Document:

EXHIBIT
      10.1

    

    Stock
      Option Plan

    

    CYBER
      DEFENSE SYSTEMS, INC.

    2005
      STOCK OPTION PLAN

    

    1. PURPOSE
      OF PLAN; ADMINISTRATION

    

    1.1 Purpose.

    

    The
      Cyber
      Defense Systems, Inc. 2005 Stock Option Plan (hereinafter, the "Plan")
      is
      hereby established to grant to officers and other employees of Cyber Defense
      Systems, Inc. or of its parents or subsidiaries (as defined in Sections 424(e)
      and (f), respectively, of the Internal Revenue Code of 1986, as amended (the
      “Code”)),
      if
      any (individually and collectively, the “Company”),
      and
      to non-employee directors, consultants and advisors and other persons who may
      perform significant services for or on behalf of the Company, a favorable
      opportunity to acquire Class A common stock, $.001 par value (“Common
      Stock”),
      of
      the Company and, thereby, to create an incentive for such persons to remain
      in
      the employ of or provide services to the Company and to contribute to its
      success.

    

    The
      Company may grant under the Plan both incentive stock options within the meaning
      of Section 422 of the Code (the “ISOs”
or
      “Incentive
      Stock Options”)
      and
      stock options that do not qualify for treatment as ISOs (“NSOs”
or
      “Nonstatutory
      Options”).
      Unless expressly provided to the contrary herein, all references herein to
      “options,” shall include both ISOs and NSOs.

    

    1.2 Administration.

    

    The
      Plan
      shall be administered by the Board of Directors of the Company (the
“Board”),
      if
      each member is a “Non-Employee Director” within the meaning of Rule 16b-3 under
      the Securities Exchange Act of 1934, as amended (“Rule
      16b-3”),
      or a
      committee (the “Committee”)
      of
[two or
      more directors, each of whom is a Non-Employee Director].
      Appointment of Committee members shall be effective upon acceptance of
      appointment. Committee members may resign at any time by delivering written
      notice to the Board. Vacancies in the Committee may be filled by the Board.
      Until such time that the Committee is properly appointed, the Board shall
      administer the Plan in accordance with the terms of this Section
      1.2.

    

    A
      majority of the members of the Committee shall constitute a quorum for the
      purposes of the Plan. Provided a quorum is present, the Committee may take
      action by affirmative vote or consent of a majority of its members present
      at a
      meeting. Meetings may be held telephonically as long as all members are able
      to
      hear one another, and a member of the Committee shall be deemed to be present
      for this purpose if he or she is in simultaneous communication by telephone
      with
      the other members who are able to hear one another. In lieu of action at a
      meeting, the Committee may act by written consent of a majority of its
      members.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Subject
      to the express provisions of the Plan, the Committee shall have the authority
      to
      construe and interpret the Plan and all Stock Option Agreements (as defined
      in
      Section 3.4) entered into pursuant hereto and to define the terms used therein,
      to prescribe, adopt, amend and rescind rules and regulations relating to the
      administration of the Plan and to make all other determinations necessary or
      advisable for the administration of the Plan; provided, however, that the
      Committee may delegate nondiscretionary administrative duties to such employees
      of the Company as it deems proper; and, provided, further, in its absolute
      discretion, the Board may at any time and from time to time exercise any and
      all
      rights and duties of the Committee under the Plan. Subject to the express
      limitations of the Plan, the Committee shall designate the individuals from
      among the class of persons eligible to participate as provided in Section 1.3
      who shall receive options, whether an optionee will receive ISOs or NSOs, or
      both, and the amount, price, restrictions and all other terms and provisions
      of
      such options (which need not be identical). 

     

    Members
      of the Committee shall receive such compensation for their services as members
      as may be determined by the Board. All expenses and liabilities which members
      of
      the Committee incur in connection with the administration of this Plan shall
      be
      borne by the Company. The Committee may, with the approval of the Board, employ
      attorneys, consultants, accountants, appraisers, brokers or other persons.
      The
      Committee, the Company and the Company's officers and directors shall be
      entitled to rely upon the advice, opinions or valuations of any such persons.
      No
      members of the Committee or Board shall be personally liable for any action,
      determination or interpretation made in good faith with respect to the Plan,
      and
      all members of the Committee shall be fully protected by the Company in respect
      of any such action, determination or interpretation.

    

    
       1.3  Participation.

    

    

    Officers
      and other employees of the Company, non-employee directors, consultants and
      advisors and other persons who may perform significant services on behalf of
      the
      Company shall be eligible for selection to participate in the Plan upon approval
      by the Committee; provided, however, that only "employees" (within the meaning
      of Section 3401(c) of the Code) of the Company shall be eligible for the grant
      of Incentive Stock Options. An individual who has been granted an option may,
      if
      otherwise eligible, be granted additional options if the Committee shall so
      determine. No person is eligible to participate in the Plan by matter of right;
      only those eligible persons who are selected by the Committee in its discretion
      shall participate in the Plan.

    

    1.4
       Stock
      Subject to the Plan.

    

    Subject
      to adjustment as provided in Section 3.5, the stock to be offered under the
      Plan
      shall be shares of authorized but unissued Common Stock, including any shares
      repurchased under the terms of the Plan or any Stock Option Agreement entered
      into pursuant hereto. The cumulative aggregate number of shares of Common Stock
      to be issued under the Plan shall not exceed 15,000,000
      shares,
      subject
      to adjustment as set forth in Section 3.5.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    If
      any
      option granted hereunder shall expire or terminate for any reason without having
      been fully exercised, the unpurchased shares subject thereto shall again be
      available for the purposes of the Plan. For purposes of this Section 1.4, where
      the exercise price of options is paid by means of the grantee's surrender of
      previously owned shares of Common Stock, only the net number of additional
      shares issued and which remain outstanding in connection with such exercise
      shall be deemed "issued" for purposes of the Plan.

