Document:

<PAGE>

Exhibit 10.17

                                                                    June 2, 2001

International Dispensing Corporation
1111 Benfield Boulevard, Suite 230
Millersville, Maryland 21108

Gentlemen:

      Reference is made to the Preferred Stock Subscription Agreement (the
"Purchase Agreement") dated as of August 15, 2000, by and among Gregory B.
Abbott ("Greg Abbott") , George Kriste ("Kriste"), Louis A. Simpson ("Simpson"),
Reed Slatkin, George Abbott and International Dispensing Corporation (the
"Company"). Unless otherwise defined herein, capitalized terms used herein have
the meanings ascribed to them in the Purchase Agreement.

      This will confirm the agreement of the undersigned and the Company as
follows:

      The parties hereby agree that on the date hereof Juliet Shield, 221 North
Starwood, Aspen, Colorado ("Shield") shall become a party to the Purchase
Agreement and shall purchase 75 shares of Series C Redeemable Convertible
Preferred Stock, par value $.001 per share, of the Company ("Series C Stock").
Such purchases shall be upon all of the terms and conditions set forth in the
Purchase Agreement.

      In keeping with the investment incentives offered in the first and second
rounds, the Company shall also issue to Shield warrants to purchase up to an
additional 75 shares of Series C Stock at a price of $2,000 per share, such
warrants to be exercisable through December 31, 2001.

      Each of George Abbott, Kriste and Simpson hereby confirms to the Company
that he has declined to participate in the current round of financing.

      The Company reaffirms as of the date hereof all of the representations and
agreements made by the Company in the Purchase Agreement, except that as of the
date hereof, prior to the purchases being made hereby, an aggregate 9,728,396
shares of Common Stock are outstanding and an aggregate of 575 Shares of Series
C Stock and warrants to purchase an aggregate of 75 shares of Series C Stock are
issued and outstanding.

                                        Very truly yours,

                                        /s/ Juliet Shield
                                        ----------------------------------------
                                        Juliet Shield

                                        /s/ Gregory Abbott
                                        ----------------------------------------
                                        Gregory Abbott

                                        /s/ Louis A. Simpson
                                        ----------------------------------------
                                        Louis A. Simpson

                                        /s/ George Abbott
                                        ----------------------------------------
                                        George Abbott

                                        /s/ George Kriste
                                        ----------------------------------------
                                        George Kriste

AGREED TO:

INTERNATIONAL DISPENSING
   CORPORATION

By: /s/ Gary Allanson
   --------------------------------
   Gary Allanson
   President

                                       1<PAGE>

Exhibit 10.18

                              EMPLOYMENT AGREEMENT

      AGREEMENT, dated as of the 31st day of December, 2001 by and between
INTERNATIONAL DISPENSING CORPORATION, a Delaware corporation, with offices at
1111 Benfield Boulevard, Suite 230, Millersville, Maryland 21108 (the
"Company"), and EDWIN THARP, an individual residing at 3983 Glenville Road,
Glenville, Pennsylvania 17329 (the "Employee").

                              W I T N E S S E T H :
                               - - - - - - - - - -

      WHEREAS, the parties desire to enter into this agreement to set forth the
terms of the Employee's employment by the Company.

      NOW, THEREFORE, in consideration of the mutual premises and covenants set
forth herein and for other good and valuable consideration, the receipt,
adequacy and legal sufficiency of which are hereby acknowledged, the Company and
the Employee mutually agree as follows:

      1. EMPLOYMENT AND DUTIES.

            (a) EMPLOYMENT. The Company agrees to employ the Employee, and the
Employee agrees to accept employment with the Company, on the terms and
conditions hereinafter set forth.

            (b) SCOPE OF DUTIES. The Employee's title shall be Chief Operating
Officer, Chief Financial Officer and Secretary of the Company. The Employee
shall render services solely for the benefit, and on behalf of the Company and
its subsidiaries as directed by the Board of Directors of the Company. The Chief
Executive Officer of the Company shall have the power to determine the general
and specific duties to be performed by the Employee and the means and the manner
by which those duties shall be performed including, without limitation, that the
Employee shall be responsible for overseeing the financial operations of the
Company, and such other areas as the Employee and Chief Executive Officer deem
appropriate.

