exhibit A

                Form of Performance-Based Stock Option Agreement









<PAGE>





                                                                     Exhibit A


                             BASE TEN SYSTEMS, INC.
                                PERFORMANCE-BASED
                             STOCK OPTION AGREEMENT


         This Option Agreement (the  "Agreement"),  made as of October 28, 1999,
is between Base Ten Systems, Inc., a New Jersey corporation (the "Company"), and
Stephen A. Cloughley, an individual (the "Optionee").

         WHEREAS,  in  consideration  of the  Optionee's  agreement  to serve as
President  and  Chief  Executive  Officer  of the  Company  under an  Employment
Agreement  dated as of October 28, 1999  between  Optionee  and the Company (the
"Employment  Agreement"),  the Company  has agreed to grant to Optionee  certain
options  to  purchase  shares of the  Company's  Class A Common  Stock  ("Common
Stock") pursuant to the Employment Agreement and the Base Ten Systems, Inc. 1998
Stock Option and Stock Award Plan (the "Plan") on the terms and  conditions  set
forth herein.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants set forth below, the parties agree as follows:


         1. Options.  (a) Subject to the terms and  conditions set forth herein,
and in the  Employment  Agreement  and the Plan (the  terms of both of which are
hereby  incorporated  by reference),  the Company grants to Optionee  fifty-five
thousand  (55,000)  rights (each an "Option") to subscribe  for and purchase one
share  of  Common  Stock at the  price of one  dollar  ($1.00)  per  share ( the
"Purchase  Price").  The Options  granted  pursuant to this  Agreement  shall be
considered  Performance-Based  Stock  Options,  and  shall be  considered  to be
nonqualified  stock  options.  Performance-Based  Stock  Options  shall vest and
become  exercisable as follows:  (i) thirty thousand (30,000) Options shall vest
forty-five (45) days after the Company achieves its first  "profitable  quarter"
(provided  that the number of days shall be ninety (90) days with respect to the
fourth quarter of a year)  following the execution of the Employment  Agreement;
and (ii) twenty-five  thousand  (25,000) Options shall vest forty-five (45) days
after the Company achieves its first "cash flow positive quarter" (provided that
the number of days shall be ninety (90) days with respect to the fourth  quarter
of a year) following the execution of the Employment Agreement.  For purposes of
this Agreement,  the terms "profitable quarter" and "cash flow positive quarter"
shall have the meanings set forth in Section 4(b) of the  Employment  Agreement.
In addition,  for so long as the Optionee remains an employee of the Company, in
the event that a person or entity that  beneficially owns less than five percent
(5%) of the Company's  outstanding  Common Stock as of the date hereof  acquires
the  beneficial  ownership of greater than ninety percent (90%) of the Company's
outstanding  Common  Stock (a "Sale of the  Company"),  then the  Options  shall
immediately vest upon the consummation of such Sale of the Company.

         (b) The  Options  shall not be  transferable  other than by will or the
laws  of  descent  and  distribution  or,  after  the  Optionee's  death,  to  a
beneficiary  (or  beneficiaries)  designated  by  Optionee  in writing in a form
satisfactory  to the  Company,  and the  Options  may be  exercised,  during the
lifetime of the Optionee, only by the Optionee.  Without limiting the generality
of the  foregoing,  the  Options  may not be  assigned,  transferred  (except as
provided above), pledged or hypothecated in any way, and shall not be subject to
execution,  attachment or similar process. Any attempted  assignment,  transfer,
pledge, hypothecation or other disposition of any of the Options contrary to the
provisions  hereof, or the levy of any execution,  attachment or similar process
upon any Option, shall be null and void and without effect.

         2. Exercise. (a) Subject to the terms and conditions of this Agreement,
the Employment Agreement and the Plan, Optionee shall have the right to exercise
at the  Purchase  Price all vested  Options  at any time after the date  hereof.
Notwithstanding  anything herein to the contrary, all Options granted under this
Agreement  shall expire on the tenth  anniversary of the date of this Agreement,
unless  earlier  terminated  pursuant  to  the  terms  of  this  Agreement,  the
Employment Agreement or the Plan.