     

    2. Stock
      Options.

    

    2.1 Exercise
      Price; Payment.

    

    (a)
      The
      exercise price of each Incentive Stock Option granted under the Plan shall
      be
      determined by the Committee, but shall not be less than 100% of the "Fair Market
      Value" (as defined below) of Common Stock on the date of grant. If an Incentive
      Stock Option is granted to an employee who at the time such option is granted
      owns (within the meaning of section 424(d) of the Code) more than 10% of the
      total combined voting power of all classes of capital stock of the Company,
      the
      option exercise price shall be at least 110% of the Fair Market Value of Common
      Stock on the date of grant. The exercise price of each Nonstatutory Option
      also
      shall be determined by the Committee, but shall not be less than 85% of the
      Fair
      Market Value of Common Stock on the date of grant. The status of each option
      granted under the Plan as either an Incentive Stock Option or a Nonstatutory
      Option shall be determined by the Committee at the time the Committee acts
      to
      grant the option, and shall be clearly identified as such in the Stock Option
      Agreement relating thereto.

    

    "Fair
      Market Value" for purposes of the Plan shall mean: (i) the closing price of
      a
      share of Common Stock on the principal exchange on which shares of Common Stock
      are then trading, if any, on the day immediately preceding the date of grant,
      or, if shares were not traded on the day preceding such date of grant, then
      on
      the next preceding trading day during which a sale occurred; or (ii) if Common
      Stock is not traded on an exchange but is quoted on Nasdaq or a successor
      quotation system, (1) the last sales price (if Common Stock is then listed
      on
      the Nasdaq Stock Market) or (2) the mean between the closing representative
      bid
      and asked price (in all other cases) for Common Stock on the day prior to the
      date of grant as reported by Nasdaq or such successor quotation system; or
      (iii)
      if there is no listing or trading of Common Stock either on a national exchange
      or over-the-counter, that price determined in good faith by the Committee to
      be
      the fair value per share of Common Stock, based upon such evidence as it deems
      necessary or advisable.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)
      In
      the discretion of the Committee at the time the option is exercised, the
      exercise price of any option granted under the Plan shall be paid in full in
      cash, by check or by the optionee's interest-bearing promissory note (subject
      to
      any limitations of applicable state corpora tions law) delivered at the time
      of
      exercise; provided, however, that subject to the timing requirements of Section
      2.7, in the discretion of the Committee and upon receipt of all regulatory
      approvals, the person exercising the option may deliver as payment in whole
      or
      in part of such exercise price certificates for Common Stock of the Company
      (duly endorsed or with duly executed stock powers attached), which shall be
      valued at its Fair Market Value on the day of exercise of the option, or other
      property deemed appropriate by the Committee; and, provided further, that,
      subject to Section 422 of the Code, so-called cashless exercises as permitted
      under applicable rules and regulations of the Securities and Exchange Commission
      and the Federal Reserve Board shall be permitted in the discretion of the
      Committee. Without limiting the Committee's discretion in this regard,
      consecutive book entry stock-for-stock exercises of options (or "pyramiding")
      also are permitted in the Committee's discretion.

    

    Irrespective
      of the form of payment, the delivery of shares issuable upon the exercise of
      an
      option shall be conditioned upon payment by the optionee to the Company of
      amounts sufficient to enable the Company to pay all federal, state, and local
      withholding taxes resulting, in the Company's judgment, from the exercise.
      In
      the discretion of the Committee, such payment to the Company may be effected
      through (i) the Company's withholding from the number of shares of Common Stock
      that would otherwise be delivered to the optionee by the Company on exercise
      of
      the option a number of shares of Common Stock equal in value (as determined
      by
      the Fair Market Value of Common Stock on the date of exercise) to the aggregate
      withholding taxes, (ii) payment by the optionee to the Company of the aggregate
      withholding taxes in cash, (iii) withholding by the Company from other amounts
      contemporaneously owed by the Company to the optionee, or (iv) any combination
      of these three methods, as determined by the Committee in its
      discretion.

    

    2.2 Option
      Period.

    

    (a)
      The
      Committee shall provide, in the terms of each Stock Option Agreement, when
      the
      option subject to such agreement expires and becomes unexercisable, but in
      no
      event will an Incentive Stock Option granted under the Plan be exercisable
      after
      the expiration of ten years from the date it is granted. Without limiting the
      generality of the foregoing, the Stock Option Agreement provides that the option
      subject thereto expires 30 days following a Termination of Employment (as
      defined in Section 3.2 hereof) for any reason the options including those vested
      are canceled, other than death or disability, or six months following a
      Termination of Employment for disability or following an optionee's death.
      

    

    (b) Outside
      Date for Exercise.
      Notwithstanding any provision of this Section 2.2, in no event shall any option
      granted under the Plan be exercised after the expiration date of such option
      set
      forth in the applicable Stock Option Agreement.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.3 Exercise
      of Options.

