Document:

SPONGETECH
        DELIVERY SYSTEMS, INC.

      

      2007
        INCENTIVE STOCK PLAN

      
        
          

        

      

      

      This
        Spongetech Delivery Systems, Inc. 2007
        Incentive Stock Plan
        (the
        "Plan")
        is
        designed to retain directors, executives and selected employees and consultants
        and reward them for making major contributions to the success of the Company.
        These objectives are accomplished by making long-term incentive awards under
        the
        Plan thereby providing Participants with a proprietary interest in the growth
        and performance of the Company.

      

      	1.  	
              Definitions.

            

      

      	(a)  	
              "Board"
                -
                The Board of Directors of the Company.

            

      

      	(b)  	
              "Change
                in Control"
                -
                Means, and shall be deemed to have occurred upon the occurrence of,
                any
                one of the following events: 

            

      

      	(i)  	
              The
                acquisition in one or more transactions by any individual, entity
                or group
                (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
                Act)
                (a "Person") of beneficial ownership (within the meaning of Rule
                l3d-3
                promulgated under the Exchange Act) of shares or other securities
                (as
                defined in Section 3(a)(10) of the Exchange Act) representing 40%
                or more
                of outstanding Stock; provided, however, that a Change in Control
                as
                defined in this clause (1) shall not be deemed to occur in connection
                with
                any acquisition by the Company, an employee benefit plan of the Company
                or
                any Person who immediately prior to the effective date of this Plan
                is a
                holder of Stock (a "Current Stockholder") so long as such acquisition
                does
                not result in any Person other than the Company, such employee benefit
                plan or such Current Stockholder beneficially owning shares or securities
                representing 40% or more of the outstanding Stock;
                or

            

      

      	(ii)  	
              Any
                election has occurred of persons as directors of the Company that
                causes
                two-thirds or more of the Board to consist of persons other than
                (i)
                persons who, were members of the Board on the effective date of this
                Plan
                and (ii) persons who were nominated by the Board for election as
                members
                of the Board at a time when at least two-thirds of the Board consisted
                of
                persons who were members of the Board on the effective date of this
                Plan;
                provided, however, that any person nominated for election by the
                Board
                when at least two-thirds of the members of the Board are persons
                described
                in subclause (i) or (ii) and persons who were themselves previously
                nominated in accordance with this clause (2) shall, for this purpose,
                be
                deemed to have been nominated by a Board composed of persons described
                in
                subclause (ii); or 

            

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      	(iii)  	
              Approval
                by the stockholders of the Company of a reorganization, merger,
                consolidation or similar transaction (a "Reorganization Transaction"),
                in
                each case, unless, immediately following such Reorganization Transaction,
                more than 50% of, respectively, the outstanding shares of common
                stock (or
                similar equity security) of the corporation or other entity resulting
                from
                or surviving such Reorganization Transaction and the combined voting
                power
                of the securities of such corporation or other entity entitled to
                vote
                generally in the election of directors, is then beneficially owned,
                directly or indirectly, by the individuals and entities who were
                the
                respective beneficial owners of the outstanding Stock immediately
                prior to
                such Reorganization Transaction in substantially the same proportions
                as
                their ownership of the outstanding Stock immediately prior to such
                Reorganization Transaction; or 

            

      

      	(iv)  	
              Approval
                by the stockholders of the Company of (i) a complete liquidation
                or
                dissolution of the Company or (ii) the sale or other disposition
                of all or
                substantially all of the assets of the Company to a corporation or
                other
                entity, unless, with respect to such corporation or other entity,
                immediately following such sale or other disposition more than 50%
                of,
                respectively, the outstanding shares of common stock (or similar
                equity
                security) of such corporation or other entity and the combined voting
                power of the securities of such corporation or other entity entitled
                to
                vote generally in the election of directors, is then beneficially
                owned,
                directly or indirectly, by the individuals and entities who were
                the
                respective beneficial owners of the outstanding Stock immediately
                prior to
                such sale or disposition in substantially the same proportions as
                their
                ownership of the outstanding Stock immediately prior to such sale
                or
                disposition.

            

      

      	(c)  	
              "Code"
                -
                The Internal Revenue Code of 1986, as amended from time to
                time.

            

      

      	(d)  	
              "Committee"
                -
                The Compensation Committee of the Company's Board, or such other
                committee
                of the Board that is designated by the Board to administer the Plan,
                composed of not less than two members of the Board whom are disinterested
                persons, as contemplated by Rule 16b-3 ("Rule
                16b-3")
                promulgated under the Securities Exchange Act of 1934, as amended
                (the
                "Exchange
                Act").

            

      

      	(e)  	
              "Company"
                -
                Spongetech Delivery Systems, Inc. and its subsidiaries including
                subsidiaries of subsidiaries.

            

      

      	(f)  	
              "Exchange Act"
                -
                The Securities Exchange Act of 1934, as amended from time to
                time.

            

      

      	(g)  	
              "Fair
                Market Value"
                -
                The fair market value of the Company's issued and outstanding Stock
                as
                determined in good faith by the Board or
                Committee.

            

      

      	(h)  	
              "Grant"
                -
                The grant of any form of stock option, stock award, or stock purchase
                offer, whether granted singly, in combination or in tandem, to a
                Participant pursuant to such terms, conditions and limitations as
                the
                Committee may establish in order to fulfill the objectives of the
                Plan.

            

      

      	(i)  	
              "Grant
                Agreement"
                -
                An agreement between the Company and a Participant that sets forth
                the
                terms, conditions and limitations applicable to a
                Grant.

            

      

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      	(j)  	
              "Option"
                -
                Either an Incentive Stock Option, in accordance with Section 422
                of Code,
                or a Nonstatutory Option, to purchase the Company's Stock that may
                be
                awarded to a Participant under the Plan. A Participant who receives
                an
                award of an Option shall be referred to as an "Optionee."

            

      

      	(k)  	
              "Participant"
                -
                A director, officer, employee or consultant of the Company to whom
                an
                Award has been made under the Plan.

            

      

      	(l)  	
              "Restricted
                Stock Purchase Offer"
                -
                A Grant of the right to purchase a specified number of shares of
                Stock
                pursuant to a written agreement issued under the
                Plan.

            

      

      	(m)  	
              "Securities
                Act"
                -
                The Securities Act of 1933, as amended from time to
                time.

            

      

      	(n)  	
              "Stock"
                -
                Authorized and issued or unissued shares of common stock of the
                Company.

            

      

      	(o)  	
              "Stock
                Award"
                -
                A Grant made under the Plan in stock or denominated in units of stock
                for
                which the Participant is not obligated to pay additional
                consideration.

            

      

      	2.  	
              Administration.
                The Plan shall be administered by the Board, provided however, that
                the
                Board may delegate such administration to the Committee. Subject
                to the
                provisions of the Plan, the Board and/or the Committee shall have
                authority to (a) grant, in its discretion, Incentive Stock Options
                in
                accordance with Section 422 of the Code, or Nonstatutory Options,
                Stock
                Awards or Restricted Stock Purchase Offers; (b) determine in good
                faith
                the fair market value of the Stock covered by any Grant; (c) determine
                which eligible persons shall receive Grants and the number of shares,
                restrictions, terms and conditions to be included in such Grants;
                (d)
                construe and interpret the Plan; (e) promulgate, amend and rescind
                rules
                and regulations relating to its administration, and correct defects,
                    omissions and inconsistencies in the Plan or any Grant; (f) consistent
                with the Plan and with the consent of the Participant, as appropriate,
                amend any outstanding Grant or amend the exercise date or dates thereof;
                (g) determine the duration and purpose of leaves of absence which
                may be
                granted to Participants without constituting termination of their
                employment for the purpose of the Plan or any Grant; and (h) make
                all
                other determinations necessary or advisable for the Plan's administration.
                The interpretation and construction by the Board of any provisions
                of the
                Plan or selection of Participants shall be conclusive and final.
                No member
                of the Board or the Committee shall be liable for any action or
                determination made in good faith with respect to the Plan or any
                Grant
                made thereunder.

            

      

      	3.  	
              Eligibility.

            

      

      	(a)  	
              General:
                The persons who shall be eligible to receive Grants shall be directors,
                officers, employees or consultants to the Company. The term consultant
                shall mean any person, other than an employee, who is engaged by
                the
                Company to render services and is compensated for such services.
                An
                Optionee may hold more than one Option. Any issuance of a Grant to
                an
                officer or director of the Company subsequent to the first registration
                of
                any of the securities of the Company under the Exchange Act shall
                comply
                with the requirements of Rule 16b-3.

            

      

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

      	(b)  	
              Incentive
                Stock Options:
                Incentive Stock Options may only be issued to employees of the Company.
                Incentive Stock Options may be granted to officers or directors,
                provided
                they are also employees of the Company. Payment of a director's fee
                shall
                not be sufficient to constitute employment by the
                Company.

            

      

        The
        Company shall not grant an Incentive Stock Option under the Plan to any employee
        if such Grant would result in such employee holding the right to exercise
        for
        the first time in any one calendar year, under all Incentive Stock Options
        granted under the Plan or any other plan maintained by the Company, with
        respect
        to shares of Stock having an aggregate fair market value, determined as of
        the
        date of the Option is granted, in excess of $100,000. Should it be determined
        that an Incentive Stock Option granted under the Plan exceeds such maximum
        for
        any reason other than a failure in good faith to value the Stock subject
        to such
        option, the excess portion of such option shall be considered a Nonstatutory
        Option. To the extent the employee holds two (2) or more such Options which
        become exercisable for the first time in the same calendar year, the foregoing
        limitation on the exercisability of such Option as Incentive Stock Options
        under
        the Federal tax laws shall be applied on the basis of the order in which
        such
        Options are granted. If, for any reason, an entire Option does not qualify
        as an
        Incentive Stock Option by reason of exceeding such maximum, such Option shall
        be
        considered a Nonstatutory Option.

      

      	(c)  	
              Nonstatutory
                Option:
                The provisions of the foregoing Section 3(b) shall not apply to any
                Option
                designated as a "Nonstatutory
                Option"
                or which sets forth the intention of the parties that the Option
                be a
                Nonstatutory Option.

            

      

      	(d)  	
              Stock
                Awards and Restricted Stock Purchase Offers:
                The provisions of this Section 3 shall not apply to any Stock Award
                or
                Restricted Stock Purchase Offer under the
                Plan.

            

      

      	4.  	
              Stock.

            

      

      	(a)  	
              Authorized
                Stock:
                Stock subject to Grants may be either unissued or reacquired
                Stock.

            

      

      	(b)  	
              Number
                of Shares:
                Subject to adjustment as provided in Section 5(i) of the Plan, the
                total
                number of shares of Stock which may be purchased or granted directly
                by
                Options, Stock Awards or Restricted Stock Purchase Offers, or purchased
                indirectly through exercise of Options granted under the Plan shall
                not
                exceed Seven Million Five Hundred Thousand (7,500,000). If any Grant
                shall
                for any reason terminate or expire, any shares allocated thereto
                but
                remaining unpurchased upon such expiration or termination shall again
                be
                available for Grants with respect thereto under the Plan as though
                no
                Grant had previously occurred with respect to such shares. Any shares
                of
                Stock issued pursuant to a Grant and repurchased pursuant to the
                terms
                thereof shall be available for future Grants as though not previously
                covered by a Grant.

            

      

      	(c)  	
              Reservation
                of Shares:
                The Company shall reserve and keep available at all times during
                the term
                of the Plan such number of shares as shall be sufficient to satisfy
                the
                requirements of the Plan. If, after reasonable efforts, which efforts
                shall not include the registration of the Plan or Grants under the
                Securities Act, the Company is unable to obtain authority from any
                applicable regulatory body, which authorization is deemed necessary
                by
                legal counsel for the Company for the lawful issuance of shares hereunder,
                the Company shall be relieved of any liability with respect to its
                failure
                to issue and sell the shares for which such requisite authority was
                so
                deemed necessary unless and until such authority is
                obtained.

            

      

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

      	(d)  	
              Application
                of Funds:
                The
                proceeds received by the Company from the sale of Stock pursuant
                to the
                exercise of Options or rights under Stock Purchase Agreements will
                be used
                for general corporate purposes.

            

      

      	(e)  	
              No
                Obligation to Exercise:
                The issuance of a Grant shall impose no obligation upon the Participant
                to
                exercise any rights under such Grant.

            

      

      	5.  	
              Terms
                and Conditions of Options. Options granted hereunder shall be evidenced
                by
                agreements between the Company and the respective Optionees, in such
                form
                and substance as the Board or Committee shall from time to time approve.
                The form of Incentive Stock Option Agreement attached hereto as
                Exhibit
                A
                and the three forms of a Nonstatutory Stock Option Agreement for
                employees, for directors and for consultants, attached hereto as
                Exhibit
                B-1, Exhibit
                B-2
                and
                Exhibit B-3,
                respectively, shall be deemed to be approved by the Board. Option
                agreements need not be identical, and in each case may include such
                provisions as the Board or Committee may determine, but all such
                agreements shall be subject to and limited by the following terms
                and
                conditions:

            

      

      	(a)  	
              Number
                of Shares:
                Each Option shall state the number of shares to which it
                pertains.

            

      

      	(b)  	
              Exercise
                Price:
                Each Option shall state the exercise price, which shall be determined
                as
                follows:

            

      

      	(i)  	
              Any
                Incentive Stock Option granted to a person who at the time the Option
                is
                granted owns (or is deemed to own pursuant to Section 424(d) of the
                Code)
                stock possessing more than ten percent (10%) of the total combined
                voting
                power or value of all classes of stock of the Company ("Ten Percent
                Holder") shall have an exercise price of no less than 110% of the
                Fair
                Market Value of the Stock as of the date of grant;
                and

            

      

      	(ii)  	
              Incentive
                Stock Options granted to a person who at the time the Option is granted
                is
                not a Ten Percent Holder shall have an exercise price of no less
                than 100%
                of the Fair Market Value of the Stock as of the date of
                grant.

            

      

      For
        the
        purposes of this Section 5(b), the Fair Market Value shall be as determined
        by
        the Board in good faith, which determination shall be conclusive and binding;
        provided however, that if there is a public market for such Stock, the Fair
        Market Value per share shall be the average of the bid and asked prices (or
        the
        closing price if such stock is listed on the NASDAQ National Market System
        or
        Small Cap Issue Market) on the date of grant of the Option, or if listed
        on a
        stock exchange, the closing price on such exchange on such date of
        grant.

      

      	(c)  	
              Medium
                and Time of Payment:
                The exercise price shall become immediately due upon exercise of
                the
                Option and shall be paid in cash or check made payable to the Company.
                Should the Company's outstanding Stock be registered under Section
                12(g)
                of the Exchange Act at the time the Option is exercised, then the
                exercise
                price may also be paid as follows:

            

       

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

      	(i)  	
              in
                shares of Stock held by the Optionee for the requisite period necessary
                to
                avoid a charge to the Company's earnings for financial reporting
                purposes
                and valued at Fair Market Value on the exercise date,
                or

            

      

      	(ii)  	
              through
                a special sale and remittance procedure pursuant to which the Optionee
                shall concurrently provide irrevocable written instructions (a) to
                a
                Company designated brokerage firm to effect the immediate sale of
                the
                purchased shares and remit to the Company, out of the sale proceeds
                available on the settlement date, sufficient funds to cover the aggregate
                exercise price payable for the purchased shares plus all applicable
                Federal, state and local income and employment taxes required to
                be
                withheld by the Company by reason of such purchase and (b) to the
                Company
                to deliver the certificates for the purchased shares directly to
                such
                brokerage firm in order to complete the sale
                transaction.

            

      

      At
        the
        discretion of the Board, exercisable either at the time of Option grant or
        of
        Option exercise, the exercise price may also be paid (i) by Optionee's delivery
        of a promissory note in form and substance satisfactory to the Company and
        permissible under applicable securities rules and bearing interest at a rate
        determined by the Board in its sole discretion, but in no event less than
        the
        minimum rate of interest required to avoid the imputation of compensation
        income
        to the Optionee under the Federal tax laws, or (ii) in such other form of
        consideration permitted by the Delaware corporations law as may be acceptable
        to
        the Board.

      

      	(d)  	
              Term
                and Exercise of Options:
                Any Option granted to an employee of the Company shall become exercisable
                over a period of no longer than five (5) years. In no event shall
                any
                Option be exercisable after the expiration of ten (10) years from
                the date
                it is granted, and no Incentive Stock Option granted to a Ten Percent
                Holder shall, by its terms, be exercisable after the expiration of
                five
                (5) years from the date of the Option. Unless otherwise specified
                by the
                Board or the Committee in the resolution authorizing such Option,
                the date
                of grant of an Option shall be deemed to be the date upon which the
                Board
                or the Committee authorizes the granting of such Option.
                

            

      

      Each
        Option shall be exercisable to the nearest whole share, in installments or
        otherwise, as the respective Option agreements may provide. During the lifetime
        of an Optionee, the Option shall be exercisable only by the Optionee and
        shall
        not be assignable or transferable by the Optionee, and no other person shall
        acquire any rights therein. To the extent not exercised, installments (if
        more
        than one) shall accumulate, but shall be exercisable, in whole or in part,
        only
        during the period for exercise as stated in the Option agreement, whether
        or not
        other installments are then exercisable.

      

      	(e)  	
              Termination
                of Status as Employee, Consultant or Director:
                If
                Optionee's status as an employee shall terminate for any reason other
                than
                Optionee's disability or death, then Optionee (or if the Optionee
                shall
                die after such termination, but prior to exercise, Optionee's personal
                representative or the person entitled to succeed to the Option) shall
                have
                the right to exercise the portions of any of Optionee's Incentive
                Stock
                Options which were exercisable as of the date of such termination,
                in
                whole or in part, within 30 days after such termination (or, in the
                event
                of "termination
                for good cause"
                as that term is defined in Delaware case law related thereto, or
                by the
                terms of the Plan or the Option Agreement or an employment agreement,
                the
                Option shall automatically terminate as of the termination of employment
                as to all shares covered by the Option). 

            

      

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

      With
        respect to Nonstatutory Options granted to employees, directors or consultants,
        the Board may specify such period for exercise, not less than 30 days (except
        that in the case of "termination
        for cause"
        or
        removal of a director), the Option shall automatically terminate as of the
        termination of employment or services as to shares covered by the Option,
        following termination of employment or services as the Board deems reasonable
        and appropriate. The Option may be exercised only with respect to installments
        that the Optionee could have exercised at the date of termination of employment
        or services. Nothing contained herein or in any Option granted pursuant hereto
        shall be construed to affect or restrict in any way the right of the Company
        to
        terminate the employment or services of an Optionee with or without
        cause.

      

      	(f)  	
              Disability
                of Optionee:
                If
                an Optionee is disabled (within the meaning of Section 22(e)(3) of
                the
                Code) at the time of termination, the three (3) month period set
                forth in
                Section 5(e) shall be a period, as determined by the Board and set
                forth
                in the Option, of not less than six months nor more than one year
                after
                such termination. 

            

      

      	(g)  	
              Death
                of Optionee:
                If
                an Optionee dies while employed by, engaged as a consultant to, or
                serving
                as a Director of the Company, the portion of such Optionee's Option
                which
                was exercisable at the date of death may be exercised, in whole or
                in
                part, by the estate of the decedent or by a person succeeding to
                the right
                to exercise such Option at any time within (i) a period, as determined
                by
                the Board and set forth in the Option, of not less than six (6) months
                nor
                more than one (1) year after Optionee's death, which period shall
                not be
                more, in the case of a Nonstatutory Option, than the period for exercise
                following termination of employment or services, or (ii) during the
                remaining term of the Option, whichever is the lesser. The Option
                may be
                so exercised only with respect to installments exercisable at the
                time of
                Optionee's death and not previously exercised by the
                Optionee.

            

      

      	(h)  	
              Nontransferability
                of Option:
                No
                Option shall be transferable by the Optionee, except by will or by
                the
                laws of descent and distribution.

            

      

      	(i)  	
              Recapitalization:
                Subject to any required action of shareholders, the number of shares
                of
                Stock covered by each outstanding Option, and the exercise price
                per share
                thereof set forth in each such Option, shall be proportionately adjusted
                for any increase or decrease in the number of issued shares of Stock
                of
                the Company resulting from a stock split, stock dividend, combination,
                subdivision or reclassification of shares, or the payment of a stock
                dividend, or any other increase or decrease in the number of such
                shares
                affected without receipt of consideration by the Company; provided,
                however, the conversion of any convertible securities of the Company
                shall
                not be deemed to have been "effected
                without receipt of consideration"
                by the Company.

            

      

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

      In
        the
        event of a proposed dissolution or liquidation of the Company, a merger or
        consolidation in which the Company is not the surviving entity, or a sale
        of all
        or substantially all of the assets or capital stock of the Company
        (collectively, a "Reorganization"),
        unless otherwise provided by the Board, this Option shall terminate immediately
        prior to such date as is determined by the Board, which date shall be no
        later
        than the consummation of such Reorganization. In such event, if the entity
        which
        shall be the surviving entity does not tender to Optionee an offer, for which
        it
        has no obligation to do so, to substitute for any unexercised Option a stock
        option or capital stock of such surviving of such surviving entity, as
        applicable, which on an equitable basis shall provide the Optionee with
        substantially the same economic benefit as such unexercised Option, then
        the
        Board may grant to such Optionee, in its sole and absolute discretion and
        without obligation, the right for a period commencing thirty (30) days prior
        to
        and ending immediately prior to the date determined by the Board pursuant
        hereto
        for termination of the Option or during the remaining term of the Option,
        whichever is the lesser, to exercise any unexpired Option or Options without
        regard to the installment provisions of Paragraph 6(d) of the Plan; provided,
        that any such right granted shall be granted to all Optionees not receiving
        an
        offer to receive substitute options on a consistent basis, and provided further,
        that any such exercise shall be subject to the consummation of such
        Reorganization.

      

      Subject
        to any required action of shareholders, if the Company shall be the surviving
        entity in any merger or consolidation, each outstanding Option thereafter
        shall
        pertain to and apply to the securities to which a holder of shares of Stock
        equal to the shares subject to the Option would have been entitled by reason
        of
        such merger or consolidation.

      

      In
        the
        event of a change in the Stock of the Company as presently constituted, which
        is
        limited to a change of all of its authorized shares without par value into
        the
        same number of shares with a par value, the shares resulting from any such
        change shall be deemed to be the Stock within the meaning of the
        Plan.

      

      To
        the
        extent that the foregoing adjustments relate to stock or securities of the
        Company, such adjustments shall be made by the Board, whose determination
        in
        that respect shall be final, binding and conclusive. Except as expressly
        provided in this Section 5(i), the Optionee shall have no rights by reason
        of
        any subdivision or consolidation of shares of stock of any class or the payment
        of any stock dividend or any other increase or decrease in the number of
        shares
        of stock of any class, and the number or price of shares of Stock subject
        to any
        Option shall not be affected by, and no adjustment shall be made by reason
        of,
        any dissolution, liquidation, merger, consolidation or sale of assets or
        capital
        stock, or any issue by the Company of shares of stock of any class or securities
        convertible into shares of stock of any class.

      

      The
        Grant
        of an Option pursuant to the Plan shall not affect in any way the right or
        power
        of the Company to make any adjustments, reclassifications, reorganizations
        or
        changes in its capital or business structure or to merge, consolidate, dissolve,
        or liquidate or to sell or transfer all or any part of its business or
        assets.

      

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

      	(j)  	
              Rights
                as a Shareholder:
                An
                Optionee shall have no rights as a shareholder with respect to any
                shares
                covered by an Option until the effective date of the issuance of
                the
                shares following exercise of such Option by Optionee. No adjustment
                shall
                be made for dividends (ordinary or extraordinary, whether in cash,
                securities or other property) or distributions or other rights for
                which
                the record date is prior to the date such stock certificate is issued,
                except as expressly provided in Section 5(i) hereof.
                

            

      

      	(k)  	
              Modification,
                Acceleration, Extension, and Renewal of Options:
                Subject to the terms and conditions and within the limitations of
                the
                Plan, the Board may modify an Option, or, once an Option is exercisable,
                accelerate the rate at which it may be exercised, and may extend
                or renew
                outstanding Options granted under the Plan or accept the surrender
                of
                outstanding Options (to the extent not theretofore exercised) and
                authorize the granting of new Options in substitution for such Options,
                provided such action is permissible under Section 422 of the Code
                and
                applicable state securities laws. Notwithstanding the provisions
                of this
                Section 5(k), however, no modification of an Option shall, without
                the
                consent of the Optionee, alter to the Optionee's detriment or impair
                any
                rights or obligations under any Option theretofore granted under
                the
                Plan.

            

      

      	(l)  	
              Exercise
                Before Exercise Date:
                At
                the discretion of the Board, the Option may, but need not, include
                a
                provision whereby the Optionee may elect to exercise all or any portion
                of
                the Option prior to the stated exercise date of the Option or any
                installment thereof. Any shares so purchased prior to the stated
                exercise
                date shall be subject to repurchase by the Company upon termination
                of
                Optionee's employment as contemplated by Section 5(n) hereof prior
                to the
                exercise date stated in the Option and such other restrictions and
                conditions as the Board or Committee may deem
                advisable.

            

      

      	(m)  	
              Other
                Provisions:
                The Option agreements authorized under the Plan shall contain such
                other
                provisions, including, without limitation, restrictions upon the
                exercise
                of the Options, as the Board or the Committee shall deem advisable.
                Shares
                shall not be issued pursuant to the exercise of an Option, if the
                exercise
                of such Option or the issuance of shares thereunder would violate,
                in the
                opinion of legal counsel for the Company, the provisions of any applicable
                law or the rules or regulations of any applicable governmental or
                administrative agency or body, such as the Code, the Securities Act,
                the
                Exchange Act, applicable state securities laws, Delaware corporation
                law,
                and the rules promulgated under the foregoing or the rules and regulations
                of any exchange upon which the shares of the Company are listed.
                Without
                limiting the generality of the foregoing, the exercise of each Option
                shall be subject to the condition that if at any time the Company
                shall
                determine that (i) the satisfaction of withholding tax or other similar
                liabilities, or (ii) the listing, registration or qualification of
                any
                shares covered by such exercise upon any securities exchange or under
                any
                state or federal law, or (iii) the consent or approval of any regulatory
                body, or (iv) the perfection of any exemption from any such withholding,
                listing, registration, qualification, consent or approval is necessary
                or
                desirable in connection with such exercise or the issuance of shares
                thereunder, then in any such event, such exercise shall not be effective
                unless such withholding, listing registration, qualification, consent,
                approval or exemption shall have been effected, obtained or perfected
                free
                of any conditions not acceptable to the
                Company.