            (c) EXCLUSIVE SERVICE. The Employee shall be required, and does
hereby agree, to devote his full working time and attention to the duties
imposed upon him under this Agreement. The Employee shall perform his duties in
a diligent manner; shall not engage in activities which are or could be
detrimental to the existing or future business of the Company; and shall observe
and conform to all laws, customs and standards of business ethics and honest
business practices.

            (d) PROFESSIONAL STANDARDS. Recognizing and acknowledging that it is
essential for the protection and enhancement of the name and business of the
Company and the good will pertaining thereto, the Employee shall perform his
duties under this Agreement professionally and in accordance with the standards
established by the Company from time to time; and the Employee shall not act,
and shall refrain from acting, in any manner that could harm or tarnish the
name, business or income of the Company or the good will pertaining thereto.

      2. COMPENSATION.

            (a) BASE SALARY. For all services rendered by the Employee during
the term of this Agreement, the Company shall pay the Employee a base salary at
the rate of $190,000.00 per year, for 2002 and $218,500 in 2003 and $251,275 in
2004, payable bi-weekly and otherwise in accordance with the Company's customary
payment policies.

            (b) BONUSES. The Employee shall be eligible to receive performance
bonuses. determined by the Board of Directors in its sole discretion.

            (c) STOCK OPTIONS. Subject to the approval by the stockholders at
the next annual meeting of stockholders held after this Agreement is executed of
an amendment to the Company's 1998 Stock Option Plan (the Plan) to increase the
number of shares of Common Stock of the Company which may be issued upon
exercise of all options granted under the Plan from 2,500,000 to an amount of
shares which will accommodate the issuance of such options to the Employee, on
the date hereof the Company has granted to the Employee options under the Plan
to purchase an aggregate of 500,000 shares of the Company's Common Stock at an
exercise price of $1.00 per share. The terms of the options referred to in the
preceding sentence are set forth on Exhibit A hereto. The Employee shall also be
eligible for additional awards of stock options under the Plan or otherwise. The
granting of said options shall be within the sole discretion of the Board of
Directors or the Committee thereof administering the Plan or any other option
plan under which

                                       1
<PAGE>

options may be granted to the Employee.

            (d) FRINGE BENEFITS.

                  (i)   During the term of this Agreement, the Company at its
                        sole cost shall provide to the Employee and the
                        Employee's family, hospital, major medical and dental
                        insurance.

                  (ii)  During the term of this Agreement and provided that the
                        Employee is insurable, the Company shall obtain and pay
                        the premiums on a term life insurance policy on the life
                        of the Employee in the amount of $500,000.00, the
                        beneficiary or beneficiaries of which shall be
                        designated by the Employee.

                  (iii) The Company may from time to time provide to, or
                        withdraw from, the Employee certain other fringe
                        benefits. Nothing herein shall require the Company to
                        adopt, maintain or continue any such fringe benefit.

            (e) VACATION. During the term of this Agreement, the Employee shall
be entitled to a vacation of fifteen (15) working days per year, which may be
taken all at once or from time to time; PROVIDED, HOWEVER, that (i) the Employee
shall schedule such vacation time so as to mitigate the adverse effects to the
Company of the Employee's absence; and (ii) the Employee shall give the Company
at least thirty (30) days notice of consecutive vacation days in excess of five
(5) to be taken by the Employee at any one time.

