[GRAPHIC OMITTED]
Electronic
1077 Business Center Circle
Sensor
Newbury Park, California 91320
Technology
Tel. (805) 480-1994
FAX (805) 480-1984
February 21, 2005
Jim Frey
1305 Ballantre Court
McClean, VA 22101
Dear Jim:
I want to thank you personally for taking your valuable time to
meet
Mark Tompkins, Mike Clofine, Humbert Powell
and myself in New York City. We are
all very excited about your potential
involvement in the future growth of
Electronic Sensor Technology, Inc. As we
have discussed, there are many
opportunities for the application of zNose
(TM) technology in the defense,
homeland security and commercial markets.
We would very much like to have your
commitment to become the Chairman of our
Board of Directors and assist us to the
growth of our company.
This letter is intended to formalize the terms of your
participation
as the Chairman of the Board of Directors
of Electronic Sensor Technology, Inc.,
a Nevada Corporation (the "Company"). The
term of your role as a member of the
Board of Directors for the Company will be
two (2) years.
As compensation for your good faith efforts to promote the
business
interests of the Company, the Company will
grant you 50,000 unregistered shares
of the Company's Common Stock upon the
execution of this letter, and 50,000
unregistered shares shall vest at six
months and twelve months of the date of
the execution of this letter (for a total
of 150,000 shares); provided that you
are still participating as a Company Board
Member as of each such anniversary
("Granted Interests"). In addition, the
Company will grant you 250,000 Options
to purchase Company Common Stock at fair
market value (FMV) that will vest on a
semi-annual basis over a two year period
from the date of this letter. In
addition, you shall receive $2,500 per
Board Meeting including a business class
ticket for any meeting requiring more than
two hours of travel. You shall also
be entitled to reimbursement of expenses
incurred in performing your
responsibilities hereunder to the extent
pre-approved by the Company. EST shall
provide you with liability insurance as
director of the board.
Your responsibilities as Board Chairman shall include but are
not
limited to:
- Attend a
minimum of four (4) quarterly meetings per calendar
year. The Company shall give appropriate advance notice of
the scheduling of the quarterly meetings.
<PAGE>
- Promote
interests of the Company through raising its
profile, making introductions to generate new business
opportunities, introduce potential full time executives and
employees and strengthening the Board of Directors and
investor base of the Company.
- As
requested by the Board of Directors, serve on designat