            

      

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

      	(n)  	
              Repurchase
                Agreement:
                The Board may, in its discretion, require as a condition to the Grant
                of
                an Option hereunder, that an Optionee execute an agreement with the
                Company, in form and substance satisfactory to the Board in its discretion
                ("Repurchase
                Agreement"),
                (i) restricting the Optionee's right to transfer shares purchased
                under
                such Option without first offering such shares to the Company or
                another
                shareholder of the Company upon the same terms and conditions as
                provided
                therein; and (ii) providing that upon termination of Optionee's employment
                with the Company, for any reason, the Company (or another shareholder
                of
                the Company, as provided in the Repurchase Agreement) shall have
                the right
                at its discretion (or the discretion of such other shareholders)
                to
                purchase and/or redeem all such shares owned by the Optionee on the
                date
                of termination of his or her employment at a price equal to: (A)
                the fair
                value of such shares as of such date of termination; or (B) if such
                repurchase right lapses at 20% of the number of shares per year,
                the
                original purchase price of such shares, and upon terms of payment
                permissible under the applicable state securities laws; provided
                that in
                the case of Options or Stock Awards granted to officers, directors,
                consultants or affiliates of the Company, such repurchase provisions
                may
                be subject to additional or greater restrictions as determined by
                the
                Board or Committee.

            

      

      	6.  	
              Stock
                Awards and Restricted Stock Purchase
                Offers.

            

      

      	(a)  	
              Types
                of Grants.

            

      

      	(i)  	
              Stock
                Award.
                All or part of any Stock Award under the Plan may be subject to conditions
                established by the Board or the Committee, and set forth in the Stock
                Award Agreement, which may include, but are not limited to, continuous
                service with the Company, achievement of specific business objectives,
                increases in specified indices, attaining growth rates and other
                comparable measurements of Company performance. Such Awards may be
                based
                on Fair Market Value or other specified valuation. All Stock Awards
                will
                be made pursuant to the execution of a Stock Award Agreement substantially
                in the form attached hereto as Exhibit
                C.

            

      

      	(ii)  	
              Restricted
                Stock Purchase Offer.
                A
                Grant of a Restricted Stock Purchase Offer under the Plan shall be
                subject
                to such (i) vesting contingencies related to the Participant's continued
                association with the Company for a specified time and (ii) other
                specified
                conditions as the Board or Committee shall determine, in their sole
                discretion, consistent with the provisions of the Plan. All Restricted
                Stock Purchase Offers shall be made pursuant to a Restricted Stock
                Purchase Offer substantially in the form attached hereto as Exhibit
                D.

            

      

      	(b)  	
              Conditions
                and Restrictions.
                Shares of Stock which Participants may receive as a Stock Award under
                a
                Stock Award Agreement or Restricted Stock Purchase Offer under a
                Restricted Stock Purchase Offer may include such restrictions as
                the Board
                or Committee, as applicable, shall determine, including restrictions
                on
                transfer, repurchase rights, right of first refusal, and forfeiture
                provisions. When transfer of Stock is so restricted or subject to
                forfeiture provisions it is referred to as "Restricted
                Stock".
                Further, with Board or Committee approval, Stock Awards or Restricted
                Stock Purchase Offers may be deferred, either in the form of installments
                or a future lump sum distribution. The Board or Committee may permit
                selected Participants to elect to defer distributions of Stock Awards
                or
                Restricted Stock Purchase Offers in accordance with procedures established
                by the Board or Committee to assure that such deferrals comply with
                applicable requirements of the Code including, at the choice of
                Participants, the capability to make further deferrals for distribution
                after retirement. Any deferred distribution, whether elected by the
                Participant or specified by the Stock Award Agreement, Restricted
                Stock
                Purchase Offers or by the Board or Committee, may require the payment
                be
                forfeited in accordance with the provisions of Section 6(c). Dividends
                or
                dividend equivalent rights may be extended to and made part of any
                Stock
                Award or Restricted Stock Purchase Offers denominated in Stock or
                units of
                Stock, subject to such terms, conditions and restrictions as the
                Board or
                Committee may establish.

            

      

      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

      	(c)  	
              Cancellation
                and Rescission of Grants.
                Unless the Stock Award Agreement or Restricted Stock Purchase Offer
                specifies otherwise, the Board or Committee, as applicable, may cancel
                any
                unexpired, unpaid, or deferred Grants at any time if the Participant
                is
                not in compliance with all other applicable provisions of the Stock
                Award
                Agreement or Restricted Stock Purchase Offer, the Plan and with the
                following conditions:

            

      

      	(i)  	
              A
                Participant shall not render services for any organization or engage
                directly or indirectly in any business which, in the judgment of
                the chief
                executive officer of the Company or other senior officer designated
                by the
                Board or Committee, is or becomes competitive with the Company, or
                which
                organization or business, or the rendering of services to such
                organization or business, is or becomes otherwise prejudicial to
                or in
                conflict with the interests of the Company. For Participants whose
                employment has terminated, the judgment of the chief executive officer
                shall be based on the Participant's position and responsibilities
                while
                employed by the Company, the Participant's post-employment
                responsibilities and position with the other organization or business,
                the
                extent of past, current and potential competition or conflict between
                the
                Company and the other organization or business, the effect on the
                Company's customers, suppliers and competitors and such other
                considerations as are deemed relevant given the applicable facts
                and
                circumstances. A Participant who has retired shall be free, however,
                to
                purchase as an investment or otherwise, stock or other securities
                of such
                organization or business so long as they are listed upon a recognized
                securities exchange or traded over-the-counter, and such investment
                does
                not represent a substantial investment to the Participant or a greater
                than ten percent (10%) equity interest in the organization or
                business.

            

      

      	(ii)  	
              A
                Participant shall not, without prior written authorization from the
                Company, disclose to anyone outside the Company, or use in other
                than the
                Company's business, any confidential information or material, as
                defined
                in the Company's Proprietary Information and Invention Agreement
                or
                similar agreement regarding confidential information and intellectual
                property, relating to the business of the Company, acquired by the
                Participant either during or after employment with the Company.
                

            

      

      	(iii)  	
              A
                Participant, pursuant to the Company's Proprietary Information and
                Invention Agreement, shall disclose promptly and assign to the Company
                all
                right, title and interest in any invention or idea, patentable or
                not,
                made or conceived by the Participant during employment by the Company,
                relating in any manner to the actual or anticipated business, research
                or
                development work of the Company and shall do anything reasonably
                necessary
                to enable the Company to secure a patent where appropriate in the
                United
                States and in foreign countries.

            

      

      
        
           

        

        
          -11-

          
            

          

        

        
           

        

      

      	(iv)  	
              Upon
                exercise, payment or delivery pursuant to a Grant, the Participant
                shall
                certify on a form acceptable to the Committee that he or she is in
                compliance with the terms and conditions of the Plan. Failure to
                comply
                with all of the provisions of this Section 6(c) prior to, or during
                the
                six months after, any exercise, payment or delivery pursuant to a
                Grant
                shall cause such exercise, payment or delivery to be rescinded. The
                Company shall notify the Participant in writing of any such rescission
                within two years after such exercise, payment or delivery. Within
                ten days
                after receiving such a notice from the Company, the Participant shall
                pay
                to the Company the amount of any gain realized or payment received
                as a
                result of the rescinded exercise, payment or delivery pursuant to
                a Grant.
                Such payment shall be made either in cash or by returning to the
                Company
                the number of shares of Stock that the Participant received in connection
                with the rescinded exercise, payment or
                delivery.

            

      

      	(d)  	
              Nonassignability.

            

      

      	(i)  	
              Except
                pursuant to Section 6(e)(iii) and except as set forth in Section
                6(d)(ii),
                no Grant or any other benefit under the Plan shall be assignable
                or
                transferable, or payable to or exercisable by, anyone other than
                the
                Participant to whom it was granted.

            

      

      	(ii)  	
              Where
                a Participant terminates employment and retains a Grant pursuant
                to
                Section 6(e)(ii) in order to assume a position with a governmental,
                charitable or educational institution, the Board or Committee, in
                its
                discretion and to the extent permitted by law, may authorize a third
                party
                (including but not limited to the trustee of a "blind" trust), acceptable
                to the applicable governmental or institutional authorities, the
                Participant and the Board or Committee, to act on behalf of the
                Participant with regard to such Awards.

            

      

      	(e)  	
              Termination
                of Employment.
                If
                the employment or service to the Company of a Participant terminates,
                other than pursuant to any of the following provisions under this
                Section
                6(e), all unexercised, deferred and unpaid Stock Awards or Restricted
                Stock Purchase Offers shall be cancelled immediately, unless the
                Stock
                Award Agreement or Restricted Stock Purchase Offer provides otherwise:
                

            

      

      	(i)  	
              Retirement
                Under a Company Retirement Plan.
                When a Participant's employment terminates as a result of retirement
                in
                accordance with the terms of a Company retirement plan, the Board
                or
                Committee may permit Stock Awards or Restricted Stock Purchase Offers
                to
                continue in effect beyond the date of retirement in accordance with
                the
                applicable Grant Agreement and the exercisability and vesting of
                any such
                Grants may be accelerated.

            

      

      	(ii)  	
              Rights
                in the Best Interests of the Company.
                When a Participant resigns from the Company and, in the judgment
                of the
                Board or Committee, the acceleration and/or continuation of outstanding
                Stock Awards or Restricted Stock Purchase Offers would be in the
                best
                interests of the Company, the Board or Committee may (i) authorize,
                where
                appropriate, the acceleration and/or continuation of all or any part
                of
                Grants issued prior to such termination and (ii) permit the exercise,
                vesting and payment of such Grants for such period as may be set
                forth in
                the applicable Grant Agreement, subject to earlier cancellation pursuant
                to Section 9 or at such time as the Board or Committee shall deem
                the
                continuation of all or any part of the Participant's Grants are not
                in the
                Company's best interest.

            

      

      
        
           

        

        
          -12-

          
            

          

        

        
           

        

      

      	(iii)  	
              Death
                or Disability of a Participant. 

            

      

      	(1)  	
              In
                the event of a Participant's death, the Participant's estate or
                beneficiaries shall have a period up to the expiration date specified
                in
                the Grant Agreement within which to receive or exercise any outstanding
                Grant held by the Participant under such terms as may be specified
                in the
                applicable Grant Agreement. Rights to any such outstanding Grants
                shall
                pass by will or the laws of descent and distribution in the following
                order: (a) to beneficiaries so designated by the Participant; if
                none,
                then (b) to a legal representative of the Participant; if none, then
                (c)
                to the persons entitled thereto as determined by a court of competent
                jurisdiction. Grants so passing shall be made at such times and in
                such
                manner as if the Participant were living.

            

      

      	(2)  	
              In
                the event a Participant is deemed by the Board or Committee to be
                unable
                to perform his or her usual duties by reason of mental disorder or
                medical
                condition which does not result from facts which would be grounds
                for
                termination for cause, Grants and rights to any such Grants may be
                paid to
                or exercised by the Participant, if legally competent, or a committee
                or
                other legally designated guardian or representative if the Participant
                is
                legally incompetent by virtue of such
                disability.

            

      

      	(3)  	
              After
                the death or disability of a Participant, the Board or Committee
                may in
                its sole discretion at any time (1) terminate restrictions in Grant
                Agreements; (2) accelerate any or all installments and rights; and
                (3)
                instruct the Company to pay the total of any accelerated payments
                in a
                lump sum to the Participant, the Participant's estate, beneficiaries
                or
                representative; notwithstanding that, in the absence of such termination
                of restrictions or acceleration of payments, any or all of the payments
                due under the Grant might ultimately have become payable to other
                beneficiaries.

            

      

      	(4)  	
              In
                the event of uncertainty as to interpretation of or controversies
                concerning this Section 6, the determinations of the Board or Committee,
                as applicable, shall be binding and
                conclusive.

            

      

      
        	7.	
                Change
                  in Control.
                  Unless otherwise provided in the applicable award agreement, in
                  the event
                  of a Change in Control, all vesting restrictions applicable to
                  the Grant
                  shall terminate fully and the Participant shall immediately have
                  the right
                  to the delivery of share certificates or exercise of
                  Options.

              

      

      

      
        
           

        

        
          -13-

          
            

          

        

        
           

        

      

      
        	8.	
                Investment
                  Intent. All Grants under the Plan are intended to be exempt from
                  registration under the Securities Act provided by Rule 701 thereunder.
                  Unless and until the granting of Options or sale and issuance of
                  Stock
                  subject to the Plan are registered under the Securities Act or
                  shall be
                  exempt pursuant to the rules promulgated thereunder, each Grant
                  under the
                  Plan shall provide that the purchases or other acquisitions of
                  Stock
                  thereunder shall be for investment purposes and not with a view
                  to, or for
                  resale in connection with, any distribution thereof. Further, unless
                  the
                  issuance and sale of the Stock have been registered under the Securities
                  Act, each Grant shall provide that no shares shall be purchased
                  upon the
                  exercise of the rights under such Grant unless and until (i) all
                  then
                  applicable requirements of state and federal laws and regulatory
                  agencies
                  shall have been fully complied with to the satisfaction of the
                  Company and
                  its counsel, and (ii) if requested to do so by the Company, the
                  person
                  exercising the rights under the Grant shall (i) give written assurances
                  as
                  to knowledge and experience of such person (or a representative
                  employed
                  by such person) in financial and business matters and the ability
                  of such
                  person (or representative) to evaluate the merits and risks of
                  exercising
                  the Option, and (ii) execute and deliver to the Company a letter
                  of
                  investment intent and/or such other form related to applicable
                  exemptions
                  from registration, all in such form and substance as the Company
                  may
                  require. If shares are issued upon exercise of any rights under
                  a Grant
                  without registration under the Securities Act, subsequent registration
                  of
                  such shares shall relieve the purchaser thereof of any investment
                  restrictions or representations made upon the exercise of such
                  rights.

              

      

      

      
        	9.	
                Amendment,
                  Modification, Suspension or Discontinuance of the Plan. The Board
                  may,
                  insofar as permitted by law, from time to time, with respect to
                  any shares
                  at the time not subject to outstanding Grants, suspend or terminate
                  the
                  Plan or revise or amend it in any respect whatsoever, except that
                  without
                  the approval of the shareholders of the Company, no such revision
                  or
                  amendment shall (i) increase the number of shares subject to the
                  Plan,
                  (ii) decrease the price at which Grants may be granted, (iii) materially
                  increase the benefits to Participants, or (iv) change the class
                  of persons
                  eligible to receive Grants under the Plan; provided, however, no
                  such
                  action shall alter or impair the rights and obligations under any
                  Option,
                  or Stock Award, or Restricted Stock Purchase Offer outstanding
                  as of the
                  date thereof without the written consent of the Participant thereunder.
                  No
                  Grant may be issued while the Plan is suspended or after it is
                  terminated,
                  but the rights and obligations under any Grant issued while the
                  Plan is in
                  effect shall not be impaired by suspension or termination of the
                  Plan.

              

      

      

      In
        the
        event of any change in the outstanding Stock by reason of a stock split,
        stock
        dividend, combination or reclassification of shares, recapitalization, merger,
        or similar event, the Board or the Committee may adjust proportionally (a)
        the
        number of shares of Stock (i) reserved under the Plan, (ii) available for
        Incentive Stock Options and Nonstatutory Options and (iii) covered by
        outstanding Stock Awards or Restricted Stock Purchase Offers; (b) the Stock
        prices related to outstanding Grants; and (c) the appropriate Fair Market
        Value
        and other price determinations for such Grants. In the event of any other
        change
        affecting the Stock or any distribution (other than normal cash dividends)
        to
        holders of Stock, such adjustments as may be deemed equitable by the Board
        or
        the Committee, including adjustments to avoid fractional shares, shall be
        made
        to give proper effect to such event. In the event of a corporate merger,
        consolidation, acquisition of property or stock, separation, reorganization
        or
        liquidation, the Board or the Committee shall be authorized to issue or assume
        stock options, whether or not in a transaction to which Section 424(a) of
        the
        Code applies, and other Grants by means of substitution of new Grant Agreements
        for previously issued Grants or an assumption of previously issued
        Grants.

      

      
        
           

        

        
          -14-

          
            

          

        

        
           

        

      

      
        	
                10.

              	
                Tax
                  Withholding. The Company shall have the right to deduct applicable
                  taxes
                  from any Grant payment and withhold, at the time of delivery or
                  exercise
                  of Options, Stock Awards or Restricted Stock Purchase Offers or
                  vesting of
                  shares under such Grants, an appropriate number of shares for payment
                  of
                  taxes required by law or to take such other action as may be necessary
                  in
                  the opinion of the Company to satisfy all obligations for withholding
                  of
                  such taxes. If Stock is used to satisfy tax withholding, such stock
                  shall
                  be valued based on the Fair Market Value when the tax withholding
                  is
                  required to be made. 

              

      

       

      
        	11.	
                Availability
                  of Information. During the term of the Plan and any additional
                  period
                  during which a Grant granted pursuant to the Plan shall be exercisable,
                  the Company shall make available, not later than one hundred and
                  twenty
                  (120) days following the close of each of its fiscal years, such
                  financial
                  and other information regarding the Company as is required by the
                  bylaws
                  of the Company and applicable law to be furnished in an annual
                  report to
                  the shareholders of the Company. 

              

      

       

      
        	12.	
                Notice.
                  Any written notice to the Company required by any of the provisions
                  of the
                  Plan shall be addressed to the chief personnel officer or to the
                  chief
                  executive officer of the Company, and shall become effective when
                  it is
                  received by the office of the chief personnel officer or the chief
                  executive officer. 

              

      

      

      
        	13.	
                Indemnification
                  of Board. In addition to such other rights or indemnifications
                  as they may
                  have as directors or otherwise, and to the extent allowed by applicable
                  law, the members of the Board and the Committee shall be indemnified
                  by
                  the Company against the reasonable expenses, including attorneys'
                  fees,
                  actually and necessarily incurred in connection with the defense
                  of any
                  claim, action, suit or proceeding, or in connection with any appeal
                  thereof, to which they or any of them may be a party by reason
                  of any
                  action taken, or failure to act, under or in connection with the
                  Plan or
                  any Grant 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 claim, action, suit or proceeding, except
                  in any
                  case in relation to matters as to which it shall be adjudged in
                  such
                  claim, action, suit or proceeding that such Board or Committee
                  member is
                  liable for negligence or misconduct in the performance of his or
                  her
                  duties; provided that within sixty (60) days after institution
                  of any such
                  action, suit or Board proceeding the member involved shall offer
                  the
                  Company, in writing, the opportunity, at its own expense, to handle
                  and
                  defend the same. 

              

      

       

      
        	14.	
                Governing
                  Law. The Plan and all determinations made and actions taken pursuant
                  hereto, to the extent not otherwise governed by the Code or the
                  securities
                  laws of the United States, shall be governed by the law of the
                  State of
                  Delaware and construed accordingly.

              

      

      

      
        	15.	
                Effective
                  and Termination Dates. The Plan shall become effective on the date
                  it is
                  approved by the holders of a majority of the shares of Stock then
                  outstanding. The Plan shall terminate ten years later, subject
                  to earlier
                  termination by the Board pursuant to Section 9.

              

      

      

      
        
           

        

        
          -15-

          
            

          

        

        
           

        

      

      The
        foregoing 2007 Incentive Stock Plan (consisting of 16 pages, including this
        page) was duly adopted and approved by the Board of Directors on January
        __,
        2007.

      

      
        	 	
                SPONGETECH
                  DELIVERY SYSTEMS, INC.

                 

                 

                By:
                   ________________________

                Michael
                  Metter

                Its:         
                  Chief
                  Executive Officer

              

      

      

    

     

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

    

    SPONGETECH
      DELIVERY SYSTEMS, INC.

    

    INCENTIVE
      STOCK OPTION AGREEMENT

    
      
        

      

    

    

    This
      Incentive Stock Option Agreement ("Agreement")
      is
      made and entered into as of the date set forth below, by and between Spongetech
      Delivery Systems, Inc.,
      a
      Delaware corporation (the "Company"),
      and the
      employee of the Company named in Section 1(b). ("Optionee"):

    

    In
      consideration of the covenants herein set forth, the parties hereto agree as
      follows:

     

    1.
      Option
      Information.

    

    (a) Date
      of
      Option: __________________________

    

    (b) Optionee:         
      __________________________

    

    (c) Number
      of
      Shares:  _______________________

    

    (d) Exercise
      Price:  __________________________

     

    2.
      Acknowledgements.

    

    
      	 	 	
              (a)

            	
              Optionee
                is an employee of the Company.

            

    

    

    (b) The
      Board
      of Directors (the "Board"
      which
      term shall include an authorized committee of the Board of Directors) and
      shareholders of the Company have heretofore adopted a 2007 Incentive Stock
      Plan
      (the "Plan"),
      pursuant to which this Option is being granted.

    

    (c) The
      Board
      has authorized the granting to Optionee of an incentive stock option
      ("Option")
      as
      defined in Section 422 of the Internal Revenue Code of 1986, as amended, (the
      "Code")
      to
      purchase shares of common stock of the Company ("Stock")
      upon
      the terms and conditions hereinafter stated and pursuant to an exemption from
      registration under the Securities Act of 1933, as amended (the "Securities
      Act")
      provided by Section 4(2) thereunder.

    

    3.
      Shares;
      Price.
      The
      Company hereby grants to Optionee the right to purchase, upon and subject to
      the
      terms and conditions herein stated, the number of shares of Stock set forth
      in
      Section 1(c) above (the "Shares")
      for
      cash (or other consideration as is authorized under the Plan and acceptable
      to
      the Board, in their sole and absolute discretion) at the price per Share set
      forth in Section 1(d) above (the "Exercise
      Price"),
      such
      price being not less than the fair market value per share of the Shares covered
      by this Option as of the date hereof (unless Optionee is the owner of Stock
      possessing ten percent or more of the total voting power or value of all
      outstanding Stock of the Company, in which case the Exercise Price shall be
      no
      less than 110% of the fair market value of such Stock).

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.
      Term
      of Option; Continuation of Employment.
      This
      Option shall expire, and all rights hereunder to purchase the Shares shall
      terminate five (5) years from the date hereof. This Option shall earlier
      terminate subject to Sections 7 and 8 hereof upon, and as of the date of, the
      termination of Optionee's employment if such termination occurs prior to the
      end
      of such five (5) year period. Nothing contained herein shall confer upon
      Optionee the right to the continuation of his or her employment by the Company
      or to interfere with the right of the Company to terminate such employment
      or to
      increase or decrease the compensation of Optionee from the rate in existence
      at
      the date hereof.

    

    5.
      Vesting
      of Option.
      Subject
      to the provisions of Sections 7 and 8 hereof, this Option shall become
      exercisable during the term of Optionee's employment in [four (4) equal annual
      installments of twenty-five percent (25%) of the Shares covered by this Option,
      the first installment to be exercisable on the twelve (12) month anniversary
      of
      the date of this Option (the "Initial Vesting Date"), with an additional
      twenty-five percent (25%) of such Shares becoming exercisable on each of the
      three (3) successive twelve (12) month periods following the Initial Vesting
      Date.] The installments shall be cumulative (i.e., this option may be exercised,
      as to any or all Shares covered by an installment, at any time or times after
      an
      installment becomes exercisable and until expiration or termination of this
      option).

    

    6.
      Exercise.
      This
      Option shall be exercised by delivery to the Company of (a) written notice
      of
      exercise stating the number of Shares being purchased (in whole shares only)
      and
      such other information set forth on the form of Notice of Exercise attached
      hereto as Appendix A, (b) a check or cash in the amount of the Exercise Price
      of
      the Shares covered by the notice (or such other consideration as has been
      approved by the Board of Directors consistent with the Plan) and (c) a written
      investment representation as provided for in Section 13 hereof. This Option
      shall not be assignable or transferable, except by will or by the laws of
      descent and distribution, and shall be exercisable only by Optionee during
      his
      or her lifetime, except as provided in Section 8 hereof.

    

    7.
      Termination
      of Employment.
      If
      Optionee shall cease to be employed by the Company for any reason, whether
      voluntarily or involuntarily, other than by his or her death, Optionee (or
      if
      the Optionee shall die after such termination, but prior to such exercise date,
      Optionee's personal representative or the person entitled to succeed to the
      Option) shall have the right at any time within one year following such
      termination of employment or the remaining term of this Option, whichever is
      the
      lesser, to exercise in whole or in part this Option to the extent, but only
      to
      the extent, that this Option was exercisable as of the date of termination
      of
      employment and had not previously been exercised; provided, however: (i) if
      Optionee is permanently disabled (within the meaning of Section 22(e)(3) of
      the
      Code) at the time of termination, the foregoing one year period shall be
      extended in the discretion of the Board of Directors to up to one (1) year
      and
      six (6) months; or (ii) if Optionee is terminated "for
      cause"
      as that
      term is defined under Delaware Law and case law related thereto, or by the
      terms
      of the Plan or this Option Agreement or by any employment agreement between
      the
      Optionee and the Company, this Option shall automatically terminate as to all
      Shares covered by this Option not exercised prior to termination. Unless earlier
      terminated, all rights under this Option shall terminate in any event on the
      expiration date of this Option as defined in Section 4 hereof.

    

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    8.
      Death
      of Optionee.
      If the
      Optionee shall die while in the employ of the Company, Optionee's personal
      representative or the person entitled to Optionee's rights hereunder may at
      any
      time within six (6) months after the date of Optionee's death, or during the
      remaining term of this Option, whichever is the lesser, exercise this Option
      and
      purchase Shares to the extent, but only to the extent, that Optionee could
      have
      exercised this Option as of the date of Optionee's death, as such may be
      accelerated by the Board of Directors; provided, in any case, that this Option
      may be so exercised only to the extent that this Option has not previously
      been
      exercised by Optionee.

    

    9.
      No
      Rights as Shareholder.
      Optionee
      shall have no rights as a shareholder with respect to the Shares covered by
      any
      installment of this Option until the effective date of issuance of Shares
      following exercise of this Option, and no adjustment will be made for dividends
      or other rights for which the record date is prior to the date such stock
      certificate or certificates are issued except as provided in Section 10
      hereof.

    

    10.
      Recapitalization.
      Subject
      to any required action by the shareholders of the Company, the number of Shares
      covered by this Option, and the Exercise Price thereof, shall be proportionately
      adjusted for any increase or decrease in the number of issued shares resulting
      from a subdivision or consolidation of shares or the payment of a stock
      dividend, or any other increase or decrease in the number of such shares
      effected without receipt of consideration by the Company; provided however
      that
      the conversion of any convertible securities of the Company shall not be deemed
      having been "effected
      without receipt of consideration by the Company".

    

    In
      the
      event of a proposed dissolution or liquidation of the Company, a merger or
      consolidation in which the Company is not the surviving entity, or a sale of
      all
      or substantially all of the assets or capital stock of the Company
      (collectively, a "Reorganization"),
      unless otherwise provided by the Board, this Option shall terminate immediately
      prior to such date as is determined by the Board, which date shall be no later
      than the consummation of such Reorganization. In such event, if the entity
      which
      shall be the surviving entity does not tender to Optionee an offer, for which
      it
      has no obligation to do so, to substitute for any unexercised Option a stock
      option or capital stock of such surviving of such surviving entity, as
      applicable, which on an equitable basis shall provide the Optionee with
      substantially the same economic benefit as such unexercised Option, then the
      Board may grant to such Optionee, in its sole and absolute discretion and
      without obligation, the right for a period commencing thirty (30) days prior
      to
      and ending immediately prior to the date determined by the Board pursuant hereto
      for termination of the Option or during the remaining term of the Option,
      whichever is the lesser, to exercise any unexpired Option or Options without
      regard to the installment provisions of Section 5; provided, however, that
      such
      exercise shall be subject to the consummation of such
      Reorganization.

    

    Subject
      to any required action by the shareholders of the Company, if the Company shall
      be the surviving entity in any merger or consolidation, this Option thereafter
      shall pertain to and apply to the securities to which a holder of Shares equal
      to the Shares subject to this Option would have been entitled by reason of
      such
      merger or consolidation, and the installment provisions of Section 5 shall
      continue to apply.

    

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    In
      the
      event of a change in the shares of the Company as presently constituted, which
      is limited to a change of all of its authorized Stock without par value into
      the
      same number of shares of Stock with a par value, the shares resulting from
      any
      such change shall be deemed to be the Shares within the meaning of this
      Option.

    

    To
      the
      extent that the foregoing adjustments relate to shares or securities of the
      Company, such adjustments shall be made by the Board, whose determination in
      that respect shall be final, binding and conclusive. Except as hereinbefore
      expressly provided, Optionee shall have no rights by reason of any subdivision
      or consolidation of shares of Stock of any class or the payment of any stock
      dividend or any other increase or decrease in the number of shares of stock
      of
      any class, and the number and price of Shares subject to this Option shall
      not
      be affected by, and no adjustments shall be made by reason of, any dissolution,
      liquidation, merger, consolidation or sale of assets or capital stock, or any
      issue by the Company of shares of stock of any class or securities convertible
      into shares of stock of any class.

    

    The
      grant
      of this Option shall not affect in any way the right or power of the Company
      to
      make adjustments, reclassifications, reorganizations or changes in its capital
      or business structure or to merge, consolidate, dissolve or liquidate or to
      sell
      or transfer all or any part of its business or assets.

     

    11.
      Additional
      Consideration.
      Should
      the Internal Revenue Service determine that the Exercise Price established
      by
      the Board as the fair market value per Share is less than the fair market value
      per Share as of the date of Option grant, Optionee hereby agrees to tender
      such
      additional consideration, or agrees to tender upon exercise of all or a portion
      of this Option, such fair market value per Share as is determined by the
      Internal Revenue Service.

    

    12.
      Modifications,
      Extension and Renewal of Options.
      The
      Board or Committee, as described in the Plan, may modify, extend or renew this
      Option or accept the surrender thereof (to the extent not theretofore exercised)
      and authorize the granting of a new option in substitution therefore (to the
      extent not theretofore exercised), subject at all times to the Plan, and Section
      422 of the Code. 

    

    13.
      Investment
      Intent; Restrictions on Transfer.

    

    (a)
      Optionee represents and agrees that if Optionee exercises this Option in whole
      or in part, Optionee will in each case acquire the Shares upon such exercise
      for
      the purpose of investment and not with a view to, or for resale in connection
      with, any distribution thereof; and that upon such exercise of this Option
      in
      whole or in part, Optionee (or any person or persons entitled to exercise this
      Option under the provisions of Sections 7 and 8 hereof) shall furnish to the
      Company a written statement to such effect, satisfactory to the Company in
      form
      and substance. If the Shares represented by this Option are registered under
      the
      Securities Act, either before or after the exercise of this Option in whole
      or
      in part, the Optionee shall be relieved of the foregoing investment
      representation and agreement and shall not be required to furnish the Company
      with the foregoing written statement.

    

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    (b)
      Optionee further represents that Optionee has had the opportunity to ask
      questions of the Company concerning its business, operations and financial
      condition, and to obtain additional information reasonably necessary to verify
      the accuracy of such information.

    

    (c)
      Unless and until the Shares represented by this Option are registered under
      the
      Securities Act, all certificates representing the Shares and any certificates
      subsequently issued in substitution therefor and any certificate for any
      securities issued pursuant to any stock split, share reclassification, stock
      dividend or other similar capital event shall bear legends in substantially
      the
      following form:

    

    
      	 	
              THESE
                SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER
                THE
                SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE
                OR
                SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST
                THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
                IN THE
                ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
                SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS
                THEREFROM.

            

    

    

    
      	 	
              THE
                SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT
                TO THAT
                CERTAIN INCENTIVE STOCK OPTION AGREEMENT DATED ____________ BETWEEN
                THE
                COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES
                WHICH
                ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN
                CONDITIONS.

            

    

    

    such
      other legend or legends as the Company and its counsel deem necessary or
      appropriate. Appropriate stop transfer instructions with respect to the Shares
      have been placed with the Company's transfer agent.

    

    14.
      Effects
      of Early Disposition.
      Optionee
      understands that if an Optionee disposes of shares acquired hereunder within
      two
      (2) years after the date of this Option or within one (1) year after the date
      of
      issuance of such shares to Optionee, such Optionee will be treated for income
      tax purposes as having received ordinary income at the time of such disposition
      of an amount generally measured by the difference between the purchase price
      and
      the fair market value of such stock on the date of exercise, subject to
      adjustment for any tax previously paid, in addition to any tax on the difference
      between the sales price and Optionee's adjusted cost basis in such shares.
      The
      foregoing amount may be measured differently if Optionee is an officer, director
      or ten percent holder of the Company. Optionee agrees to notify the Company
      within ten (10) working days of any such disposition.

    

    15.
      Stand-off
      Agreement.
      Optionee
      agrees that in connection with any registration of the Company's securities
      under the Securities Act, and upon the request of the Company or any underwriter
      managing an underwritten offering of the Company's securities, Optionee shall
      not sell, short any sale of, loan, grant an option for, or otherwise dispose
      of
      any of the Shares (other than Shares included in the offering) without the
      prior
      written consent of the Company or such managing underwriter, as applicable,
      for
      a period of at least one year following the effective date of registration
      of
      such offering.

    

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    16.
      Restriction
      Upon Transfer.
      The
      Shares may not be sold, transferred or otherwise disposed of and shall not
      be
      pledged or otherwise hypothecated by the Optionee except as hereinafter
      provided.

    

    (a)
      Repurchase
      Right on Termination Other Than for Cause.
      For the
      purposes of this Section, a "Repurchase
      Event"
      shall
      mean an occurrence of one of (i) termination of Optionee's employment by the
      Company, voluntary or involuntary and without cause; (ii) retirement or death
      of
      Optionee; (iii) bankruptcy of Optionee, which shall be deemed to have occurred
      as of the date on which a voluntary or involuntary petition in bankruptcy is
      filed with a court of competent jurisdiction; (iv) dissolution of the marriage
      of Optionee, to the extent that any of the Shares are allocated as the sole
      and
      separate property of Optionee's spouse pursuant thereto (in which case this
      Section shall only apply to the Shares so affected); or (v) any attempted
      transfer by the Optionee of Shares, or any interest therein, in violation of
      this Agreement. Upon the occurrence of a Repurchase Event, the Company shall
      have the right (but not an obligation) to repurchase all or any portion of
      the
      Shares of Optionee at a price equal to the fair value of the Shares as of the
      date of the Repurchase Event.

    

    (b)
      Repurchase
      Right on Termination for Cause.
      In the
      event Optionee's employment is terminated by the Company "for
      cause",
      then
      the Company shall have the right (but not an obligation) to repurchase Shares
      of
      Optionee at a price equal to the Exercise Price. Such right of the Company
      to
      repurchase Shares shall apply to 100% of the Shares for one (1) year from the
      date of this Agreement; and shall thereafter lapse at the rate of twenty percent
      (20%) of the Shares on each anniversary of the date of this Agreement. In
      addition, the Company shall have the right, in the sole discretion of the Board
      and without obligation, to repurchase upon termination for cause all or any
      portion of the Shares of Optionee, at a price equal to the fair value of the
      Shares as of the date of termination, which right is not subject to the
      foregoing lapsing of rights. In the event the Company elects to repurchase
      the
      Shares, the stock certificates representing the same shall forthwith be returned
      to the Company for cancellation.

    

    (c)
      Exercise
      of Repurchase Right.
      Any
      Repurchase Right under Paragraphs 16(a) or 16(b) shall be exercised by giving
      notice of exercise as provided herein to Optionee or the estate of Optionee,
      as
      applicable. Such right shall be exercised, and the repurchase price thereunder
      shall be paid, by the Company within a ninety (90) day period beginning on
      the
      date of notice to the Company of the occurrence of such Repurchase Event (except
      in the case of termination of employment or retirement, where such option period
      shall begin upon the occurrence of the Repurchase Event). Such repurchase price
      shall be payable only in the form of cash (including a check drafted on
      immediately available funds) or cancellation of purchase money indebtedness
      of
      the Optionee for the Shares. If the Company can not purchase all such Shares
      because it is unable to meet the financial tests set forth in Delaware
      corporation law, the Company shall have the right to purchase as many Shares
      as
      it is permitted to purchase under such sections. Any Shares not purchased by
      the
      Company hereunder shall no longer be subject to the provisions of this Section
      16.

    

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    (d)
      Right
      of First Refusal.
      In the
      event Optionee desires to transfer any Shares during his or her lifetime,
      Optionee shall first offer to sell such Shares to the Company. Optionee shall
      deliver to the Company written notice of the intended sale, such notice to
      specify the number of Shares to be sold, the proposed purchase price and terms
      of payment, and grant the Company an option for a period of thirty days
      following receipt of such notice to purchase the offered Shares upon the same
      terms and conditions. To exercise such option, the Company shall give notice
      of
      that fact to Optionee within the thirty (30) day notice period and agree to
      pay
      the purchase price in the manner provided in the notice. If the Company does
      not
      purchase all of the Shares so offered during foregoing option period, Optionee
      shall be under no obligation to sell any of the offered Shares to the Company,
      but may dispose of such Shares in any lawful manner during a period of one
      hundred and eighty (180) days following the end of such notice period, except
      that Optionee shall not sell any such Shares to any other person at a lower
      price or upon more favorable terms than those offered to the
      Company.

    
       

      (e)
        Acceptance
        of Restrictions.
        Acceptance of the Shares shall constitute the Optionee's agreement to such
        restrictions and the legending of his certificates with respect thereto.
        Notwithstanding such restrictions, however, so long as the Optionee is the
        holder of the Shares, or any portion thereof, he shall be entitled to receive
        all dividends declared on and to vote the Shares and to all other rights
        of a
        shareholder with respect thereto.

    

     

    (f)
      Permitted
      Transfers.
      Notwithstanding any provisions in this Section 16 to the contrary, the Optionee
      may transfer Shares subject to this Agreement to his or her parents, spouse,
      children, or grandchildren, or a trust for the benefit of the Optionee or any
      such transferee(s); provided, that such permitted transferee(s) shall hold
      the
      Shares subject to all the provisions of this Agreement (all references to the
      Optionee herein shall in such cases refer mutatis mutandis to the permitted
      transferee, except in the case of clause (iv) of Section 16(a) wherein the
      permitted transfer shall be deemed to be rescinded); and provided further,
      that
      notwithstanding any other provisions in this Agreement, a permitted transferee
      may not, in turn, make permitted transfers without the written consent of the
      Optionee and the Company.

    

    (g)
      Release
      of Restrictions on Shares.
      All
      other restrictions under this Section 16 shall terminate five (5) years
      following the date of this Agreement, or when the Company's securities are
      publicly traded, whichever occurs earlier. 

     

    17.
      Notices.
      Any
      notice required to be given pursuant to this Option or the Plan shall be in
      writing and shall be deemed to be delivered upon receipt or, in the case of
      notices by the Company, five (5) days after deposit in the U.S. mail, postage
      prepaid, addressed to Optionee at the address last provided to the Company
      by
      Optionee for his or her employee records.

     

    18.
      Agreement
      Subject to Plan; Applicable Law.
      This
      Option is made pursuant to the Plan and shall be interpreted to comply
      therewith. A copy of such Plan is available to Optionee, at no charge, at the
      principal office of the Company. Any provision of this Option inconsistent
      with
      the Plan shall be considered void and replaced with the applicable provision
      of
      the Plan. This Option has been granted, executed and delivered in the State
      of
      Delaware, and the interpretation and enforcement shall be governed by the laws
      thereof and subject to the exclusive jurisdiction of the courts
      therein.

    

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    In
      Witness Whereof,
      the
      parties hereto have executed this Option as of the date first above
      written.

     

    
      	
              COMPANY:
                

            	
              SPONGETECH
                DELIVERY SYSTEMS, INC.,

               

               

               

              By:__________________________

              Name:________________________

              Title:_________________________

            
	 	 
	
              OPTIONEE:

            	
               

              By:__________________________

              (signature)

              Name:________________________

            

    

    

    (one
      of the following, as appropriate, shall be signed)

    

    
      	
              I
                certify that as of the date hereof I am unmarried

            	 	
              By
                his or her signature, the spouse of Optionee hereby agrees to be
                bound by
                the provisions of the foregoing INCENTIVE STOCK OPTION
                AGREEMENT

            
	 	 	 
	
              Optionee

            	 	
              Spouse
                of Optionee

            

    

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    Appendix
      A

    

    NOTICE
      OF
      EXERCISE

    

    Spongetech
      Delivery Systems, Inc.

    

    Re:
      Incentive Stock Option

    

    Notice
      is
      hereby given pursuant to Section 6 of my Incentive Stock Option Agreement that
      I
      elect to purchase the number of shares set forth below at the exercise price
      set
      forth in my option agreement:

    

    Incentive
      Stock Option Agreement dated: ____________

    

    Number
      of
      shares being purchased: ____________

    

    Exercise
      Price: $____________

    

    A
      check
      in the amount of the aggregate price of the shares being purchased is
      attached.

    

    I
      hereby
      confirm that such shares are being acquired by me for my own account for
      investment purposes, and not with a view to, or for resale in connection with,
      any distribution thereof. I will not sell or dispose of my Shares in violation
      of the Securities Act of 1933, as amended, or any applicable federal or state
      securities laws. Further, I understand that the exemption from taxable income
      at
      the time of exercise is dependent upon my holding such stock for a period of
      at
      least one year from the date of exercise and two years from the date of grant
      of
      the Option.

    

    I
      understand that the certificate representing the Option Shares will bear a
      restrictive legend within the contemplation of the Securities Act and as
      required by such other state or federal law or regulation applicable to the
      issuance or delivery of the Option Shares.

    

    I
      agree
      to provide to the Company such additional documents or information as may be
      required pursuant to the Company's 2007 Incentive Stock Plan.

    
      	 	
               

              By:     
                __________________________

              (signature)

              Name:
                __________________________

            

    

    

     

    
      
         

      

      
        Appendix
          A

        
          

        

      

      
         

      

    

    
 

    EXHIBIT
      B-1

    

    SPONGETECH
      DELIVERY SYSTEMS, INC. 

    

    EMPLOYEE
      NONSTATUTORY STOCK OPTION AGREEMENT

     

    
      
        

      

    

    

    This
      Employee Nonstatutory Stock Option Agreement ("Agreement")
      is
      made and entered into as of the date set forth below, by and between
Spongetech
      Delivery Systems, Inc.,
      a
      Delaware corporation (the "Company"),
      and
      the following employee of the Company ("Optionee"):

    

    In
      consideration of the covenants herein set forth, the parties hereto agree as
      follows:

    

    1.
      Option
      Information.

    

    (a) Date
      of
      Option:       
__________________________

    (b) Optionee:                 
      __________________________

    (c) Number
      of
      Shares:   __________________________

    (d) Exercise
      Price:         
__________________________

    

    2.
      Acknowledgements.

    

    (a)
      Optionee is an employee of the Company.

    

    (b)
      The
      Board of Directors (the "Board"
      which
      term shall include an authorized committee of the Board of Directors) and
      shareholders of the Company have heretofore adopted a 2007 Incentive Stock
      Plan
      (the "Plan"),
      pursuant to which this Option is being granted; and

    

    (c)
      The
      Board has authorized the granting to Optionee of a nonstatutory stock option
      ("Option")
      to
      purchase shares of common stock of the Company ("Stock")
      upon
      the terms and conditions hereinafter stated and pursuant to an exemption from
      registration under the Securities Act of 1933, as amended (the "Securities
      Act")
      provided by Section 4(2) thereunder.

    

    3.
      Shares;
      Price.
      Company
      hereby grants to Optionee the right to purchase, upon and subject to the terms
      and conditions herein stated, the number of shares of Stock set forth in Section
      1(c) above (the "Shares")
      for
      cash (or other consideration as is authorized under the Plan and acceptable
      to
      the Board of Directors of the Company, in their sole and absolute discretion)
      at
      the price per Share set forth in Section 1(d) above (the "Exercise
      Price"),
      such
      price being not less than eighty-five percent (85%) of the fair market value
      per
      share of the Shares covered by this Option as of the date hereof.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    4.
      Term
      of Option; Continuation of Service.
      This
      Option shall expire, and all rights hereunder to purchase the Shares shall
      terminate, five (5) years from the date hereof. This Option shall earlier
      terminate subject to Sections 7 and 8 hereof upon, and as of the date of, the
      termination of Optionee's employment if such termination occurs prior to the
      end
      of such five (5) year period. Nothing contained herein shall confer upon
      Optionee the right to the continuation of his or her employment by the Company
      or to interfere with the right of the Company to terminate such employment
      or to
      increase or decrease the compensation of Optionee from the rate in existence
      at
      the date hereof.

    

    5.
      Vesting
      of Option.
      Subject
      to the provisions of Sections 7 and 8 hereof, this Option shall become
      exercisable during the term of Optionee's employment in five (5) equal annual
      installments of twenty percent (20%) of the Shares covered by this Option,
      the
      first installment to be exercisable on the first anniversary of the date of
      this
      Option, with an additional twenty percent (20%) of such Shares becoming
      exercisable on each of the four (4) successive anniversary dates. The
      installments shall be cumulative (i.e., this option may be exercised, as to
      any
      or all shares covered by an installment, at any time or times after an
      installment becomes exercisable and until expiration or termination of this
      option).

    

    6.
      Exercise.
      This
      Option shall be exercised by delivery to the Company of (a) written notice
      of
      exercise stating the number of Shares being purchased (in whole shares only)
      and
      such other information set forth on the form of Notice of Exercise attached
      hereto as Appendix
      A,
      (b) a
      check or cash in the amount of the Exercise Price of the Shares covered by
      the
      notice (or such other consideration as has been approved by the Board of
      Directors consistent with the Plan) and (c) a written investment representation
      as provided for in Section 13 hereof. This Option shall not be assignable or
      transferable, except by will or by the laws of descent and distribution, and
      shall be exercisable only by Optionee during his or her lifetime, except as
      provided in Section 8 hereof.

    

    7.
      Termination
      of Employment.
      If
      Optionee shall cease to be employed by the Company for any reason, whether
      voluntarily or involuntarily, other than by his or her death, Optionee (or
      if
      the Optionee shall die after such termination, but prior to such exercise date,
      Optionee's personal representative or the person entitled to succeed to the
      Option) shall have the right at any time within one year following such
      termination of employment or the remaining term of this Option, whichever is
      the
      lesser, to exercise in whole or in part this Option to the extent, but only
      to
      the extent, that this Option was exercisable as of the date of termination
      of
      employment and had not previously been exercised; provided, however: (i) if
      Optionee is permanently disabled (within the meaning of Section 22(e)(3) of
      the
      Code) at the time of termination, the foregoing one year period shall be
      extended up to one (1) year and six (6) months In the discretion of the Board
      of
      Directors; or (ii) if Optionee is terminated "for
      cause"
      as that
      term is defined under Delaware Law and case law related thereto, or by the
      terms
      of the Plan or this Option Agreement or by any employment agreement between
      the
      Optionee and the Company, this Option shall automatically terminate as to all
      Shares covered by this Option not exercised prior to termination. Unless earlier
      terminated, all rights under this Option shall terminate in any event on the
      expiration date of this Option as defined in Section 4 hereof.

    

    Unless
      earlier terminated, all rights under this Option shall terminate in any event
      on
      the expiration date of this Option as defined in Section 4 hereof.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    8.
      Death
      of Optionee.
      If the
      Optionee shall die while in the employ of the Company, Optionee's personal
      representative or the person entitled to Optionee's rights hereunder may at
      any
      time within six (6) months after the date of Optionee's death, or during the
      remaining term of this Option, whichever is the lesser, exercise this Option
      and
      purchase Shares to the extent, but only to the extent, that Optionee could
      have
      exercised this Option as of the date of Optionee's death, as such may be
      accelerated by the Board of Directors; provided, in any case, that this Option
      may be so exercised only to the extent that this Option has not previously
      been
      exercised by Optionee.

    

    9.
      No
      Rights as Shareholder.
      Optionee
      shall have no rights as a shareholder with respect to the Shares covered by
      any
      installment of this Option until the effective date of issuance of the Shares
      following exercise of this Option, and no adjustment will be made for dividends
      or other rights for which the record date is prior to the date such stock
      certificate or certificates are issued except as provided in Section 10
      hereof.

    

    10.
      Recapitalization.
      Subject
      to any required action by the shareholders of the Company, the number of Shares
      covered by this Option, and the Exercise Price thereof, shall be proportionately
      adjusted for any increase or decrease in the number of issued shares resulting
      from a subdivision or consolidation of shares or the payment of a stock
      dividend, or any other increase or decrease in the number of such shares
      effected without receipt of consideration by the Company; provided however
      that
      the conversion of any convertible securities of the Company shall not be deemed
      having been "effected without receipt of consideration by the
      Company".

    

    In
      the
      event of a proposed dissolution or liquidation of the Company, a merger or
      consolidation in which the Company is not the surviving entity, or a sale of
      all
      or substantially all of the assets or capital stock of the Company
      (collectively, a "Reorganization"),
      unless otherwise provided by the Board, this Option shall terminate immediately
      prior to such date as is determined by the Board, which date shall be no later
      than the consummation of such Reorganization. In such event, if the entity
      which
      shall be the surviving entity does not tender to Optionee an offer, for which
      it
      has no obligation to do so, to substitute for any unexercised Option a stock
      option or capital stock of such surviving of such surviving entity, as
      applicable, which on an equitable basis shall provide the Optionee with
      substantially the same economic benefit as such unexercised Option, then the
      Board may grant to such Optionee, in its sole and absolute discretion and
      without obligation, the right for a period commencing thirty (30) days prior
      to
      and ending immediately prior to the date determined by the Board pursuant hereto
      for termination of the Option or during the remaining term of the Option,
      whichever is the lesser, to exercise any unexpired Option or Options without
      regard to the installment provisions of Section 5; provided, however, that
      such
      exercise shall be subject to the consummation of such
      Reorganization.

    

    Subject
      to any required action by the shareholders of the Company, if the Company shall
      be the surviving entity in any merger or consolidation, this Option thereafter
      shall pertain to and apply to the securities to which a holder of Shares equal
      to the Shares subject to this Option would have been entitled by reason of
      such
      merger or consolidation, and the installment provisions of Section 5 shall
      continue to apply.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    In
      the
      event of a change in the shares of the Company as presently constituted, which
      is limited to a change of all of its authorized Stock without par value into
      the
      same number of shares of Stock with a par value, the shares resulting from
      any
      such change shall be deemed to be the Shares within the meaning of this
      Option.

    

    To
      the
      extent that the foregoing adjustments relate to shares or securities of the
      Company, such adjustments shall be made by the Board, whose determination in
      that respect shall be final, binding and conclusive. Except as hereinbefore
      expressly provided, Optionee shall have no rights by reason of any subdivision
      or consolidation of shares of Stock of any class or the payment of any stock
      dividend or any other increase or decrease in the number of shares of stock
      of
      any class, and the number and price of Shares subject to this Option shall
      not
      be affected by, and no adjustments shall be made by reason of, any dissolution,
      liquidation, merger, consolidation or sale of assets or capital stock, or any
      issue by the Company of shares of stock of any class or securities convertible
      into shares of stock of any class.

    

    The
      grant
      of this Option shall not affect in any way the right or power of the Company
      to
      make adjustments, reclassifications, reorganizations or changes in its capital
      or business structure or to merge, consolidate, dissolve or liquidate or to
      sell
      or transfer all or any part of its business or assets.

    

    11.
      Taxation
      upon Exercise of Option.
      Optionee
      understands that, upon exercise of this Option, Optionee will recognize income,
      for Federal and state income tax purposes, in an amount equal to the amount
      by
      which the fair market value of the Shares, determined as of the date of
      exercise, exceeds the Exercise Price. The acceptance of the Shares by Optionee
      shall constitute an agreement by Optionee to report such income in accordance
      with then applicable law and to cooperate with Company in establishing the
      amount of such income and corresponding deduction to the Company for its income
      tax purposes. Withholding for federal or state income and employment tax
      purposes will be made, if and as required by law, from Optionee's then current
      compensation, or, if such current compensation is insufficient to satisfy
      withholding tax liability, the Company may require Optionee to make a cash
      payment to cover such liability as a condition of the exercise of this
      Option.

    

    12.
      Modification,
      Extension and Renewal of Options.
      The
      Board or Committee, as described in the Plan, may modify, extend or renew this
      Option or accept the surrender thereof (to the extent not theretofore exercised)
      and authorize the granting of a new option in substitution therefore (to the
      extent not theretofore exercised), subject at all times to the Plan, the Code
      and the Delaware Law. Notwithstanding the foregoing provisions of this Section
      12, no modification shall, without the consent of the Optionee, alter to the
      Optionee's detriment or impair any rights of Optionee hereunder.

    

    13.
      Investment
      Intent; Restrictions on Transfer.

    

    (a)
      Optionee represents and agrees that if Optionee exercises this Option in whole
      or in part, Optionee will in each case acquire the Shares upon such exercise
      for
      the purpose of investment and not with a view to, or for resale in connection
      with, any distribution thereof; and that upon such exercise of this Option
      in
      whole or in part, Optionee (or any person or persons entitled to exercise this
      Option under the provisions of Sections 7 and 8 hereof) shall furnish to the
      Company a written statement to such effect, satisfactory to the Company in
      form
      and substance. If the Shares represented by this Option are registered under
      the
      Securities Act, either before or after the exercise of this Option in whole
      or
      in part, the Optionee shall be relieved of the foregoing investment
      representation and agreement and shall not be required to furnish the Company
      with the foregoing written statement.

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (b)
      Optionee further represents that Optionee has had the opportunity to ask
      questions of the Company concerning its business, operations and financial
      condition, and to obtain additional information reasonably necessary to verify
      the accuracy of such information

    

    (c)
      Unless and until the Shares represented by this Option are registered under
      the
      Securities Act, all certificates representing the Shares and any certificates
      subsequently issued in substitution therefor and any certificate for any
      securities issued pursuant to any stock split, share reclassification, stock
      dividend or other similar capital event shall bear legends in substantially
      the
      following form:

    

    
      	 	
              THESE
                SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER
                THE
                SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE
                OR
                SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST
                THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
                IN THE
                ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
                SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS
                THEREFROM.

            

    

    

    
      	 	
              THE
                SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT
                TO THAT
                CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED ____________ BETWEEN
                THE
                COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES
                WHICH
                ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN
                CONDITIONS.

            

    

    

    and/or
      such other legend or legends as the Company and its counsel deem necessary
      or
      appropriate. Appropriate stop transfer instructions with respect to the Shares
      have been placed with the Company's transfer agent.

    

    14.
      Stand-off
      Agreement.
      Optionee
      agrees that, in connection with any registration of the Company's securities
      under the Securities Act, and upon the request of the Company or any underwriter
      managing an underwritten offering of the Company's securities, Optionee shall
      not sell, short any sale of, loan, grant an option for, or otherwise dispose
      of
      any of the Shares (other than Shares included in the offering) without the
      prior
      written consent of the Company or such managing underwriter, as applicable,
      for
      a period of at least one year following the effective date of registration
      of
      such offering.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    15.
      Restriction
      Upon Transfer.
      The
      Shares may not be sold, transferred or otherwise disposed of and shall not
      be
      pledged or otherwise hypothecated by the Optionee except as hereinafter
      provided.

    

    (a)
      Repurchase Right on Termination Other Than for Cause. For the purposes of this
      Section, a "Repurchase
      Event"
      shall
      mean an occurrence of one of (i) termination of Optionee's employment by the
      Company, voluntary or involuntary and without cause; (ii) retirement or death
      of
      Optionee; (iii) bankruptcy of Optionee, which shall be deemed to have occurred
      as of the date on which a voluntary or involuntary petition in bankruptcy is
      filed with a court of competent jurisdiction; (iv) dissolution of the marriage
      of Optionee, to the extent that any of the Shares are allocated as the sole
      and
      separate property of Optionee's spouse pursuant thereto (in which case, this
      Section shall only apply to the Shares so affected); or (v) any attempted
      transfer by the Optionee of Shares, or any interest therein, in violation of
      this Agreement. Upon the occurrence of a Repurchase Event, the Company shall
      have the right (but not an obligation) to repurchase all or any portion of
      the
      Shares of Optionee at a price equal to the fair value of the Shares as of the
      date of the Repurchase Event.

    

    (b)
      Repurchase Right on Termination for Cause. In the event Optionee's employment
      is
      terminated by the Company "for cause", then the Company shall have the right
      (but not an obligation) to repurchase Shares of Optionee at a price equal to
      the
      Exercise Price. Such right of the Company to repurchase Shares shall apply
      to
      100% of the Shares for one (1) year from the date of this Agreement; and shall
      thereafter lapse at the rate of twenty percent (20%) of the Shares on each
      anniversary of the date of this Agreement. In addition, the Company shall have
      the right, in the sole discretion of the Board and without obligation, to
      repurchase upon termination for cause all or any portion of the Shares of
      Optionee, at a price equal to the fair value of the Shares as of the date of
      termination, which right is not subject to the foregoing lapsing of rights.
      In
      the event the Company elects to repurchase the Shares, the stock certificates
      representing the same shall forthwith be returned to the Company for
      cancellation.

    

    (c)
      Exercise of Repurchase Right. Any Repurchase Right under Paragraphs 15(a) or
      15(b) shall be exercised by giving notice of exercise as provided herein to
      Optionee or the estate of Optionee, as applicable. Such right shall be
      exercised, and the repurchase price thereunder shall be paid, by the Company
      within a ninety (90) day period beginning on the date of notice to the Company
      of the occurrence of such Repurchase Event (except in the case of termination
      of
      employment or retirement, where such option period shall begin upon the
      occurrence of the Repurchase Event). Such repurchase price shall be payable
      only
      in the form of cash (including a check drafted on immediately available funds)
      or cancellation of purchase money indebtedness of the Optionee for the Shares.
      If the Company can not purchase all such Shares because it is unable to meet
      the
      financial tests set forth in the Delaware corporation law, the Company shall
      have the right to purchase as many Shares as it is permitted to purchase under
      such sections. Any Shares not purchased by the Company hereunder shall no longer
      be subject to the provisions of this Section 15.

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (d)
      Right
      of First Refusal. In the event Optionee desires to transfer any Shares during
      his or her lifetime, Optionee shall first offer to sell such Shares to the
      Company. Optionee shall deliver to the Company written notice of the intended
      sale, such notice to specify the number of Shares to be sold, the proposed
      purchase price and terms of payment, and grant the Company an option for a
      period of thirty days following receipt of such notice to purchase the offered
      Shares upon the same terms and conditions. To exercise such option, the Company
      shall give notice of that fact to Optionee within the thirty (30) day notice
      period and agree to pay the purchase price in the manner provided in the notice.
      If the Company does not purchase all of the Shares so offered during foregoing
      option period, Optionee shall be under no obligation to sell any of the offered
      Shares to the Company, but may dispose of such Shares in any lawful manner
      during a period of one hundred and eighty (180) days following the end of such
      notice period, except that Optionee shall not sell any such Shares to any other
      person at a lower price or upon more favorable terms than those offered to
      the
      Company.

    

    (e)
      Acceptance of Restrictions. Acceptance of the Shares shall constitute the
      Optionee's agreement to such restrictions and the legending of his certificates
      with respect thereto. Notwithstanding such restrictions, however, so long as
      the
      Optionee is the holder of the Shares, or any portion thereof, he shall be
      entitled to receive all dividends declared on and to vote the Shares and to
      all
      other rights of a shareholder with respect thereto.

    

    (f)
      Permitted Transfers. Notwithstanding any provisions in this Section 15 to the
      contrary, the Optionee may transfer Shares subject to this Agreement to his
      or
      her parents, spouse, children, or grandchildren, or a trust for the benefit
      of
      the Optionee or any such transferee(s); provided, that such permitted
      transferee(s) shall hold the Shares subject to all the provisions of this
      Agreement (all references to the Optionee herein shall in such cases refer
      mutatis mutandis to the permitted transferee, except in the case of clause
      (iv)
      of Section 15(a) wherein the permitted transfer shall be deemed to be
      rescinded); and provided further, that notwithstanding any other provisions
      in
      this Agreement, a permitted transferee may not, in turn, make permitted
      transfers without the written consent of the Optionee and the
      Company.

    

    (g)
      Release of Restrictions on Shares. All other restrictions under this Section
      15
      shall terminate five (5) years following the date of this Agreement, or when
      the
      Company's securities are publicly traded, whichever occurs earlier.

    

    16.
      Notices.
      Any
      notice required to be given pursuant to this Option or the Plan shall be in
      writing and shall be deemed to be delivered upon receipt or, in the case of
      notices by the Company, five (5) days after deposit in the U.S. mail, postage
      prepaid, addressed to Optionee at the address last provided by Optionee for
      his
      or her employee records.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    17.
      Agreement
      Subject to Plan; Applicable Law.
      This
      Option is made pursuant to the Plan and shall be interpreted to comply
      therewith. A copy of such Plan is available to Optionee, at no charge, at the
      principal office of the Company. Any provision of this Option inconsistent
      with
      the Plan shall be considered void and replaced with the applicable provision
      of
      the Plan. This Option has been granted, executed and delivered in the State
      of
      Delaware, and the interpretation and enforcement shall be governed by the laws
      thereof and subject to the exclusive jurisdiction of the courts
      therein.

    

    In
      Witness Whereof,
      the
      parties hereto have executed this Option as of the date first above
      written.

    

    
      	
              COMPANY:
                

            	
              SPONGETECH
                DELIVERY SYSTEMS, INC.,

               

               

               

              By:_____________________________

              Name:___________________________

              Title:____________________________

            
	 	 
	
              OPTIONEE:

            	
               

              By:_____________________________

              (signature)

              Name:___________________________

            

    

    

    (one
      of the following, as appropriate, shall be signed)

    

    
      	
              I
                certify that as of the date hereof I am unmarried

            	 	
              By
                his or her signature, the spouse of Optionee hereby agrees to be
                bound by
                the provisions of the foregoing INCENTIVE STOCK OPTION
                AGREEMENT

            
	 	 	 
	
              Optionee

            	 	
              Spouse
                of Optionee

            

    

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    Appendix
      A

    

    NOTICE
      OF EXERCISE

    

    Spongetech
      Delivery Systems, Inc.

    

    Re:
      Nonstatutory Stock Option

    

    Notice
      is
      hereby given pursuant to Section 6 of my Nonstatutory Stock Option Agreement
      that I elect to purchase the number of shares set forth below at the exercise
      price set forth in my option agreement:

    

    Nonstatutory
      Stock Option Agreement dated: ____________

    

    Number
      of
      shares being purchased: ____________

    

    Exercise
      Price: $____________

    

    A
      check
      in the amount of the aggregate price of the shares being purchased is
      attached.

    

    I
      hereby
      confirm that such shares are being acquired by me for my own account for
      investment purposes, and not with a view to, or for resale in connection with,
      any distribution thereof. I will not sell or dispose of my Shares in violation
      of the Securities Act of 1933, as amended, or any applicable federal or state
      securities laws. Further, I understand that the exemption from taxable income
      at
      the time of exercise is dependent upon my holding such stock for a period of
      at
      least one year from the date of exercise and two years from the date of grant
      of
      the Option.

    

    I
      understand that the certificate representing the Option Shares will bear a
      restrictive legend within the contemplation of the Securities Act and as
      required by such other state or federal law or regulation applicable to the
      issuance or delivery of the Option Shares.

    

    I
      agree
      to provide to the Company such additional documents or information as may be
      required pursuant to the Company's 2007 Incentive Stock Plan.

    
      	 	
               

              By:__________________________

              (signature)

              Name:________________________

            

    

    

    
      
         

      

      
        Appendix

        
          

        

      

      
         

      

    

    EXHIBIT
      B-2

    

    SPONGETECH
      DELIVERY SYSTEMS, INC. 

    

    NONSTATUTORY
      STOCK OPTION AGREEMENT

    
      
        

      

    

    

    This
      Nonstatutory Stock Option Agreement ("Agreement")
      is
      made and entered into as of the date set forth below, by and between SPONGETECH
      DELIVERY SYSTEMS, INC., a Delaware corporation (the "Company"),
      and
      the following Director of the Company ("Optionee"):

    

    In
      consideration of the covenants herein set forth, the parties hereto agree as
      follows:

    

    1.
      Option
      Information.

    (a) Date
      of
      Option:       ___________________________

    (b) Optionee:                
      ___________________________

    (c) Number
      of
      Shares:  ___________________________

    (d) Exercise
      Price:        
___________________________

    

    2.
      Acknowledgements.

    (a)
      Optionee is a member of the Board of Directors of the Company.

    

    (b)
      The
      Board of Directors (the "Board"
      which
      term shall include an authorized committee of the Board of Directors) and
      shareholders of the Company have heretofore adopted a 2007 Incentive Stock
      Plan
      (the "Plan"),
      pursuant to which this Option is being granted; and

    

    (c)
      The
      Board has authorized the granting to Optionee of a nonstatutory stock option
      ("Option")
      to
      purchase shares of common stock of the Company ("Stock")
      upon
      the terms and conditions hereinafter stated and pursuant to an exemption from
      registration under the Securities Act of 1933, as amended (the "Securities
      Act")
      provided by Section 4(2) thereunder.

    

    3.
      Shares;
      Price.
      Company
      hereby grants to Optionee the right to purchase, upon and subject to the terms
      and conditions herein stated, the number of shares of Stock set forth in Section
      1(c) above (the "Shares")
      for
      cash (or other consideration as is authorized under the Plan and acceptable
      to
      the Board of Directors of the Company, in their sole and absolute discretion)
      at
      the price per Share set forth in Section 1(d) above (the "Exercise
      Price"),
      such
      price being not less than eighty-five percent (85%) of the fair market value
      per
      share of the Shares covered by this Option as of the date hereof.

    

    4.
      Term
      of Option; Continuation of Service.
      This
      Option shall expire, and all rights hereunder to purchase the Shares shall
      terminate, ten (10) years from the date hereof. This Option shall earlier
      terminate subject to Sections 7 and 8 hereof upon, and as of the date of, the
      termination of Optionee's employment if such termination occurs prior to the
      end
      of such ten (10) year period. Nothing contained herein shall confer upon
      Optionee the right to the continuation of his or her employment by the Company
      or to interfere with the right of the Company to terminate such employment
      or to
      increase or decrease the compensation of Optionee from the rate in existence
      at
      the date hereof.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.
      Vesting
      of Option.
      Subject
      to the provisions of Sections 7 and 8 hereof, this Option shall become
      exercisable during the term that Optionee serves as a Director of the Company
      in
      three (3) equal annual installments of thirty-three and one-third percent (33
      1/3%) of the Shares covered by this Option, the first installment to be
      exercisable on the first anniversary of the date of this Option, with an
      additional thirty-three and one-third percent (33 1/3%) of such Shares becoming
      exercisable on each of the two (2) successive anniversary dates. The
      installments shall be cumulative (i.e., this option may be exercised, as to
      any
      or all shares covered by an installment, at any time or times after an
      installment becomes exercisable and until expiration or termination of this
      Option).

    

    6.
      Exercise.
      This
      Option shall be exercised by delivery to the Company of (a) written notice
      of
      exercise stating the number of Shares being purchased (in whole shares only)
      and
      such other information set forth on the form of Notice of Exercise attached
      hereto as Appendix
      A,
      (b) a
      check or cash in the amount of the Exercise Price of the Shares covered by
      the
      notice (or such other consideration as has been approved by the Board of
      Directors consistent with the Plan) and (c) a written investment representation
      as provided for in Section 13 hereof. This Option shall not be assignable or
      transferable, except by will or by the laws of descent and distribution, and
      shall be exercisable only by Optionee during his or her lifetime, except as
      provided in Section 8 hereof.

    

    7.
      Termination
      of Service.
      If
      Optionee shall cease to serve as a Director of the Company for any reason,
      no
      further installments shall vest pursuant to Section 5, and the maximum number
      of
      Shares that Optionee may purchase pursuant hereto shall be limited to the number
      of Shares that were vested as of the date Optionee ceases to be a Director
      (to
      the nearest whole Share). Thereupon, Optionee shall have the right to exercise
      this Option, at any time during the remaining term hereof, to the extent, but
      only to the extent, that this Option was exercisable as of the date Optionee
      ceases to be a Director as such may be accelerated by the Board of Directors;
      provided, however, if Optionee is removed as a Director pursuant to the Delaware
      corporation law, the foregoing right to exercise shall automatically terminate
      on the date Optionee ceases to be a Director as to all Shares covered by this
      Option not exercised prior to termination. Unless earlier terminated, all rights
      under this Option shall terminate in any event on the expiration date of this
      Option as defined in Section 4 hereof.

     

    8.
      Death
      of Optionee.
      If the
      Optionee shall die while in the employ of the Company, Optionee's personal
      representative or the person entitled to Optionee's rights hereunder may at
      any
      time within twelve (12) months after the date of Optionee's death, or during
      the
      remaining term of this Option, whichever is the lesser, exercise this Option
      and
      purchase Shares to the extent, but only to the extent, that Optionee could
      have
      exercised this Option as of the date of Optionee's death, as such may be
      accelerated by the Board of Directors; provided, in any case, that this Option
      may be so exercised only to the extent that this Option has not previously
      been
      exercised by Optionee.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    9.
      No
      Rights as Shareholder.
      Optionee
      shall have no rights as a shareholder with respect to the Shares covered by
      any
      installment of this Option until the effective date of issuance of the Shares
      following exercise of this Option, and no adjustment will be made for dividends
      or other rights for which the record date is prior to the date such stock
      certificate or certificates are issued except as provided in Section 10
      hereof.

    

    10.
      Recapitalization.
      Subject
      to any required action by the shareholders of the Company, the number of Shares
      covered by this Option, and the Exercise Price thereof, shall be proportionately
      adjusted for any increase or decrease in the number of issued shares resulting
      from a subdivision or consolidation of shares or the payment of a stock
      dividend, or any other increase or decrease in the number of such shares
      effected without receipt of consideration by the Company; provided however
      that
      the conversion of any convertible securities of the Company shall not be deemed
      having been "effected without receipt of consideration by the
      Company".

    

    In
      the
      event of a proposed dissolution or liquidation of the Company, a merger or
      consolidation in which the Company is not the surviving entity, or a sale of
      all
      or substantially all of the assets or capital stock of the Company
      (collectively, a "Reorganization"),
      unless otherwise provided by the Board, this Option shall terminate immediately
      prior to such date as is determined by the Board, which date shall be no later
      than the consummation of such Reorganization. In such event, if the entity
      which
      shall be the surviving entity does not tender to Optionee an offer, for which
      it
      has no obligation to do so, to substitute for any unexercised Option a stock
      option or capital stock of such surviving of such surviving entity, as
      applicable, which on an equitable basis shall provide the Optionee with
      substantially the same economic benefit as such unexercised Option, then the
      Board may grant to such Optionee, in its sole and absolute discretion and
      without obligation, the right for a period commencing thirty (30) days prior
      to
      and ending immediately prior to the date determined by the Board pursuant hereto
      for termination of the Option or during the remaining term of the Option,
      whichever is the lesser, to exercise any unexpired Option or Options without
      regard to the installment provisions of Section 5; provided, however, that
      such
      exercise shall be subject to the consummation of such
      Reorganization.

    

    Subject
      to any required action by the shareholders of the Company, if the Company shall
      be the surviving entity in any merger or consolidation, this Option thereafter
      shall pertain to and apply to the securities to which a holder of Shares equal
      to the Shares subject to this Option would have been entitled by reason of
      such
      merger or consolidation, and the installment provisions of Section 5 shall
      continue to apply.

    

    In
      the
      event of a change in the shares of the Company as presently constituted, which
      is limited to a change of all of its authorized Stock without par value into
      the
      same number of shares of Stock with a par value, the shares resulting from
      any
      such change shall be deemed to be the Shares within the meaning of this
      Option.

    

    To
      the
      extent that the foregoing adjustments relate to shares or securities of the
      Company, such adjustments shall be made by the Board, whose determination in
      that respect shall be final, binding and conclusive. Except as hereinbefore
      expressly provided, Optionee shall have no rights by reason of any subdivision
      or consolidation of shares of Stock of any class or the payment of any stock
      dividend or any other increase or decrease in the number of shares of stock
      of
      any class, and the number and price of Shares subject to this Option shall
      not
      be affected by, and no adjustments shall be made by reason of, any dissolution,
      liquidation, merger, consolidation or sale of assets or capital stock, or any
      issue by the Company of shares of stock of any class or securities convertible
      into shares of stock of any class.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    The
      grant
      of this Option shall not affect in any way the right or power of the Company
      to
      make adjustments, reclassifications, reorganizations or changes in its capital
      or business structure or to merge, consolidate, dissolve or liquidate or to
      sell
      or transfer all or any part of its business or assets.

    

    11.
      Taxation
      upon Exercise of Option.
      Optionee
      understands that, upon exercise of this Option, Optionee will recognize income,
      for Federal and state income tax purposes, in an amount equal to the amount
      by
      which the fair market value of the Shares, determined as of the date of
      exercise, exceeds the Exercise Price. The acceptance of the Shares by Optionee
      shall constitute an agreement by Optionee to report such income in accordance
      with then applicable law and to cooperate with Company in establishing the
      amount of such income and corresponding deduction to the Company for its income
      tax purposes. Withholding for federal or state income and employment tax
      purposes will be made, if and as required by law, from Optionee's then current
      compensation, or, if such current compensation is insufficient to satisfy
      withholding tax liability, the Company may require Optionee to make a cash
      payment to cover such liability as a condition of the exercise of this
      Option.

    

    12.
      Modification,
      Extension and Renewal of Options.
      The
      Board or Committee, as described in the Plan, may modify, extend or renew this
      Option or accept the surrender thereof (to the extent not theretofore exercised)
      and authorize the granting of a new option in substitution therefore (to the
      extent not theretofore exercised), subject at all times to the Plan, the Code
      and the Delaware Law. Notwithstanding the foregoing provisions of this Section
      12, no modification shall, without the consent of the Optionee, alter to the
      Optionee's detriment or impair any rights of Optionee hereunder.

    

    13.
      Investment
      Intent; Restrictions on Transfer.

    

    (a)
      Optionee represents and agrees that if Optionee exercises this Option in whole
      or in part, Optionee will in each case acquire the Shares upon such exercise
      for
      the purpose of investment and not with a view to, or for resale in connection
      with, any distribution thereof; and that upon such exercise of this Option
      in
      whole or in part, Optionee (or any person or persons entitled to exercise this
      Option under the provisions of Sections 7 and 8 hereof) shall furnish to the
      Company a written statement to such effect, satisfactory to the Company in
      form
      and substance. If the Shares represented by this Option are registered under
      the
      Securities Act, either before or after the exercise of this Option in whole
      or
      in part, the Optionee shall be relieved of the foregoing investment
      representation and agreement and shall not be required to furnish the Company
      with the foregoing written statement.

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (b)
      Optionee further represents that Optionee has had access to the financial
      statements or books and records of the Company, has had the opportunity to
      ask
      questions of the Company concerning its business, operations and financial
      condition, and to obtain additional information reasonably necessary to verify
      the accuracy of such information

    

    (c)
      Unless and until the Shares represented by this Option are registered under
      the
      Securities Act, all certificates representing the Shares and any certificates
      subsequently issued in substitution therefor and any certificate for any
      securities issued pursuant to any stock split, share reclassification, stock
      dividend or other similar capital event shall bear legends in substantially
      the
      following form:

    

    
      	 	
              THESE
                SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER
                THE
                SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE
                OR
                SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST
                THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
                IN THE
                ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
                SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS
                THEREFROM.

            

    

    

    
      	 	
              THE
                SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT
                TO THAT
                CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED ____________ BETWEEN
                THE
                COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES
                WHICH
                ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN
                CONDITIONS.

            

    

    

    and/or
      such other legend or legends as the Company and its counsel deem necessary
      or
      appropriate. Appropriate stop transfer instructions with respect to the Shares
      have been placed with the Company's transfer agent.

    

    14.
      Stand-off
      Agreement.
      Optionee
      agrees that, in connection with any registration of the Company's securities
      under the Securities Act, and upon the request of the Company or any underwriter
      managing an underwritten offering of the Company's securities, Optionee shall
      not sell, short any sale of, loan, grant an option for, or otherwise dispose
      of
      any of the Shares (other than Shares included in the offering) without the
      prior
      written consent of the Company or such managing underwriter, as applicable,
      for
      a period of at least one year following the effective date of registration
      of
      such offering.

    

    15.
      Restriction
      Upon Transfer.
      The
      Shares may not be sold, transferred or otherwise disposed of and shall not
      be
      pledged or otherwise hypothecated by the Optionee except as hereinafter
      provided.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (a)
      Repurchase
      Right on Termination Other Than by Removal.
      For the
      purposes of this Section, a "Repurchase
      Event"
      shall
      mean an occurrence of one of (i) termination of Optionee's service as a
      director; (ii) death of Optionee; (iii) bankruptcy of Optionee, which shall
      be
      deemed to have occurred as of the date on which a voluntary or involuntary
      petition in bankruptcy is filed with a court of competent jurisdiction; (iv)
      dissolution of the marriage of Optionee, to the extent that any of the Shares
      are allocated as the sole and separate property of Optionee's spouse pursuant
      thereto (in which case, this Section shall only apply to the Shares so
      affected); or (v) any attempted transfer by the Optionee of Shares, or any
      interest therein, in violation of this Agreement. Upon the occurrence of a
      Repurchase Event, and upon mutual agreement of the Company and Optionee, the
      Company may repurchase all or any portion of the Shares of Optionee at a price
      equal to the fair value of the Shares as of the date of the Repurchase
      Event.

    

    (b)
      Repurchase
      Right on Removal.
      In the
      event Optionee is removed as a director pursuant to Delaware Law, or Optionee
      voluntarily resigns as a director prior to the date upon which the last
      installment of Shares becomes exercisable pursuant to Section 5, then the
      Company shall have the right (but not an obligation) to repurchase Shares of
      Optionee at a price equal to the Exercise Price. Such right of the Company
      to
      repurchase Shares shall apply to 100% of the Shares for one (1) year from the
      date of this Agreement; and shall thereafter lapse ratably in equal annual
      increments on each anniversary of the date of this Agreement over the term
      of
      this Option specified in Section 4. In addition, the Company shall have the
      right, in the sole discretion of the Board and without obligation, to repurchase
      upon removal or resignation all or any portion of the Shares of Optionee, at
      a
      price equal to the fair value of the Shares as of the date of such removal
      or
      resignation, which right is not subject to the foregoing lapsing of rights.
      In
      the event the Company elects to repurchase the Shares, the stock certificates
      representing the same shall forthwith be returned to the Company for
      cancellation.

    

    (c)
      Exercise
      of Repurchase Right.
      Any
      Repurchase Right under Paragraphs 15(a) or 15(b) shall be exercised by giving
      notice of exercise as provided herein to Optionee or the estate of Optionee,
      as
      applicable. Such right shall be exercised, and the repurchase price thereunder
      shall be paid, by the Company within a ninety (90) day period beginning on
      the
      date of notice to the Company of the occurrence of such Repurchase Event (except
      in the case of termination or cessation of services as director, where such
      option period shall begin upon the occurrence of the Repurchase Event). Such
      repurchase price shall be payable only in the form of cash (including a check
      drafted on immediately available funds) or cancellation of purchase money
      indebtedness of the Optionee for the Shares. If the Company can not purchase
      all
      such Shares because it is unable to meet the financial tests set forth in the
      Delaware corporation law, the Company shall have the right to purchase as many
      Shares as it is permitted to purchase under such sections. Any Shares not
      purchased by the Company hereunder shall no longer be subject to the provisions
      of this Section 15.

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (d)
      Right
      of First Refusal. In the event Optionee desires to transfer any Shares during
      his or her lifetime, Optionee shall first offer to sell such Shares to the
      Company. Optionee shall deliver to the Company written notice of the intended
      sale, such notice to specify the number of Shares to be sold, the proposed
      purchase price and terms of payment, and grant the Company an option for a
      period of thirty days following receipt of such notice to purchase the offered
      Shares upon the same terms and conditions. To exercise such option, the Company
      shall give notice of that fact to Optionee within the thirty (30) day notice
      period and agree to pay the purchase price in the manner provided in the notice.
      If the Company does not purchase all of the Shares so offered during foregoing
      option period, Optionee shall be under no obligation to sell any of the offered
      Shares to the Company, but may dispose of such Shares in any lawful manner
      during a period of one hundred and eighty (180) days following the end of such
      notice period, except that Optionee shall not sell any such Shares to any other
      person at a lower price or upon more favorable terms than those offered to
      the
      Company.

    

    (e)
      Acceptance of Restrictions. Acceptance of the Shares shall constitute the
      Optionee's agreement to such restrictions and the legending of his certificates
      with respect thereto. Notwithstanding such restrictions, however, so long as
      the
      Optionee is the holder of the Shares, or any portion thereof, he shall be
      entitled to receive all dividends declared on and to vote the Shares and to
      all
      other rights of a shareholder with respect thereto.

    

    (f)
      Permitted Transfers. Notwithstanding any provisions in this Section 15 to the
      contrary, the Optionee may transfer Shares subject to this Agreement to his
      or
      her parents, spouse, children, or grandchildren, or a trust for the benefit
      of
      the Optionee or any such transferee(s); provided, that such permitted
      transferee(s) shall hold the Shares subject to all the provisions of this
      Agreement (all references to the Optionee herein shall in such cases refer
      mutatis mutandis to the permitted transferee, except in the case of clause
      (iv)
      of Section 15(a) wherein the permitted transfer shall be deemed to be
      rescinded); and provided further, that notwithstanding any other provisions
      in
      this Agreement, a permitted transferee may not, in turn, make permitted
      transfers without the written consent of the Optionee and the
      Company.

    (g)
      Release of Restrictions on Shares. All other restrictions under this Section
      15
      shall terminate five (5) years following the date of this Agreement, or when
      the
      Company's securities are publicly traded, whichever occurs earlier.

    

    16.
      Notices.
      Any
      notice required to be given pursuant to this Option or the Plan shall be in
      writing and shall be deemed to be delivered upon receipt or, in the case of
      notices by the Company, five (5) days after deposit in the U.S. mail, postage
      prepaid, addressed to Optionee at the address last provided by Optionee for
      use
      in Company records related to Optionee.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    17.
      Agreement
      Subject to Plan; Applicable Law.
      This
      Option is made pursuant to the Plan and shall be interpreted to comply
      therewith. A copy of such Plan is available to Optionee, at no charge, at the
      principal office of the Company. Any provision of this Option inconsistent
      with
      the Plan shall be considered void and replaced with the applicable provision
      of
      the Plan. This Option has been granted, executed and delivered in the State
      of
      Delaware, and the interpretation and enforcement shall be governed by the laws
      thereof and subject to the exclusive jurisdiction of the courts
      therein.

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Option as of the date
      first above written.

     

    
      	
              COMPANY:
                

            	
              SPONGETECH
                DELIVERY SYSTEMS, Inc.,

               

               

               

              By:________________________________

              Name:______________________________

              Title:_______________________________

            
	 	 
	
              OPTIONEE:

            	
               

              By:________________________________

              (signature)

              Name:______________________________

            

    

    

    (one
      of the following, as appropriate, shall be signed)

    

    
      	
              I
                certify that as of the date hereof I am unmarried

            	 	
              By
                his or her signature, the spouse of Optionee hereby agrees to be
                bound by
                the provisions of the foregoing INCENTIVE STOCK OPTION
                AGREEMENT

            
	 	 	 
	
              Optionee

            	 	
              Spouse
                of Optionee

            

    

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    Appendix
      A

    

    NOTICE
      OF
      EXERCISE

    

    Spongetech
      Delivery Systems, Inc.

    

    Re:
      Nonstatutory Stock Option

    

    Notice
      is
      hereby given pursuant to Section 6 of my Nonstatutory Stock Option Agreement
      that I elect to purchase the number of shares set forth below at the exercise
      price set forth in my option agreement:

    

    Nonstatutory
      Stock Option Agreement dated: ____________

    

    Number
      of
      shares being purchased: ____________

    

    Exercise
      Price: $____________

    

    A
      check
      in the amount of the aggregate price of the shares being purchased is
      attached.

    

    I
      hereby
      confirm that such shares are being acquired by me for my own account for
      investment purposes, and not with a view to, or for resale in connection with,
      any distribution thereof. I will not sell or dispose of my Shares in violation
      of the Securities Act of 1933, as amended, or any applicable federal or state
      securities laws. Further, I understand that the exemption from taxable income
      at
      the time of exercise is dependent upon my holding such stock for a period of
      at
      least one year from the date of exercise and two years from the date of grant
      of
      the Option.

    

    I
      understand that the certificate representing the Option Shares will bear a
      restrictive legend within the contemplation of the Securities Act and as
      required by such other state or federal law or regulation applicable to the
      issuance or delivery of the Option Shares.

    

    I
      agree
      to provide to the Company such additional documents or information as may be
      required pursuant to the Company's 2007 Incentive Stock Plan.

    
      	 	
               

              By:____________________________

              (signature)

              Name:__________________________

            

    

    

    
      
         

      

      
        Appendix
          A

        
          

        

      

      
         

      

    

    EXHIBIT
      B-3

    

    SPONGETECH
      DELIVERY SYSTEMS, INC. 

    

    CONSULTANT
      NONSTATUTORY STOCK OPTION AGREEMENT

    
      
        

      

    

    

    This
      Consultant Nonstatutory Stock Option Agreement ("Agreement")
      is
      made and entered into as of the date set forth below, by and between Spongetech
      Delivery Systems, Inc., a Delaware corporation (the "Company"),
      and
      the following consultant to the Company (herein, the "Optionee"):

    

    In
      consideration of the covenants herein set forth, the parties hereto agree as
      follows:

     

    1.
      Option
      Information.

    

    (a) Date
      of
      Option:      
___________________________

    (b) Optionee:               
      ___________________________

    (c) Number
      of
      Shares: ___________________________

    (d) Exercise
      Price:       
___________________________

    

    2.
      Acknowledgements.

    

    (a)
      Optionee is an independent consultant to the Company, not an
      employee;

    

    (b)
      The
      Board of Directors (the "Board"
      which
      term shall include an authorized committee of the Board of Directors) and
      shareholders of the Company have heretofore adopted a 2007 Incentive Stock
      Plan
      (the "Plan"),
      pursuant to which this Option is being granted; and

    

    (c)
      The
      Board has authorized the granting to Optionee of a nonstatutory stock option
      ("Option")
      to
      purchase shares of common stock of the Company ("Stock")
      upon
      the terms and conditions hereinafter stated and pursuant to an exemption from
      registration under the Securities Act of 1933, as amended (the "Securities
      Act")
      provided by Section 4(2) thereunder.

    

    3.
      Shares;
      Price.
      The
      Company hereby grants to Optionee the right to purchase, upon and subject to
      the
      terms and conditions herein stated, the number of shares of Stock set forth
      in
      Section 1(c) above (the "Shares")
      for
      cash (or other consideration as is authorized under the Plan and acceptable
      to
      the Board, in their sole and absolute discretion) at the price per Share set
      forth in Section 1(d) above (the "Exercise
      Price"),
      such
      price being not less than eighty-five 85% of the fair market value per share
      of
      the Shares covered by this Option as of the date hereof.

    

    4.
      Term
      of Option.
      This
      Option shall expire, and all rights hereunder to purchase the Shares, shall
      terminate ten (10) years from the date hereof. Nothing contained herein shall
      be
      construed to interfere in any way with the right of the Company to terminate
      Optionee as a consultant to the Company, or to increase or decrease the
      compensation paid to Optionee from the rate in effect as of the date
      hereof.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.
      Vesting
      of Option.
      Subject
      to the provisions of Sections 7 and 8 hereof, this Option shall become
      exercisable during the period that Optionee serves as a consultant of the
      Company in equal annual installments, each installment covering a fraction
      of
      the Shares, the numerator of which is one (1) and the denominator of which
      is
      the number of years in the term of this Option (not to exceed 5). The first
      installment shall become exercisable on the first anniversary of the date of
      this Option, and an additional installment shall become exercisable on each
      successive anniversary date during the term of this Option, except the last
      such
      anniversary date. The final installment shall become exercisable ninety days
      prior to the expiration of the term of this Option. The installments shall
      be
      cumulative (i.e., this option may be exercised, as to any or all shares covered
      by an installment, at any time or times after an installment becomes exercisable
      and until expiration or termination of this option).

    

    6.
      Exercise.
      This
      Option shall be exercised by delivery to the Company of (a) written notice
      of
      exercise stating the number of Shares being purchased (in whole shares only)
      and
      such other information set forth on the form of Notice of Exercise attached
      hereto as Appendix
      A,
      (b) a
      check or cash in the amount of the Exercise Price of the Shares covered by
      the
      notice (or such other consideration as has been approved by the Board of
      Directors consistent with the Plan) and (c) a written investment representation
      as provided for in Section 13 hereof. This Option shall not be assignable or
      transferable, except by will or by the laws of descent and distribution, and
      shall be exercisable only by Optionee during his or her lifetime.

    

    7.
      Termination
      of Service.
      If
      Optionee's service as a consultant to the Company terminates for any reason,
      no
      further installments shall vest pursuant to Section 5, and Optionee shall have
      the right at any time within thirty (30) days following such termination of
      services or the remaining term of this Option, whichever is the lesser, to
      exercise in whole or in part this Option to the extent, but only to the extent,
      that this Option was exercisable as of the date Optionee ceased to be a
      consultant to the Company, as such may be accelerated by the Board of Directors;
      provided, however, if Optionee is terminated for reasons that would justify
      a
      termination of employment "for
      cause"
      as
      contemplated by Delaware state law and case law related thereto, the foregoing
      right to exercise shall automatically terminate on the date Optionee ceases
      to
      be a consultant to the Company as to all Shares covered by this Option not
      exercised prior to termination. Unless earlier terminated, all rights under
      this
      Option shall terminate in any event on the expiration date of this Option as
      defined in Section 4 hereof.

    

    8.
      Death
      of Optionee.
      If the
      Optionee shall die while serving as a consultant to the Company, Optionee's
      personal representative or the person entitled to Optionee's rights hereunder
      may at any time within ninety (90) days after the date of Optionee's death,
      or
      during the remaining term of this Option, whichever is the lesser, exercise
      this
      Option and purchase Shares to the extent, but only to the extent, that Optionee
      could have exercised this Option as of the date of Optionee's death, as such
      may
      be accelerated by the Board of Directors; provided, in any case, that this
      Option may be so exercised only to the extent that this Option has not
      previously been exercised by Optionee.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    9.
      No
      Rights as Shareholder.
      Optionee
      shall have no rights as a shareholder with respect to the Shares covered by
      any
      installment of this Option until the effective date of the issuance of shares
      following exercise of this to Option, and no adjustment will be made for
      dividends or other rights for which the record date is prior to the date such
      stock certificate or certificates are issued except as provided in Section
      10
      hereof.

    

    10.
      Recapitalization.
      Subject
      to any required action by the shareholders of the Company, the number of Shares
      covered by this Option, and the Exercise Price thereof, shall be proportionately
      adjusted for any increase or decrease in the number of issued shares resulting
      from a subdivision or consolidation of shares or the payment of a stock
      dividend, or any other increase or decrease in the number of such shares
      effected without receipt of consideration by the Company; provided however
      that
      the conversion of any convertible securities of the Company shall not be deemed
      having been "effected without receipt of consideration by the
      Company."

    

    In
      the
      event of a proposed dissolution or liquidation of the Company, a merger or
      consolidation in which the Company is not the surviving entity, or a sale of
      all
      or substantially all of the assets or capital stock of the Company
      (collectively, a "Reorganization"),
      this
      Option shall terminate immediately prior to the consummation of such proposed
      action, unless otherwise provided by the Board; provided, however, if Optionee
      shall be a consultant at the time such Reorganization is approved by the
      stockholders, Optionee shall have the right to exercise this Option as to all
      or
      any part of the Shares, without regard to the installment provisions of Section
      5, for a period beginning 30 days prior to the consummation of such
      Reorganization and ending as of the Reorganization or the expiration of this
      Option, whichever is earlier, subject to the consummation of the Reorganization.
      In any event, the Company shall notify Optionee, at least 30 days prior to
      the
      consummation of such Reorganization, of his exercise rights, if any, and that
      the Option shall terminate upon the consummation of the
      Reorganization.

    

    Subject
      to any required action by the shareholders of the Company, if the Company shall
      be the surviving entity in any merger or consolidation, this Option thereafter
      shall pertain to and apply to the securities to which a holder of Shares equal
      to the Shares subject to this Option would have been entitled by reason of
      such
      merger or consolidation, and the installment provisions of Section 5 shall
      continue to apply.

    

    In
      the
      event of a change in the shares of the Company as presently constituted, which
      is limited to a change of all of its authorized Stock without par value into
      the
      same number of shares of Stock with a par value, the shares resulting from
      any
      such change shall be deemed to be the Shares within the meaning of this
      Option.

    

    To
      the
      extent that the foregoing adjustments relate to shares or securities of the
      Company, such adjustments shall be made by the Board, whose determination in
      that respect shall be final, binding and conclusive. Except as hereinbefore
      expressly provided, Optionee shall have no rights by reason of any subdivision
      or consolidation of shares of Stock of any class or the payment of any stock
      dividend or any other increase or decrease in the number of shares of stock
      of
      any class, and the number and price of Shares subject to this Option shall
      not
      be affected by, and no adjustments shall be made by reason of, any dissolution,
      liquidation, merger, consolidation or sale of assets or capital stock, or any
      issue by the Company of shares of stock of any class or securities convertible
      into shares of stock of any class.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    The
      grant
      of this Option shall not affect in any way the right or power of the Company
      to
      make adjustments, reclassifications, reorganizations or changes in its capital
      or business structure or to merge, consolidate, dissolve or liquidate or to
      sell
      or transfer all or any part of its business or assets.

    

    11.
      Taxation
      upon Exercise of Option.
      Optionee
      understands that, upon exercise of this Option, Optionee will recognize income,
      for Federal and state income tax purposes, in an amount equal to the amount
      by
      which the fair market value of the Shares, determined as of the date of
      exercise, exceeds the Exercise Price. The acceptance of the Shares by Optionee
      shall constitute an agreement by Optionee to report such income in accordance
      with then applicable law and to cooperate with Company in establishing the
      amount of such income and corresponding deduction to the Company for its income
      tax purposes. Withholding for federal or state income and employment tax
      purposes will be made, if and as required by law, from Optionee's then current
      compensation, or, if such current compensation is insufficient to satisfy
      withholding tax liability, the Company may require Optionee to make a cash
      payment to cover such liability as a condition of the exercise of this
      Option.

    

    12.
      Modification,
      Extension and Renewal of Options.
      The
      Board or Committee, as described in the Plan, may modify, extend or renew this
      Option or accept the surrender thereof (to the extent not theretofore exercised)
      and authorize the granting of a new option in substitution therefore (to the
      extent not theretofore exercised), subject at all times to the Plan, the Code.
      Notwithstanding the foregoing provisions of this Section 12, no modification
      shall, without the consent of the Optionee, alter to the Optionee's detriment
      or
      impair any rights of Optionee hereunder.

    

    13.
      Investment
      Intent; Restrictions on Transfer.

    

    (a)
      Optionee represents and agrees that if Optionee exercises this Option in whole
      or in part, Optionee will in each case acquire the Shares upon such exercise
      for
      the purpose of investment and not with a view to, or for resale in connection
      with, any distribution thereof; and that upon such exercise of this Option
      in
      whole or in part, Optionee (or any person or persons entitled to exercise this
      Option under the provisions of Sections 7 and 8 hereof) shall furnish to the
      Company a written statement to such effect, satisfactory to the Company in
      form
      and substance. If the Shares represented by this Option are registered under
      the
      Securities Act, either before or after the exercise of this Option in whole
      or
      in part, the Optionee shall be relieved of the foregoing investment
      representation and agreement and shall not be required to furnish the Company
      with the foregoing written statement.

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (b)
      Optionee further represents that Optionee has had access to the financial
      statements or books and records of the Company, has had the opportunity to
      ask
      questions of the Company concerning its business, operations and financial
      condition, and to obtain additional information reasonably necessary to verify
      the accuracy of such information.

     

    
      (c)
        Unless and until the Shares represented by this Option are registered under
        the
        Securities Act, all certificates representing the Shares and any certificates
        subsequently issued in substitution therefor and any certificate for any
        securities issued pursuant to any stock split, share reclassification, stock
        dividend or other similar capital event shall bear legends in substantially
        the
        following form:

    

     

    
      	 	
              THESE
                SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER
                THE
                SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE
                OR
                SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST
                THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
                IN THE
                ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
                SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS
                THEREFROM.

            

    

    

    
      	 	
              THE
                SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT
                TO THAT
                CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED ___________ BETWEEN
                THE
                COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES
                WHICH
                ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN
                CONDITIONS.

            

    

    

    and/or
      such other legend or legends as the Company and its counsel deem necessary
      or
      appropriate. Appropriate stop transfer instructions with respect to the Shares
      have been placed with the Company's transfer agent.

    

    14.
      Stand-off
      Agreement.
      Optionee
      agrees that, in connection with any registration of the Company's securities
      under the Securities Act, and upon the request of the Company or any underwriter
      managing an underwritten offering of the Company's securities, Optionee shall
      not sell, short any sale of, loan, grant an option for, or otherwise dispose
      of
      any of the Shares (other than Shares included in the offering) without the
      prior
      written consent of the Company or such managing underwriter, as applicable,
      for
      a period of up to one year following the effective date of registration of
      such
      offering.

    

    15.
      Restriction
      Upon Transfer.
      The
      Shares may not be sold, transferred or otherwise disposed of and shall not
      be
      pledged or otherwise hypothecated by the Optionee except as hereinafter
      provided.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (a)
      Repurchase
      Right on Termination Other Than for Cause.
      For the
      purposes of this Section, a "Repurchase
      Event"
      shall
      mean an occurrence of one of (i) termination of Optionee's service as a
      consultant, voluntary or involuntary and without cause; (ii) retirement or
      death
      of Optionee; (iii) bankruptcy of Optionee, which shall be deemed to have
      occurred as of the date on which a voluntary or involuntary petition in
      bankruptcy is filed with a court of competent jurisdiction; (iv) dissolution
      of
      the marriage of Optionee, to the extent that any of the Shares are allocated
      as
      the sole and separate property of Optionee's spouse pursuant thereto (in which
      case, this Section shall only apply to the Shares so affected); or (v) any
      attempted transfer by the Optionee of Shares, or any interest therein, in
      violation of this Agreement. Upon the occurrence of a Repurchase Event, the
      Company shall have the right (but not an obligation) to repurchase all or any
      portion of the Shares of Optionee at a price equal to the fair value of the
      Shares as of the date of the Repurchase Event.

     

    
      	 	
              (b)
                Repurchase
                Right on Termination for Cause.
                In
                the event Optionee's service as a consultant is terminated by the
                Company
                "for cause" (as contemplated by Section 7), then the Company shall
                have
                the right (but not an obligation) to repurchase Shares of Optionee
                at a
                price equal to the Exercise Price. Such right of the Company to repurchase
                Shares shall apply to 100% of the Shares for one (1) year from the
                date of
                this Agreement; and shall thereafter lapse ratably in equal annual
                increments on each anniversary of the date of this Agreement over
                the term
                of this Option specified in Section 4. In addition, the Company shall
                have
                the right, in the sole discretion of the Board and without obligation,
                to
                repurchase upon any such termination of service for cause all or
                any
                portion of the Shares of Optionee, at a price equal to the fair value
                of
                the Shares as of the date of termination, which right is not subject
                to
                the foregoing lapsing of rights. In the event the Company elects
                to
                repurchase the Shares, the stock certificates representing the same
                shall
                forthwith be returned to the Company for
                cancellation.

            

      	 	 

    

    
      	 	
              (c)
                Exercise
                of Repurchase Right.
                Any repurchase right under Paragraphs 15(a) or 15(b) shall be exercised
                by
                giving notice of exercise as provided herein to Optionee or the estate
                of
                Optionee, as applicable. Such right shall be exercised, and the repurchase
                price thereunder shall be paid, by the Company within a ninety (90)
                day
                period beginning on the date of notice to the Company of the occurrence
                of
                such Repurchase Event (except in the case of termination of employment
                or
                retirement, where such option period shall begin upon the occurrence
                of
                the Repurchase Event). Such repurchase price shall be payable only
                in the
                form of cash (including a check drafted on immediately available
                funds) or
                cancellation of purchase money indebtedness of the Optionee for the
                Shares. If the Company can not purchase all such Shares because it
                is
                unable to meet the financial tests set forth in the Delaware corporation
                law, the Company shall have the right to purchase as many Shares
                as it is
                permitted to purchase under such sections. Any Shares not purchased
                by the
                Company hereunder shall no longer be subject to the provisions of
                this
                Section 15.

            

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      	 	 

    

    
      	 	
              (d)
                Right
                of First Refusal.
                In
                the event Optionee desires to transfer any Shares during his or her
                lifetime, Optionee shall first offer to sell such Shares to the Company.
                Optionee shall deliver to the Company written notice of the intended
                sale,
                such notice to specify the number of Shares to be sold, the proposed
                purchase price and terms of payment, and grant the Company an option
                for a
                period of thirty days following receipt of such notice to purchase
                the
                offered Shares upon the same terms and conditions. To exercise such
                option, the Company shall give notice of that fact to Optionee within
                the
                thirty (30) day notice period and agree to pay the purchase price
                in the
                manner provided in the notice. If the Company does not purchase all
                of the
                Shares so offered during foregoing option period, Optionee shall
                be under
                no obligation to sell any of the offered Shares to the Company, but
                may
                dispose of such Shares in any lawful manner during a period of one
                hundred
                and eighty (180) days following the end of such notice period, except
                that
                Optionee shall not sell any such Shares to any other person at a
                lower
                price or upon more favorable terms than those offered to the
                Company.

            

      	 	 

    

    
      	 	
              (e)
                Acceptance
                of Restrictions.
                Acceptance of the Shares shall constitute the Optionee's agreement
                to such
                restrictions and the legending of his certificates with respect thereto.
                Notwithstanding such restrictions, however, so long as the Optionee
                is the
                holder of the Shares, or any portion thereof, he shall be entitled
                to
                receive all dividends declared on and to vote the Shares and to all
                other
                rights of a shareholder with respect
                thereto.

            

      	 	 

    

    
      	 	
              (f)
                Permitted
                Transfers.
                Notwithstanding any provisions in this Section 15 to the contrary,
                the
                Optionee may transfer Shares subject to this Agreement to his or
                her
                parents, spouse, children, or grandchildren, or a trust for the benefit
                of
                the Optionee or any such transferee(s); provided, that such permitted
                transferee(s) shall hold the Shares subject to all the provisions
                of this
                Agreement (all references to the Optionee herein shall in such cases
                refer
                mutatis mutandis to the permitted transferee, except in the case
                of clause
                (iv) of Section 15(a) wherein the permitted transfer shall be deemed
                to be
                rescinded); and provided further, that notwithstanding any other
                provisions in this Agreement, a permitted transferee may not, in
                turn,
                make permitted transfers without the written consent of the Optionee
                and
                the Company.

            

      	 	 

    

    
      	 	
              (g)
                Release
                of Restrictions on Shares.
                All rights and restrictions under this Section 15 shall terminate
                five (5)
                years following the date of this Agreement, or when the Company's
                securities are publicly traded, whichever occurs
                earlier.

            

    

    

    16.
      Notices.
      Any
      notice required to be given pursuant to this Option or the Plan shall be in
      writing and shall be deemed to be delivered upon receipt or, in the case of
      notices by the Company, five (5) days after deposit in the U.S. mail, postage
      prepaid, addressed to Optionee at the address last provided by Optionee for
      use
      in Company records related to Optionee.

    

    17.
      Agreement
      Subject to Plan; Applicable Law.
      This
      Option is made pursuant to the Plan and shall be interpreted to comply
      therewith. A copy of such Plan is available to Optionee, at no charge, at the
      principal office of the Company. Any provision of this Option inconsistent
      with
      the Plan shall be considered void and replaced with the applicable provision
      of
      the Plan. This Option has been granted, executed and delivered in the State
      of
      Delaware, and the interpretation and enforcement shall be governed by the laws
      thereof and subject to the exclusive jurisdiction of the courts
      therein.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    In
      Witness Whereof,
      the
      parties hereto have executed this Option as of the date first above
      written.

    

     

    
      	
              COMPANY:
                

            	
              SPONGETECH
                DELIVERY SYSTEMS, Inc.,

               

               

               

              By:
                ____________________________

              Name:__________________________

              Title:___________________________

            
	 	 
	
              OPTIONEE:

            	
               

              By:____________________________

              (signature)

              Name:__________________________

            

    

    

    (one
      of the following, as appropriate, shall be signed)

    

    
      	
              I
                certify that as of the date hereof I am unmarried

            	 	
              By
                his or her signature, the spouse of Optionee hereby agrees to be
                bound by
                the provisions of the foregoing INCENTIVE STOCK OPTION
                AGREEMENT

            
	 	 	 
	
              Optionee

            	 	
              Spouse
                of Optionee

            

    

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    Appendix
      A

    

    NOTICE
      OF
      EXERCISE

    

    Spongetech
      Delivery Systems, Inc.

    

    Re:
      Nonstatutory Stock Option

    

    Notice
      is
      hereby given pursuant to Section 6 of my Nonstatutory Stock Option Agreement
      that I elect to purchase the number of shares set forth below at the exercise
      price set forth in my option agreement:

    

    Nonstatutory
      Stock Option Agreement dated: ____________

    

    Number
      of
      shares being purchased: ____________

    

    Exercise
      Price: $____________

    

    A
      check
      in the amount of the aggregate price of the shares being purchased is
      attached.

    

    I
      hereby
      confirm that such shares are being acquired by me for my own account for
      investment purposes, and not with a view to, or for resale in connection with,
      any distribution thereof. I will not sell or dispose of my Shares in violation
      of the Securities Act of 1933, as amended, or any applicable federal or state
      securities laws. Further, I understand that the exemption from taxable income
      at
      the time of exercise is dependent upon my holding such stock for a period of
      at
      least one year from the date of exercise and two years from the date of grant
      of
      the Option.

    

    I
      understand that the certificate representing the Option Shares will bear a
      restrictive legend within the contemplation of the Securities Act and as
      required by such other state or federal law or regulation applicable to the
      issuance or delivery of the Option Shares.

    

    I
      agree
      to provide to the Company such additional documents or information as may be
      required pursuant to the Company's 2007 Incentive Stock Plan.

    
      	 	
               

              By:_____________________________

              (signature)

              Name:___________________________

            

    

    

    
      
         

      

      
        Appendix
          A

        
          

        

      

      
         

      

    

    EXHIBIT
      C

    

    SPONGETECH
      DELIVERY SYSTEMS, INC. 

    

    STOCK
      AWARD AGREEMENT

    
      
        

      

    

    

    This
      Stock Award Agreement ("Agreement")
      is
      made and entered into as of the date set forth below, by and between Spongetech
      Delivery Systems, Inc., a Colorado corporation (the "Company"),
      and
      the employee, director or consultant of the Company named in Section 1(b).
      ("Grantee"):

    

    In
      consideration of the covenants herein set forth, the parties hereto agree as
      follows:

    

    1.
      Stock
      Award Information.

    

    (a) Date
      of
      Award:        
___________________________

    (b) Grantee:                    
      ___________________________

    (c) Number
      of
      Shares:   ___________________________

    (d) Original
      Value:        
___________________________

     

    	2.  	
            Acknowledgements.

          

    

    	(a)  	
            Grantee
              is a [employee/director/consultant]
              of
              the Company.

          

    

    (b)
      The
      Company has adopted a 2007 Incentive Stock Plan (the "Plan")
      under
      which the Company's common stock ("Stock")
      may be
      offered to directors, officers, employees and consultants pursuant to an
      exemption from registration under the Securities Act of 1933, as amended (the
      "Securities
      Act")
      provided by Section 4(2) thereunder.

    

    3.
      Shares;
      Value.
      The
      Company hereby grants to Grantee, upon and subject to the terms and conditions
      herein stated, the number of shares of Stock set forth in Section 1(c) (the
      "Shares"),
      which
      Shares have a fair value per share ("Original
      Value")
      equal
      to the amount set forth in Section 1(d). For the purpose of this Agreement,
      the
      terms "Share"
      or
      "Shares"
      shall
      include the original Shares plus any shares derived therefrom, regardless of
      the
      fact that the number, attributes or par value of such Shares may have been
      altered by reason of any recapitalization, subdivision, consolidation, stock
      dividend or amendment of the corporate charter of the Company. The number of
      Shares covered by this Agreement and the Original Value thereof shall be
      proportionately adjusted for any increase or decrease in the number of issued
      shares resulting from a recapitalization, subdivision or consolidation of shares
      or the payment of a stock dividend, or any other increase or decrease in the
      number of such shares effected without receipt of consideration by the
      Company.

    

    4.
      Investment
      Intent.
      Grantee
      represents and agrees that Grantee is accepting the Shares for the purpose
      of
      investment and not with a view to, or for resale in connection with, any
      distribution thereof; and that, if requested, Grantee shall furnish to the
      Company a written statement to such effect, satisfactory to the Company in
      form
      and substance. If the Shares are registered under the Securities Act, Grantee
      shall be relieved of the foregoing investment representation and agreement
      and
      shall not be required to furnish the Company with the foregoing written
      statement.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.
      Restriction
      Upon Transfer.
      The
      Shares may not be sold, transferred or otherwise disposed of and shall not
      be
      pledged or otherwise hypothecated by the Grantee except as hereinafter
      provided.

    

    (a)
      Repurchase
      Right on Termination Other Than for Cause.
      For the
      purposes of this Section, a "Repurchase
      Event"
      shall
      mean an occurrence of one of (i) termination of Grantee's employment
[or
      service as a director/consultant]
      by the
      Company, voluntary or involuntary and without cause; (ii) retirement or death
      of
      Grantee; (iii) bankruptcy of Grantee, which shall be deemed to have occurred
      as
      of the date on which a voluntary or involuntary petition in bankruptcy is filed
      with a court of competent jurisdiction; (iv) dissolution of the marriage of
      Grantee, to the extent that any of the Shares are allocated as the sole and
      separate property of Grantee's spouse pursuant thereto (in which case, this
      Section shall only apply to the Shares so affected); or (v) any attempted
      transfer by the Grantee of Shares, or any interest therein, in violation of
      this
      Agreement. Upon the occurrence of a Repurchase Event, the Company shall have
      the
      right (but not
      an
      obligation) to purchase all or any portion of the Shares of Grantee, at a price
      equal to the fair value of the Shares as of the date of the Repurchase
      Event.

    

    (b)
      Repurchase
      Right on Termination for Cause.
      In the
      event Grantee's employment [or
      service as a director/consultant]
      is
      terminated by the Company "for
      cause"
      (as
      defined below), then the Company shall have the right (but not an obligation)
      to
      purchase Shares of Grantee at a price equal to the Original Value. Such right
      of
      the Company to purchase Shares shall apply to 100% of the Shares for one (1)
      year from the date of this Agreement; and shall thereafter lapse at the rate
      of
      twenty percent (20%) of the Shares on each anniversary of the date of this
      Agreement. In addition, the Company shall have the right, in the sole discretion
      of the Board and without obligation, to repurchase upon termination for cause
      all or any portion of the Shares of Grantee, at a price equal to the fair value
      of the Shares as of the date of termination, which right is not subject to
      the
      foregoing lapsing of rights. Termination of employment [or
      service as a director/consultant]
      "for
      cause"
      means
      (i) as to employees or consultants, termination for cause as contemplated by
      Delaware state law and case law related thereto, or as defined in the Plan,
      this
      Agreement or in any employment [or
      consulting]
      agreement between the Company and Grantee, or (ii) as to directors, removal
      pursuant to the Delaware corporation law. In the event the Company elects to
      purchase the Shares, the stock certificates representing the same shall
      forthwith be returned to the Company for cancellation.

    

    (c)
      Exercise
      of Repurchase Right.
      Any
      Repurchase Right under Paragraphs 4(a) or 4(b) shall be exercised by giving
      notice of exercise as provided herein to Grantee or the estate of Grantee,
      as
      applicable. Such right shall be exercised, and the repurchase price thereunder
      shall be paid, by the Company within a ninety (90) day period beginning on
      the
      date of notice to the Company of the occurrence of such Repurchase Event (except
      in the case of termination or cessation of services as director, where such
      option period shall begin upon the occurrence of the Repurchase Event). Such
      repurchase price shall be payable only in the form of cash (including a check
      drafted on immediately available funds) or cancellation of purchase money
      indebtedness of the Grantee for the Shares. If the Company can not purchase
      all
      such Shares because it is unable to meet the financial tests set forth in the
      Delaware corporation law, the Company shall have the right to purchase as many
      Shares as it is permitted to purchase under such sections. Any Shares not
      purchased by the Company hereunder shall no longer be subject to the provisions
      of this Section 5.

    

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    (d)
      Right
      of First Refusal.
      In the
      event Grantee desires to transfer any Shares during his or her lifetime, Grantee
      shall first offer to sell such Shares to the Company. Grantee shall deliver
      to
      the Company written notice of the intended sale, such notice to specify the
      number of Shares to be sold, the proposed purchase price and terms of payment,
      and grant the Company an option for a period of thirty days following receipt
      of
      such notice to purchase the offered Shares upon the same terms and conditions.
      To exercise such option, the Company shall give notice of that fact to Grantee
      within the thirty (30) day notice period and agree to pay the purchase price
      in
      the manner provided in the notice. If the Company does not purchase all of
      the
      Shares so offered during foregoing option period, Grantee shall be under no
      obligation to sell any of the offered Shares to the Company, but may dispose
      of
      such Shares in any lawful manner during a period of one hundred and eighty
      (180)
      days following the end of such notice period, except that Grantee shall not
      sell
      any such Shares to any other person at a lower price or upon more favorable
      terms than those offered to the Company.

    

    (e)
      Acceptance
      of Restrictions.
      Acceptance of the Shares shall constitute the Grantee's agreement to such
      restrictions and the legending of his certificates with respect thereto.
      Notwithstanding such restrictions, however, so long as the Grantee is the holder
      of the Shares, or any portion thereof, he shall be entitled to receive all
      dividends declared on and to vote the Shares and to all other rights of a
      shareholder with respect thereto.

    

    (f)
      Permitted
      Transfers.
      Notwithstanding any provisions in this Section 5 to the contrary, the Grantee
      may transfer Shares subject to this Agreement to his or her parents, spouse,
      children, or grandchildren, or a trust for the benefit of the Grantee or any
      such transferee(s); provided, that such permitted transferee(s) shall hold
      the
      Shares subject to all the provisions of this Agreement (all references to the
      Grantee herein shall in such cases refer mutatis mutandis to the permitted
      transferee, except in the case of clause (iv) of Section 5(a) wherein the
      permitted transfer shall be deemed to be rescinded); and provided further,
      that
      notwithstanding any other provisions in this Agreement, a permitted transferee
      may not, in turn, make permitted transfers without the written consent of the
      Grantee and the Company.

    

    (g)
      Release
      of Restrictions on Shares.
      All
      rights and restrictions under this Section 5 shall terminate five (5) years
      following the date of this Agreement, or when the Company's securities are
      publicly traded, whichever occurs earlier.

    

    6.
      Representations
      and Warranties of the Grantee.
      This
      Agreement and the issuance and grant of the Shares hereunder is made by the
      Company in reliance upon the express representations and warranties of the
      Grantee, which by acceptance hereof the Grantee confirms that:

    

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    (a)
      The
      Shares granted to him pursuant to this Agreement are being acquired by him
      for
      his own account, for investment purposes, and not with a view to, or for sale
      in
      connection with, any distribution of the Shares. It is understood that the
      Shares have not been registered under the Act by reason of a specific exemption
      from the registration provisions of the Act which depends, among other things,
      upon the bona fide nature of his representations as expressed
      herein;

    

    (b)
      The
      Shares must be held by him indefinitely unless they are subsequently registered
      under the Act and any applicable state securities laws, or an exemption from
      such registration is available. The Company is under no obligation to register
      the Shares or to make available any such exemption; and

    

    (c)
      Grantee further represents that Grantee has had the opportunity to ask questions
      of the Company concerning its business, operations and financial condition
      and
      to obtain additional information reasonably necessary to verify the accuracy
      of
      such information,

    

    (d)
      Unless and until the Shares represented by this Grant are registered under
      the
      Securities Act, all certificates representing the Shares and any certificates
      subsequently issued in substitution therefor and any certificate for any
      securities issued pursuant to any stock split, share reclassification, stock
      dividend or other similar capital event shall bear legends in substantially
      the
      following form:

    

    
      	 	
              THESE
                SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER
                THE
                SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE
                OR
                SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST
                THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
                IN THE
                ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
                SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS
                THEREFROM.

            

    

    

    
      	 	
              THE
                SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT
                TO THAT
                CERTAIN STOCK AWARD AGREEMENT DATED ____________ BETWEEN THE COMPANY
                AND
                THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE
                SUBJECT
                TO REPURCHASE BY THE COMPANY UNDER CERTAIN
                CONDITIONS.

            

    

    

    
      	 	
              and/or
                such other legend or legends as the Company and its counsel deem
                necessary
                or appropriate. Appropriate stop transfer instructions with respect
                to the
                Shares have been placed with the Company's transfer
                agent.

            

    

    

    (e)
      Grantee understands that he or she will recognize income, for Federal and state
      income tax purposes, in an amount equal to the amount by which the fair market
      value of the Shares, as of the date of grant, exceeds the price paid by Grantee,
      if any. The acceptance of the Shares by Grantee shall constitute an agreement
      by
      Grantee to report such income in accordance with then applicable law.
      Withholding for federal or state income and employment tax purposes will be
      made, if and as required by law, from Grantee's then current compensation,
      or,
      if such current compensation is insufficient to satisfy withholding tax
      liability, the Company may require Grantee to make a cash payment to cover
      such
      liability.

    

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    7.
      Stand-off
      Agreement.
      Grantee
      agrees that, in connection with any registration of the Company's securities
      under the Securities Act, and upon the request of the Company or any underwriter
      managing an underwritten offering of the Company's securities, Grantee shall
      not
      sell, short any sale of, loan, grant an option for, or otherwise dispose of
      any
      of the Shares (other than Shares included in the offering) without the prior
      written consent of the Company or such managing underwriter, as applicable,
      for
      a period of at least one year following the effective date of registration
      of
      such offering. This Section 8 shall survive any termination of this
      Agreement.

    

    8.
      Termination
      of Agreement.
      This
      Agreement shall terminate on the occurrence of any one of the following events:
      (a) written agreement of all parties to that effect; (b) a proposed dissolution
      or liquidation of the Company, a merger or consolidation in which the Company
      is
      not the surviving entity, or a sale of all or substantially all of the assets
      of
      the Company; (c) the closing of any public offering of common stock of the
      Company pursuant to an effective registration statement under the Securities
      Act; or (d) dissolution, bankruptcy, or insolvency of the Company.

    

    9.
      Agreement
      Subject to Plan; Applicable Law.
      This
      Grant is made pursuant to the Plan and shall be interpreted to comply therewith.
      A copy of such Plan is available to Grantee, at no charge, at the principal
      office of the Company. Any provision of this Agreement inconsistent with the
      Plan shall be considered void and replaced with the applicable provision of
      the
      Plan. This Grant shall be governed by the laws of the State of Delaware and
      subject to the exclusive jurisdiction of the courts therein.

    

    10.
      Miscellaneous.

    

    (a)
      Notices.
      Any
      notice required to be given pursuant to this Agreement or the Plan shall be
      in
      writing and shall be deemed to have been duly delivered upon receipt or, in
      the
      case of notices by the Company, five (5) days after deposit in the U.S. mail,
      postage prepaid, addressed to Grantee at the last address provided by Grantee
      for use in the Company's records.

    

    (b)
      Entire
      Agreement.
      This
      instrument constitutes the sole agreement of the parties hereto with respect
      to
      the Shares. Any prior agreements, promises or representations concerning the
      Shares not included or reference herein shall be of no force or effect. This
      Agreement shall be binding on, and shall inure to the benefit of, the Parties
      hereto and their respective transferees, heirs, legal representatives,
      successors, and assigns.

    

    (c)
      Enforcement.
      This
      Agreement shall be construed in accordance with, and governed by, the laws
      of
      the State of Delaware and subject to the exclusive jurisdiction of the courts
      located in Delaware, Delaware. If Grantee attempts to transfer any of the Shares
      subject to this Agreement, or any interest in them in violation of the terms
      of
      this Agreement, the Company may apply to any court for an injunctive order
      prohibiting such proposed transaction, and the Company may institute and
      maintain proceedings against Grantee to compel specific performance of this
      Agreement without the necessity of proving the existence or extent of any
      damages to the Company. Any such attempted transaction shares in violation
      of
      this Agreement shall be null and void.

    

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    (d)
      Validity
      of Agreement.
      The
      provisions of this Agreement may be waived, altered, amended, or repealed,
      in
      whole or in part, only on the written consent of all parties hereto. It is
      intended that each Section of this Agreement shall be viewed as separate and
      divisible, and in the event that any Section shall be held to be invalid, the
      remaining Sections shall continue to be in full force and effect.

    

    In
      Witness Whereof,
      the
      parties have executed this Agreement as of the date first above
      written.

    

    

    
      	
              COMPANY:
                

            	
              Spongetech
                Delivery Systems, Inc.,

               

               

               

              By:_________________________

              Name:_______________________

              Title:________________________

            
	 	 
	
              GRANTEE:

            	
               

              By:_________________________

              (signature)

              Name:_______________________

            

    

    

    (one
      of the following, as appropriate, shall be signed)

    

    
      	
              I
                certify that as of the date hereof I am unmarried

            	 	
              By
                his or her signature, the spouse of Grantee hereby agrees to be bound
                by
                the provisions of the foregoing STOCK AWARD AGREEMENT

            
	 	 	 
	
              Grantee

            	 	
              Spouse
                of Grantee

            

    

     

    
 

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    EXHIBIT
      D

    

    SPONGETECH
      DELIVERY SYSTEMS, INC.

    

    RESTRICTED
      STOCK PURCHASE AGREEMENT

    
      
        

      

    

    

    This
      Restricted Stock Purchase Agreement ("Agreement")
      is
      made and entered into as of the date set forth below, by and between Spongetech
      Delivery Systems, Inc., a Delaware corporation (the "Company"),
      and
      the employee, director or consultant of the Company named in Section 1(b).
      ("Grantee"):

    

    In
      consideration of the covenants herein set forth, the parties hereto agree as
      follows:

    

    1.
      Stock
      Purchase Information.

    

    (a) Date
      of
      Agreement:    ___________________________

    (b) Grantee:                 
            ___________________________

    (c) Number
      of
      Shares:      ___________________________

    (d) Purchase
      Price:          
___________________________

     

    2.
      Acknowledgements.

    

    (a)
      Grantee is a [employee/director/consultant]
      of the
      Company.

    

    (b)
      The
      Company has adopted a 2007 Incentive Stock Plan (the "Plan")
      under
      which the Company's common stock ("Stock")
      may be
      offered to officers, employees, directors and consultants pursuant to an
      exemption from registration under the Securities Act of 1933, as amended (the
      "Securities
      Act")
      provided by Section 4(2) thereunder.

    

    (c)
      The
      Grantee desires to purchase shares of the Company's common stock on the terms
      and conditions set forth herein.

    

    3.
      Purchase
      of Shares.
      The
      Company hereby agrees to sell and Grantee hereby agrees to purchase, upon and
      subject to the terms and conditions herein stated, the number of shares of
      Stock
      set forth in Section 1(c) (the "Shares"),
      at
      the price per Share set forth in Section 1(d) (the "Price").
      For
      the purpose of this Agreement, the terms "Share"
      or
      "Shares"
      shall
      include the original Shares plus any shares derived therefrom, regardless of
      the
      fact that the number, attributes or par value of such Shares may have been
      altered by reason of any recapitalization, subdivision, consolidation, stock
      dividend or amendment of the corporate charter of the Company. The number of
      Shares covered by this Agreement shall be proportionately adjusted for any
      increase or decrease in the number of issued shares resulting from a
      recapitalization, subdivision or consolidation of shares or the payment of
      a
      stock dividend, or any other increase or decrease in the number of such shares
      effected without receipt of consideration by the Company.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.
      Investment
      Intent.
      Grantee
      represents and agrees that Grantee is accepting the Shares for the purpose
      of
      investment and not with a view to, or for resale in connection with, any
      distribution thereof; and that, if requested, Grantee shall furnish to the
      Company a written statement to such effect, satisfactory to the Company in
      form
      and substance. If the Shares are registered under the Securities Act, Grantee
      shall be relieved of the foregoing investment representation and agreement
      and
      shall not be required to furnish the Company with the foregoing written
      statement.

    

    5.
      Restriction
      Upon Transfer.
      The
      Shares may not be sold, transferred or otherwise disposed of and shall not
      be
      pledged or otherwise hypothecated by the Grantee except as hereinafter
      provided.

    

    (a)
      Repurchase Right on Termination Other Than for Cause. For the purposes of this
      Section, a "Repurchase
      Event"
      shall
      mean an occurrence of one of (i) termination of Grantee's employment
      [or
      service as a director/consultant]
      by the
      Company, voluntary or involuntary and without cause; (ii) retirement or death
      of
      Grantee; (iii) bankruptcy of Grantee, which shall be deemed to have occurred
      as
      of the date on which a voluntary or involuntary petition in bankruptcy is filed
      with a court of competent jurisdiction; (iv) dissolution of the marriage of
      Grantee, to the extent that any of the Shares are allocated as the sole and
      separate property of Grantee's spouse pursuant thereto (in which case, this
      Section shall only apply to the Shares so affected); or (v) any attempted
      transfer by the Grantee of Shares, or any interest therein, in violation of
      this
      Agreement. Upon the occurrence of a Repurchase Event, the Company shall have
      the
      right (but not an obligation) to repurchase all or any portion of the Shares
      of
      Grantee at a price equal to the fair value of the Shares as of the date of
      the
      Repurchase Event.

    

    (b)
      Repurchase Right on Termination for Cause. In the event Grantee's employment
      [or
      service as a director/consultant]
      is
      terminated by the Company "for
      cause"
      (as
      defined below), then the Company shall have the right (but not an obligation)
      to
      repurchase Shares of Grantee at a price equal to the Price. Such right of the
      Company to repurchase Shares shall apply to 100% of the Shares for one (1)
      year
      from the date of this Agreement; and shall thereafter lapse at the rate of
      twenty percent (20%) of the Shares on each anniversary of the date of this
      Agreement. In addition, the Company shall have the right, in the sole discretion
      of the Board and without obligation, to repurchase upon termination for cause
      all or any portion of the Shares of Grantee, at a price equal to the fair value
      of the Shares as of the date of termination, which right is not subject to
      the
      foregoing lapsing of rights. Termination of employment [or
      service as a director/consultant]
      "for
      cause"
      means
      (i) as to employees and consultants, termination for cause as contemplated
      by
      Delaware state law and case law related thereto, or as defined in the Plan,
      this
      Agreement or in any employment [or
      consulting]
      agreement between the Company and Grantee, or (ii) as to directors, removal
      pursuant to the Delaware corporation law. In the event the Company elects to
      repurchase the Shares, the stock certificates representing the same shall
      forthwith be returned to the Company for cancellation.

    

    (c)
      Exercise
      of Repurchase Right.
      Any
      Repurchase Right under Paragraphs 4(a) or 4(b) shall be exercised by giving
      notice of exercise as provided herein to Grantee or the estate of Grantee,
      as
      applicable. Such right shall be exercised, and the repurchase price thereunder
      shall be paid, by the Company within a ninety (90) day period beginning on
      the
      date of notice to the Company of the occurrence of such Repurchase Event (except
      in the case of termination of employment or retirement, where such option period
      shall begin upon the occurrence of the Repurchase Event). Such repurchase price
      shall be payable only in the form of cash (including a check drafted on
      immediately available funds) or cancellation of purchase money indebtedness
      of
      the Grantee for the Shares. If the Company can not purchase all such Shares
      because it is unable to meet the financial tests set forth in the Delaware
      corporation law, the Company shall have the right to purchase as many Shares
      as
      it is permitted to purchase under such sections. Any Shares not purchased by
      the
      Company hereunder shall no longer be subject to the provisions of this Section
      5.

    

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    (d)
      Right
      of First Refusal.
      In the
      event Grantee desires to transfer any Shares during his or her lifetime, Grantee
      shall first offer to sell such Shares to the Company. Grantee shall deliver
      to
      the Company written notice of the intended sale, such notice to specify the
      number of Shares to be sold, the proposed purchase price and terms of payment,
      and grant the Company an option for a period of thirty days following receipt
      of
      such notice to purchase the offered Shares upon the same terms and conditions.
      To exercise such option, the Company shall give notice of that fact to Grantee
      within the thirty (30) day notice period and agree to pay the purchase price
      in
      the manner provided in the notice. If the Company does not purchase all of
      the
      Shares so offered during foregoing option period, Grantee shall be under no
      obligation to sell any of the offered Shares to the Company, but may dispose
      of
      such Shares in any lawful manner during a period of one hundred and eighty
      (180)
      days following the end of such notice period, except that Grantee shall not
      sell
      any such Shares to any other person at a lower price or upon more favorable
      terms than those offered to the Company.

    

    (e)
      Acceptance
      of Restrictions.
      Acceptance of the Shares shall constitute the Grantee's agreement to such
      restrictions and the legending of his certificates with respect thereto.
      Notwithstanding such restrictions, however, so long as the Grantee is the holder
      of the Shares, or any portion thereof, he shall be entitled to receive all
      dividends declared on and to vote the Shares and to all other rights of a
      shareholder with respect thereto.

    

    (f)
      Permitted
      Transfers.
      Notwithstanding any provisions in this Section 5 to the contrary, the Grantee
      may transfer Shares subject to this Agreement to his or her parents, spouse,
      children, or grandchildren, or a trust for the benefit of the Grantee or any
      such transferee(s); provided, that such permitted transferee(s) shall hold
      the
      Shares subject to all the provisions of this Agreement (all references to the
      Grantee herein shall in such cases refer mutatis mutandis to the permitted
      transferee, except in the case of clause (iv) of Section 5(a) wherein the
      permitted transfer shall be deemed to be rescinded); and provided further,
      that
      notwithstanding any other provisions in this Agreement, a permitted transferee
      may not, in turn, make permitted transfers without the written consent of the
      Grantee and the Company.

    

    (g)
      Release
      of Restrictions on Shares.
      All
      rights and restrictions under this Section 5 shall terminate five (5) years
      following the date upon which the Company receives the full Price as set forth
      in Section 3, or when the Company's securities are publicly traded, whichever
      occurs earlier.

    

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    5.
      Representations
      and Warranties of the Grantee.
      This
      Agreement and the issuance and grant of the Shares hereunder is made by the
      Company in reliance upon the express representations and warranties of the
      Grantee, which by acceptance hereof the Grantee confirms that:

    

    (a)
      The
      Shares granted to him pursuant to this Agreement are being acquired by him
      for
      his own account, for investment purposes, and not with a view to, or for sale
      in
      connection with, any distribution of the Shares. It is understood that the
      Shares have not been registered under the Act by reason of a specific exemption
      from the registration provisions of the Act which depends, among other things,
      upon the bona fide nature of his representations as expressed
      herein;

    

    (b)
      The
      Shares must be held by him indefinitely unless they are subsequently registered
      under the Act and any applicable state securities laws, or an exemption from
      such registration is available. The Company is under no obligation to register
      the Shares or to make available any such exemption; and

    

    (c)
      Grantee further represents that Grantee has had access to the financial
      statements or books and records of the Company, has had the opportunity to
      ask
      questions of the Company concerning its business, operations and financial
      condition and to obtain additional information reasonably necessary to verify
      the accuracy of such information;

    

    (d)
      Unless and until the Shares represented by this Grant are registered under
      the
      Securities Act, all certificates representing the Shares and any certificates
      subsequently issued in substitution therefor and any certificate for any
      securities issued pursuant to any stock split, share reclassification, stock
      dividend or other similar capital event shall bear legends in substantially
      the
      following form:

    

    
      	 	
              THESE
                SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER
                THE
                SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE
                OR
                SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST
                THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
                IN THE
                ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
                SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS
                THEREFROM.

            

    

    

    
      	 	
              THE
                SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT
                TO THAT
                CERTAIN RESTRICTED STOCK PURCHASE AGREEMENT DATED ____________ BETWEEN
                THE
                COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES
                WHICH
                ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN
                CONDITIONS.

            

    

    

    
      	 	
              and/or
                such other legend or legends as the Company and its counsel deem
                necessary
                or appropriate. Appropriate stop transfer instructions with respect
                to the
                Shares have been placed with the Company's transfer
                agent.

            

    

    

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    (e)
      Grantee understands that he or she will recognize income, for Federal and state
      income tax purposes, in an amount equal to the amount by which the fair market
      value of the Shares, as of the date of Grant, exceeds the price paid by Grantee.
      The acceptance of the Shares by Grantee shall constitute an agreement by Grantee
      to report such income in accordance with then applicable law. Withholding for
      federal or state income and employment tax purposes will be made, if and as
      required by law, from Grantee's then current compensation, or, if such current
      compensation is insufficient to satisfy withholding tax liability, the Company
      may require Grantee to make a cash payment to cover such liability.

    

    7.
      Stand-off
      Agreement.
      Grantee
      agrees that, in connection with any registration of the Company's securities
      under the Securities Act, and upon the request of the Company or any underwriter
      managing an underwritten offering of the Company's securities, Grantee shall
      not
      sell, short any sale of, loan, grant an option for, or otherwise dispose of
      any
      of the Shares (other than Shares included in the offering) without the prior
      written consent of the Company or such managing underwriter, as applicable,
      for
      a period of at least one year following the effective date of registration
      of
      such offering. This Section 8 shall survive any termination of this
      Agreement.

    

    8.
      Termination
      of Agreement.
      This
      Agreement shall terminate on the occurrence of any one of the following events:
      (a) written agreement of all parties to that effect; (b) a proposed dissolution
      or liquidation of the Company, a merger or consolidation in which the Company
      is
      not the surviving entity, or a sale of all or substantially all of the assets
      of
      the Company; (c) the closing of any public offering of common stock of the
      Company pursuant to an effective registration statement under the Act; or (d)
      dissolution, bankruptcy, or insolvency of the Company.