          In the event of the  termination  of the  "Employment  Term"  "without
cause," the Optionee shall have the continued right to exercise the Options,  to
the extent that the Options  are, or become,  vested and  exercisable  under the
terms of the Employment  Agreement,  until the second anniversary of the date of
the  termination  of the  Optionee's  employment  with the  Company.  The  terms
"Employment  Term" and "without  cause" shall have the meanings set forth in the
Employment Agreement.

         Upon  termination  of the  Employment  Term by  reason  of the death or
"permanent  disability"  of the Optionee,  the Optionee  shall have the right to
exercise any outstanding  Options to the extent that such Options had vested and
are exercisable on the date of such termination,  at any time through the second
anniversary of such date. The term "permanent disability" shall have the meaning
set forth in the Employment Agreement.

         Upon  termination  of the  Employment  Term  at  any  time  during  the
Employment  Term by the Company for "cause," or by Optionee  "voluntarily,"  the
Options  which  have  not  been  exercised  prior to the  date  upon  which  the
Optionee's  employment with the Company  terminates  shall be canceled as of the
date of such  termination  and shall be null and void.  The  terms  "cause"  and
"voluntarily" shall have the meanings set forth in the Employment Agreement.

         If the Optionee's  employment  with the Company is terminated by reason
of and at the time of the  "Expiration"  of the Employment  Agreement,  then all
Options which have not vested shall  immediately be canceled,  and shall be null
and void.  All  Options  that  were  vested  at the time of the  termination  of
employment  with the  Company  by reason of and at the time of the  "Expiration"
shall  remain  exercisable  until  the  second  anniversary  of  the  Optionee's
termination  of employment  with the Company;  provided,  that in the event that
Optionee  rejects an offer made by the Company at or before the  "Expiration" of
the Employment  Agreement to either (1) renew the Employment  Agreement,  or (2)
enter into an agreement with Optionee on  substantially  similar terms as, or on
terms more favorable to Optionee than,  the  Employment  Agreement,  all Options
which have not been exercised prior to the date on which  Optionee's  employment
with the Company terminates shall be canceled as of the date of such termination
and shall be null and void.  The term  "Expiration"  shall have the  meaning set
forth in the Employment Agreement.

         Except as otherwise  provided,  the Options  shall remain  exercisable,
with  respect to any shares for which they have  vested and become  exercisable,
until the earlier of (i) the date upon which they are exercised for such shares,
(ii)  the  second  anniversary  of the  date of the  Optionee's  termination  of
employment with the Company,  if such  termination was "without cause" (in which
case the Options may thereafter  continue to vest), due to the Expiration of the
Employment  Term,  or by reason of Optionee's  death or "permanent  disability,"
(iii) the date upon which the Optionee's  employment terminates or is terminated
for  "cause" or  "voluntarily,"  and (iv) the tenth  anniversary  of the date of
grant.

         (b) Vested  Options  may be  exercised  by the  Optionee in whole or in
part, but not as to a fractional  share, by surrender of such Options,  properly
endorsed  at the  principal  office of the  Company,  and by  delivering  to the
Company (i) a written  exercise notice  substantially in the form annexed hereto
as Schedule A, and (ii) payment of the aggregate  Purchase Price,  plus required
tax withholding  amounts (as determined by the Company) for the number of shares
purchased by  certified  check or bank check (or in such other form or method as
the  Company may elect to accept).  The shares  purchased  shall be deemed to be
issued to the  Optionee  as the record  owner as of the close of business on the
date of which the  Options are  surrendered  and payment is made for the shares.
Certificates  representing  the  shares  purchased  shall  be  delivered  to the
Optionee  within  thirty (30) days after the rights  represented  by the Options
have been properly exercised, unless otherwise agreed by the parties hereto.

         (c) For so long as Optionee remains an employee of the Company,  in the
event  that a person  or  entity  that  beneficially  owns  less  than 5% of the
Company's  outstanding  Class A Common Stock as of the date hereof  acquires the
beneficial  ownership of greater than 90% of the Company's  outstanding  Class A
Common Stock (a "Sale of the Company"),  the Options shall immediately vest upon
the consummation of such Sale of the Company.

         3.  Shares.  (a) The  Company  covenants  and agrees that all shares of
Common  Stock  shall,  on  issuance  and payment of the  consideration  therefor
hereunder,  be fully paid and nonassessable  and free from all taxes,  liens and
charges related to the issuance of such shares.