    

    Each
      option granted under the Plan shall become exercisable and the total number
      of
      shares subject thereto shall be purchasable, in a lump sum or in such
      installments, which need not be equal, as the Committee shall determine;
      provided, however, that each option shall become exercisable in full no later
      than ten years after such option is granted, and each option shall vest and
      become exercisable (subject in all cases to the discretion of the Committee
      to
      modify the vesting schedule of any options granted under the Plan) as follows:
      (i) twenty-five percent (25%) on the date of grant of the option (“Grant
      Date”);
      and
      (ii) thereafter, twenty-five percent (25%) on each annual anniversary of the
      Grant Date; provided, further, that if the holder of an option shall not in
      any
      given installment period purchase all of the shares which such holder is
      entitled to purchase in such installment period, such holder's right to purchase
      any shares not purchased in such installment period shall continue until the
      expiration or sooner termination of such holder's option. The Committee may,
      at
      any time after grant of the option and from time to time, increase the number
      of
      shares purchasable in any installment, subject to the total number of shares
      subject to the option and the limitations set forth in Section 2.5. At any
      time
      and from time to time prior to the time when any exercisable option or
      exercisable portion thereof becomes unexercisable under the Plan or the
      applicable Stock Option Agreement, such option or portion thereof may be
      exercised in whole or in part; provided, however, that the Committee may, by
      the
      terms of the option, require any partial exercise to be with respect to a
      specified minimum number of shares. No option or installment thereof shall
      be
      exercisable except with respect to whole shares. Fractional share interests
      shall be disregarded, except that they may be accumulated as provided above
      and
      except that if such a fractional share interest constitutes the total shares
      of
      Common Stock remaining available for purchase under an option at the time of
      exercise, the optionee shall be entitled to receive on exercise a certified
      or
      bank cashier's check in an amount equal to the Fair Market Value of such
      fractional share of stock. Notwithstanding the foregoing, options held by any
      optionee shall continue to vest only so long as such optionee remains employed
      or otherwise engaged by the Company.

     

    2.4 Transferability
      of Options.

    

    Except
      as
      the Committee may determine as aforesaid, an option granted under the Plan
      shall, by its terms, be nontransferable by the optionee other than by will
      or
      the laws of descent and distribution, or pursuant to a qualified domestic
      relations order (as defined by the Code), and shall be exercisable during the
      optionee's lifetime only by the optionee or by his or her guardian or legal
      representative. More particularly, but without limiting the generality of the
      immediately preceding sentence, an option may not be assigned, transferred
      (except as provided in the preceding sentence), pledged or hypothecated (whether
      by operation of law or otherwise), and shall not be subject to execution,
      attachment or similar process. Any attempted assignment, transfer, pledge,
      hypothecation or other disposition of any option contrary to the provisions
      of
      the Plan and the applicable Stock Option Agreement, and any levy of any
      attachment or similar process upon an option, shall be null and void, and
      otherwise without effect, and the Committee may, in its sole discretion, upon
      the happening of any such event, terminate such option forthwith.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.5 Limitation
      on Exercise of Incentive Stock Options.

    

    To
      the
      extent that the aggregate Fair Market Value (determined on the date of grant
      as
      provided in Section 2.1 above) of the Common Stock with respect to which
      Incentive Stock Options granted hereunder (together with all other Incentive
      Stock Option plans of the Company) are exercisable for the first time by an
      optionee in any calendar year under the Plan exceeds $100,000, such options
      granted hereunder shall be treated as Nonstatutory Options to the extent
      required by Section 422 of the Code. The rule set forth in the preceding
      sentence shall be applied by taking options into account in the order in which
      they were granted.

    

    2.6 Disqualifying
      Dispositions of Incentive Stock Options.

    

    If
      Common
      Stock acquired upon exercise of any Incentive Stock Option is disposed of in
      a
      disposition that, under Section 422 of the Code, disqualifies the option holder
      from the application of Section 421(a) of the Code, the holder of the Common
      Stock immediately before the disposition shall comply with any requirements
      imposed by the Company in order to enable the Company to secure the related
      income tax deduction to which it is entitled in such event.

     

    2.7 Certain
      Timing Requirements.

    

    At
      the
      discretion of the Committee, shares of Common Stock issuable to the optionee
      upon exercise of an option may be used to satisfy the option exercise price
      or
      the tax withholding consequences of such exercise, in the case of persons
      subject to Section 16 of the Securities Exchange Act of 1934, as amended, only
      (i) during the period beginning on the third business day following the date
      of
      release of the quarterly or annual summary statement of sales and earnings
      of
      the Company and ending on the twelfth business day following such date or (ii)
      pursuant to an irrevocable written election by the optionee to use shares of
      Common Stock issuable to the optionee upon exercise of the option to pay all
      or
      part of the option price or the withholding taxes made at least six months
      prior
      to the payment of such option price or withholding taxes.

    

    2.8 No
      Effect on Employment.

    

    Nothing
      in the Plan or in any Stock Option Agreement hereunder shall confer upon any
      optionee any right to continue in the employ of the Company, any Parent
      Corporation or any Subsidiary or shall interfere with or restrict in any way
      the
      rights of the Company, its Parent Corporation and its Subsidiaries, which are
      hereby expressly reserved, to discharge any optionee at any time for any reason
      whatsoever, with or without cause.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    For
      purposes of the Plan, "Parent Corporation" shall mean any corporation in an
      unbroken chain of corporations ending with the Company if each of the
      corporations other than the Company then owns stock possessing 50% or more
      of
      the total combined voting power of all classes of stock in one of the other
      corporations in such chain. For purposes of the Plan, "Subsidiary" shall mean
      any corporation in an unbroken chain of corporations beginning with the Company
      if each of the corporations other than the last corporation in the unbroken
      chain then owns stock possessing 50% or more of the total combined voting power
      of all classes of stock in one of the other corporations in such
      chain.