      3. NON-COMPETITION.

            (a) In view of the Employee's knowledge of the trade secrets and
other proprietary information relating to the business of the Company and its
subsidiaries and their customers and dealers which the Employee has heretofore
obtained and is expected to obtain during the term the Employee is employed
under this Agreement (the "Employment Period"), and in consideration of the
compensation to be received hereunder, the Employee agrees: (i) that he will not
during the Employment Period and for one year thereafter Participate In (as such
term hereinafter defined) any other business or organization if such business or
organization now is or shall then be competing with or be of a nature similar to
the business of the Company or its subsidiaries; and (ii) (A) for a period of
two (2) years after the Termination Date (as defined in Section 7) due to a
termination of this Agreement for Cause (as defined in Section 8(b)) or (B) for
such period as the Company shall continue to pay to the Employee his salary and
insurance benefits in accordance with Section 9(c) after a termination of the
Employee's employment Without Cause (as defined in Section 8(c)), he will not in
any geographic area in which the Company does business as of the Termination
Date compete with or be engaged in the same business as, or Participate In any
other business or organization which during such period competes with or is
engaged in the same business as, the Company or its subsidiaries with respect to
any service offered or activity engaged in up to the Termination Date, except
that in each case the provisions of this Section 3 will not be deemed breached
merely because the Employee owns not more than 2% of the outstanding common
stock of a corporation, if, at the time of its acquisition by the Employee, such
stock is listed on a national securities exchange, is reported on NASDAQ, or is
regularly traded in the over-the-counter market by a member of a national
securities exchange.

            (b) The term "Participate In" shall mean: "directly or indirectly,
for his own benefit or for, or

                                       2
<PAGE>

through any other person, firm, or corporation, own, manage, operate, control,
loan money to (provided, that an investment in debt instruments issued pursuant
to an effective registration statement under the Securities Act shall not be
deemed to be a loan), or participate in the ownership, management, operation, or
control of, or be connected as a director, officer, employee, partner,
consultant, agent, independent contractor, or otherwise with, or acquiesce in
the use of his name in."

            (c) During the Employment Period and, in the case of the termination
of the Employee's employment for Cause only, for a period of two (2) years after
the Termination Date, the Employee will not directly or indirectly:

                  (i)   reveal the name of, solicit, use or interfere with, or
                        endeavor to entice away from the Company (or any of its
                        subsidiaries) any of its customers, vendors or
                        employees, or

                  (ii)  employ any person who, at any time up to the Termination
                        Date, was an employee of the Company or its subsidiaries
                        without the written consent of the Company.

            (d) The Employee agrees that the provisions of this Section 3 are
necessary and reasonable to protect the Company in the conduct of its business.
If any restriction contained in this Section 3 shall be deemed to be invalid,
illegal, or unenforceable by reason of the extent, duration, or geographical
scope thereof, or otherwise, then the court making such determination shall have
the right to reduce such extent, duration, geographical scope, or other
provisions hereof, and in its reduced form such restriction shall then be
enforceable in the manner contemplated hereby.

      4. CONFIDENTIAL INFORMATION. All information which the Employee may now
possess, may obtain during or after the Employment Period, or may create prior
to the end of the Employment Period relating to the business of the Company or
its subsidiaries or of any of their respective customers or vendors
(collectively, the Confidential Information) shall not be published, disclosed,
or made accessible by him to any other person, firm or corporation either during
or after the Employment Period or used by him except during the Employment
Period in the business and for the benefit of the Company without the prior
written consent of the Company. The Employee shall return all tangible evidence
of such Confidential Information to the Company prior to or at the end of the
Employment Period.

      5. RIGHTS OF THE COMPANY.

            (a) Any interest in copyrights, copyrightable works, developments,
discoveries, designs and processes, patents, patent applications, inventions and
technological innovations (collectively, "Inventions") which the Employee (i)
owns, conceives of or develops, alone or with others, (A) relating to the
business of the Company or its subsidiaries or any business in which the Company
(or its subsidiaries) contemplates being engaged or (B) which anticipate
research or development of the Company or its subsidiaries, or (ii) conceives of
or develops utilizing the time, material, facilities or information of the
Company or its subsidiaries, in either case during the Employment Period, shall
belong to the Company.

            (b) As soon as the Employee owns, conceives of or develops any
Invention, the Employee shall immediately communicate such fact in writing to
the Board of Directors of the Company. Upon the request of the Company, the
Employee shall, without further compensation but at the Company's expense
(subject to clause (i) below) execute all such assignments and other documents
(including applications for trademarks, copyrights and patents and assignments
thereof) and take all such other action as the Company may reasonably request,
including obtaining spousal consents or waivers, (i) to vest in the Company all
right, title

                                       3
<PAGE>

and interest of the Employee in and to such Inventions, free and clear of all
liens, mortgages, security interests, pledges, charges and encumbrances (the
Employee to take such action, at his expense, as is necessary to remove all such
liens) and (ii) if patentable or copyrightable, to obtain patents or copyrights
(including extensions and renewals) therefore in any and all jurisdictions in
and outside the United States in the name of the Company or in such other
name(s) as the Company shall determine.

      6. INSURANCE. The Employee agrees to submit to such medical examinations
as may be reasonably required by the Company to enable the Company to obtain the
term life insurance policy referred to in Section 2(d)(ii) and, at its option,
key man life insurance on the life of the Employee in such amount and with such
insurer as the Company may determine in its sole discretion.

      7. EMPLOYMENT PERIOD. (a) Unless extended in accordance with Section 7(b),
the Employment Period shall commence on the date of this Agreement and shall
continue for a term ending on December 31, 2003:

            (b) The term of this Agreement shall be automatically extended until
December 31, 2004 if prior to September 1, 2003 neither party shall have given
written notice to the other of its decision to terminate this Agreement as of
December 31, 2003 (or such earlier date as this Agreement may be terminated in
accordance with its terms). If the term of this Agreement is extended to
December 31, 2004, the Employee shall be paid a base salary of $251,275.00 for
calendar year 2004.

            (c) Notwithstanding Sections 7(a) and 7(b), the term of this
Agreement shall end on the date on which any of the following events occur (the
date the term of this Agreement ends as a result of the expiration of the term
as provided in Sections 7(a) or 7(b) or the occurrence of the events set forth
below is referred to as the Termination Date);

                  (i)   the death of the Employee;

                  (ii)  the voluntary resignation of the Employee;

                  (iii) the termination by the Board of Directors of the
                        Employee's employment for Disability (as hereinafter
                        defined);

                  (iv)  the termination by the Board of Directors of the
                        Employee's employment for Cause (as hereinafter
                        defined); or

                  (v)   the termination by the Board of Directors of the
                        Employee's employment Without Cause (as hereinafter
                        defined).

      8. DEFINITIONS RELATING TO TERMINATION

            (a) DISABILITY

                  The term "Disability" shall mean any physical or mental
condition of the Employee which, in the reasonable discretion of the Board of
Directors, after consultation with the Employee's physician, materially impairs
the Employee's ability to render the services to be performed by him hereunder
for a period of 90 consecutive days or for at least 120 days in any consecutive
180 day period.

            (b) CAUSE

                  The term "Cause" shall mean the good faith finding by the
Board of Directors of the Company upon resolution adopted by it of the existence
of any one of the following:

                  (i)   The Employee's failure or refusal to perform specific
                        written directives consistent with his duties and

                                       4
<PAGE>

                        responsibilities as set forth in Section 1 hereof, which
                        lack of performance is not cured within 15 days after
                        written notice thereof or 30 days if at the 15th day and
                        thereafter the Employee is diligently attempting to
                        cure;

                  (ii)  Excessive use of alcohol or the use of illegal drugs,
                        interfering with performance of the Employee's
                        obligations under this Agreement;

                  (iii) Conviction of a felony or of any crime involving moral
                        turpitude or fraud;

                  (iv)  The commission by the Employee of an act of embezzlement
                        or other similar act;

                  (v)   The commission by the Employee of any willful or
                        intentional act which the Employee reasonably should
                        have contemplated would have the effect of injuring the
                        reputation, financial condition, business or business
                        relationships of the Company and/or the Employee; or

                  (vi)  Any material breach (not covered by any of the clauses
                        (i) through (v) hereof) of any of the provisions of this
                        Agreement, if such breach is not cured within 30 days
                        after written notice thereof to by the Board of
                        Directors.

If the Employee terminates his employment with the Company other than for Good
Reason (as hereinafter defined), the cessation of employment will be treated as
a termination for Cause.

            (c) WITHOUT CAUSE

                  The term "Without Cause" shall mean a determination of the
Board of Directors to terminate the Employee for any reason other than death,
Disability or Cause.

            (d) GOOD REASON

                  The term "Good Reason" shall mean (i) any removal of the
Employee while he is employed hereunder from his position as an officer of the
Company, except in connection with termination or suspension of the Employee's
employment for death, Disability or Cause or (ii) a breach by the Company of any
material provision of this Agreement.

      9. EFFECT OF TERMINATION.

            (a) If the Employee's employment is terminated for Disability, for
Cause or upon his death, the Employee or his estate shall be paid his Base
Salary and other benefits hereunder through the Termination Date.

            (b) If the Employee terminates his employment by voluntarily
resigning for Good Reason, the Employee shall be paid his Base Salary and other
benefits through the date which is 180 days after the Termination Date. (c) If
the Employee's employment is terminated Without Cause, the Company shall until
the end of the term of this Agreement then in effect (either December 31, 2003
or December 31, 2004) continue to (i) pay the Employee his salary and (ii)
provide the Employee and the Employee's family, hospital, major medical and
dental insurance equivalent to the insurance provided on the Termination Date.

            (d) Irrespective of the basis for the termination of the Employee's
employment, all benefits, if any, other than base salary, insurance (as
described in Section 9(c)) and rights under stock options, shall cease as of the
Termination

                                       5
<PAGE>

Date, other than COBRA rights which shall continue to the extent provided
thereunder.

      10. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or any breach or termination thereof, shall be settled by
arbitration in Baltimore, Maryland in accordance with the laws of the State of
Maryland and rules then obtaining of the American Arbitration Association or any
successor thereto. Within ten (10) days after a request for arbitration by one
party to the other, the Company and the Employee shall each select one
arbitrator. Within ten (10) days after the second of such arbitrators has been
selected, the two arbitrators thereby selected shall choose a third arbitrator
who shall be the Chairman of the panel. If the first two arbitrators selected
cannot agree upon a third arbitrator, the American Arbitration Association shall
name the third arbitrator. The arbitrators may grant injunctions or other relief
in such dispute or controversy. In the arbitration, the parties shall be
entitled to pre-hearing discovery. The decision of the arbitrators shall be
final, conclusive and binding on the parties to the arbitration. In connection
with such arbitration and the enforcement of any award rendered as a result
thereof, the parties hereto irrevocably consent to the personal jurisdiction of
the federal and state courts located in Baltimore, Maryland, and further consent
that any process or notice of motion or other application to the said Courts or
judges thereof may be served inside or outside the State of Maryland by
registered mail or personal service, provided a time period of at least twenty
(20) days for appearance is allowed. Since a breach of the provisions of
Sections 3, 4 and 5 may result in irreparable injury to the Company and may not
adequately be compensated by money damages, the Company shall be entitled, in
addition to any other right and remedy available to it, to an injunction issued
by the foregoing courts or in the Arbitration proceeding restraining such breach
or a threatened breach (and in either case no bond or other security shall be
required in connection therewith) and the Employee hereby consents to the
issuance of such injunction. This Section 10 shall survive the termination (by
expiration or otherwise) of this Agreement.

      11. MODIFICATION. This Agreement sets forth the entire understanding of
the parties with respect to the subject matter hereof, supersedes all existing
agreements between them concerning such subject matter, and may be modified only
by a written instrument duly executed by each party.

      12. NOTICES. Any notice or communication to be given hereunder by any
party to the other shall be in writing and shall be deemed to have been given
when personally delivered or transmitted by facsimile, or three (3) days after
the date sent by registered or certified mail, postage prepaid, as follows:

            (a)   if to the Company, addressed to it at:

                  1111 Benfield Boulevard
                  Suite 230
                  Millersville, Maryland 21108
                  Attention: Board of Directors

            with copies to:

                  Shustak Jalil & Heller
                  545 Madison Avenue
                  New York, New York  10022
                  Attn: Jay Weil, Esq.