         (b) The Company  shall use its best  reasonable  efforts to assure that
all shares of Common  Stock  received by Optionee on any  exercise of any Option
shall be, and shall remain,  (i) fully  registered  (at the  Company's  expense)
under the Securities Act of 1933, as amended,  for resale, (ii) fully registered
or qualified  (at the Company's  expense)  under such state  securities  laws as
Optionee may reasonably request,  for resale, and (iii) qualified for trading on
NASDAQ or listed on a national securities exchange as the Company's Common Stock
is then so registered.

         4.  Adjustments.  In the event  that  there is any change in the Common
Stock arising through merger, consolidation,  reorganization,  recapitalization,
stock dividend,  stock split or  combination,  the Board of Directors shall make
such  adjustments in the aggregate  number of Options  subject to this Agreement
and/or  the price per share of such  Options  in order to  prevent  dilution  or
enlargement of the Optionee's rights and the value represented by the Options.

         5.  Absence of Rights.  No Option  shall  entitle  the  Optionee to any
rights as a shareholder of the Company prior to the exercise of such Option.

         6.  Invalidity;  Severability.  If any  clause  or  provision  of  this
Agreement shall be adjudged  invalid,  the same shall not affect the validity of
any other  clause  or  provision  of this  Agreement,  or of any other  document
pertaining to the subject matter thereof,  or constitute by reason thereof,  any
claim or cause of  action  in favor of  Optionee  as  against  the  Company.  In
addition, the provisions of this Agreement shall be read and construed and shall
have effect as separate,  severable and independent  provisions or restrictions,
and shall be enforceable accordingly.

         7. Entire Agreement; No Waiver;  Remedies. This Agreement, the Plan and
the  Employment  Agreement  contain  the entire  agreement  of the  parties  and
incorporate and supersede any and all prior or  contemporaneous  oral or written
agreements  with  respect to the matters  referred to in them.  No waiver of any
breach or default  hereunder  shall be  considered  valid  unless in writing and
signed by the party  giving such  waiver,  and no such waiver  shall be deemed a
waiver of any  subsequent  breach or default of the same or similar  nature.  No
failure on the part of any party to  exercise,  and no delay in  exercising  any
right,  remedy,  power or privilege hereunder shall operate as a waiver thereof;
no  waiver  whatever  shall be valid  unless in  writing  signed by the party or
parties to be charged and then only to the extent specifically set forth in such
writing.  All  remedies,  rights,  powers  and  privileges,  either  under  this
Agreement or by law or otherwise  afforded the parties to this Agreement,  shall
be  cumulative  and shall not be exclusive of any remedies,  rights,  powers and
privileges provided by law.

         8.  Notices.  Any notice  required or  permitted to be given under this
Agreement  shall  be given  in  accordance  with  Section  12 of the  Employment
Agreement.

         9.  Successors and Assigns.  The rights and  obligations of the Company
under this  Agreement or the Options  shall inure to the benefit of and shall be
binding upon the successors and assigns of the Company.

         10.  Headings;  Counterparts;  Governing  Law.  The  headings  in  this
Agreement are for  convenience  of reference only and are not intended to define
or limit the  contents  of any  section  or  paragraph.  This  Agreement  may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall  constitute  one and the same  instrument.  This
Agreement  shall in all  respects  be  governed by the  internal  laws  (without
reference to conflicts of laws principles) of the State of New Jersey applicable
to contracts made and performed within the State of New Jersey.

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
date first set forth above.

STEPHEN A. CLOUGHLEY                         BASE TEN SYSTEMS, INC.

__________________________                   By:___________________________

                                             Print Name:____________________

                                             Title:_________________________


<PAGE>


                                   Schedule A

                                 Exercise Notice





Base Ten Systems, Inc.
One Electronics Drive
P.O. Box 3151
Trenton, NJ 08619


Gentlemen:

The  undersigned  hereby  exercises the option to purchase  __________shares  of
Class A Common Stock of Base Ten Systems, Inc. pursuant to the Base Ten Systems,
Inc.  Performance-Based Stock Option Agreement (the "Option Agreement") dated as
of  October  28,  1999  between  Base Ten  Systems,  Inc.  and the  undersigned.
Accompanying this Exercise Notice is payment pursuant to the Option Agreement in
the amount of $____________.




Dated:________________________             By:_________________________________
                                              Stephen A. Cloughley