EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of this 29th day of January 2001, between eRoomSystem Technologies, Inc., a
Nevada corporation (the "Company"), and Derek K. Ellis, an individual (the
"Executive"). The Company and Executive are collectively referred to hereinafter
as the "Parties".

                                   WITNESSETH:

         WHEREAS, on July 12, 2000, the Company and the Executive entered into
an Executive Employment Agreement ("2000 Employment Agreement"). On January 29,
2001, Executive agreed to rescind the 2000 Employment Agreement in consideration
for a one-time cash payment of $81,582.38, payable in ten (10) equal bi-weekly
installments of $8,158.24 (less state and Federal income tax withholdings and
other customary deductions);

         WHEREAS, the Parties believe it is in their respective best interests
to enter into a new employment agreement providing for the Company's employment
of Executive pursuant to the terms herein stated; and

         WHEREAS, it is the intention of the Parties that this Agreement be
effective retroactively as of July 12, 2000.

         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
Financial Officer, Treasurer and Secretary 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 effective as of July 12, 2000 and shall conclude on December
31, 2002 (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 one-year periods following the
expiration of the Term of Employment, unless (i) terminated earlier in
accordance with Section 7, or (ii) either the Company or the Executive notifies
the other 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:
<PAGE>

                (a) ANNUAL BASE SALARY; ONE-TIME CASH BONUS. The Executive's
         annual base salary shall be $132,500 per calendar year. The Executive's
         base salary shall be reviewed annually by the Company's 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. In consideration for rescinding
         the 2000 Employment Agreement, the Executive shall receive a one-time
         cash payment of $81,582.38, payable in ten (10) equal bi-weekly
         installments of $8,158.24 (less state and Federal income tax
         withholdings and other customary deductions), with the first
         installment payable on February 9, 2001 and the final installment to be
         paid on June 15, 2001.

                (b) PERFORMANCE BONUS. The Executive shall be eligible to
         receive a performance bonus at the end of each of the Company's fiscal
         year during the term hereof. 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 key hotel chains and customers, development of
         corporate projects and new products, and any other short- and long-term
         interests of the Company as it deems appropriate.

                (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"). On January 23, 2001, the Executive was
         granted, pursuant to the Plan, an option to purchase 100,000 shares of
         common stock at an exercise price of $1.91 per share, subject to the
         terms and conditions of the option grant attached hereto as Exhibit A,
         and the Plan; provided, however, Executive shall have an irrevocable
         right to exercise any and all options to purchase common stock of the
         Company issued to him at any time (including options issued pursuant to
         the Plan prior to the date of this Agreement), assuming such options
         are fully vested, through the final date on which such options are
         exercisable by Executive; provided, further, 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 $500. The monthly car allowance shall cover
         Executive's car lease/purchase installments, mileage, gas, insurance,
         repair and maintenance expenses.

                (e) OTHER BENEFITS. Executive shall be paid for ten (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
         Financial Officer.

                (f) HEALTH AND DENTAL INSURANCE. The Company shall provide
         health and dental insurance for Executive and his dependents with an
         insurance carrier of Employer's choice.

                                       2
<PAGE>

                (g) LIFE INSURANCE. The Company shall provide term life
         insurance coverage for Executive in the amount of three times
         Executive's annual salary, or $397,500. The period of such coverage
         will coincide with Executive's term of employment.

         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.

         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 the 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 three (3) months 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 Chief Executive Officer or the Board; (iii) fraud,
         misappropriation, dishonesty or embezzlement, or (iv) any willful or
         negligent misconduct, criminal conviction or similar conduct or
         activities.


                                       3
<PAGE>

                (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.

         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 stored 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.


                                       4
<PAGE>

         (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.

         (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 therefor.

         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 of the Company as it is now
or hereafter undertaken by 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 this 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 therefor.

         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 Las Vegas,
Nevada, in accordance with the rules for employment disputes of the American
Arbitration Association then in effect. The prevailing


                                       5
<PAGE>

party in such proceeding shall be entitled to recover the costs of arbitration
from 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 Nevada 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:                    eRoomSystem Technologies, Inc.
                                               390 North 3050 East
                                               St. George, Utah 84790
                                               Attention:  General Counsel

         IF TO THE EXECUTIVE:                  89 N. Stone Mountain Dr.
                                               St. George, UT 84770

         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 hall 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 preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

         16.    MODIFICATION. No amendment, modification, termination or waiver
of any provision of this Agreement nor consent to any departure by the Executive
or the Company therefrom 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.


                                       6
<PAGE>

         17.    TAXES. The Compensation payable is stated in gross amounts and
shall be subject to such 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

BY:   /s/ DAVID S. HARKNESS                 /s/ DEREK K. ELLIS
      --------------------------            -------------------------------
      DAVID S. HARKNESS                     DEREK K. ELLIS
      CHIEF EXECUTIVE OFFICER



                                       7
<PAGE>


                                    EXHIBIT A

                                  OPTION GRANT



                                       8
<PAGE>


                         EROOMSYSTEM TECHNOLOGIES, INC.