    

    3.
       Other
      Provisions.

    

    3.1 Sick
      Leave and Leaves of Absence.

    

    Unless
      otherwise provided in the Stock Option Agreement, and to the extent permitted
      by
      Section 422 of the Code, an optionee's employment shall not be deemed to
      terminate by reason of sick leave, military leave or other leave of absence
      approved by the Company if the period of any such leave does not exceed a period
      approved by the Company, or, if longer, if the optionee's right to reemployment
      by the Company is guaranteed either contractually or by statute. A Stock Option
      Agreement may contain such additional or different provisions with respect
      to
      leave of absence as the Committee may approve, either at the time of grant
      of an
      option or at a later time. 

     

    3.2 Termination
      of Employment.

    

    For
      purposes of the Plan "Termination of Employment," shall mean the time when
      the
      employee-employer relationship between the optionee and the Company, any
      Subsidiary or any Parent Corporation is terminated for any reason, including,
      but not by way of limitation, a termination by resignation, discharge, death,
      disability or retirement; but excluding (i) terminations where there is a
      simultaneous reemployment or continuing employment of an optionee by the
      Company, any Subsidiary or any Parent Corporation, (ii) at the discretion of
      the
      Committee, terminations which result in a temporary severance of the
      employee-employer relationship, and (iii) at the discretion of the Committee,
      terminations which are followed by the simultaneous establishment of a
      consulting relationship by the Company, a Subsidiary or any Parent Corporation
      with the former employee. Subject to Section 3.1, the Committee, in its absolute
      discretion, shall determine the affect of all matters and questions relating
      to
      Termination of Employment; provided, however, that, with respect to Incentive
      Stock Options, a leave of absence or other change in the employee-employer
      relationship shall constitute a Termination of Employment if, and to the extent
      that such leave of absence or other change interrupts employment for the
      purposes of Section 422(a)(2) of the Code and the then-applicable regulations
      and revenue rulings under said Section.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.3 Issuance
      of Stock Certificates.

    

    Upon
      exercise of an option, the Company shall deliver to the person exercising such
      option a stock certificate evidencing the shares of Common Stock acquired upon
      exercise. Notwithstanding the foregoing, the Committee in its discretion may
      require the Company to retain possession of any certificate evidencing stock
      acquired upon exercise of an option which remains subject to repurchase under
      the provisions of the applicable Stock Option Agreement or any other agreement
      signed by the optionee in order to facilitate such repurchase
      provisions.

    

    3.4 Terms
      and Conditions of Options.

    

    Each
      option granted under the Plan shall be evidenced by a written Stock Option
      Agreement ("Stock Option Agreement") between the option holder and the Company
      providing that the option is subject to the terms and conditions of the Plan
      and
      to such other terms and conditions not inconsistent therewith as the Committee
      may deem appropriate in each case.

    

    3.5 Adjustments
      Upon Changes in Capitalization; Merger and Consolidation.

    

    If
      the
      outstanding shares of Common Stock are changed into, or exchanged for cash
      or a
      different number or kind of shares or securities of the Company or of another
      corporation through reorganization, merger, recapitalization, reclassification,
      stock split-up, reverse stock split, stock dividend, stock consolidation, stock
      combination, stock reclassification or similar transaction, an appropriate
      adjustment shall be made by the Committee in the number and kind of shares
      as to
      which options may be granted. In the event of such a change or exchange, other
      than for shares or securities of another corporation or by reason of
      reorganization, the Committee shall also make a corresponding adjustment
      changing the number or kind of shares and the exercise price per share allocated
      to unexercised options or portions thereof, which shall have been granted prior
      to any such change, shall likewise be made. Any such adjustment, however, shall
      be made without change in the total price applicable to the unexercised portion
      of the option (except for any change in the aggregate price resulting from
      rounding-off of share quantities or prices).

     

    In
      the
      event of a "spin-off" or other substantial distribution of assets of the Company
      which has a material diminutive effect upon the Fair Market Value of the Common
      Stock, the Committee in its discretion shall make an appropriate and equitable
      adjustment to the exercise prices of options then outstanding under the
      Plan.

    

    Where
      an
      adjustment under this Section 3.5 of the type described above is made to an
      Incentive Stock Option, the adjustment will be made in a manner which will
      not
      be considered a "modification" under the provisions of subsection 424(b)(3)
      of
      the Code.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    In
      connection with the dissolution or liquidation of the Company or a partial
      liquidation involving 50% or more of the assets of the Company, a reorganization
      of the Company in which another entity is the survivor, a merger or
      reorganization of the Company under which more than 50% of the Common Stock
      outstanding prior to the merger or reorganization is converted into cash or
      into
      a security of another entity, a sale of more than 50% of the Company's assets,
      or a similar event that the Committee determines, in its discretion, would
      materially alter the structure of the Company or its ownership, the Committee,
      upon 30 days prior written notice to the option holders, may, in its discretion,
      do one or more of the following: (i) shorten the period during which options
      are
      exercisable (provided they remain exercisable for at least 30 days after the
      date the notice is given); (ii) accelerate any vesting schedule to which an
      option is subject; (iii) arrange to have the surviving or successor entity
      grant
      replacement options with appropriate adjustments in the number and kind of
      securities and option prices, or (iv) cancel options upon payment to the option
      holders in cash, with respect to each option to the extent then exercisable
      (including any options as to which the exercise has been accelerated as
      contemplated in clause (ii) above), of any amount that is the equivalent of
      the
      Fair Market Value of the Common Stock (at the effective time of the dissolution,
      liquidation, merger, reorganization, sale or other event) or the fair market
      value of the option. In the case of a change in corporate control, the Committee
      may, in considering the advisability or the terms and conditions of any
      acceleration of the exercisability of any option pursuant to this Section 3.5,
      take into account the penalties that may result directly or indirectly from
      such
      acceleration to either the Company or the option holder, or both, under Section
      280G of the Code, and may decideto limit such acceleration to the extent
      necessary to avoid or mitigate such penalties or their effects.

