Document:

EXHIBIT
      10.7

    

    Foothills
      Resources, Inc.

    4540
      California Avenue, Suite 550

    Bakersfield,
      California 93309

    

    

    

    April
      21,
      2006

    

    

    Mr.
      James
      H. Drennan

    3408
      Eastview Court

    Bakersfield,
      California 93306

    

    Dear
      Jim:

    

    Foothills
      Resources, Inc. (the “Company”) is pleased to offer you employment on the
      following terms:

    

    1. Position.
      You
      will serve in a full-time capacity as Vice President - Land and Legal of the
      Company. You will report to John L. Moran. By signing this letter agreement,
      you
      represent and warrant to the Company that you are under no contractual
      commitments inconsistent with your obligations to the Company. 

    

    2. Salary.
      You
      will be paid a salary at the annual rate of $125,000, payable in semi-monthly
      installments in accordance with the Company’s standard payroll practices for
      salaried employees. This salary will be subject to adjustment pursuant to the
      Company’s employee compensation policies in effect from time to time.

    

    3. Benefits.
      You
      will receive the Company’s standard benefits for salaried employees, including
      401(k) retirement account, Company-paid health, dental, life and disability
      insurance, and vacation and personal days.

    

    4. Stock
      Options.
      Subject
      to the approval of the Company’s Board of Directors or its Compensation
      Committee, you will be granted an option to purchase 100,000 shares of the
      Company’s Common Stock. The exercise price per share will be equal to the fair
      market value per share on the date the option is granted or on your first day
      of
      employment, whichever is later. The option will be subject to the terms and
      conditions applicable to options granted under the Company’s 2006 Equity
      Incentive Plan, as described in that Plan and the applicable stock option
      agreement. The option will vest as follows: 25% of the shares of Common Stock
      underlying such option will vest on the date of grant, and the remaining 75%
      of
      the shares of Common Stock underlying the option will vest in equal annual
      installments on the first, second and third anniversaries of the date of
      grant.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5. Confidential
      Information/Ownership and Assignment of Inventions; Non-Competition and
      Non-Solicitation; Insider
      Trading Policy/Public Disclosure.
      Like
      all Company employees, you will be required, as a condition to your employment
      with the Company, to sign the Company’s standard Assignment of Invention and
      Non-Disclosure Agreement, Non-Solicitation Agreement, and Insider Trading and
      Disclosure Policy Acknowledgement, copies of which are attached hereto as
      Exhibits A, B and C, respectively. 

    

    6. Period
      of Employment.
      Your
      employment with the Company will be “at will,” meaning that either you or the
      Company will be entitled to terminate your employment at any time and for any
      reason, with or without cause. Any contrary representations which may have
      been
      made to you are superseded by this offer. This is the full and complete
      agreement between you and the Company on this term. Although your job duties,
      title, compensation and benefits, as well as the Company’s personnel policies
      and procedures, may change from time to time, the “at will” nature of your
      employment may only be changed in an express written agreement signed by you
      and
      a duly authorized officer of the Company. 

    

    7. Outside
      Activities.
      While
      you render services to the Company, you will not engage in any other gainful
      employment, business or activity without the written consent of the Company.
      While you render services to the Company, you also will not assist any person
      or
      organization in competing with the Company, in preparing to compete with the
      Company or in hiring any employees of the Company. 

    

    8. Withholding
      Taxes.
      All
      forms of compensation referred to in this letter are subject to reduction to
      reflect applicable withholding and payroll taxes.

    

    9. Entire
      Agreement.
      This
      letter and the Exhibits attached hereto contain all of the terms of your
      employment with the Company and supersede any prior understandings or
      agreements, whether oral or written, between you and the Company. 

    

    10. Amendment
      and Governing Law.
      This
      letter agreement may not be amended or modified except by an express written
      agreement signed by you and a duly authorized officer of the Company. The terms
      of this letter agreement and the resolution of any disputes will be governed
      by
      California law.

    

    We
      hope
      that you find the foregoing terms acceptable. You may indicate your agreement
      with these terms and accept this offer by signing and dating the enclosed
      duplicate original of this letter and the enclosed Assignment of Invention
      and
      Non-Disclosure Agreement, Non-Solicitation Agreement, and Insider Trading and
      Disclosure Policy Acknowledgement, and returning them to me. As required by
      law,
      your employment with the Company is also contingent upon your providing legal
      proof of your identity and authorization to work in the United States. This
      offer, if not accepted, will expire at the close of business on April 28,
      2006.