            (b)   if to the Employee, addressed to him at:

                  3983 Glenville Road
                  Glenville, Pennsylvania 17329

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<PAGE>

or to such other persons or addresses as may be designated in writing by the
party to receive such notice.

      13. WAIVER. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.

      14. ASSIGNMENT. The Employee's rights and obligations under this Agreement
shall not be transferable by assignment or otherwise. The Company may assign its
rights and obligations hereunder to any of its subsidiaries or affiliates. The
Company will provide notice of such assignment to the Employee.

      15. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Employee and his heirs and personal
representatives, and shall be binding upon and inure to the benefit of the
Company and its successors and assigns.

      16. HEADINGS. The headings in this Agreement are solely for the
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.

      17. JURISDICTION. The validity and interpretation of this Agreement shall
be construed in accordance with and be governed by the laws of the State of
Maryland.

      18. ATTORNEY'S FEES. If a legal action or other proceeding is brought for
enforcement of this Agreement because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party shall be entitled to recover reasonable
attorney's fees and costs incurred, in addition to any other relief to which
they may be entitled.

      19. SEVERABILITY. The provisions of this Agreement are severable and
should any provision hereof be void, voidable or unenforceable under any
applicable law, such void, voidable or unenforceable provision shall not affect
or invalidate any other provision of this Agreement, which shall continue to
govern the relative rights and duties of the parties as though the void,
voidable or unenforceable provision were not a part hereof.

      20. SURVIVAL. All warranties, representations, indemnities, covenants and
other agreements of the parties hereto shall survive the execution, delivery and
termination of this Agreement and shall, notwithstanding the execution, delivery
and termination of this Agreement, continue in full force and effect.

                                       7
<PAGE>

      21. ACKNOWLEDGMENT. The Employee specifically acknowledges that: the
Employee has read and understands all of the terms of this Agreement; in
executing this Agreement, the Employee does not rely on any inducements,
agreements, promises or representations of the Company or any agent of the
Company, other than the terms and conditions specifically set forth in this
Agreement; the Employee has had an opportunity to consult with independent
counsel with respect to the execution of this Agreement; and that the Employee
has made such investigation of the facts pertaining to this Agreement and of all
the matters pertaining hereto as he deems necessary.

      22. COUNTERPARTS. This Agreement may be executed in two counterparts, each
of which shall be deemed an original, but both of which together shall
constitute one and the same instrument. IN WITNESS WHEREOF, the Company and the
Employee have executed this Agreement on the day and year first above written.

                                        INTERNATIONAL DISPENSING CORPORATION

                                        By: /s/ Gary Allanson
                                           -------------------------------------
                                           Gary Allanson, President

                                            /s/ Edwin Tharp
                                           -------------------------------------
                                           Edwin Tharp

                                       8
<PAGE>

                                    EXHIBIT A

                        INCENTIVE STOCK OPTION AGREEMENT

OPTIONEE: Edwin Tharp

DATE OF GRANT: December 5, 2001

NUMBER OF SHARES: 500,000

PRICE:  $1.00

EXERCISE DATES:

                              DATE OPTION
NUMBER OF SHARES              BECOMES EXERCISABLE            EXERCISABLE UNTIL
----------------              -------------------            -----------------

100,000                       December 31, 2001              December 4, 2011

100,000                       January 1, 2002                December 4, 2011

100,000                       January 1, 2003                December 4, 2011

100,000                       January 1, 2004*               December 4, 2011

100,000                       January 1, 2005*               December 4, 2011

            INTERNATIONAL DISPENSING CORPORATION (the "Corporation"), a Delaware
corporation, on the terms and conditions set forth below, hereby on the date of
grant shown above grants to the optionee named above an option to purchase in
whole or in part the number of shares shown above of the Corporation's common
stock, at the price shown above, exercisable on the exercise dates shown above
(the "Expiration Date"), except as provided in paragraph 3(b) hereof.

            1. The option evidenced hereby has been granted pursuant to the
Corporation's Amended and Restated 1998 Stock Option Plan (the "Stock Option
Plan").

            2. The option evidenced hereby shall be an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").

----------
            * Subject to stockholders' approval of an amendment to the Stock
Option Plan to increase the aggregate number of shares of the Corporation's
Common Stock that may be issued upon exercise of all options granted under the
Stock Option Plan.

            3. Subject to the rules set forth in the last two sentences of this
paragraph, the option evidenced hereby shall terminate upon termination of the
optionee's employment by the Corporation or a subsidiary. The term "subsidiary"
shall have the meaning set forth in Section 424(f) of the Code. If, prior to the
Expiration Date, the optionee dies or if the optionee's employment with the
Corporation or any subsidiary is terminated by reason of his permanent
disability, then the optionee or the legal representatives of the optionee's
estate, or a legatee or legatees of the optionee, shall have the right, for a
period ending on the sooner to occur of (i) the Expiration Date or (ii) the
first anniversary of the date the optionee's employment is terminated by reason
of his death or permanent disability, to exercise all or any portion of the
option (whether or not such option was exerciseable on the date of termination
of the optionee's employment for such reason). If the optionee's employment with
the Corporation is terminated prior to the Expiration Date for any reason other
than the optionee's death or permanent disability, then this option may be
exercised for a period of three months after the termination of employment to
the extent that the optionee could have exercised the option on the date the
optionee's employment is terminated for such reason.

            4. This instrument and the rights hereunder are not transferable or
assignable except by will or by the laws of descent and distribution. During the
lifetime of the optionee, the option may be exercised only by the optionee.

            5. (a) The option evidenced hereby is exercised upon receipt by the
Secretary of the Corporation, or other designated person, of a duly executed and
completed facsimile of the form for such purpose attached hereto, accompanied by
full payment for the number of shares being purchased. Payment of the exercise
price may be made in full by (i) certified or bank cashier's check, (ii)
cancellation of indebtedness owed by the Corporation to the optionee, (iii)
delivery to the Corporation of shares of Common Stock of the Corporation owned
by the optionee having a fair market value on the date of exercise equal to the
exercise price, (iv) cashless exercise as set forth in Section 5(b), (v) any
combination of the foregoing or (vi) such other form of payment as may be
permitted by the Committee administering the Stock Option Plan.

                  (b) The optionee may elect to receive shares of Common Stock
equal to the value of the entire unexercised portion of the option determined in
the manner described below (or any portion of the option remaining unexercised)
upon delivery of Notice of Cashless Exercise Form annexed hereto duly executed.
In such event the Corporation shall issue to the optionee a number of shares of
the Corporation's Common Stock computed using the following formula:

                                 X = Y (A-B)
                                     -------
                                        A

Where X = the number of shares of Common Stock to be issued to the optionee.

      Y = the number of shares of Common Stock purchasable under this option
          for which the optionee elects a cashless exercise.

      A = the Market Value of the Corporation's Common Stock on the business day
          immediately preceding the day on which the

          Notice of Cashless Exercise is received by the Corporation.

      B = The Price set forth on the first page of this Agreement (as adjusted
          to the date of such calculation).

                  (c) For purposes of this Agreement, the Market Value of a
share of Common Stock on any date shall be equal to (i) the closing bid price
per share as published by a national securities exchange on which shares of
Common Stock (or other units of the security) are traded (an "Exchange") on such
date or, if there is no bid for Common Stock on such