                      2000 STOCK OPTION AND INCENTIVE PLAN

                                  OPTION GRANT


                                             
Optionee:   Derek K. Ellis                       Date of Grant:   January 23, 2001

Grant No:   2001-1-266                           Exercise Price:   $1.91

Type of Option:   Incentive Option (1)           Number of Shares:   100,000

Term of Option:   Commencing on the Date of Grant and expiring on the
                  third anniversary date of this option grant (2)


         Subject to the terms, conditions and restrictions of the 2000 Stock
Option and Incentive Plan (the "Plan") and this Option Grant, eRoomSystem
Technologies, Inc. (the "Company") hereby grants an option (the "Option") to
purchase the above-referenced number of shares of common stock, $.001 par value
("Common Stock"), of the Company exercisable at the exercise price stated above.
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Plan.

         The Option granted hereunder shall be exercisable only to the extent it
has vested. Each installment of the Option shall vest on the vesting date(s) set
forth below so long as Optionee continues to have an uninterrupted Relationship
with the Company or a Subsidiary up to, and including, each such respective
scheduled vesting date. Optionee will only have the right to exercise any vested
portion(s) of the Option. If Optionee ceases to have a Relationship with the
Company or a Subsidiary up to, and including, the date upon which all or any
installment of the option vest(s), the Optionee shall have no right, nor be
entitled, to exercise the unvested portion of the Option. The vesting schedule
for the Option under this Option Grant is as follows:

                June 30, 2001                --      50% of the Option vests


                December 31, 2001            --      50% of the Option vests

         The Option shall not be assigned, pledged, sold, encumbered,
transferred or otherwise disposed of by Optionee, either voluntarily or by
operation of law, other than by will or the laws of descent and distribution,
and during the lifetime of Optionee the Option shall be exercisable only by such
Optionee. Any attempted assignment, pledge, sale, encumbrance, transfer or other
disposition of the Option, other than in accordance with the terms set forth
herein, shall be null and void, and of no effect.

----------
(1)  In order to qualify as an Incentive Option, numerous conditions must be
     met, including the approval of the Plan by the stockholders of the Company
     within twelve months after the date of adoption of the Plan by the Board.
     Neither the Committee, the Board nor the Company shall have any liability
     if the Option does not qualify as an Incentive Option. Any portion of the
     Option that does not qualify as an Incentive Option shall be deemed to be a
     Nonstatutory Option.

(2)  The Option shall terminate in accordance with the Plan.


                                       9
<PAGE>

         In addition to the foregoing, the shares of Common Stock issuable upon
exercise of the Option shall not be assigned, pledged, sold, encumbered or
otherwise transferred by Optionee, either voluntarily or by operation of law,
other than by will or the laws of descent and distribution, for a period of one
year after the close of an underwritten initial public offering for shares of
the Company's Common Stock, or for an additional period if required by the
Nasdaq National Market or similar agency. Any attempted assignment, pledge,
sale, encumbrance, transfer or other disposition of the shares of Common Stock
issuable upon exercise of the Option, other than in accordance with the terms
set forth herein, shall be null and void, and of no effect.

NOTE: A COPY OF THE PLAN IS ATTACHED. THE PLAN DETAILS THE TERMS, CONDITIONS AND
RESTRICTIONS OF THE OPTION AND THE UNDERLYING SHARES OF COMMON STOCK, AND SHOULD
BE CAREFULLY READ IN ITS ENTIRETY. IN ADDITION, THIS OPTION GRANT MAY CONTAIN
ADDITIONAL TERMS, CONDITIONS AND RESTRICTIONS OF THE OPTION AND THE UNDERLYING
SHARES OF COMMON STOCK. IF THERE IS ANY QUESTION, AMBIGUITY OR CONTRADICTION IN
THIS OPTION GRANT, THE LANGUAGE OF THE PLAN SHALL GOVERN.

         IN WITNESS WHEREOF, the undersigned executes this Option Grant as of
the Date of Grant first set forth above:

                                               EROOMSYSTEM TECHNOLOGIES, INC.,
                                               A NEVADA CORPORATION

                                               By:
                                                  ------------------------------
                                                     DAVID S. HARKNESS
                                                     CHIEF EXECUTIVE OFFICER

ACCEPTED AND AGREE TO AS OF THE DATE OF GRANT:

Signature:                            Social Security Number:
          --------------------------                         -------------------


Residence Address:   89 Stone Canyon Dr.                St. George, UT 84770
                     -----------------------------------------------------------
                     (street address)                   (city, state, zip code)


                                       10

Source: OneCLE Business Contracts.