    

    We
      look
      forward to having you join us on May 1, 2006.

    

    If
      you
      have any questions, please call me at 661-978-6986.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Very
      truly yours,

    

    FOOTHILLS
      RESOURCES, INC. 

    

    By:

     

    /s/
      John Moran   

    President

     

    I
      have
      read and accept this employment offer:

     

    /s/
      James H. Drennan   

    Signature
      of James H. Drennan  Dated:
      April 21, 2006Exhibit
      10.1 

    CYBERBUGTM

    SALES
      AGREEMENT

    

    This
      CyberBugTM
      Sales
      Agreement (the “Agreement”) is entered into as of the 4th
      day
      of
      October, 2006, by and between National Security Associates, Inc PO Box 8465
      Warner Robins, GA 31095, a Georgia corporation (“NSA”) and Cyber Defense
      Systems, Inc., a Florida corporation (“Cyber”).

    In
      consideration of the mutual covenants contained herein, the parties agree as
      follows:

    

    1.
      Recitals.

    

    (a)
      Cyber
      is engaged in the business of manufacturing and marketing to
      agencies

    of
      the
      United States government and to private customers an unmanned aerial vehicle
      (UAV) that it sells under the trademark CyberBugTM.

    

    (b)
      NSA
      is engaged in the business of Marketing, Selling and Training to DOD and Law
      Enforcement agencies and desires to acquire the rights to market, sell and
      train
      clients on the CyberBugTM
      Systems
      and accessories in certain geographic areas hereafter defined.

    

    (c)
      Cyber
      desires to sell CyberBugTM
      Systems
      to NSA for resell purposes and to

    grant
      such non-exclusive
      sales rights except as defined below
      to NSA
      pursuant to the terms and conditions of this Agreement.

    

    2.
      Receive
      and Sale
      of CyberBugTM
      Field
      System Demonstration Unit.

     

    (a)
      Cyber
      hereby agrees to provide
      NSA one (1) CyberBugTM
      Field
      Systems for demonstration
      purposes (“Demonstration Units”) having the specifications described on Exhibit
      A attached hereto. The Demonstration Unit are for demonstration purposes only
      and may not be resold by NSA until they have been held and used for a minimum
      of
      6 months at which time it may be sold with approval of Cyber. This
      unit
      will remain the property of Cyber, until sold. NSA will sell the unit every
      6
      -12 months,
      at an
      agreed upon discount as required to maintain a “like new” unit at all times with
      all upgrades, for on hand demonstrations and training. NSA
      will
      insure and replace at cost any CyberBug lost or destroyed during the
      demonstration period.

    

    (b)
      Cyber
      will at no charge train NSA operators at Cyber’s facility.

    

    (c)
      Cyber
      shall have the Demonstration Unit ready for pickup at such address not
      later
      than October 30, 2006. Additional Units sold by Cyber to NSA hereunder shall
      be
      ready for pickup at Cyber’s factory in St. Petersburg, Florida not later than
      thirty (30) days beginning October 30,
      2006
      following Cyber’s receipt of an order for additional Unit by NSA, delivered to
      NSA by insured freight to 3100 Gentian Blvd, Ste 002, Columbus, GA 3107.

    

    (d)
      Prior
      to acceptance of any CyberBugTM
      unit
      by
      NSA, Cyber shall inspect and test
      each
      unit, including performing any tests required to verify complete and proper
      functionality.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.
      Future Sales of CyberBugTM
      Production
      Units.

    

    (a)
      Subject to Section 3(b), Cyber hereby grants NSA the exclusive right to
purchase,
      market and resell CyberBugTM
      Systems
      (hereinafter referred to as “Production Units”) for end-users globally
      collectively, the “Territory”. Exclusive right, as it applies here, is applied
      to all end purchasers that are registered as customers of NSA.

    

    (b)
      NSA
      is granted the exclusive right, as a reseller, to list the CyberBugTM
      on
      the
“GSA contract” except
      for existing clients as registered by Cyber.

    

    (c)
      NSA’s
      sales and marketing rights in each identified territory within the Territory
      shall commence thirty (30) days from the date of Cyber’s providing of the
      CyberBugTM
      Field
      System for use in any identified territory; thereafter, the continuation of
      NSA’s sales and marketing rights shall be contingent upon NSA ordering from
      Cyber a minimum of two (2) Production Units during the initial 90 days, and
      an
      average of two Production Units per month for the next 12
      months,
      to be followed by an average of 3
      Production
      Models
      per
      month thereafter. This sales goal is subject to annual review and approval
      by
      both parties, in Jan of each year, starting in 2010. In the event NSA fails
      to
      order the minimum number of Production Units for resale in any identified
      territory in a given 12-month period, Cyber shall be entitled to market and
      sell
      Production Units directly to customers in that identified territory or to grant
      others the right to do so. Thereafter, without need for further action by the
      parties, the “Territory” shall be automatically redefined to constitute the
      remaining identified territory.

    

    (d)
      The
      specifications for the Production Units are set forth on Exhibit B attached
      hereto. Each new Production Unit sold by Cyber to NSA hereunder shall be ready
      for pickup at Cyber’s facility in St. Petersburg, Florida not later than thirty
      (30) days following Cyber’s receipt of an order for the Production Unit by
      NSA.

    

    (e)
      The
      purchase price for Production Units and parts sold by Cyber to NSA hereunder
      shall be Cyber’s government price less _% price
      for
      each of the Basic System and accessories as set forth on Exhibit B. (Cyber
      and
      NSA will work towards a _% discount for NSA by lowering production
      cost)

    

    (f)
      NSA
      may provide a demonstration flight of a Demonstration Unit to any customer
      in the Territory. In the event the customer purchases a Production Unit from
      NSA, or is a registered client of NSA, Cyber will agree not to solicit sales
      from such customer, and shall agree to place a similar covenant with respect
      to
      such customer in each sales agreement it may enter into with other resellers.
      NSA will register all prospect sells with Mr. Mike Lawson of Cyber.

    

    (g)
      During the time NSA retains the sales and marketing rights in the Territory,
      NSA
      agrees that it will not, within the Territory, purchase for resale from
      competitors of Cyber any products in competition with the CyberBugTM.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.
      Product Markings. NSA
      agrees to maintain on each product sold by Cyber to NSA and
      resold by NSA to each customer the CyberBugTM
      trademark
      and a notification that the product was manufactured by Cyber Defense Systems,
      Inc. NSA may place its own trademark and contact information on each such
      product, provided that this marking does not obscure any Cyber trademark or
      notification.

    

    5.
      Warranties.

    

    
      	
              Warranty
                Policy

            

    

    

    
      	
              Cyber
                warrants that the equipment is fit for the purposes described for
                a period
                of one year after the date of shipment when used in accordance with
                the
                directions for use. Unless the equipment is used in accordance with
                such
                instruction, this warranty is void and of no effect. 

               

              There
                are no other express or implied warranties. Cyber sole obligation
                and
                purchaser's exclusive remedy for breach of any warranty shall be
                limited
                to repair or replacement of the product, at the option of Cyber.
                Cyber
                shall not be liable for proximate, incidental, or consequential
                damages.

            

    

    

    (a) Cyber
      will provide NSA with documentation pertaining to the use of the products sold
      hereunder and technical issues pertaining to training.

    

    (b) CYBER
      WILL PROVIDE NSA WITH SPECIFICATIONS AND/OR MANUFACTURER PRODUCT WARRANTY DATA
      AND ASSISTANCE TO
      NSA.
      EXCEPT AS STATED HEREIN, IT IS AGREED THAT THE SALE OF ALL PRODUCT UNDER THIS
      AGREEMENT IS “AS IS, WHERE IS.” SELLER EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES,
      EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF TITLE OR INFRINGEMENT, AND ANY
      IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
      NSA
      IS PURCHASING THE PRODUCTS WITH FULL ASSUMPTION OF THE RISKS ASSOCIATED WITH
      THIS DISCLAIMER AND THE PURCHASE PRICE HAS BEEN NEGOTIATED TO REFLECT THIS
      ASSUMPTION OF RISK.

     

    8.
      Termination. This
      Agreement may be terminated by either party upon thirty (30) days
      prior notice at any time following the date NSA no longer retains marketing
      rights in the Territory. Any sales in progress upon termination will be honored
      for ninety (90) days.

    

    9.
      Notices.
      All
      notices required or given under this Agreement shall be in writing and
shall
      be
      deemed given (i) when received, if personally delivered; (ii) the day after
      it
      is sent, if sent by a recognized expedited delivery service with next-day
      delivery requested; or (iii) five days after it is sent, if mailed, postage
      prepaid, via certified mail, return receipt requested. In each case, notice
      shall be sent to the following, as applicable, or to such other address as
      such
      party shall have specified by notice in writing to the other party:

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    If
      to
      NSA: National Security Associates, Inc

    PO
      Box
      8465

    Warner
      Robins, GA 31095

    Attn:
      Tony L. Oxford, President

    

    If
      to
      Cyber: Cyber Defense Systems, Inc., and Techsphere

    10901
      Roosevelt Blvd.

    Suite
      100D

    St.
      Petersburg, FL 33716

    Attn:
      Michael F. Lawson, Chief Marketing Officer and Board Member

    

    10.
      General.

    

    (a)
      This
      Agreement constitutes the whole and entire agreement between the parties
pertaining
      to the subject matter hereof, and supersedes all prior agreements or
      understandings between the parties, both verbal and written, with respect to
      such subject. This Agreement may not be modified except by an instrument in
      writing signed by all parties.

    

    (b)
      The
      validity, construction and enforcement of, and the remedies under, this
Agreement
      shall be governed in accordance with the laws of Florida, except any choice
      of
      law provision of Florida law shall not apply if the law of a state or
      jurisdiction other than Florida would apply thereby.

    

    (c)
      The
      parties to this Agreement agree that jurisdiction and venue of any action
brought
      to enforce, or to construe or determine the validity of, any term or provision
      contained in this agreement shall properly lie only in any state or federal
      district court located in St. Petersburg, Florida. Each of the parties waives
      any defense of inconvenient forum to the maintenance of any action or proceeding
      so brought and waives any bond, surety, or other security that might be required
      of any other party with respect thereto. Any party may make service on the
      other
      party by sending or delivering a copy of the process to the party to be served
      at the address and in the manner provided for the giving of notices in Section
      9
      above. Nothing in this Section 10(c), however, shall affect the right
      of
      any party to serve legal process in any other manner permitted by law or in
      equity. Each party agrees that a final judgment in any action or proceeding
      so
      brought shall be conclusive and may be enforced by suit on the judgment or
      in
      any other manner provided by law or in equity.

    

    (d)
      This
      Agreement shall inure to the benefit of and be binding upon the parties
hereto
      and their respective personal representatives, successors and permitted assigns.
      No party may assign its, his or her obligations hereunder without the prior
      written consent of all other parties. 

    

    (e)
      The
      headings contained in this Agreement are for reference purposes only and
shall
      not
      affect the meaning or interpretation of this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (f)
      Each
      party to this Agreement shall bear its, his or her own expenses incurred in
      connection
      with negotiation, preparation and execution of this Agreement and the
      transactions contemplated herein. 

    

    (g)
      This
      Agreement may be executed in counterparts, each of which shall be deemed
      an
      original, but all of which shall constitute one and the same instrument. Any
      signature delivered by facsimile transmission shall be deemed a valid and
      binding signature for all purposes hereof. 

    

    (h)
      If
      any action is brought to enforce, or to construe or determine the validity
      of,
any
      term
      or provision of this agreement, the prevailing party shall be entitled to
      reasonable attorney's fees and costs of the action. 

    

    (i)
      In
      case any one or more of the provisions contained in this Agreement shall for
      any
      reason be held to be invalid, illegal. or unenforceable in any respect, such
      invalidity, illegality, or unenforceability shall not affect any other
      provisions hereof, and this Agreement shall be construed as if such invalid,
      illegal, or unenforceable provision had never been contained herein.

    

    The
      rest
      of this page is left intentionally blank

    

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

    

    
      	Cyber Defense Systems, Inc.,
              and
              Techsphere	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By: 	/s/
              Michael F. Lawson	 	 	 
	 	
              
Michael
              F. Lawson, Board Member and CMO	 	 	
            
	 	 	 	 	 

      	National Security Associates,
              Inc	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By: 	/s/
              Tony L. Oxford	 	 	 
	 	
              
Tony
              L. Oxford, President

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