    

    No
      fractional share of Common Stock shall be issued under the Plan on account
      of
      any adjustment under this Section 3.5.

    

    3.6 Rights
      of Participants and Beneficiaries.

    

    The
      Company shall pay all amounts payable hereunder only to the option holder or
      beneficiaries entitled thereto pursuant to the Plan. The Company shall not
      be
      liable for the debts, contracts or engagements of any optionee or his or her
      beneficiaries, and rights to cash payments under the Plan may not be taken
      in
      execution by attachment or garnishment, or by any other legal or equitable
      proceeding while in the hands of the Company.

    

    3.7 Government
      Regulations.

    

    The
      Plan,
      and the grant and exercise of options and the issuance and delivery of shares
      of
      Common Stock under options granted hereunder, shall be subject to compliance
      with all applicable federal and state laws, rules and regulations (including
      but
      not limited to state and federal securities law) and federal margin requirements
      and to such approvals by any listing, regulatory or governmental authority
      as
      may, in the opinion of counsel for the Company, be necessary or advisable in
      connection therewith. Any securities delivered under the Plan shall be subject
      to such restrictions, and the person acquiring such securities shall, if
      requested by the Company, provide such assurances and representations to the
      Company as the Company may deem necessary or desirable to assure compliance
      with
      all applicable legal requirements. To the extent permitted by applicable law,
      the Plan and options granted hereunder shall be deemed amended to the extent
      necessary to conform to such laws, rules and regulations.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.8 Amendment
      and Termination.

    

    The
      Board
      or the Committee may at any time suspend, amend or terminate the Plan and may,
      with the consent of the option holder, make such modifications of the terms
      and
      conditions of such option holder's option as it shall deem advisable, provided,
      however, that, without approval of the Company's stockholders given within
      twelve months before or after the action by the Board or the Committee, no
      action of the Board or the Committee may, (A) materially increase the benefits
      accruing to participants under the Plan; (B) materially increase the number
      of
      securities which may be issued under the Plan; or (C) materially modify the
      requirements as to eligibility for participation in the Plan. No option may
      be
      granted during any suspension of the Plan or after such termination. The
      amendment, suspension or termination of the Plan shall not, without the consent
      of the option holder affected thereby, alter or impair any rights or obligations
      under any option theretofore granted under the Plan. No option may be granted
      during any period of suspension nor after termination of the Plan, and in no
      event may any option be granted under the Plan after the expiration of ten
      years
      from the date the Plan is adopted by the Board.

    

    3.9 Time
      of Grant and Exercise of Option.

    

    An
      option
      shall be deemed to be exercised when the Secretary of the Company receives
      written notice from an option holder of such exercise, payment of the exercise
      price determined pursuant to Section 2.1 of the Plan and set forth in the Stock
      Option Agreement, and all representations, indemnifications and documents
      reasonably requested by the Committee.

    

    3.10 Privileges
      of Stock Ownership; Non-Distributive Intent;
      Reports
      to Option Holders.

    

    A
      participant in the Plan shall not be entitled to the privilege of stock
      ownership as to any shares of Common Stock not actually issued to the optionee.
      Upon exercise of an option at a time when there is not in effect under the
      Securities Act of 1933, as amended, a Registration Statement relating to the
      Common Stock issuable upon exercise or payment therefor and available for
      delivery a Prospectus meeting the requirements of Section 10(a)(3) of said
      Act,
      the optionee shall represent and warrant in writing to the Company that the
      shares purchased are being acquired for investment and not with a view to the
      distribution thereof.

    

    The
      Company shall furnish to each optionee under the Plan the Company's annual
      report and such other periodic reports, if any, as are disseminated by the
      Company in the ordinary course to its stockholders.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.11 Legending
      Share Certificates.

    

    In
      order
      to enforce any restrictions imposed upon Common Stock issued upon exercise
      of an
      option granted under the Plan or to which such Common Stock may be subject,
      the
      Committee may cause a legend or legends to be placed on any share certificates
      representing such Common Stock, which legend or legends shall make appropriate
      reference to such restrictions, including, but not limited to, a restriction
      against sale of such Common Stock for any period of time as may be required
      by
      applicable laws or regulations. If any restriction with respect to which a
      legend was placed on any certificate ceases to apply to Common Stock represented
      by such certificate, the owner of the Common Stock represented by such
      certificate may require the Company to cause the issuance of a new certificate
      not bearing the legend.

    

    Additionally,
      and not by way of limitation, the Committee may impose such restrictions on
      any
      Common Stock issued pursuant to the Plan as it may deem advisable, including,
      without limitation, restrictions under the requirements of any stock exchange
      upon which Common Stock is then traded.

    

    3.12 Use
      of Proceeds.

    

    Proceeds
      realized pursuant to the exercise of options under the Plan shall constitute
      general funds of the Company.

    

    3.13 Changes
      in Capital Structure; No Impediment to Corporate Transactions.

    

    The
      existence of outstanding options under the Plan shall not affect the Company's
      right to effect adjustments, recapitalizations, reorganizations or other changes
      in its or any other corporation's capital structure or business, any merger
      or
      consolidation, any issuance of bonds, debentures, preferred or prior preference
      stock ahead of or affecting Common Stock, the dissolution or liquidation of
      the
      Company's or any other corporation's assets or business, or any other corporate
      act, whether similar to the events described above or otherwise. 

