EMPLOYMENT
AGREEMENT
AGREEMENT made as of the 25th day of October, 1999 between
INTELLI-CHECK, INC. ("Company"), a New York Corporation having an office at 000
Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000 and Xxxxxx Xxxxxxxx ("Employee"),
residing at 2142 Singing Xxxxx Drive, Skaneateles, N.Y. 13152
WHEREAS, Company and Employee wish to enter into an Employment
Agreement pursuant to which Employee will serve as Vice President, Sales of the
Company.
NOW, THEREFORE, in consideration of the respective agreements
hereinafter set forth, the parties agree as follows:
Article I
Employment
1.01 Term. Company hereby employs Employee, and Employee hereby accepts
employment with Company (including also employment by, and in
connection with the business activities of any of Company's affiliates,
subsidiaries and related corporations), in the position and with the
duties hereinafter set forth, for a period (the "term") commencing on
October 25, 1999 and ending October 24, 2001 subject, however, to
earlier termination in accordance with the provisions of this
Agreement. This Agreement shall automatically renew except if the
Employer gives Employee 90 days written notice before the completion of
the initial term of this Agreement.
Article II
Duties
2.01 General. Employee shall be the Vice President, Sales of the Company and
shall perform such executive duties as may from time to time be
assigned to him by Company's Board of Directors. If so elected or
appointed, Employee shall also serve without additional compensation as
a director and/or officer of the Company or any of its subsidiaries.
However, the Employee recognizes and agrees that the Board may elect to
amend the position and/or duties assigned to Employee. Such amendment
of position and/or duties shall be commensurate with that of a Vice
President with no reduction in Fixed Salary, benefits or incentives.
2.02 Performance. During the term of his employment, Employee shall devote
substantially all his business time, best efforts and attention to the
business, operations and affairs of Company and the performance of his
duties hereunder provided, however, that during the term of his
employment, Employee may work for a non-competing Company so long as he
devotes substantially all of his business time, best efforts and
attention to the business operations and affairs of the Company and the
performance of his duties hereunder.
2.03 Employee's Representations. Employee represents and warrants to and
agrees with Company that:
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Neither the execution nor performance by Employee of this Agreement is
prohibited by or constitutes or will constitute, directly or
indirectly, a breach or violation of, or will be adversely affected by,
any written or other agreement to which Employee is or has been a party
or by which he is bound.
Neither Employee nor any business or entity in which he has any
interest or from which he receives any payments has, directly or
indirectly, any interest of any kind in or is entitled to receive, and
neither Employee nor any such business or entity shall accept, from any
person, firm, corporation or other entity doing business with Company
any payments of any kind on account of any services performed by
Employee during the term of his employment.
Article III
Compensation and Related Matters
3.01(a) Fixed Salary. As compensation for Employee's services Company shall pay
Employee a salary of $115,000 per annum (the "Fixed Salary").
3.01(b) The Employee shall have the right at his election, to receive
compensation in the form of the Company's restricted Common Stock. Such
Stock shall be valued at fifty percent (50%) of the closing bid price
of the Company's Common Stock as quoted on NASDAQ/NMS (or other
established exchange) as of the date of the Employee's election. Such
election may be for all or part of the Employee's Compensation. At the
beginning of each quarter, Employee shall give the Company notice of
his election to exercise his option to receive restricted Common Stock
in lieu of cash compensation.
3.01(c) Fixed Salary Adjustment. The Fixed Salary may not be decreased
hereunder during the term of this Agreement, but may be increased upon
review by and within the sole discretion of the Company's Board of
Directors.
3.02 Expenses. Company shall pay or reimburse Employee for all reasonable
travel, hotel, entertainment and other business expenses incurred in
the performance of Employee's duties upon submission of appropriate
vouchers and other supporting data therefore.
3.03 Stock Options. The Company will grant to the Employee, pursuant to a
Stock Option Agreement substantially in the form of Exhibit A attached
hereto, an option to purchase 50,000 shares of the Company's Common
Stock at the price of the proposed initial public offering price
("IPO") to be vested as follows: 20,000 upon signing of Employment
Agreement, 5,000 for each 10,000 sales of ID-Check Products sold that
exceed 10,000. The maximum options that can be earned in any calendar
year may not exceed 100,000. Any options earned above the 50,000
granted herein shall be at fair market value on date of such grant.
3.04 Benefits. Employee shall be entitled to (i) participate in all general
pension, profit-sharing, life, medical, disability and other insurance
and employee benefit plans and programs at any time in effect for
executive employees of Company, provided, however, that nothing herein
shall obligate Company to establish or maintain any employee benefit
plan or program, whether of the type referred to in this clause (i) or
otherwise, and (ii) three (3) weeks vacation during each twelve month
period of employment at mutually agreeable times. Employee shall be
entitled to the use of a Company vehicle, however, Employee may elect
to provide his own vehicle and if such election is made, Company agrees
to pay Employee One Thousand Dollars ($1,000) per
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month to cover cost of the vehicle, insurance, repairs and other
expenses, pertaining thereto.
Article IV
Termination for Cause; Disability; Death
4.01 For Cause. