Document:

Exhibit
10.1

 

EMPLOYMENT
AGREEMENT

 

This
Employment Agreement ("Agreement") is made and entered into on this 29th day of
March, 2005 by and between DDS
TECHNOLOGIES USA, INC., a Nevada
corporation (the "Company"), and
SPENCER
STERLING
(hereinafter, the "Executive").

 

R
E C I T A L S

 

A. The
Company and the Executive entered into an Employment Agreement as of October 30,
2003 (the "Prior Employment Agreement"); and

 

B. The
Company and the Executive now wish to terminate in its entirety the provisions
of the Prior Employment Agreement and enter into a new employment agreement in
its place, pursuant to the terms and conditions set forth herein.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:

 

1. Employment.

 

1.1 Employment
and Term. The
Company hereby agrees to employ the Executive and the Executive hereby agrees to
serve the Company on the terms and conditions set forth herein.

 

1.2 Duties
of Executive. During
the Term of Employment (as defined herein below) under this Agreement, the
Executive shall serve as the President and Chief Executive Officer of the
Company, and shall diligently perform all services, at such times and at such
places, as may be assigned to him from time to time by the Company’s Board of
Directors (the "Board"). The Executive shall devote his full time and attention
to the business and affairs of the Company, render such services to the best of
his ability, and use his reasonable best efforts to promote the interests of the
Company. 

 

2. Term
of Employment.  The Term
of Employment under this Agreement, and the employment of the Executive
hereunder (including any renewal periods hereof, the “Term
of Employment”), shall
commence on the date of execution of this Agreement (the "Commencement
Date") and
shall terminate upon the earlier of (a) October 30, 2008, or (b) the date on
which the employment of the Executive is terminated pursuant to and in
accordance with Section 5 hereof. Commencing on November 1, 2008, and on each
subsequent November 1 thereafter, the Term of Employment hereunder shall be
renewed automatically for successive periods of one (1) year (each period being
referred to herein as a “Renewal
Term”),
unless either the Company or the Executive elects not to renew such term by
giving written notice to the other thereof at least ninety (90) days prior to
the Expiration Date (as herein defined). For purposes hereof, the date on which
the Term of Employment shall is expire is sometimes referred to herein as the
“Expiration
Date.”

 

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3. Compensation.

 

3.1 Base
Salary. The
Executive shall receive a base salary at the annual rate of One Hundred Fifty
Thousand Dollars ($150,000) (the "Base
Salary") during
the Term of Employment, with such Base Salary payable in installments consistent
with the Company's normal payroll schedule, subject to applicable withholding
and other taxes. The Base Salary shall be reviewed, at least annually, for merit
increases and may, by action and in the discretion of the Board, be increased at
any time or from time to time. The Base Salary also shall be reviewed within 45
days after the Company raises additional capital of at least $2,000,000 on or
before June 1, 2005. 

 

3.2 Discretionary
Bonuses. During
the Term of Employment, the Company, in its sole and absolute discretion, may
pay to the Executive such bonuses, if any, as the Company may determine.

 

3.3 Offset. The
Company shall have the right to offset amounts payable by the Executive (if any)
to the Company against Base Salary and/or any other amounts payable by the
Company to the Executive hereunder. 

 

4. Expense
Reimbursement and Other Benefits.

 

4.1 Reimbursement
of Expenses. Upon
the submission of proper substantiation by the Executive, and subject to such
rules and guidelines as the Company may from time to time adopt, the Company
shall reimburse the Executive for all reasonable expenses actually paid or
incurred by the Executive during the Term of Employment in the course of and
pursuant to the business of the Company. The Executive shall account to the
Company in writing for all expenses for which reimbursement is sought and shall
supply to the Company copies of all relevant invoices, receipts or other
evidence reasonably requested by the Company.

 

4.2 Compensation/Benefit
Programs. During
the Term of Employment, the Executive shall be entitled to participate in such
life insurance, medical, dental and 401(k) plans and other benefit programs, if
any, as may be approved from time to time by the Company for the benefit of
executive employees of the Company, subject to the general eligibility and
participation provisions set forth in such plans and applicable
law.

 

4.3 Stock
Options. The
Company shall grant to the Executive immediately upon the Executive's execution
of this Agreement, an option to purchase up to 400,000 shares of common stock
(the "Common Stock") of the Company at an exercise price of $1.00 per share,
subject to the terms and conditions of the Option Agreement attached hereto as
Exhibit A, and the Company’s 2003 Stock Option Plan pursuant to which the
foregoing option shall be granted.

 

4.4 Vacation. The
Executive shall be entitled to paid vacation at a rate of three (3) weeks per
calendar year (to be pro-rated for partial calendar years) during the Term of
Employment, to be taken at such times as the Executive and the Company shall
mutually determine and provided that no vacation time shall significantly
interfere with the duties required to be rendered by the Executive hereunder.
Any vacation time not taken by Executive during any calendar year may not be
carried forward into any succeeding calendar year. 

 

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4.5 Withholding.
Anything in this Agreement to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Executive or his estate or
beneficiaries shall be subject to the withholding of such amounts relating to
taxes as the Company may reasonably determine it should withhold pursuant to any
applicable law or regulation. In lieu of withholding such amounts, in whole or
in part, the Company may, in its sole discretion, accept other provisions for
payment of taxes and withholding as required by law, provided it is satisfied
that all requirements of law affecting its responsibilities to withhold have
been satisfied.