     

    3.14 Effective
      Date of the Plan.

    

    The
      Plan
      shall be effective as of the date of its approval by the stockholders of the
      Company within twelve months after the date of the Board's initial adoption
      of
      the Plan. Options may be granted but not exercised prior to stockholder approval
      of the Plan. If any options are so granted and stockholder approval shall not
      have been obtained within twelve months of the date of adoption of this Plan
      by
      the Board of Directors, such options shall terminate retroactively as of the
      date they were granted.

    

    3.15 Termination.

    

    The
      Plan
      shall terminate automatically as of the close of business on the day preceding
      the tenth anniversary date of its adoption by the Board or earlier as provided
      in Section 3.8. Unless otherwise provided herein, the termination of the Plan
      shall not affect the validity of any option agreement outstanding at the date
      of
      such termination.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.16 No
      Effect on Other Plans.

    

    The
      adoption of the Plan shall not affect any other compensation or incentive plans
      in effect for the Company, any Subsidiary or any Parent Corporation. Nothing
      in
      the Plan shall be construed to limit the right of the Company (i) to establish
      any other forms of incentives or compensation for employees of the Company,
      any
      Subsidiary or any Parent Corporation or (ii) to grant or assume options or
      other
      rights otherwise than under the Plan in connection with any proper corporate
      purpose including but not by way of limitation, the grant or assumption of
      options in connection with the acquisition by purchase, lease, merger,
      consolidation or otherwise, of the business, stock or assets of any corporation,
      partnership, firm or association.

    

    *
      *
      *EMPLOYMENT AGREEMENT

This employment agreement (this "Agreement") is made and entered into as of the
1st day of January 2007, between eRoomSystem Technologies, Inc., a Nevada
corporation (the "Company"), and David Gestetner, an individual (the
"Executive").

                                   WITNESSETH

WHEREAS, the Company and Executive deem it to be in their respective best
interests to enter into an agreement providing for the Company's employment of
Executive pursuant to the terms herein stated.

NOW THEREFORE, in consideration of the mutual provisions herein contained, the
parties agree as follows:

      1.    Duties. The Company hereby employs the Executive as the Chief
            Executive Officer and President of the Company, with the powers and
            duties in that capacity to be those powers and duties customary to
            such positions in similar publicly held corporations, together with
            any other duties of a senior executive nature as may be reasonably
            requested by the Board of Directors (the "Board") from time to time,
            which may include duties for one or more subsidiaries or affiliates
            of the Company. The Executive, in his capacity as an employee and
            officer of the Company, shall be responsible to obey the reasonable
            and lawful directives of the Board.

      2.    Term of Employment. The term of employment pursuant to this
            Agreement shall be two years commencing on the date of this
            Agreement and ending on December 31, 2008 (the "Term of
            Employment"), subject to earlier termination in accordance with
            Section 7 below. The Term of Employment and this Agreement shall be
            automatically extended for successive two-year periods following the
            expiration of the Term of Employment, unless (i) terminated earlier
            in writing, at least thirty days prior to such expiration, that the
            Term of Employment and this Agreement shall not be so extended.

      3.    Compensation. The Executive shall receive the following compensation
            for his services during the Term of Employment hereunder:

            (a)   Annual Base Salary. The Executive's annual base salary shall
                  be One Hundred Fifty Thousand dollars per calendar year.
                  Executive's base salary shall be reviewed annually by the
                  Compensation Committee. Such annual base salary shall be
                  payable on a pro rata basis, in twenty-six (26) equal
                  installments, in accordance with the Company's normal payroll
                  procedures.

            (b)   Performance Bonus. The Executive shall be eligible to receive
                  a performance bonus at the end of the Company's fiscal year.
                  The amount of such performance bonus, if any, shall be
                  determined by the Compensation Committee, in its sole and
                  absolute discretion, based upon such factors as the Company's
                  overall financial performance, anticipated working capital
                  requirements, cash reserves, anticipated liabilities or
                  threatened litigation, successful implementation of the
                  Company's business plan, establishment of relationships with
                  businesses, development of corporate projects and new
                  products, and any other short- and long-term interest of the
                  Company as it deems appropriate.

                                       1
<PAGE>

            (c)   Stock Options. The Executive shall be eligible to participate
                  in the Company's 2000 Stock Option Plan, as amended from time
                  to time (the "Plan"). Executive shall have an irrevocable
                  right to exercise any and all options to purchase common stock
                  of the Company issued to him under the Plan, assuming such
                  options are fully vested, through the final date on which such
                  options are exercisable by Executive; provided, Executive
                  shall not be bound by the terms of Section 6(f) of the Plan.

            (d)   Car Allowance. The Executive shall be entitled to a monthly
                  car allowance of $400 or a company car. The monthly car
                  allowance shall cover Executive's car lease/purchase
                  installments, excluding mileage which will be reimbursed at
                  the IRS allowed rate, gas, insurance, repair and maintenance
                  expenses.

            (e)   Other Benefits. Executive shall be paid for (10) holidays
                  annually as designated by the Company. Additionally, Flexible
                  Time Off (FTO) will accrue at the rate of 4.31 hours upon the
                  completion of each pay period in which you are employed as
                  Chief Executive Officer.

            (f)   Health, Dental and Term Life Insurance. The Company shall
                  provide health, dental and term life insurance for Executive
                  and his dependents with an insurance carrier of Employer's
                  choice.