    

    9.
      Agreement
      Subject to Plan; Applicable Law.
      This
      Grant is made pursuant to the Plan and shall be interpreted to comply therewith.
      A copy of such Plan is available to Grantee, at no charge, at the principal
      office of the Company. Any provision of this Agreement inconsistent with the
      Plan shall be considered void and replaced with the applicable provision of
      the
      Plan. This Grant shall be governed by the laws of the State of Delaware and
      subject to the exclusive jurisdiction of the courts therein.

    

    10.
      Miscellaneous.

    

    (a)
      Notices.
      Any
      notice required to be given pursuant to this Agreement or the Plan shall be
      in
      writing and shall be deemed to have been duly delivered upon receipt or, in
      the
      case of notices by the Company, five (5) days after deposit in the U.S. mail,
      postage prepaid, addressed to Grantee at the last address provided by Grantee
      for use in the Company's records.

    

    (b)
      Entire
      Agreement.
      This
      instrument constitutes the sole agreement of the parties hereto with respect
      to
      the Shares. Any prior agreements, promises or representations concerning the
      Shares not included or reference herein shall be of no force or effect. This
      Agreement shall be binding on, and shall inure to the benefit of, the Parties
      hereto and their respective transferees, heirs, legal representatives,
      successors, and assigns.

    

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    (c)
      Enforcement.
      This
      Agreement shall be construed in accordance with, and governed by, the laws
      of
      the State of Delaware and subject to the exclusive jurisdiction of the courts
      located in Delaware, Delaware. If Grantee attempts to transfer any of the Shares
      subject to this Agreement, or any interest in them in violation of the terms
      of
      this Agreement, the Company may apply to any court for an injunctive order
      prohibiting such proposed transaction, and the Company may institute and
      maintain proceedings against Grantee to compel specific performance of this
      Agreement without the necessity of proving the existence or extent of any
      damages to the Company. Any such attempted transaction shares in violation
      of
      this Agreement shall be null and void.

    

    (d)
      Validity
      of Agreement.
      The
      provisions of this Agreement may be waived, altered, amended, or repealed,
      in
      whole or in part, only on the written consent of all parties hereto. It is
      intended that each Section of this Agreement shall be viewed as separate and
      divisible, and in the event that any Section shall be held to be invalid, the
      remaining Sections shall continue to be in full force and effect.

    

    In
      Witness Whereof, the
      parties have executed this Agreement as of the date first above
      written.

    

    
      	
              COMPANY:
                

            	
              Spongetech
                Delivery Systems, Inc.,

               

               

               

              By:__________________________

              Name:________________________

              Title:_________________________

            
	 	 
	
              GRANTEE:

            	
               

              By:__________________________

              (signature)

              Name:________________________

            

    

    

    

    
      
         

      

      
        -6-Exhibit 10.1(a)

                          AGREEMENT AND PLAN OF MERGER

     THIS AGREEMENT AND PLAN OF MERGER (the  "AGREEMENT")  is made this 24th day
of  July,  2007  by and  among  Cyber  Vault  Technologies,  Inc.,  an  Illinois
corporation (the "COMPANY"),  the shareholders of the Company listed on APPENDIX
A attached hereto (each a "SELLER" and collectively, "SELLERS"), and Terra Firma
Technologies, Inc., a Delaware corporation (f/k/a Highriver Acquisition Corp., a
Delaware corporation) ("PURCHASER").

     WHEREAS,  Sellers are the record and  beneficial  owner of Five Million One
Hundred Twenty-One Thousand Nine Hundred Sixty-Two  (5,121,962) shares of common
stock of the  Company,  no par value,  (together,  the "SELLER  SHARES"),  which
constitute One Hundred  Percent (100%) of the issued and  outstanding  shares of
capital stock of the Company;

     WHEREAS,  the  respective  Boards of Directors of Purchaser and the Company
have  determined  that  it is  advisable  and in the  best  interests  of  their
respective   companies  and  their   shareholders  to  consummate  the  business
combination  transaction  provided for herein in which the Company will, subject
to the terms and conditions set forth herein, merge with and into Purchaser (the
"MERGER"); and

     WHEREAS,  Purchaser,  the  Company  and the Seller  desire to make  certain
representations, warranties and covenants in connection with the Merger;

     WHEREAS,  the parties hereto intend for the Merger to qualify,  for federal
income tax purposes, as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and

     WHEREAS,  Sellers and Purchaser  desire to set forth herein their agreement
relative to the matters set forth above in these Recitals.

     NOW,  THEREFORE,  for  and in  consideration  of the  mutual  promises  and
agreements  contained  herein,  and other good and valuable  consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the parties hereto
agree as follows:

     1.  Recitals.  The  recitals  contained  herein  are  specifically  remade,
restated and fully incorporated into the terms and conditions of this Agreement.

     2. The Merger.  Subject to the terms and conditions of this  Agreement,  in
accordance with the Delaware  General  Corporation Law ("DGCL") and the Illinois
Business Corporation Act of 1983 ("IBCA"), at the Effective Time (as hereinafter
defined),  the Company  shall  merge with and into  Purchaser.  Purchaser  shall
become the surviving  corporation  (hereinafter  sometimes called the "SURVIVING
CORPORATION")  in the Merger,  and shall continue its corporate  existence under
the laws of the State of Delaware.  The name of the Surviving  Corporation shall
be "Terra Firma Technologies,  Inc.", a Delaware corporation.  Upon consummation
of the Merger, the separate corporate existence of the Company shall terminate.

     3. Plan of Merger.  This Agreement shall  constitute an agreement of merger
for purposes of the DGCL and the IBCA.

     4. Effective Time. As promptly as  practicable,  but in no event later than
the third (3rd) business day after all of the conditions set forth in Section 14
shall have been  satisfied or, if  permissible,  waived by the party entitled to
the benefit of the same,  the Company and Purchaser  shall duly execute and file
certificates/articles  of merger  (collectively,  the  "CERTIFICATES OF MERGER")
<PAGE>
with the Secretary of State of the State of Delaware (the "DELAWARE  SECRETARY")
in  accordance  with the DGCL and with the  Secretary  of State of the  State of
Illinois (the  "ILLINOIS  SECRETARY")  in accordance  with the IBCA.  The Merger
shall become effective on the date (the "CLOSING DATE") and at the later of such
time (the  "EFFECTIVE  TIME") as the  Certificates  of Merger are filed with the
Delaware  Secretary and the Illinois Secretary or at such later date and time as
is specified in such  Certificates of Merger,  but in no event shall the Closing
Date  occur  later  than  July 20,  2007  unless  agreed  to in  writing  by the
undersigned.  Subject to the terms and conditions of this Agreement, the closing
of the Merger (the "CLOSING")  shall be held at the offices of Hennessy & Roach,
P.C.,  140 South Dearborn  Street,  7th Floor,  Chicago,  Illinois 60603 or such
other location as the parties may mutually agree upon.

     5. Effect of the Merger.  At the Effective  Time,  the effect of the Merger
shall be as  provided  herein  and as set forth in  Section  259 of the DGCL and
Section 11.50 of the IBCA. Without limiting the generality of the foregoing, and
subject  thereto,  at  the  Effective  Time,  (a)  all  the  property,   rights,
privileges,  powers and  franchises  of the Company  shall vest in the Surviving
Corporation,  and  (b)  all  debts,  liabilities,   obligations,   restrictions,
disabilities  and duties of  Purchaser  and the Company  shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.

     6. Conversion of Company Common Stock.

          (a) At the Effective  Time, the Seller Shares shall, by virtue of this
     Agreement  and  without  any action on the part of the holder  thereof,  be
     converted  into the right to  receive  and be  exchangeable  for  5,121,962
     shares  of  Purchaser's  common  stock,   $0.001  par  value  in  the  same
     proportions   that  each  Seller  owns  the  Seller   Shares  (the  "MERGER
     CONSIDERATION").  Each  Seller  Share  converted  into the right to receive
     Merger  Consideration  pursuant  to this  Section  6  shall  no  longer  be
     outstanding and shall automatically be canceled and retired and shall cease
     to exist, and each certificate (each a "CERTIFICATE," and collectively, the
     "CERTIFICATES")  previously  representing  any  such  Seller  Shares  shall
     thereafter represent the right to receive Merger Consideration.

          (b) If, between the date of this Agreement and the Effective Time, the
     outstanding shares of Purchaser shall be changed into a different number of
     shares by reason of any  reclassification,  recapitalization or exchange of
     shares or if a stock split,  combination,  stock dividend,  stock rights or
     dividend  thereon  shall be declared with a record date within said period,
     the  number of  Purchaser  shares  included  in the  Merger  Consideration,
     rounded to the nearest whole number.

     7. Certificate of Incorporation.  Unless otherwise agreed to by the parties
prior to the Effective Time, at and after the Effective Time, the Certificate of
Incorporation  of Purchaser  shall be the  Certificate of  Incorporation  of the
Surviving  Corporation,  until  thereafter  amended as  provided by law and such
Certificate of Incorporation.

     8. Bylaws. Unless otherwise agreed to by the parties prior to the Effective
Time,  at and after the  Effective  Time,  the Bylaws of Purchaser  shall be the
Bylaws of the Surviving  Corporation,  until  thereafter  amended as provided by
law, the  Certificate of  Incorporation  of the Surviving  Corporation  and such
Bylaws.

     9.  Additional  Actions.  If, at any time  after the  Effective  Time,  the
Surviving  Corporation shall consider or be advised that any further assignments
or  assurances  in law or any other acts are necessary or desirable (a) to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation,  title
to and  possession  of any  property or right of the  Company  acquired or to be
acquired by reason of, or as a result of, the Merger,  or (b) otherwise to carry
out the  purposes of this  Agreement,  the Company and its proper  officers  and

                                       2
<PAGE>
directors  shall be deemed  to have  granted  to the  Surviving  Corporation  an
irrevocable  power of attorney  to execute  and  deliver all such proper  deeds,
assignments  and  assurances  in law and to do all acts  necessary  or proper to
vest,  perfect or confirm title to and  possession of such property or rights in
the  Surviving  Corporation  and  otherwise  to carry out the  purposes  of this
Agreement;  and the proper  officers and directors of the Surviving  Corporation
are fully authorized in the name of the Company or otherwise to take any and all
such action.

     10. Accounting and Tax Treatment. The parties to this Agreement intend that
the Merger  shall be treated as a  reorganization  under  Section  368(a) of the
Code.

     11. Exchange of Shares.

          (a) At the  Effective  Time,  upon  surrender of all the  Certificates
     representing  all  issued  and  outstanding  Seller  Shares  to  Purchaser,
     Purchaser  shall  deliver to each Seller such  Seller's pro rata portion of
     the Merger Consideration.

          (b) After the date of this  Agreement,  there shall be no transfers on
     the stock transfer  books of the Company of the Seller  Shares,  which were
     issued and outstanding immediately prior to the date hereof.

     12. Closing Deliveries.

          (a) At Closing, Sellers shall deliver to Purchaser:

               (i) a Certificate  of Good Standing for the Company issued by the
          Illinois Secretary of State not more than 30 days prior to Closing;

               (ii) a certified copy of resolutions  adopted by the shareholders
          and board of directors of the Company  authorizing  the  execution and
          delivery of this Agreement and the transactions contemplated hereby;

               (iii)assignment  of any agreements of the Company relating to the
          business  of  the  Company  and  any   consents   required   for  such
          assignments;

               (iv) certificates  representing the Seller Shares, which shall be
          duly endorsed in blank,  or  accompanies by stock powers duly endorsed
          in blank, in proper form for transfer;

               (v) a  shareholder  agreement  between the Company and all of its
          shareholders  executed by each Seller in the form  attached  hereto as
          EXHIBIT A;

               (vi) a  license  agreement  in  substantially  the form  attached
          hereto as  EXHIBIT B wherein  the  Company  agrees to  license  to the
          Purchaser the right to use the  Intellectual  Property (as hereinafter
          defined);

               (vii) an irrevocable  lease-purchase  agreement in  substantially
          the form attached hereto as EXHIBIT C wherein after  Purchaser  agrees
          to lease from  Cybervault  Properties,  LLC and  Illinois  Information
          Management, LLC certain real property and intellectual property;

                                       3
<PAGE>
               (viii) an irrevocable  lease-purchase  agreement in substantially
          the form attached hereto as EXHIBIT D wherein after  Purchaser  agrees
          to lease from the Company the IT Assets (as hereinafter defined);

               (ix) all schedules referenced in this Agreement; and

               (x) such other documents as may be reasonably  necessary to carry
          out the transactions contemplated by this Agreement.

     (b) At Closing, Purchaser shall deliver to Sellers:

          (i) the Merger Consideration;

          (ii) a  Certificate  of Good  Standing  for  Purchaser  issued  by the
     Illinois and Delaware  Secretaries  of State not more than 30 days prior to
     Closing;

          (iii) a certified copy of resolutions  adopted by the shareholders and
     board of directors of Purchaser  authorizing  the execution and delivery of
     this Agreement and the transactions contemplated herein;

          (iv) an employment agreement in substantially the form attached hereto
     as EXHIBIT E for continued employment with the Purchaser for each member of
     the  Company's  management  team so  designated by the Company prior to the
     Closing; and

          (v) such other  documents as may be reasonably  necessary to carry out
     the transactions contemplated by this Agreement.

     13. Representations and Warranties.

          (a) The Company and Sellers hereby represent and warrant to Purchaser,
     respectively, as follows:

               (i)  Organization.  The Company is a corporation  duly formed and
          validly  existing  under the laws of the State of Illinois and has the
          power and  authority  to carry on its  business as now  conducted,  to
          execute  this  Agreement  and  the  instruments  referred  to in  this
          Agreement  that it is executing and  delivering,  and to carry out the
          transactions contemplated hereby and thereby.

               (ii) Enforceability. The execution and delivery by the Company of
          this Agreement and the instruments  referred to in this Agreement have
          been  duly  authorized  by the  board of  directors  and  Sellers  and
          constitute  legal,  valid,  binding  and  enforceable  agreements  and
          instruments of the Company.

               (iii)  No  Violation.   Neither  the  execution,   delivery,  nor
          performance of this Agreement or any instrument executed and delivered
          by or on  behalf  of the  Company  in  connection  herewith,  nor  the
          consummation of the transactions herein or therein  contemplated,  nor
          compliance   with  the  terms  and   provisions   hereof  or  thereof,
          contravenes the Articles of Incorporation or By-Laws of the Company or
          any provisions of law, statute, rule, regulation or judgment,  decree,
          franchise,  order or permit applicable to the Company, or conflicts or
          is  inconsistent  with  or  will  result  in any  breach  of or to the
          Company's   Knowledge   constitute  a  default   under  any  contract,

                                       4
<PAGE>
          commitment,  agreement,  understanding,  arrangement or instrument, or
          result in the  creation  of or  imposition  of (or the  obligation  to
          create or impose) any lien,  encumbrance  or  liability  on any of the
          property or assets of the Company.  "COMPANY'S  KNOWLEDGE"  shall mean
          the actual knowledge of the Sellers after reasonable investigation.

               (iv)  Compliance  with  Laws.  To the  Company's  Knowledge,  the
          Company  is  in  compliance  with  all  applicable   laws,   statutes,
          ordinances, rules, regulations and orders of governmental authorities,
          and the  Company  has not  received  notice  asserting  any  violation
          thereof or non-compliance  therewith. To the Company's Knowledge,  the
          Company holds all the permits, licenses, certificates,  registrations,
          approvals or authorizations by or of governmental authorities or third
          parties   necessary  or  desirable  for  operation  of  the  Company's
          business, all of which are in full force and effect.

               (v)  Litigation.   There  is  no  claim,  demand,  suit,  action,
          arbitration  or  other  administrative   proceeding  or  investigation
          pending or threatened against the Company,  or to which the Company is
          otherwise a party,  or which may cause a material  adverse  effect for
          the  Company,  before  any  court  or  any  governmental   department,
          commission,  board,  agency or  instrumentality;  nor to the Company's
          Knowledge is there any basis for any such claim, demand, suit, action,
          proceeding  or  investigation.   For  purposes  of  this  sub-section,
          "material adverse effect" shall mean any liability, cost, or potential
          financial exposure of at least $10,000, or any effect,  which may have
          a tendency to  substantially  disrupt or affect the  ongoing  business
          operations of the Company or the Purchaser.

               (vi) Disclosure.  To Company's Knowledge, the representations and
          warranties of the Company made in or pursuant to this Agreement do not
          omit any material fact necessary in order to make the statements  made
          herein, in light of the  circumstances  under which they are made, not
          misleading.  To the  Company's  Knowledge,  none  of  the  information
          contained  herein contains any untrue  statement of a material fact or
          omits a  material  fact  necessary  to make the  statements  contained
          herein not misleading.

               (vii) The Company.  The  authorized  capital stock of the Company
          consists of Five Million One Hundred Twenty-One  Thousand Nine Hundred
          Sixty-Two (5,121,962) shares of common stock, of which only the Shares
          are issued and  outstanding  as of the date of this  Agreement  and no
          shares are held in  treasury.  The Shares  have been duly and  validly
          authorized and issued and are fully paid and nonassessable.  No Shares
          are   subject  to  any   preferences,   qualifications,   limitations,
          restrictions  or  special  or  relative  rights  under  the  Company's
          articles of incorporation. There are no options, warrants, agreements,
          contracts or other rights in existence to purchase or acquire from the
          Company  any shares of capital  stock of the  Company,  whether now or
          hereafter authorized or issued.

               (viii)  Title to the Shares.  Sellers  own,  beneficially  and of
          record,  the number of Shares set forth  under  Sellers'  names on the
          signature page to this  Agreement,  free and clear of all all options,
          pledges,  security  interests,  liens,  mortgages,   charges,  claims,
          conditional sale agreements, title exceptions or other encumbrances or
          restrictions of any kind (collectively, "Encumbrances"), and have good
          and  marketable  title to such Shares and full legal right,  power and
          authority to transfer such Shares in the manner  contemplated  by this
          Agreement.

                                       5
<PAGE>
               (ix) No Undisclosed Liabilities.  To the Company's Knowledge, the
          Company has no liabilities,  whether accrued, absolute,  contingent or
          otherwise,  existing  or arising  out of any  transaction  or state of
          facts  existing on or prior to the date  hereof,  except (a) as and to
          the  extent  arising  under  contracts,  commitments,  transaction  or
          circumstances  identified in the Exhibits and  Schedules  provided for
          herein, excluding any liabilities for Company breaches thereunder; and
          (b)  liabilities,  not material in the  aggregate  and incurred in the
          Ordinary Course of Business,  which, under GAAP, would not be required
          to be reflected on a balance sheet prepared as of the date hereof. For
          purposes of the preceding  subsection (b), any liabilities incurred in
          connection with litigation or judicial,  administrative or arbitration
          proceedings  or claims  against the Company  shall not be deemed to be
          incurred in the Ordinary  Course of  Business.  An action taken in the
          "ORDINARY  COURSE  OF  BUSINESS"  shall  mean an  action  taken in the
          ordinary course of business of the Company, as applicable,  consistent
          with custom and  practice  (including  with  respect to  quantity  and
          frequency)  and  where  for  such  action  to be  taken,  no  separate
          authorization by the Company's board of directors,  as applicable,  is
          required.

               (x) Material  Contracts.  Schedule  13(a)(x) lists a complete and
          correct  list of all  Material  Contracts,  which  the  Company  shall
          deliver to the Purchaser prior to the Closing.  The Company shall make
          available to the Purchaser all Material  Contracts,  and all copies of
          such Material  Contracts made available to the Purchaser shall be true
          and complete. "MATERIAL CONTRACTS" include every contract,  commitment
          or  arrangement,  whether  written or oral with a value  greater  than
          $5,000  (and  the  Company  shall  deliver  to the  Purchaser  written
          descriptions  of  the  terms  and  conditions  of  all  oral  Material
          Contracts),  of a material nature under which the Company is obligated
          on the date hereof, including the following:

               (A) all consulting arrangements,  and contracts for professional,
          advisory  and other  services,  including  contracts  under  which the
          Company performs services for others;

               (B) all leases of real estate and personal property;

               (C)  all   contracts,   commitments   and   agreements   for  the
          acquisition,  development or disposition of real or personal  property
          other  than  conditional   sales  contacts  and  security   agreements
          whereunder  total future  payments  are, in each  instance,  less than
          $5,000.00;

               (D)  all  contracts  relating  to  the  employment,   engagement,
          compensation  or  termination  of  directors,   officers,   employees,
          consultants  or agents of the Company,  and all  pension,  retirement,
          profit  sharing,  stock option,  stock purchase,  stock  appreciation,
          insurance  or similar  plans or  arrangements  for the  benefit of any
          employees, officers or directors of the Company;

               (E) all loans,  loan commitments,  promissory  notes,  letters of
          credit or other financial  accommodations or arrangements or evidences
          of  indebtedness,   including  modifications,  waivers  or  amendments
          thereof, extended to or for the benefit of the Company;

               (F) all loans,  loan commitments,  promissory  notes,  letters of
          credit or other financial  accommodations or arrangements or evidences

                                       6
<PAGE>
          of  indebtedness,   including  modifications,  waivers  or  amendments
          thereof,  extended  to or for the  benefit of any single  borrower  or
          related group of borrowers if the aggregate  amount of all such loans,
          loan  commitments,  promissory  notes,  letters  of  credit  or  other
          financial  accommodations or arrangements or evidences of indebtedness
          extended  to such  borrower  or  related  group of  borrowers  exceeds
          $50,000.00;

               (G) all union and other labor contracts;

               (H) any contract  involving  total future payments by the Company
          of more than  $5,000.00 or which  requires  performance by the Company
          beyond the second  anniversary of the Closing Date,  that by its terms
          does not terminate or is not terminable by the Company without penalty
          within 30 days after the date of this Agreement;

               (I) except for  provisions of the Articles of  Incorporation  and
          By-Laws of the Company,  all contracts  under which the Company as any
          obligation,  direct,  indirect,  contingent or otherwise, to assume or
          guarantee  any  liability or to indemnify  any person (other than in a
          fiduciary capacity);

               (J) all joint  venture  or  marketing  agreements  with any other
          person or entity;

               (K) all other Material Contracts, made other than in the Ordinary
          Course of Business of the Company,  to which the Company is a party or
          under which the Company is obligated.

               (xi) No Defaults.  The Company has fulfilled and taken all action
          reasonably necessary to date to enable it to fulfill, when due, all of
          its material obligations under all Material Contracts to which it is a
          party.  There are no breaches  or  defaults  by the Company  under any
          Material  Contract that could give rise to a right of  termination  or
          claim for material  damages under such Material  Contract,  and to the
          Company's  Knowledge no events have occurred  that,  with the lapse of
          time or the election of any other party,  will become such a breach or
          default  by the  Company.  To the  Company's  Knowledge,  no breach or
          default by any other party under any Material Contract has occurred or
          is threatened  that will or could impair the ability of the Company to
          enforce any of its rights under such Material Contract.

               (xii) Taxes.

               (A) The  Company  has  duly  and  timely  filed  all Tax  Returns
          required to be filed or  delivered by the Company in  connection  with
          the Company's business and operations,  to the Company's Knowledge all
          information  included in such Tax Returns is accurate in all  material
          respects,  and all Taxes  required  to be shown on such Tax Returns as
          payable by the Company  with respect to the income of the Company have
          been paid when due. No application for an extension of time for filing
          any  Tax  Return  or  consent  to  any  extension  of  the  period  of
          limitations  applicable to the  assessment or collection of any Tax is
          in effect with respect to the Company. To the Company's Knowledge, the
          Company is not  delinquent  on the payment of any Taxes  claimed to be
          due from the Company by any taxing  authority,  and adequate  reserves
          for Taxes  (including  any  penalties  and  interest)  payable  by the
          Company  have been made on the  books of the  Company  and on the most
          recent of the  Company's  financial  statements.  The  Company has not
          received any notice (whether  written or, to the Company's  knowledge,

                                       7
<PAGE>
          oral) of any  proposed  audit or proposed  deficiency  for any Tax due
          from the Company with respect to the  business and  operations  of the
          Company, as the case may be, and there are no pending audits or claims
          with respect thereto.

               (B) The Company is not,  and within the past five years,  has not
          been, a party to any contract,  agreement or  arrangement  under which
          the Company has agreed to share Tax liability of any person.

               (C) "TAXES" shall mean any and all taxes,  charges,  fees, levies
          or other assessments,  including net income,  gross receipts,  excise,
          real  or  personal  property,  sales,  withholding,  social  security,
          occupation,  use,  service,  service use,  value added,  license,  net
          worth,  payroll,   franchise,   transfer,   recording,  gross  income,
          alternative  or add-on  minimum,  environmental,  goods and  services,
          capital stock, profits, single business, employment, severance, stamp,
          unemployment,  customs and duties taxes, fees and charges,  imposed by
          any taxing authority (whether domestic or foreign including any state,
          local or  foreign  government  or any  subdivision  or  taxing  agency
          thereof),  whether  computed  on a  separate,  consolidated,  unitary,
          combined or any other basis; and such term shall include any interest,
          penalties or additional  amounts  attributable to, or imposed upon, or
          with  respect  to,  any such  taxes,  charges,  fees,  levies or other
          assessments.  "TAX RETURN"  shall mean any report,  return,  document,
          declaration or other  information or filing required to be supplied to
          any taxing  authority  or  jurisdiction  (foreign  or  domestic)  with
          respect to Taxes.

               (xiii)  Environmental  Conditions.  To the  Company's  Knowledge,
          there  are no  present  or past  Environmental  Conditions  in any way
          relating to the business of the Company as conducted on its  Premises.
          "ENVIRONMENTAL  CONDITIONS"  means  the  introduction  into the  soil,
          groundwater  or  environment  of the Premises  (through  leak,  spill,
          release, discharge,  escape, emission, dumping, disposal or otherwise)
          of  any  pollution,  including  without  limitation  any  contaminant,
          irritant or pollutant or hazardous  substance (whether or not upon the
          Premises  and whether or not such  pollution  constituted  at the time
          thereof a  violation  of any  environmental  law) as a result of which
          Company or, after the Closing,  Purchaser  has or may become liable to
          any person or  federal,  state,  or local  government  or agency or by
          reason of which any of the Company's assets may suffer or be subjected
          to any lien. .

               (xiv) Technology and Intellectual Property.

               (A) Schedule 13(a)(xiv) sets forth a complete and correct list of
          all (i) registered trademarks,  service marks, copyrights and patents;
          (ii)  applications  for registration or grant of any of the foregoing;
          (iii) unregistered  trademarks,  service marks, trade names, logos and
          assumed  names;  and (iv) licenses for any of the  foregoing,  in each
          cased,  owned by the  Company or used in or  necessary  to conduct the
          Company's  business  as  presently  conducted.  The items on  Schedule
          13(a)(xiv),  together will all other trademarks,  service marks, trade
          names,  logos,  assumed  names,  patents,  copyrights,  trade secrets,
          computer  software,   licenses,  formulae,  customer  lists  or  other
          databases,  business application designs and inventions currently used
          in or  necessary  to conduct the  business of the Company as presently
          conducted constitute the "INTELLECTUAL PROPERTY".

               (B) Except at set forth on Schedule  13(a)(xiv),  the Company has
          ownership  of,  or such  other  rights  by  license,  lease  or  other
          agreement  in and to, the  Intellectual  Property as is  necessary  to
          permit the Company to use the Intellectual  Property in the conduct of

                                       8
<PAGE>
          its  business as  presently  conducted.  The Company has not  received
          notice (whether written or, to the Company's Knowledge, oral) alleging
          that the Company has infringed or violated any trademark,  trade name,
          copyright,  patent,  trade secret right or other  proprietary right of
          others, and to the Company's Knowledge,  it has not committed any such
          violation  or  infringement.  Other  than  as set  forth  on  Schedule
          13(a)(xiv), to the Company's Knowledge,  there is no reason to believe
          that,  upon  consummation  of the  transactions  contemplated  hereby,
          including  execution  of any and all  license  agreements  between the
          Company and the Purchaser, the Company or the Purchaser will be in any
          way more  restricted  in its use of any of the  Intellectual  Property
          than it was on the date hereof under any contract to which the Company
          is a party or by which it is bound,  or that use of such  Intellectual
          Property by the  Company or the  Purchaser  will,  as a result of such
          consummation, violate or infringe the rights of any person, or subject
          the Purchaser or the Company to liability of any kind,  under any such
          contract.

               (C) The IT Assets operate and perform in all material respects in
          accordance with their documentation and functional  specifications and
          otherwise as required by the Company in connection  with its business,
          and except as set forth in  Schedule  13(a)(xiv)  have not  materially
          malfunctioned  or failed within the past three (3) years.  "IT ASSETS"
          means   the   computers,   computer   software,   firmware,   servers,
          workstations,  routers, hubs, switches,  data communications lines and
          all  other  information  technology  equipment,   and  all  associated
          documentation,  owned  or  leased  by the  Company.  To the  Company's
          Knowledge,  the IT Assets do not  contain  any worms,  viruses,  bugs,
          faults or other  devices  or  effects  that (i)  enable or assist  any
          person or entity to access  without  authorization  the IT Assets;  or
          (ii) otherwise significantly adversely affect the functionality of the
          IT Assets, except as disclosed in its documentation.  To the Company's
          Knowledge,  no person or entity has gained  unauthorized access to the
          IT Assets. The Company has implemented reasonable back-up and disaster
          recovery  technology  consistent  with  industry  practices.   To  the
          Company's  Knowledge,  none of the IT Assets  contains any  shareware,
          open  source  code,  or  other  software,  the use of  which  requires
          disclosure or licensing of any intellectual property.

               (xv)  Change in  Business  Relationships.  As of the date of this
          Agreement, the Company has not received notice (whether written or, to
          the Company's Knowledge, oral), whether on account of the transactions
          contemplated  by this  Agreement or otherwise,  (i) that any customer,
          agent, representative, supplier, vendor or business referral source of
          the   Company   intends  to   discontinue,   diminish  or  change  its
          relationship  with the Company,  the effect of which would be material
          to the  Company  taken as a whole;  or (ii)  that any  officer  of the
          Company intends to terminate or  substantially  alter the terms of his
          or her employment.  There have been no complaints or disputes (in each
          case  set  forth  in  writing)  with any  customer,  employee,  agent,
          representative,  supplier or vendor of the Company  that have not been
          resolved  which are  reasonably  likely to be  material to the Company
          taken as a whole.

               (xvi) Financial Condition. The Company is solvent and the Company
          reasonably  expects  that it will operate with actual net cash flow as
          of the end of fiscal  year 2007 of not less than  $452,000  and actual
          gross  revenue  as of the end of  fiscal  year  2007 of not less  than
          $25,000.

                                       9
<PAGE>
               (xvii) Accredited Investors. The Sellers are accredited investors
          pursuant  to the rules  promulgated  by the  Securities  and  Exchange
          Commission  (the "SEC")  pursuant to the  Securities  Act of 1933,  as
          amended (the "SECURITIES ACT").

               (xviii) Real Property.  Attached as Schedule  13(a)(xviii)  is an
          exhibit of Real  Property,  which sets for the a complete  and correct
          description  of all real property owned or leased by the Company or in
          which the Company has an interest (other than as a mortgagee). No real
          property  is  carried on the  Company's  books as "other  real  estate
          owned."  The  Company  owns,  or  has a  valid  right  to use or has a
          leasehold  interest in, all real property used by it in the conduct of
          its  business as such  business is  presently  conducted.  The Company
          shall deliver to Purchaser true,  correct,  and complete copies of any
          leases for  premises  leased by the  Company  and  listed on  Schedule
          13(a)(xviii)  of the  Disclosure  Schedule  (the  "LEASES").  All rent
          amounts  due  under the  Leases  have  been  paid  and,  to  Company's
          Knowledge,  there  exists no  default  under the terms of the  Leases.
          Except as otherwise set forth in Schedule 13(a)(xviii),  the ownership
          or  leasehold  interest  of the  Company of such real  property is not
          subject to free of all liens,  and is not subject to any  encumbrances
          except  for  Permitted  Encumbrances.   As  used  in  this  Agreement,
          "PERMITTED  ENCUMBRANCES"  shall mean (i)  Encumbrances  arising under
          conditional  sales  contracts and equipment  leases with third parties
          under  which  the  Company  is  not  delinquent  or in  default;  (ii)
          carriers',  workers', repairers',  materialmen's,  warehousemen liens'
          and similar Encumbrances  incurred in the ordinary course of business;
          (iii)  Encumbrances  for  taxes not yet due and  payable,  or that are
          being  contested in good faith and for which proper reserves have been
          established by the Company;  and (iv) zoning and similar  restrictions
          on the use of real property. All Leases shall permit the assignment to
          or  assumption  by the  Purchaser;  and, if  necessary,  Company shall
          obtain  the  written  consent of any  lessor to the  assignment  to or
          assumption by the Purchaser of any Lease.  All material  certificates,
          licenses and permits  required for the lawful use and occupancy of any
          real  property by the Company,  as the case may be, have been obtained
          and are in full force and effect.

               (xix)  Personal  Property.  Section  13(a)(xix) of the Disclosure
          Schedule  Attached  sets forth a complete and correct  description  of
          each item of tangible  personal  property owned by the Company or used
          by the Company in the conduct of its  business  that is reflected as a
          capital  asset  worth  in  excess  of  $1,000  by the  Company  on the
          Company's financial statements. The Company owns, or has a valid right
          to use or a leasehold  interest in, all such  personal  property,  all
          such property is owned free and clear of any  Encumbrances  except for
          Permitted  Encumbrances,  and  all to  the  Company's  Knowledge  such
          property is in good working condition, normal wear and tear excepted.

     (b) Purchaser hereby represents and warrants to Sellers as follows:

          (i)  Organization  and Good  Standing.  Purchaser  is duly  organized,
     validly  existing  and in good  standing  under  the  laws of the  State of
     Delaware  and has the power and  authority  to carry on its business as now
     conducted,  to execute this  Agreement and the  instruments  referred to in
     this  Agreement that it is executing and  delivering,  and to carry out the
     transactions contemplated hereby and thereby.

          (ii) Authorization. Purchaser has the requisite power and authority to
     make,  execute  and  deliver  and to  perform  its  obligations  under this
     Agreement.  This Agreement has been duly authorized by all requisite action
     on the  part  of  Purchaser.  This  Agreement  is  the  valid  and  binding

                                       10
<PAGE>
     obligation of Purchaser,  enforceable  against Purchaser in accordance with
     its terms.

          (iii) No Violation.  Neither the execution,  delivery, nor performance
     of this Agreement or any instrument  executed and delivered by or on behalf
     of  Purchaser  in  connection   herewith,   not  the  consummation  of  the
     transactions herein or therein contemplated,  nor compliance with the terms
     and  provisions  hereof or  thereof,  contravenes  the  provisions  of law,
     statute, rule, regulations or judgment,  decree, franchise, order or permit
     applicable  to  Purchaser,  or  conflicts or is  inconsistent  with or will
     result  in any  breach of or  constitute  a  default  under  any  contract,
     commitment, agreement, understanding,  arrangement or instrument, or result
     in the  creation  of or  imposition  of (or the  obligations  to  create or
     impose) any lien, encumbrance or liability on any of the property or assets
     of Purchaser.

          (iv) Employment.  Each individual currently employed by the Company as
     an officer or manager will be offered  continued  employment with Purchaser
     in a role substantially similar to that in which he or she currently serves
     with the Company, with responsibilities  involving the continued management
     and  operation  of  the  Company's  products  and  services,  and  at  each
     individual  employee's  current  annualized  salary  as of the date of this
     Agreement.  Such  employment  offers shall be made in the form of a written
     employment  agreement given by the Purchaser.  Upon  successful  closing of
     this  transaction,  each affected employee shall be eligible for a one-time
     bonus of preferred  stock in Purchaser,  with amounts of such bonuses to be
     determined at the discretion of the Purchaser.

          (v) Securities Laws. Based in part on the representations  made by the
     Sellers in this Agreement,  the issuance of the Purchaser's  stock pursuant
     to the  Merger is exempt  from the  registration  and  prospectus  delivery
     requirements of the Securities Act.

          (vi) Disclosure.  To Purchaser's  Knowledge,  the  representations and
     warranties  of the Purchaser  made in or pursuant to this  Agreement do not
     omit any  material  fact  necessary  in order to make the  statements  made
     herein,  in light of the  circumstances  under  which  they are  made,  not
     misleading. To the Purchaser's Knowledge, none of the information contained
     herein contains any untrue statement of a material fact or omits a material
     fact  necessary to make the  statements  contained  herein not  misleading.
     "PURCHASER'S  KNOWLEDGE"  shall mean the actual knowledge of Brian Kawamura
     after reasonable investigation.

     (c) All  representations  and  warranties  made  by  either  party  to this
Agreement shall survive the Closing.

14.  Agreement and Covenants.

     (a) Conduct of Business.  During the period  commencing  on the date hereof
and  continuing  until the Closing Date, the Company shall conduct the Company's
business in the Ordinary  Course of Business  consistent  with prudent  business
practice,  as  applicable.  Without  limiting the  foregoing,  without the prior
written  consent  of the  Purchaser,  which  consent  shall not be  unreasonably
withheld, the Company agrees and covenants that:

          (i) no  change  shall  be made in the  articles  of  incorporation  or
     By-Laws of the Company;

                                       11
<PAGE>
          (ii) no change shall be made in the  capitalization  of the Company or
     in the number of issued and outstanding Shares;

          (iii) no dividends or other distributions shall be declared or paid by
     the Company;

          (iv) the  Company  shall use its  commercially  reasonable  efforts to
     maintain  its  present  insurance  coverage  in respect to its  properties,
     assets, and its business;

          (v) no material  changes  shall be made in the  general  nature of the
     business conducted by the Company;

          (vi) no employment,  consulting or similar agreements shall be entered
     into by the Company that are not  terminable  by the Company on 30 days' or
     fewer notice without penalty or obligation;

          (vii) the Company  shall file all Tax  Returns in a timely  manner and
     shall make any  application  for or consent  to any  extension  of time for
     filing  any Tax  Return  or any  extension  of the  period  of  limitations
     applicable thereto;

          (viii) the Company shall not do or fail to do anything that will cause
     a breach by the Company of, or default by the Company  under,  any Material
     Contract; and

          (ix) no  changes  of a  material  nature  shall  be made in any of the
     Company's  accounting  procedures,  methods,  policies or  practices or the
     manner in which the Company maintain its records.

     (b) No Conduct  Inconsistent  with this Agreement.  Sellers and the Company
shall not, directly or indirectly, solicit, encourage or facilitate inquiries or
proposals  or  enter  into  any  agreement  with  respect  to,  or  initiate  or
participate in any  negotiations or discussions  with or furnish any information
to any person or entity  concerning (i) any disposition or sale of the Shares of
all or a substantial portion of the assets of the Company; or (ii) any merger or
other business combination involving the Company,  other than as contemplated by
this Agreement.  Sellers and the Company shall immediately  notify the Purchaser
orally and in writing if any such proposal  (including  the materials  terms and
conditions thereof) is received by, or any person or entity seeks to obtain such
information  or to  initiate  such  discussions  with the Company or any Seller,
which  notice  shall  include the  identity of the person or entity  making such
proposal or inquiry.

     (c)  Untrue  Representations  and  Warranties.  During  the  term  of  this
Agreement,  if any party  becomes  aware of any facts,  circumstances  or of the
occurrence or impending  occurrence of any event that would cause one or more of
such party's representations and warranties contained in this Agreement to be or
to become untrue as of the Closing Date, then:

          (i) such party shall promptly give detailed  written notice thereof to
     the other parties; and

          (ii) such party shall use  reasonable  and diligent  efforts to change
     such  facts or events to make such  representations  and  warranties  true,
     unless the same shall have been waived in writing by the other parties.

                                       12
<PAGE>
     (d) Non-Competition; Non-Solicitation of Employees.

          (i) For a period of three (3) years  beginning  on the  Closing  Date,
     except with the prior written consent of the Purchaser,  each Seller agrees
     not to,  directly or indirectly,  either alone or in  conjunction  with any
     other person, firm, association, company or corporation:

          (A) engage in the  business  of design  and  development  of  document
     archival  products,  systems and services  that convert  paper,  emails and
     electronic  files into  permanent,  non-modifiable  archived  records  (the
     "BUSINESS")  and the  solicitation  of  customers  for such  services as an
     owner, principal,  agent, employee or in any other capacity at any business
     which conducts such Business within the  greater-Chicago  metropolitan area
     (which for  purposes  of  Sections  14(d)(i)(A)  and  14(d)(i)(D)  includes
     McHenry, Cook, Lake and DuPage counties and northwest Indiana),  other than
     in  the  performance  of  his  employment  responsibilities  on  behalf  of
     Purchaser;

          (B) solicit or conduct business which involves  customer  relationship
     management with any person, corporation or other entity which is a customer
     of the Company, the Purchaser or a potential customer with whom the Company
     or the Purchaser  has an  outstanding  oral or written  proposal to provide
     customer relationship management services, other than in the performance of
     his employment responsibilities on behalf of Purchaser;

          (C)  request,  advise or  directly  or  indirectly  invite  any of the
     existing  customers,  suppliers or service  providers  of the Company,  the
     Purchaser or any other  affiliate of the Purchaser to withdraw,  curtail or
     cancel its business with the Company, the Purchaser, or any other affiliate
     of the Purchaser other than through mass mailings or general advertisements
     not specifically  directed at customers of the Company,  the Purchaser,  or
     affiliates of the Purchaser; or

          (D) hire,  solicit,  induce  or  attempt  to  solicit  or  induce  any
     employee,  consultant  or  agent of the  Company  or the  Purchaser  to (1)
     terminate  his or her  employment  or  association  with the Company or the
     Purchaser;  (2) become employed by or serve in any employment,  management,
     director,  consulting or advisory capacity with a company whose business is
     in direct competition with the Business of the Company or the Purchaser; or
     (3) in any way  participate  in starting a new company whose business is in
     direct competition with the Business of Company or the Purchaser, and which
     is located in the greater-Chicago  metropolitan area, as defined in Section
     14(d)(i)(A).

          (ii) Notwithstanding the foregoing, each Seller shall not be prevented
     by this Section  14(d)(ii)  from (i) investing or owning shares of stock of
     any  corporation  engaged in any  business  provided  that such  shares are
     regularly traded on a national securities exchange or any  over-the-counter
     market; or (ii) retaining any shares of stock in any corporation which such
     Seller owned prior to the Closing Date.

          (iii) Each Seller has  reviewed the  provision  of this Section  14(d)
     with legal counsel and acknowledges that the Purchaser would be irreparably
     inured by a violation of this Section  14(d),  that the  provisions of this
     Section 9(e) are reasonable and that the Purchaser  could not be adequately
     compensated in damages for any such violation,  in light of the sensitivity
     of the non-public  Company's  Knowledge that Sellers  possess.  Each Seller
     agrees that the Purchaser,  in addition to any other remedies  available to

                                       13
<PAGE>
     it for any breach or  threatened  breach of this  Section  14(d),  shall be
     entitled to seek a preliminary  injunction,  temporary restraining order or
     other  equivalent  relief  restraining  any Seller  from any such breach or
     threatened breach.

          (e)  Releases.  Effective as of the Closing,  each Seller,  hereby and
     without any further action, releases and forever discharges the Company and
     the  Purchaser  and their  respective  officers,  directors,  employees and
     agents, from any and all liabilities, claims, obligations,  actions, causes
     of actions,  suits at law or in equity of whatever  kind or nature,  debts,
     dues,  sums  or  money,  accounts,  bonds,  bills,  covenants,   contracts,
     promises,   variances,    trespasses,    judgments,    verdicts,   extents,
     encumbrances,  payments,  damages,  costs,  attorneys fees,  expenses,  and
     demands of any kind or nature,  which such Seller may have or may have had,
     known or unknown,  from the  beginning  of the world,  based in whole or in
     part upon events  occurring prior to the Closing Date and/or  circumstances
     existing as of the Closing  Date,  against the Company or the Purchaser and
     their  respective  officers,  directors,  employees  and agents,  provided,
     however,  that the  foregoing  shall not be deemed to waive,  discharge  or
     release  any of the  following  claims,  benefits  or rights of any  Seller
     existing as of the Closing Date: (i) claims arising out of the  Purchaser's
     obligations  under this  Agreement;  (ii)  claims for  salary  accrued  and
     unpaid;  (iii) unreimbursed  business expenses and director's fees incurred
     in the  Ordinary  Course  of  Business;  (iv) any right of a Seller in such
     Seller's  capacity,  either  directly  or  indirectly,  as a lender  to the
     Company; (v) claims arising from the obligations of a Seller as a guarantor
     of the  Company's or  Purchaser's  debt or any other  obligations;  or (vi)
     claims arising from the Company's or Purchaser's Tax obligations.

     15. Securities Laws. Sellers  acknowledge that the shares of Purchaser they
shall  receive  as  Merger  Consideration  have not been  registered  under  the
Securities Act will be issued to the Sellers in a private placement  transaction
effected in reliance on an exemption from the  registration  requirements of the
Securities Act and in reliance on exemptions from the qualification requirements
of applicable state securities laws.  Sellers understand that none of the shares
they  receive  as  Merger  Consideration  may be sold or  otherwise  transferred
without either (a) registration under the Securities Act and registration and/or
qualification  under  applicable  state  securities  laws  or (b)  an  exemption
therefrom.

     16. Indemnification.

          (a)  Indemnification  of  Purchaser.  Subject  to the  limitations  of
     Section 13(c) above,  Sellers shall jointly and severally  hold  Purchaser,
     and, from and after the Closing,  Purchaser and its affiliates,  directors,
     officers,   partners,   successors,   assigns,   and  agents  (collectively
     "PURCHASER INDEMNIFIED PERSONS"),  harmless and indemnify each of them from
     and  against,  and Sellers  waive any claim for  contribution  or indemnity
     against Purchaser Indemnified Persons with respect to any claims,  actions,
     administrative  proceedings,   judgments,  compensatory  damages,  punitive
     damages, penalties,  fines, costs, liabilities,  sums paid in settlement or
     compromise  of claims,  interest  or losses,  reasonable  attorneys'  fees,
     expert  witness  fees and  expenses,  together  with all  other  costs  and
     expenses  of any kind or  nature,  including  any such  fees and  expenses,
     relating to a claim for Indemnification  ("INDEMNIFIED LOSSES") incurred or
     to be incurred by any of them, to the extent resulting from or arising from
     the breach of any agreement, covenant,  representation,  warranty, or other
     obligation of Seller made or incurred under or pursuant to this  Agreement;
     provided,  however,  when all aggregate  Indemnified  Losses  Purchaser has
     suffered by reason of all breaches or alleged breaches exceed the amount of
     the Merger  Consideration,  Sellers  will have no  obligation  to indemnify
     Purchaser from and against any further Indemnified Losses.

                                       14
<PAGE>
          (b) Indemnification of Sellers.  Subject to the limitations of Section
     13(c) above,  Purchaser shall hold Sellers,  their successors,  assigns and
     agents (collectively  "SELLER INDEMNIFIED  PERSONS") harmless and indemnify
     each of  them  from  and  against,  and  Purchaser  waives  any  claim  for
     contribution  or  indemnity  against the Seller  Indemnified  Persons  with
     respect to any and all Indemnified Losses incurred or to be incurred by any
     of  them  up to the  amount  of the  Merger  Consideration,  to the  extent
     resulting  from or arising  out of the breach of any  agreement,  covenant,
     representation, warranty, or other obligation of Purchaser made or incurred
     under this Agreement;  provided,  however,  when all aggregate  Indemnified
     Losses Sellers have suffered by reason of all breaches or alleged  breaches
     exceed  the  amount of the  Merger  Consideration,  Purchaser  will have no
     obligation  to indemnify  Sellers from and against any further  Indemnified
     Losses.

          (c) Notice of Claim.  In the event that a party seeks  indemnification
     hereunder such party (the "INDEMNIFIED PARTY") shall give written notice to
     the  indemnifying  Party (the  "INDEMNIFYING  PARTY")  specifying the facts
     constituting the basis for such claim and the amount,  to the extent known,
     of the claim asserted.  Subject to the terms hereof, the Indemnifying Party
     shall  pay the  amount of any valid  claim not more than  thirty  days (30)
     after the Indemnified  Party provides notice to the  Indemnifying  Party of
     such amount.

     17. Notices.  All notices,  requests,  demands and other  communications in
connection  with this Agreement  shall be made in writing and shall be deemed to
have been given (i) when had  delivered;  (ii) on the first day after proper and
timely  deposit,  freight  prepaid,  with  a  nationally  recognized  commercial
next-day  delivery service to the recipient;  (iii) three (3) days after deposit
in the United  States  mail,  postage  prepaid  and  certified,  return  receipt
requested; or (iv) when sent by facsimile,  provided confirmatory notice is sent
on the same day as such  facsimile  transmission  by first class  mail,  postage
prepaid,  in each case addressed to the party entitled thereto at the address or
facsimile  number set forth  below,  unless  such  address is modified by notice
under this section:

     If to Seller:     Cyber Vault Technologies, Inc.
                       c/o Thomas Schlosser
                       3177 McIntyre Road
                       Building 21
                       Savanna, Illinois 61074

     With a copy to:   Edward Y. Lau
                       Law Office of Edward Y. Lau
                       30 North LaSalle Street
                       Suite 3900
                       Chicago, Illinois 60602
                       (312) 346-1155
                       (312) 346-5910 Fax

     If to Purchaser:  Terra Firma Technologies, Inc.
                       c/o Brian Kawamura
                       175 West Jackson
                       Suite 1650
                       Chicago, Illinois 60604
                       (312) 939-8039
                       (312) 939-1022 Fax

                                       15
<PAGE>
     With a copy to:   Hennessy & Roach, P.C.
                       c/o William J. Hawkins
                       140 South Dearborn Street
                       7th Floor
                       Chicago, Illinois 60603
                       (312) 346-6019
                       (312) 346-5330 Fax

     18. Entire Agreement;  Amendment.  This Agreement and the attached Exhibits
and  Schedules  constitute  the entire  understanding  of the parties and may be
amended only by a writing executed by the parties.

     19. Assignment;  Binding Effect. No party may assign its rights or delegate
its obligations  hereunder  without the consent of the other party,  except that
Purchaser may assign its rights hereunder to any affiliated  entity.  Subject to
the foregoing,  this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.

     20. No Third-Party  Beneficiaries.  Nothing in this Agreement  shall confer
any third-party  beneficiary  rights or other benefits upon any person or entity
that is not a party hereto, and no such third parties may rely on this Agreement
to enforce any obligations against any party hereto.

     21. Counterparts.  This Agreement may be executed  simultaneously 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.

     22.  Governing  Law.  This  Agreement  shall be  construed  and enforced in
accordance with the laws of the State of Illinois.

     23. Construction. The Section headings herein are solely for convenience of
reference and shall not in any way affect the  interpretation of this Agreement.
When used herein,  the  masculine  shall include the feminine and the neuter and
the singular shall include the plural and vice versa.

     24. Incorporation.  The recitals set forth above and the Schedules attached
hereto are  incorporated  herein by this  reference and by such  reference mad a
part hereof.

     25.  Termination.  If this Agreement is terminated  prior to the closing of
the transaction contemplated herein without Purchaser's fault, the Deposit shall
be returned to Purchaser, but if the termination is caused by Purchaser's fault,
then upon notice to  Purchaser,  the  Deposit  shall be  forfeited  to Seller as
liquidated damages.

     26.  Attorneys'  Fees.  The  prevailing  party  in any  action  under  this
Agreement  shall be  entitled to recover its  reasonable  attorney's  fees court
costs and expenses.

          [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       16
<PAGE>
     IN WITNESS  WHEREOF,  the Company,  each  Seller,  and the  Purchaser  have
affixed  their  signatures  to this  Agreement and Plan of Merger as of the date
first written above.

CYBER VAULT TECHNOLOGIES, INC.          TERRA FIRMA TECHNOLOGIES, INC.

By: /s/ Thomas Schlosser                By: /s/ Brian Kawamura
   --------------------------              -------------------------
   Thomas Schlosser                         Brian Kawamura

Its: Chief Executive Officer            Its: Chief Executive Officer

                                       17
<PAGE>
                                   APPENDIX A

                                     SELLERS

Shareholder                                                     Number of Shares
-----------                                                     ----------------
Daniel Robinson                                                     435,350
Miles Ackmann                                                       435,350
William Hartmann                                                    415,000
Raymond Chin                                                        448,690
Eileen Chin                                                          50,500
Christine Chun                                                      231,000
Eric Y Chang                                                        331,000
Shameless Commerce, LLC                                             469,360
John Reynolds                                                        10,000
Pelican Associates                                                  571,380
Paul R Troyke                                                       221,500
Paul L Troyke                                                       321,500
Melissa Troyke                                                       35,000
Steve Troyke                                                        186,500
Siegfried Schulz                                                    321,500
Vern Schlosser                                                      127,020
Lucile Danneker                                                      65,510
Drew Chambers                                                        74,502
Earl P. Volden                                                       34,000
Karen/Dave Diamond                                                   50,500
Harmon Family Trust dated 12/12/01                                   65,510
Tom Schlosser                                                        49,140
Mark Kieffer - F                                                      2,000
Deja Vu Holdings, LLC                                                   150
Tony Asta                                                            30,000
Wendell  Clausen                                                      5,000
Bill Bird                                                             5,000
Bradley S O'Halloran                                                130,000

                                                    TOTAL         5,121,962

                                       18

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