                                       9
<PAGE>

date, the bid price on such Exchange at the close of trading on the next earlier
date or, (ii) if shares of Common Stock are not listed on a national securities
exchange on such date, the closing bid price per share as published on the
National Association of Securities Dealers Automatic Quotation System ("NASDAQ")
National Market System if the shares are quoted on such system on such date, or
(iii) the closing bid price in the over-the-counter market at the close of
trading on such date if the shares are not traded on an Exchange or listed on
the NASDAQ National Market System, or (iv) if the Common Stock is not traded on
a national securities exchange or in the over-the-counter market, the fair
market value of a share of Common Stock on such date as determined in good faith
by the Board of Directors. If the optionee disagrees with the determination of
the Market Value of any securities of the Corporation determined by the Board of
Directors under Section 5(c)(iv), the Market Value of such securities shall be
determined by an independent appraiser acceptable to the Corporation and the
optionee (or, if they cannot agree on such an appraiser, by an independent
appraiser selected by each of them, and Market Value shall be the median of the
appraisals made by such appraisers). If there is one appraiser, the cost of the
appraisal shall be shared equally between the Corporation and the optionee. If
there are two appraisers, each the Corporation and the optionee shall pay for
its own appraisal.

            6. The Corporation will pay any stock transfer tax in connection
with the issuance, transfer or exchange of stock pursuant hereto, but may
require deposit or payment of any other tax which the Corporation may be
required to withhold or collect.

            7. The price and number of shares subject to the option shall be
appropriately adjusted in the event of a reorganization, recapitalization, stock
split, stock dividend, combination of shares, or similar change in the
Corporation's shares. The good faith determination by the Board of Directors of
the Corporation of the appropriate adjustment shall be final and conclusive. In
the case of a merger, sale of assets or similar transaction which results in a
replacement of the Corporation's shares of common stock with stock of another
corporation, the Corporation shall be required to replace any outstanding
options covered hereby with comparable options to purchase the stock of such
other corporation, or will provide for immediate exercisability of the options
covered hereby, with all options covered hereby not being exercised within the
time period specified by the Board being terminated.

            8. This instrument confers no rights as a stockholder upon the
optionee, and an optionee shall have no such rights unless and until the date a
certificate representing shares of the Corporation's stock is issued or
transferred to such person upon the exercise hereof. Nothing contained herein
shall be deemed to give any individual any right to be retained in the employ of
the Corporation or any subsidiary.

            9. Enforcement of the terms of this instrument shall be governed by
the laws of the State of Delaware. Any action brought hereunder shall be brought
in the Federal or State courts located in Maryland, to which jurisdiction both
parties hereto submit. Any action hereunder against the optionee may be
instituted by registered or certified mail, return receipt requested, to his
residence, as indicated on the books of the Corporation.

            10. Notwithstanding the vesting dates set forth in the table above,
all options granted hereunder shall become immediately exercisable upon a Change
of Control. A Change of Control shall be deemed to have occurred if:

                (i) any "person" (as defined in Sections 13(d) and 14(d) of the
      Securities Exchange Act of 1994, as amended (the "Exchange Act") becomes
      the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
      directly or indirectly, of securities of the Corporation representing more
      than fifty percent (50%) of the combined voting power of the Corporation's
      then outstanding securities;

                (ii) there shall cease to be a majority of the Board of
      Directors comprised as follows: individuals who on the date of this
      Agreement constitute the Board of Directors, and any new director(s) whose
      election by the Board of Directors or nomination for election by the
      Corporation's stockholders was approved by a vote of at a majority of the
      directors then still in office who either were directors or whose election
      or nomination for election was previously so approved; or

                (iii) the stockholders of the Corporation approve a merger or
      consolidation of the Company with any other corporation, other than a
      merger or consolidation which would result in the voting securities of the
      Corporation outstanding immediately prior thereto continuing to represent
      (either by remaining outstanding or by being converted into voting
      securities of the surviving entity) at least fifty percent (50%) of the
      combined voting power of the voting securities of the Corporation or such
      surviving entity outstanding immediately after such merger or
      consolidation, or the stockholders of the Corporation approve a plan of
      complete liquidation of the Corporation or an agreement for the sale or
      disposition by the Corporation of all or substantially all the
      Corporation's assets.

                                       10
<PAGE>

            IN WITNESS WHEREOF, this instrument has been executed for the
Corporation by a duly authorized officer thereof and by the optionee as of the
date of grant.

Dated: December 5, 2001

                                        INTERNATIONAL DISPENSING CORPORATION

                                        By: /s/ Gary Allanson
                                           -------------------------------------
                                           Gary Allanson, President

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