      4.    Expense Reimbursement. The Company shall reimburse the Executive for
            all expenses incurred by him in the performance of his duties
            hereunder as required by the Board, including, but not limited to,
            transportation expenses, accommodations, entertainment, and other
            expenses incurred in connection with the business of the Company, in
            accordance with the Company's expense reimbursement policies, but
            specifically excluding automobile related expenses as outlined in
            Section 3(d) above.

      5.    Indemnification. The Company shall indemnify the Executive in his
            capacity as an officer and a director and hold him harmless from any
            cost, expense or liability arising out of or relating to any acts or
            decisions made by him on behalf of or in the course of performing
            services for the Company to the maximum extent provided by the
            Company's bylaws and applicable law.

                                       2
<PAGE>

      6.    Scope of Employment. The Executive agrees to devote in good faith
            his full time and best efforts (allowing for usual vacations and
            sick leave), during reasonable business hours to the duties that he
            is required to render to the Company hereunder, and agrees to travel
            to the extent he deems necessary to perform such duties.
            Notwithstanding the foregoing, the Executive shall be permitted to
            engage in other charitable, community or business affairs that may,
            from time to time require minor portions of his time, but which
            shall not interfere or be inconsistent with his duties hereunder.

      7.    Termination. This Agreement and the employment of the Executive
            hereunder shall or may be terminated for any of the following
            reasons:

            (a)   The Company may terminate this Agreement and employment of the
                  Executive hereunder without cause upon not less than thirty
                  (30) days advance written notice; provided, however, in such
                  event the Company shall pay to Executive severance equal to
                  one (1) year of his then existing salary as well as
                  continuation of Executive's health and dental benefits and car
                  allowance for such period. Severance payments shall be made on
                  a bi-weekly basis. The severance period shall commence upon
                  the conclusion of the notice period, or the first day
                  following Executive's final day of employment.

            (b)   By the Company at any time immediately for cause by providing
                  written notice to Executive. For purposes of this Agreement,
                  "cause" shall include, without limitation, (i) a breach of any
                  provision of this Agreement or a violation of any other duty
                  or obligation to the Company; (ii) a failure to follow a
                  written directive of the Board; (iii) fraud, misappropriation,
                  dishonesty or embezzlement, or (iv) any willful or negligent
                  misconduct, criminal conviction or similar conduct or
                  activities.

            (c)   Immediately without notice upon the Executive's death or
                  disability. For purposes of this Agreement, "disability" shall
                  mean the inability of the Executive to perform his duties
                  under this Agreement for a consecutive period of three (3)
                  months or a non-consecutive period of six (6) months within
                  any twelve-month period. In the event of the death or
                  disability of the Executive, the Executive or the estate,
                  beneficiary or legal representative of the Executive shall be
                  entitled to any applicable death or disability benefits (other
                  than key-man life insurance) which may be available under any
                  benefit plans maintained by the Company solely for the benefit
                  of the Executive at the time of the death or disability of the
                  Executive, and for the allowable duration of those benefit
                  plans as provided by their respective plan documents.

Except as otherwise provided in subsection (a) above, upon the termination of
this Agreement and the employment of Executive hereunder, the Company shall have
no further obligation or liability whatsoever to Employee under this Agreement
except with respect to any stock options granted under the Plan which have
vested as of such date or salary earned by the Executive and not paid by the
Company prior to the date of termination.

                                       3
<PAGE>

      8.    Assignment. By reason of the special and unique nature of the
            services hereunder, it is agreed that neither party hereto may
            assign any interest, rights or duties which it or he may have in
            this Agreement without the prior written consent of the other party,
            except that upon any merger, liquidation, or sale of all or
            substantially all of the assets of the Company to another
            corporation, this Agreement shall inure to the benefit of and be
            binding upon the Executive and the purchasing, surviving, or
            resulting company or corporation in the same manner and to the same
            extent as though such company or corporation were the Company.

      9.    Confidentiality.

            (a)   Recognizing that the knowledge and information about, or
                  relationships with, the business associates, partners,
                  customers, clients, suppliers, personnel and agents of the
                  Company and its affiliated companies and the business,
                  financing and marketing methods, systems, plans policies,
                  techniques and know-how of the Company and of its affiliated
                  companies (collectively, "Confidential Information") which the
                  Executive has heretofore and shall hereafter receive, obtain
                  or establish as an employee of the Company, or otherwise, is
                  valuable and a unique asset of the Company, the Executive
                  agrees that, during the Term of Employment and for a period of
                  three (3) years thereafter, he shall hold all Confidential
                  Information in the strictest confidence, and shall not
                  (otherwise than pursuant to his duties hereunder), directly or
                  indirectly, disclose without the express written consent of
                  the Company, any Confidential Information pertaining to any
                  person, firm, corporation or other entity, for any reason or
                  purpose whatsoever. The Executive acknowledges and agrees that
                  Confidential Information shall be deemed to include, without
                  limitation, all knowledge, data or information shared on any
                  electronic or other media. The Executive acknowledges and
                  agrees that all memoranda, notes records and other documents
                  made or compiled by the Executive or made available to the
                  Executive concerning any Confidential Information shall be the
                  Company's exclusive property and shall be delivered by the
                  Executive to the Company upon expiration or termination of
                  this Agreement or at any other time upon the request of the
                  Company.

            (b)   The Executive hereby acknowledges that the services to be
                  rendered by him are of a special, unique and extraordinary
                  character and, in connection with such services, he will have
                  access to Confidential Information. By reason of this, the
                  Executive consents and agrees that if he violates any of the
                  provisions of this Agreement with respect to confidentiality,
                  the Company would sustain irreparable harm and, therefore, in
                  addition to any other remedies which the Company may have
                  under this Agreement, or otherwise the Company will be
                  entitled to an injunction to be issued by any court of
                  competent jurisdiction restraining the Executive from
                  committing or continuing any such violation of this Agreement.

                                       4
<PAGE>

            (c)   The provisions of this Section 9 shall survive the expiration
                  or termination (for any reason) of this Agreement or any part
                  thereof, without regard to the reason therefore.

      10.   Covenant Not to Compete: Nonsolicitation.

            (a)   The parties acknowledge that the Executive's performance of
                  all terms of this Agreement is necessary to protect the
                  Company's legitimate business interests. The Executive agrees,
                  that, during the Term of Employment and for a period of three
                  (3) years thereafter, he will not, on behalf of himself, or on
                  behalf of any person, company, corporation, partnership or
                  other entity or enterprise, directly or indirectly, as an
                  employee, proprietor, owner, stockholder, partner, member,
                  officer, director, manager, lender, advisor, consultant or
                  otherwise engage in any business or activity competitive with
                  the business activities of the Company or any subsidiary. The
                  Executive further agrees that he will not, directly or
                  indirectly, during the Term of employment and for a period of
                  two years thereafter, solicit the trade or patronage of any
                  customers or prospective customers of the Company, any
                  subsidiary of the Company or of anyone who has heretofore
                  traded or dealt with the Company or any subsidiary of the
                  Company with respect to any technologies, services, products,
                  trade secrets or other matters in which the Company is active.

            (b)   The Executive hereby acknowledges that the services to be
                  rendered by him under this Agreement are of a special, unique
                  and extraordinary character and, in connection with such
                  services, he will have access to Confidential Information. By
                  reason thereof, the Executive consents and agrees that if he
                  violates any of the provisions of this Agreement with respect
                  to noncompetition or nonsolicitation, the Company would
                  sustain irreparable harm and therefore, in addition to any
                  other remedies which the Company may have under t his
                  Agreement or otherwise, the Company shall be entitled to an
                  injunction to be issued by any court of competent jurisdiction
                  restraining the Executive from committing or continuing any
                  such violation of this Agreement

            (c)   The provisions of this Section 10 shall survive the expiration
                  or termination of this Agreement or any part thereof, without
                  regard to the reason therefore.

                                       5
<PAGE>

      11.   Arbitration. Unless otherwise indicated, any dispute arising out of
            the terms and conditions of this Agreement or the Executive's
            employment with the company shall be settled by binding arbitration
            to be held in Lakewood, New Jersey, in accordance with the rules for
            employment disputes of the American Arbitration Association then in
            effect. The prevailing party in such proceeding shall be entitled to
            recover the costs of arbitration form the other party, including,
            without limitation, reasonable attorneys' fee.

      12.   Governing Law. This Agreement shall be subject to, and governed by,
            the laws of the State of New Jersey without reference to any
            principles of conflict of law.

      13.   Notices. All notices and other communications required or permitted
            under this Agreement shall be in writing (including a writing
            delivered by facsimile transmission) and shall be deemed to have
            been duly given (a) when delivered, if sent by registered or
            certified mail (return receipt requested), (b) when delivered, if
            delivered personally or by facsimile, or (c) on the second following
            business day, if sent by overnight mail or overnight courier, in
            each case to the parties at the following addresses (or at such
            other addresses as shall be specified by like notice):

                  If to the Company:      eRoom System Technologies, Inc.
                                          1072 Madison Avenue
                                          Lakewood, NJ 08701

                  If to the Executive:    c/o William Dauber
                                          1072 Madison Avenue
                                          Lakewood, NJ 08701

      14.   Severability: If any provision hereof is unenforceable, illegal or
            invalid for any reason whatsoever, such fact shall not affect the
            remaining provisions hereof. If any of the provisions hereof which
            impose restrictions on the Executive are, with respect to such
            restrictions, determined by a final judgment of any court of
            competent jurisdiction to be unenforceable or invalid because of the
            geographic scope or time duration of such restrictions, such
            provisions shall be deemed retroactively modified to provide for the
            maximum geographic scope and time duration which would make such
            provisions enforceable and valid. However, no such retroactive
            modification shall affect any of the Company's rights hereunder
            arising out of the breach of any such restrictive provisions,
            including, without limitation, the Company's rights to terminate
            this Agreement.

      15.   Waiver: No Failure or delay on the part of the Company or the
            Executive in exercising any right, power or remedy hereunder shall
            operate as a waiver thereof nor shall any single or partial exercise
            of any such right, power or remedy hereunder. The remedies herein
            provided are cumulative and not exclusive of any remedies provided
            by law.

                                       6
<PAGE>

      16.   Modification: No amendment, modification, termination or waiver of
            any provision of the Agreement nor consent to any departure by the
            Executive or the Company there from shall in any event be effective
            unless the same shall be in writing and signed by a duly authorized
            officer of the Company or by the Executive, as the case may be. Any
            such waiver or consent shall be effective only in the specific
            instance and for the specific purpose for which given.

      17.   Taxes: The Compensation payable is stated in gross amounts and shall
            be subject to withholding taxes and other taxes as may be required
            by law.

      IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
      by its duly authorized officer, and the Executive has hereunto set his
      signature as of the day and year first above written.

      EROOMSYSTEM TECHNOLOGIES, INC.,                 Executive
      a Nevada Corporation

      Compensation Committee

      By: ___________________________                __________________________
          Herbert Hardt                              David Gestetner
          Member of the Board                        President, CEO

      By: ___________________________
         Lawrence K. Wein
         Member of the Board

                                       7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}]]