 

5. Termination.

 

5.1 Reasons
for Termination.

 

(a) The Term
of Employment under this Agreement shall terminate upon the earliest to occur of
the following:

 

(i) the date
of death of the Executive;

 

	 	
      (ii)
	
      the
      date that the Company gives written notice to the Executive that the
      Company is terminating the Term of Employment based on the Company’s
      determination that the Executive suffers from a Disability (as defined
      below);

 

	 	
      (iii)
	
      the
      date that the Company provides the Executive with written notice that the
      Company is terminating the Term of Employment for Cause (as defined
      below); 

 

	 	
      (iv)
	
      the
      ninetieth (90th)
      day after either the Executive or the Company gives written notice to the
      other party of his or its election to terminate the Term of Employment;
      and

 

	 	
      (v)
	
      the
      Expiration Date.

 

(b) In the
event that the Term of Employment is terminated for any of the reasons stated in
subsection 5.1(a) hereof, the Company shall pay to the Executive any unpaid Base
Salary through the effective date of the termination of employment. If the
Company terminates the Term of Employment hereunder without Cause or the
Executive terminates the Term of Employment for Good Reason, the Company shall
continue to pay to the Executive the Base Salary he was receiving as of the date
on which the Term of Employment terminates, for a period that begins on the date
on which the Term of Employment terminates and ends on the earlier of (i) the
first anniversary of the date on which the Term of Employment terminates, and
(ii) the Expiration Date. The Company shall pay such Base Salary to Executive in
the manner and at the same times as the Base Salary would have been payable to
the Executive had the Term of Employment not terminated. The Company shall have
no further liability or obligations under this Agreement (other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to Section 4.1 hereof).

 

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(c) For
purposes of this Agreement, the following terms shall have the meaning
indicated:

 

	 	
      (i)
	
      “Disability”
      shall mean that as a result of a mental or physical incapacity, illness or
      disability, the Executive is unable to perform his normal obligations
      hereunder, with or without reasonable accommodation, for a period of
      ninety (90) days in any twelve (12) month period.

 

	 	
      (ii)
	
      “Cause”
      shall mean (1) the Executive’s incompetence, negligence, unsatisfactory
      performance, violation of any rule or regulation that may be established
      from time to time for the conduct of the Company’s business, or any breach
      or neglect of any duty or obligation of the Executive under this
      Agreement, (2) a willful and continuing failure to perform Executive’s
      duties and responsibilities hereunder, (3) the Executive’s fraud,
      embezzlement, misappropriation of funds or breach of trust in connection
      with his services hereunder, (4) the Executive’s commission of any crime
      which involves dishonesty or a breach of trust, (5) chronic addiction to
      alcohol, drugs or other similar substances affecting the Executive’s work
      performance; or (6) the Executive’s engaging in other serious misconduct
      of such a nature that the continued employment of the Executive may
      reasonably be expected to adversely affect the business or properties of
      the Company. The Executive shall be given a thirty (30) day notice and
      right to cure before the Employer may terminate the Term of Employment for
      any reason described in clauses (1), (2), or (6) of this Section 5(c)(ii).
      The Board’s determination of Cause shall be final, binding and conclusive
      with respect to all parties.

 

	 	
      (iii)
	
      “Good
      Reason” shall
      mean unless Executive shall have consented in writing thereto, any of the
      following: (1) a reduction by Employer in Executive’s Base Salary or
      material reduction in fringe benefits; (2) the breach by Employer of any
      material agreement or obligation under this Agreement after notice and a
      thirty (30) day right to cure; or (3) a requirement that Executive
      relocate from the Employer’s location in Boca Raton,
    Florida.

 

5.2 Survival. The
provisions of this Article 5 shall survive the expiration or termination of the
Term of Employment hereunder. 

 

6. Restrictive
Covenants.

 

6.1 Non-competition.

 

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(a) Except as
provided in paragraph (c) of this Section 6.1, at all times during the
Non-Compete Period (as defined in Section 6.1(b)(i) below), the Executive shall
not, directly or indirectly, engage in any competition with, or have any
interest in any sole proprietorship, corporation, company, partnership,
association, venture or business or any other person or entity (whether as an
employee, officer, director, partner, agent, security holder, creditor,
consultant or otherwise) that directly or indirectly (or through any affiliated
entity) competes with the Business, (as defined in Section 6.1(b)(ii) below) of
the Company anywhere in the world.

 

(b) For
purposes of this Article 6, the following terms shall having the following
meanings:

 

(i) “Non-Compete
Period” shall mean at all times while the Executive is employed by the Company
and for a two (2) year period immediately following the date of termination of
the Executive’s employment hereunder, for any reason.

 

 

(ii) “Business”
shall mean any business that is competitive with any business in which the
Company is engaged at any time during the Term of Employment; and

 

   (c) This
Section 6.1 shall not apply to the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed
or admitted for trading on any United States national securities exchange or
that are quoted on the Nasdaq Stock Market, or any similar system or automated
dissemination of quotations of securities prices in common use, so long as the
Executive does not control, acquire a controlling interest in or become a member
of a group which exercises direct or indirect control of, more than five percent
(5%) of any class of capital stock of such corporation. 

 

6.2 Confidential
Information. The
Executive shall not at any time divulge, communicate, use to the detriment of
the Company or for the benefit of any other person or persons, or misuse in any
way, any Confidential Information (as hereinafter defined) pertaining to the
Company’s Business. Any Confidential Information or data now or hereafter
acquired by the Executive with respect to the Company’s Business (which shall
include, but not be limited to, information concerning the Company's financial
condition, prospects, technology, customers, suppliers, sources of leads and
methods of doing business) shall be deemed a valuable, special and unique asset
of the Company that is received by the Executive in confidence and as a
fiduciary, and the Executive shall remain a fiduciary to the Company with
respect to all of such information. For purposes of this Agreement,
“Confidential Information” means all trade secrets and information disclosed to
the Executive or known by the Executive as a consequence of or through the
unique position of his employment with the Company (including information
conceived, originated, discovered or developed by the Executive and any
information acquired by the Company from others) prior to or after the date
hereof, and not generally or publicly known, (other than as a result of
unauthorized disclosure by the Executive), with respect to the Company or the
Company’s Business, and including proprietary or confidential information
received by the Company from third parties subject to an obligation on the
Company’s part to maintain the confidentiality of the information.
Notwithstanding the foregoing, nothing herein shall be deemed to restrict the
Executive from disclosing Confidential Information to promote the best interests
of the Company. If any person or authority makes a demand on the Executive
purporting to legally compel him to divulge any Confidential Information, the
Executive immediately shall give notice of the demand to the Company so that the
Company may first assess whether to challenge the demand prior to the
Executive’s divulging of such Confidential Information. The Executive shall not
divulge such Confidential Information until the Company either has concluded not
to challenge the demand, or has exhausted its challenge, including appeals, if
any. Upon request by the Company, the Executive shall deliver promptly to the
Company upon termination of his services for the Company, or at any time
thereafter as the Company may request, all memoranda, notes, records, reports,
manuals, drawings, designs, computer files in any media and other documents (and
all copies thereof) relating to the Company containing such Confidential
Information and all property of the Company or any other Company affiliate,
which he may then possess or have under his control.

 

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6.3 Nonsolicitation
of Executives, Consultants, Independent Contractors, Vendors, Agents, and
Customers. At all
times while the Executive is employed by the Company and for the two (2) year
period immediately following the termination of the Executive’s employment with
the Company for any reason, the Executive shall not, directly or indirectly, for
himself or for any other person, firm, corporation, partnership, association or
other entity (a) employ or attempt to employ or enter into any contractual
arrangement with any employee, consultant, independent contractor, agent, or
vendor of the Company, unless such employee, consultant, independent contractor,
agent, or vendor has not been employed or engaged by the Company for a period in
excess of six (6) months, and/or (b) call on or solicit any of the actual
or targeted prospective customers or clients of the Company on behalf of any
person or entity in connection with any business that competes with the
Company’s Business, nor shall the Executive make known the names and addresses
of such actual or targeted prospective customers or clients, or any information
relating in any manner to the Company's trade or business relationships with
such customers or clients, other than in connection with the performance of the
Executive's duties under this Agreement.

 

6.4 Ownership
of Developments. All
processes, concepts, techniques, inventions and works of authorship, including
new contributions, improvements, formats, packages, programs, systems, machines,
compositions of matter manufactured, developments, applications and discoveries,
and all copyrights, patents, trade secrets, or other intellectual property
rights associated therewith conceived, invented, made, developed or created by
the Executive during the Term of Employment either during the course of
performing work for the Company or its clients or which are related in any
manner to the business (commercial or experimental) of the Company or its
clients (collectively, the “Work
Product”) shall
belong exclusively to the Company and shall, to the extent possible, be
considered a work made by the Executive for hire for the Company within the
meaning of Title 17 of the United States Code. To the extent the Work Product
may not be considered work made by the Executive for hire for the Company, the
Executive agrees to assign, and automatically assign at the time of creation of
the Work Product, without any requirement of further consideration, any right,
title, or interest the Executive may have in such Work Product. Upon the request
of the Company, the Executive shall take such further actions, including
execution and delivery of instruments of conveyance, as may be appropriate to
give full and proper effect to such assignment. The Executive shall further: (a)
promptly disclose the Work Product to the Company; (b) assign to the Company,
without additional compensation, all patent or other rights to such Work Product
for the United States and foreign countries; (c) sign all papers necessary to
carry out the foregoing; and (d) give testimony in support of his inventions,
all at the sole cost and expense of the Company.

 

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6.5 Books
and Records. All
books, records, and accounts relating in any manner to the customers or clients
of the Company, whether prepared by the Executive or otherwise coming into the
Executive's possession, shall be the exclusive property of the Company and shall
be returned immediately to the Company on termination of the Executive's
employment hereunder or on the Company's request at any time.

 

6.6 Definition
of Company. Solely
for purposes of this Article 6, the term "Company" also shall include any
existing or future subsidiaries of the Company that are operating during the
time periods described herein and any other entities that directly or
indirectly, through one or more intermediaries, control, are controlled by or
are under common control with the Company during the periods described
herein.

 

6.7 Acknowledgment
by Executive. The
Executive acknowledges and confirms that the restrictive covenants contained in
this Article 6 (including without limitation the length of the term of the
provisions of this Article 6) are reasonably necessary to protect the legitimate
business interest of the Company, and are not overbroad, overlong, or unfair and
are not the result of overreaching, duress or coercion of any kind. The
Executive further acknowledges and confirms that the compensation payable to the
Executive under this Agreement is in consideration for the duties and
obligations of the Executive hereunder, including the restrictive covenants
contained in this Article 6, and that such compensation is reasonable and
sufficient for purposes of the enforcement of the restrictive covenants
contained in this Article 6. The Executive further acknowledges and confirms
that his full, uninhibited and faithful observance of each of the covenants
contained in this Article 6 will not cause him any undue hardship, financial or
otherwise, and that enforcement of each of the covenants contained herein will
not impair his ability to obtain employment commensurate with his abilities and
on terms fully acceptable to him or otherwise to obtain income required for the
comfortable support of him and his family and the satisfaction of the needs of
his creditors. The Executive acknowledges and confirms that his special
knowledge of the business of the Company is such as would cause the Company
serious injury or loss if he were to use such ability and knowledge to the
benefit of a competitor or were to compete with the Company in violation of the
terms of this Article 6. The Executive further acknowledges that the
restrictions contained in this Article 6 are intended to be, and shall be, for
the benefit of and shall be enforceable by, the Company’s successors and
assigns. The Executive expressly agrees that upon any breach or violation of the
provisions of this Article 6, the Company shall be entitled, as a matter of
right, in addition to any other rights or remedies it may have, to (a) temporary
and/or permanent injunctive relief in any court of competent jurisdiction as
provided in Section 6.10 hereof, and (b) such damages as are provided at law or
in equity. The existence of any claim or cause of action against the Company or
its affiliates, whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement of the restrictions contained in this
Article 6

 

6.8 Reformation
by Court. In the
event that a court of competent jurisdiction shall determine that any provision
of this Article 6 is invalid or more restrictive than permitted under the
governing law of such jurisdiction, then only as to enforcement of this Article
6 within the jurisdiction of such court, such provision shall be interpreted or
reformed and enforced as if it provided for the maximum restriction permitted
under such governing law.

 

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6.9 Extension
of Time. If the
Executive shall be in violation of any provision of this Article 6, then each
time limitation set forth in this Article 6 shall be extended for a period of
time equal to the period of time during which such violation or violations
occur. If the Company seeks injunctive relief from such violation in any court,
then the covenants set forth in this Article 6 shall be extended for a period of
time equal to the pendency of such proceeding including all appeals by the
Executive.

 

6.10 Injunction. It is
recognized and hereby acknowledged by the parties hereto that a breach by the
Executive of any of the covenants contained in Article 6 of this Agreement will
cause irreparable harm and damage to the Company, the monetary amount of which
may be virtually impossible to ascertain. As a result, the Executive recognizes
and hereby acknowledges that the Company may be entitled to an injunction from
any court of competent jurisdiction enjoining and restraining any violation of
any or all of the covenants contained in Article 6 of this Agreement by the
Executive or any of his affiliates, associates, partners or agents, either
directly or indirectly, and that any such right to an injunction shall be
cumulative and in addition to whatever other remedies the Company may
possess.

 

6.11 Survival. The
provisions of this Article 6 shall survive the expiration or termination of the
Term of Employment.

 

7. Mediation. Except
to the extent the Company has the right to seek an injunction under Section 6.10
hereof, in the event a dispute arises out of or relates to this Agreement, or
the breach thereof, and if the dispute cannot be settled through negotiation,
the parties hereby agree first to attempt in good faith to settle the dispute by
mediation administered by the American Arbitration Association under its
Employment Mediation Rules before resorting to arbitration pursuant to Section 8
hereof.

 

8. Arbitration. 

 

8.1 Exclusive
Remedy. The
parties recognize that litigation in federal or state courts or before federal
or state administrative agencies of disputes arising out of the Executive’s
employment with the Company or out of this Agreement, or the Executive’s
termination of employment or termination of this Agreement, may not be in the
best interests of either the Executive or the Company, and may result in
unnecessary costs, delays, complexities, and uncertainty. The parties agree that
any dispute between the parties arising out of or relating to the Executive’s
employment, or to the negotiation, execution, performance or termination of this
Agreement or the Executive’s employment, including, but not limited to, any
claim arising out of this Agreement, claims under Title VII of the Civil Rights
Act of 1964, as amended, the Civil Rights Act of 1991, the Age Discrimination in
Employment Act of 1967, the Americans with Disabilities Act of 1990, Section
1981 of the Civil Rights Act of 1966, as amended, the Family Medical Leave Act,
the Employee Retirement Income Security Act, and any similar federal, state or
local law, statute, regulation, or any common law doctrine, whether that dispute
arises during or after employment shall be resolved by arbitration in the Palm
Beach County, Florida area, in accordance with the National Employment
Arbitration Rules of the American Arbitration Association, as modified by the
provisions of this Section 8. Except as set forth below with respect to Section
6 of this Agreement, the parties each further agree that the arbitration
provisions of this Agreement shall provide each party with its exclusive remedy,
and each party expressly waives any right it might have to seek redress in any
other forum, except as otherwise expressly provided in this Agreement.
Notwithstanding anything in this Agreement to the contrary, the provisions of
this Section 8 shall not apply to any injunctions that may be sought with
respect to disputes arising out of or relating to Section 6 of this Agreement.
The parties acknowledge and agree that their obligations under this arbitration
agreement survive the expiration or termination of this Agreement and continue
after the termination of the employment relationship between the Executive and
the Company. By
election of arbitration as the means for final settlement of all claims, the
parties hereby waive their respective rights to, and agree not to, sue each
other in any action in a Federal, State or local court with respect to such
claims, but may seek to enforce in court an arbitration award rendered pursuant
to this Agreement. The parties specifically agree to waive their respective
rights to a trial by jury, and further agree that no demand, request or motion
will be made for trial by jury.

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8.2 Arbitration
Procedure and Arbitrator’s Authority. In the
arbitration proceeding, each party shall be entitled to engage in any type of
discovery permitted by the Federal Rules of Civil Procedure, to retain its own
counsel, to present evidence and cross-examine witnesses, to purchase a
stenographic record of the proceedings, and to submit post-hearing briefs. In
reaching his/her decision, the arbitrator shall have no authority to add to,
detract from, or otherwise modify any provision of this Agreement. The
arbitrator shall submit with the award a written opinion which shall include
findings of fact and conclusions of law. Judgment upon the award rendered by the
arbitrator may be entered in any court having competent
jurisdiction.

8.3. Effect
of Arbitrator’s Decision: Arbitrator’s Fees. The
decision of the arbitrator shall be final and binding between the parties as to
all claims which were or could have been raised in connection with the dispute,
to the full extent permitted by law. In all cases in which applicable federal
law precludes a waiver of judicial remedies, the parties agree that the decision
of the arbitrator shall be a condition precedent to the institution or
maintenance of any legal, equitable, administrative, or other formal proceeding
by the Executive in connection with the dispute, and that the decision and
opinion of the arbitrator may be presented in any other forum on the merits of
the dispute. If the arbitrator finds that the Executive was terminated in
violation of law or this Agreement, the parties agree that the arbitrator acting
hereunder shall be empowered to provide the Executive with any remedy available
should the matter have been tried in a court, including equitable and/or legal
remedies, compensatory damages and back pay. The arbitrator’s fees and expenses
and all administrative fees and expenses associated with the filing of the
arbitration (the “Fees”) shall be borne by the non-prevailing party.

 

9. Damages;
Attorneys’ Fees. Nothing
contained herein shall be construed to prevent the Company or the Executive from
seeking and recovering from the other damages sustained by either or both of
them as a result of its or his breach of any term or provision of this
Agreement. In the event that either party hereto seeks to collect any damages
resulting from, or the injunction of any action constituting, a breach of any of
the terms or provisions of this Agreement, then the party found to be at fault
shall pay all reasonable costs and attorneys' fees of the other.

 

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10. Assignment. The
Company shall have the right to assign this Agreement and its rights and
obligations hereunder in whole, but not in part, to any corporation or other
entity with or into which the Company may hereafter merge or consolidate or to
which the Company may transfer all or substantially all of its assets, if in any
such case said corporation or other entity shall by operation of law or
expressly in writing assume all obligations of the Company hereunder as fully as
if it had been originally made a party hereto, but may not otherwise assign this
Agreement or its rights and obligations hereunder. The Executive may not assign
or transfer this Agreement or any rights or obligations hereunder.

 

11. Governing
Law;. This
Agreement shall be governed by and construed and enforced in accordance with the
internal laws of the State of Florida, without regard to principles of conflict
of laws.

 

12. Jurisdiction
and Venue;. The
parties acknowledge that a substantial portion of the negotiations, anticipated
performance and execution of this Agreement occurred or shall occur in Palm
Beach County, Florida and that, therefore, without limiting the jurisdiction or
venue of any other federal or state courts, each of the parties irrevocably and
unconditionally (a) agrees that any suit, action or legal proceeding arising out
of or relating to this Agreement which is expressly permitted by the terms of
this Agreement to be brought in a court of law, shall be brought in the courts
of record of the State of Florida in Palm Beach County, or the court of the
United States, Southern District of Florida; (b) consents to the jurisdiction of
each such court in any such suit, action or proceeding; (c) waives any objection
which it or he may have to the laying of venue of any such suit, action or
proceeding in any of such courts; and (d) agrees that service of any court
papers may be effected on such party by mail, as provided in this Agreement, or
in such other manner as may be provided under applicable laws or court rules in
such courts. 

 

13. Entire
Agreement. This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and, upon its effectiveness, shall
supersede all prior agreements, understandings and arrangements, both oral and
written, between the Executive and the Company (or any of its affiliates) with
respect to such subject matter, including without limitation, the Prior
Employment Agreement. This Agreement may not be modified in any way unless by a
written instrument signed by both the Company and the Executive.

 

14. Notices: All
notices required or permitted to be given hereunder shall be in writing and
shall be personally delivered by courier, sent by registered or certified mail,
return receipt requested or sent by confirmed facsimile transmission addressed
as set forth herein. Notices personally delivered, sent by facsimile or sent by
overnight courier shall be deemed given on the date of delivery and notices
mailed in accordance with the foregoing shall be deemed given upon the earlier
of receipt by the addressee, as evidenced by the return receipt thereof, or
three (3) days after deposit in the U.S. mail. Notice shall be sent (i) if
to the Company, addressed to 150 East Palmetto Park Road, Suite 510, Boca Raton,
Florida 33432, and (ii) if to the Executive, to his address as reflected on
the payroll records of the Company, or to such other address as either party
shall request by notice to the other in accordance with this
provision.

 

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15. Benefits;
Binding Effect. This
Agreement shall be for the benefit of and binding upon the parties hereto and
their respective heirs, personal representatives, legal representatives,
successors and, where permitted and applicable, assigns, including, without
limitation, any successor to the Company, whether by merger, consolidation, sale
of stock, sale of assets or otherwise.

 

16
16. Right
to Consult with Counsel; No Drafting Party. The
Executive acknowledges having read and considered all of the provisions of this
Agreement carefully, and having had the opportunity to consult with counsel of
his own choosing, and, given this, the Executive agrees that the obligations
created hereby are not unreasonable. The Executive acknowledges that he has had
an opportunity to negotiate any and all of these provisions and no rule of
construction shall be used that would interpret any provision in favor of or
against a party on the basis of who drafted the Agreement.

 

17
17. Severability. The
invalidity of any one or more of the words, phrases, sentences, clauses,
provisions, sections or articles contained in this Agreement shall not affect
the enforceability of the remaining portions of this Agreement or any part
thereof, all of which are inserted conditionally on their being valid in law,
and, in the event that any one or more of the words, phrases, sentences,
clauses, provisions, sections or articles contained in this Agreement shall be
declared invalid, this Agreement shall be construed as if such invalid word or
words, phrase or phrases, sentence or sentences, clause or clauses, provisions
or provisions, section or sections or article or articles had not been inserted.
If such invalidity is caused by length of time or size of area, or both, the
otherwise invalid provision will be considered to be reduced to a period or area
which would cure such invalidity.

 

18. Waivers. The
waiver by either party hereto of a breach or violation of any term or provision
of this Agreement shall not operate nor be construed as a waiver of any
subsequent breach or violation.

 

19. Section
Headings. The
article, section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

20. No
Third Party Beneficiary. Nothing
expressed or implied in this Agreement is intended, or shall be construed, to
confer upon or give any person other than the Company, the parties hereto and
their respective heirs, personal representatives, legal representatives,
successors and permitted assigns, any rights or remedies under or by reason of
this Agreement.

 

21. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together shall constitute one and the
same instrument and agreement.

 

-11
-

 

IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

 

	 	COMPANY:

       

      DDS
      TECHNOLOGIES USA, INC., a Nevada corporation

       

      By:/s/
      Leo Paul Koulos  

      Name:
      Leo Paul Koulos

      
      
      Title:
      Chairman
      Compensation Committee

       

      EXECUTIVE:

       

      /s/
      Spencer Sterling

      SPENCER
      L. STERLING

 

 

-12
-Exhibit
10.2

 

DDS
TECHNOLOGIES USA, INC.

2003
STOCK OPTION PLAN

STOCK
OPTION AGREEMENT

 

THIS
STOCK OPTION AGREEMENT, dated
as of March 29, 2005 (the “Agreement”), is made by and between DDS Technologies
USA, Inc., a Nevada corporation (the “Company”) and Spencer Sterling, an
employee of the Company (the “Optionee”).

 

WHEREAS, the
Company has adopted the DDS Technologies USA, Inc. 2003 Stock Option Plan (the
“Plan”), providing for the grant to certain key employees, advisors, or
directors of the Company or a Subsidiary of the Company, of options to purchase
shares of common stock of the Company; and

 

WHEREAS, the
Board has determined that it would be to the advantage and best interest of the
Company and its shareholders to grant the option provided for herein to the
Optionee as an inducement to remain in the service of the Company or its
Subsidiaries and as an incentive for increased efforts during such service, and
has instructed the undersigned officer to execute and deliver this Agreement to
the Optionee.

 

NOW,
THEREFORE, in
consideration of the mutual covenants herein contained and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
agree as follows:

 

SECTION
1. GRANT
OF OPTION.

 

(a) Option. On the
terms and conditions set forth in this Agreement and the Plan, the Company
grants to the Optionee, on the Date of Grant, the option to purchase at the
Exercise Price the number of Shares set forth below. This option will be a
Non-Qualified Stock Option and not an Incentive Stock Option.

 

Number of
Shares Subject to Option: 400,000

Date of
Grant: March 29, 2005

Exercise
Price: $1.00

Type of
Option: x NQSO

 

(b) Stock
Plan. This
option is granted pursuant to the Plan, a copy of which the Optionee
acknowledges having received. The provisions of the Plan are incorporated into
this Agreement by this reference.

 

-1
-

 

SECTION
2. DEFINITIONS.

 

(a) “Board”
means the Board of Directors of the Company, as constituted from time to time,
or if a Committee has been appointed under Section 3(a) of the Plan, the
Committee.

 

(b) “Cause”
means “Cause” as defined in the Employment Agreement as of the Date of
Grant.

 

(c) “Change
in Control” means:

 

(i) the sale,
exchange, transfer or other disposition of 50% or more in value of the assets of
the Company to another Person or entity, except to an entity controlled directly
or indirectly by the Company; or

 

(ii) the
merger, consolidation or other reorganization of the Company in which the
Company is not the surviving entity and in which the historic shareholders of
the Company continue to own less than 50% of the outstanding securities of the
acquiror immediately following the transaction, or a plan of liquidation or
dissolution of the Company other than pursuant to bankruptcy or insolvency laws
is adopted.

 

Notwithstanding
the foregoing, a Change in Control will not be deemed to have occurred for
purposes of this Plan (1) in the event of a sale, exchange, transfer or other
disposition of substantially all of the assets of the Company to, or a merger,
consolidation or other reorganization involving the Company and the Optionee,
alone or with other officers of the Company, or any entity in which the Optionee
(alone or with other officers) has, directly or indirectly, at least a 25%
equity or ownership interest; or (2) in a transaction otherwise commonly
referred to as a “management leveraged buy-out.”

 

(d) “Code”
means the Internal Revenue Code of 1986, as amended.

 

(e) “Consultant”
means a person who performs bona fide services for the Company or a Subsidiary
as a consultant or advisor, excluding Employees and Directors.

 

(f) “Date of
Grant” means the date of grant of this option as specified in Section 1 of this
Agreement.

 

(g) “Director”
means a member of the Board.

 

(h) “Employee”
means any individual who is a common-law employee of the Company or a
Subsidiary.

 

(i) “Employment
Agreement” means, for any Optionee, an employment agreement between the Optionee
and the Company or any Subsidiary in effect at the time of the grant of an
Option under the Plan.

 

(j) “Exercise
Price” means the amount for which one Share may be purchased upon exercise of
this option, as specified in Section 1 of this Agreement.

 

-2
-

 

(k) “Good
Reason” means Good Reason as defined in the Employment Agreement as of the Date
of Grant.

 

(l) “ISO”
means an employee incentive stock option described in Section 422(b) of the
Code.

 

(m) “NQSO”
means a stock option not described in Section 422(b) of the Code.

 

(n) “Person”
means any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, or governmental body.

 

(o) “Purchase
Price” means the Exercise Price multiplied by the number of Shares with respect
to which this option is being exercised.

 

(p) “Securities
Act” means the Securities Act of 1933, as amended.

 

(q) “Service”
means service as an Employee, Consultant or Director.

 

(r) “Share”
means one share of Stock, issuable when this Option is exercised, as adjusted in
accordance with Section 8 of the Plan (if applicable).

 

(s) “Stock”
means the common stock of the Company.

 

(t) “Subsidiary”
means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns shares possessing 50% or more of
the total combined voting power of all classes of shares in one of the other
corporations in the chain. A corporation that attains the status of a Subsidiary
on a date after the adoption of the Plan will be considered a Subsidiary
commencing as of that date.

 

SECTION
3. RIGHT
TO EXERCISE.

 

(a) Exercisability. Subject
to subsection (b) below and the other conditions set forth in this Agreement and
Plan, the option may be exercised prior to its expiration in accordance with the
schedule set forth below.

 

(i) This
option may be exercised with respect to the fraction of the Shares subject to
this option, as set follows: options with respect to 100,000 shares shall be
exercisable immediately. Thereafter, options with respect to an additional
100,000 shares shall become exercisable on each of the first, second and third
anniversaries of the Date of Grant, provided that the Optionee is in Service on
each of those dates. 

 

(ii) This
option shall become immediately fully exercisable in the event that the
Opitonee’s Service with the Company and its Subsidiaries is terminated by the
Company or a Subsidiary without Cause or by the Optionee for Good
Reason.

 

-3
-

 

(b) Shareholder
Approval. Any
other provision of this Agreement notwithstanding, no portion of this option
constituting an ISO is exercisable at any time prior to the approval of the Plan
by the shareholders of the Company.

 

(c) Partial
Exercise. At any
time before any exercisable portion of the option becomes unexercisable under
this Agreement, that portion may be exercised in whole or in part, except that
the Company is not required to issue fractional shares and the option may not be
exercised for less than 100 Shares unless the exercise is the full exercise of
the exercisable portion of the option.

 

SECTION
4. NO
TRANSFER OR ASSIGNMENT OF OPTION.

 

Except as
otherwise provided in this Agreement with respect to NQSOs only, this option and
the rights and privileges conferred by this Agreement may not be sold, pledged
or otherwise transferred (whether by operation of law or otherwise) and are not
subject to sale under execution, attachment, levy or similar process. The terms
of the Plan and this Agreement are binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.

 

SECTION
5. EXERCISE
PROCEDURES.

 

(a) Notice
of Exercise. The
Optionee or the Optionee’s representative may exercise this option by giving
written notice to the Company in a form acceptable to the Company. The notice
must specify the election to exercise this option, the number of Shares for
which it is being exercised and the form and amount of payment. The notice must
be signed by the person exercising this option. If this option is exercised by
the representative of the Optionee, the notice must be accompanied by proof
(satisfactory to the Company) of the representative’s right to exercise this
option. The Optionee or the Optionee’s representative must deliver to the
Company, at the time of giving the notice, payment in a form permissible under
Section 6 for the full amount of the Purchase Price.

 

(b) Issuance
of Shares. After
receiving a proper notice of exercise and payment for the Shares, the Company
will issue a certificate or certificates for the Shares as to which this option
has been exercised.

 

(c) Withholding
Taxes. If the
Company determines that it is required to withhold any tax as a result of the
exercise of this option, the Optionee, as a condition to the exercise of this
option, must make arrangements satisfactory to the Company to enable it to
satisfy all withholding requirements. The Optionee must also make arrangements
satisfactory to the Company to enable it to satisfy any withholding requirements
that may arise in connection with the vesting or disposition of Shares purchased
by exercising this option.

 

SECTION
6. PAYMENT
FOR STOCK.

 

(a) Cash. All or
part of the Purchase Price may be paid in cash or cash equivalents.

 

(b) Surrender
of Stock. All or
any part of the Purchase Price may be paid by surrendering, or attesting to the
ownership of, Shares that are already owned by the Optionee. Those Shares must
be surrendered to the Company in good form for transfer and will be valued at
their Fair Market Value on the date when this option is exercised. The Optionee
may not surrender, or attest to the ownership of, Shares in payment of the
Purchase Price if that action would cause the Company to recognize compensation
expense (or additional compensation expense) with respect to this option for
financial reporting purposes.

 

-4
-

 

(c) Exercise/Sale
or Exercise/Pledge. If and
to the extent permitted by law and approved by the Committee, in the event that
generally accepted accounting principles require the Company to record the grant
of options as an expense, and if the Stock is publicly traded, all or part of
the Purchase Price and any withholding taxes may be paid as
follows:

 

(i) by the
delivery (on a form prescribed by the Company) of an irrevocable direction to a
securities broker approved by the Company to sell Shares and to deliver all or
part of the sales proceeds to the Company; or

 

(ii) by the
delivery (on a form prescribed by the Company) of an irrevocable direction to
pledge Shares to a securities broker or lender approved by the Company, as
security for a loan, and to deliver all or part of the loan proceeds to the
Company.

 

SECTION
7. TERM
AND EXPIRATION.

 

(a) Basic
Term. This
option will expire on the date that is 10 years after the Date of Grant (five
years after the Date of Grant if this option is designated as an ISO in this
Agreement and Section 4(b) of the Plan applies).

 

(b) Termination
of Service. If the
Optionee’s Service terminates then this option will expire in accordance with
the provisions contained in the Plan.

 

(c) Notice
Concerning ISO Treatment. If this
option is designated as an ISO in this Agreement, it ceases to qualify for
favorable tax treatment as an ISO to the extent it is exercised after the
Optionee has been on a leave of absence for more than 90 days, unless the
Optionee’s reemployment rights are guaranteed by statute or by
contract.

 

SECTION
8. LEGALITY
OF INITIAL ISSUANCE.

 

No Shares
will be issued upon the exercise of this option unless and until the Company has
determined that:

 

(a) It and
the Optionee have taken any actions required to register the Shares under the
Securities Act or to perfect an exemption from the registration requirements
thereof,

 

(b) Any
applicable listing requirement of any stock exchange or other securities market
on which Stock is listed has been satisfied; and

 

(c) Any other
applicable provision of state or federal law has been satisfied.

 

-5
-

 

SECTION
9. NO
REGISTRATION RIGHTS.

 

The
Company may, but is not obligated to, register or qualify the sale of Shares
under the Securities Act or any other applicable law. The Company is not
obligated to take any affirmative action to cause the sale of Shares under this
Agreement to comply with any law.

 

SECTION
10. RESTRICTIONS
ON TRANSFER.

 

(a) Securities
Law Restrictions.
Regardless of whether the offering and sale of Shares under this Agreement have
been registered under the Securities Act or have been registered or qualified
under the securities laws of any state, the Company at its discretion may impose
restrictions on the sale, pledge or other transfer of the Shares (including the
placement of appropriate legends on stock certificates or the imposition of
stop-transfer instructions) if, in the judgment of the Company, those
restrictions are necessary or desirable to achieve compliance with the
Securities Act, the securities laws of any state or any other law. Any
determination by the Company and its counsel in connection with any of the
matters set forth in this Section 10 is conclusive and binding on the Optionee
and all other persons.

 

(b) Investment
Intent at Agreement. The
Optionee represents and agrees that the Shares to be acquired upon exercising
this option will be acquired for investment, and not with a view to the sale or
distribution thereof.

 

(c) Investment
Intent at Exercise. If the
sale of Shares under this Agreement is not registered under the Securities Act
but an exemption is available that requires an investment representation or
other representation, the Optionee will represent and agree at the time of
exercise that the Shares being acquired upon exercising this option are being
acquired for investment, and not with a view to their sale or distribution, and
will make any other representations that are deemed necessary or appropriate by
the Company and its counsel.

 

(d) Legends. All
certificates evidencing Shares purchased under this Agreement in an unregistered
transaction will bear the following legend (and such other restrictive legends
as are required or deemed advisable under the provisions of any applicable
law):

 

THE
SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.

 

(e) Removal
of Legends. If, in
the opinion of the Company and its counsel, any legend placed on a stock
certificate representing Shares sold under this agreement is no longer required,
the holder of the certificate will be entitled to exchange the certificate for a
certificate representing the same number of Shares but without the
legend.

 

-6
-

 

(f) Administration. Any
good faith determination by the Company and its counsel in connection with any
of the matters set forth in this Section 10 is conclusive and binding on the
Optionee and all other persons.

 

SECTION
11. CHANGE
OF CONTROL.

 

Notwithstanding
Section 6(g) of the Plan, the exercisability of the option granted pursuant to
this Agreement shall not accelerate as a result of a Change in
Control.

 

SECTION
12. ADJUSTMENT
OF SHARES.

 

In the
event of any transaction described in Section 8(a) of the Plan, the terms of
this option (including, without limitation, the number and kind of Shares
subject to this option and the Exercise Price) will be adjusted or exchanged as
set forth in Section 8(a) of the Plan. In the event that the Company is a party
to a merger, consolidation or other reorganization, this option will be subject
to the agreement of merger, consolidation or other reorganization, as provided
in Section 8(b) of the Plan.

 

SECTION
13. MISCELLANEOUS
PROVISIONS.

 

(a) Income
Tax Consequences. The
Optionee acknowledges that the Company has advised him or her that there are
income tax consequences related to the purchase of Shares by the Optionee and
that the Company has recommended that he or she obtain independent advice on the
tax consequences of the purchase of the Shares. The Optionee hereby releases and
discharges the Company and its affiliates, directors, officers and agents from
any and all responsibility or liability with respect to any tax consequences to
the Optionee of his or her purchase or sale of the Shares of the Company
purchased by the Optionee under the Plan or otherwise.

 

(b) Rights
as a Shareholder. Neither
the Optionee nor the Optionee’s representative has any rights as a shareholder
with respect to any Shares subject to this option prior to the date of issuance
to the Optionee or the Optionee’s representative of a certificate or
certificates for the Shares.

 

(c) No
Retention Rights. Nothing
in this Agreement or in the Plan confers upon the Optionee any right to continue
in Service for any period of time or interferes with or otherwise restricts in
any way the rights of the Company (or any Subsidiary) or of the Optionee, which
rights are hereby expressly reserved by each, to terminate his or her Service at
any time and for any reason.

 

(d) Notice. Any
notice required by the terms of this Agreement must be given in writing and will
be deemed effective upon personal delivery, upon deposit (with fees prepaid)
with nationally recognized overnight delivery service, or on the fifth business
day following deposit (with first class postage and fees prepaid) with the
United States Postal Service. Notice must be addressed to the Company at its
principal executive office and to the Optionee at the address that he or she
most recently provided to the Company.

 

-7
-

 

(e) Entire
Agreement. This
Agreement and the Plan constitute the entire contract between the parties hereto
with regard to the grant and exercise of the option. They supersede any other
agreements, representations or understandings (whether oral or written and
whether express or implied) that relate to the option.

 

(f) Choice
of Law. This
Agreement is governed by, and construed in accordance with, the laws in force in
the State of Nevada.

 

IN
WITNESS WHEREOF, the
parties have executed this Agreement.

 

	
      OPTIONEE:

       

      /s/
      Spencer Sterling    

      Signature

       

      Spencer
      Sterling

      Name
      of Optionee
	
      COMPANY:

       

      DDS
      TECHNOLOGIES USA, INC.

       

       

      By: /s/
      Leo Paul Koulos   

      Chairman
      Compensation Committee

	 	 

 

-8
-

 

APPENDIX
A

DDS
TECHNOLOGIES USA, INC. 2003 STOCK OPTION PLAN

NOTICE
OF STOCK OPTION EXERCISE

 

OPTIONEE
INFORMATION:

 

Name:

 

Social
Security Number: 

          

Address:             

 

 

OPTION
INFORMATION

Date of
Grant: March 29,
2005     Type of
Option: x NQSO

                     
__ NQSO

 

Exercise
Price per Share: $1.00

 

Total
number of common shares of DDS Technologies USA, Inc. (the “Company”) covered by
option: 400,000
Shares

 

EXERCISE
INFORMATION:

 

Number of
common shares of the Company for which option is being exercised
now: _
. (These
shares are referred to below as the “Purchased Shares.”)

 

Total
Exercise Price for the Purchased Shares: $   

 

Form of
payment enclosed:

 

Check for
$____________, made payable to “DDS Technologies USA, Inc.”

 

Other:              

 

The
certificate for the Purchased Shares should be sent to the following
address:

 

 

 

 

-9
-

Optionee’s
signature:

            ____________________________

 

 

-10
-

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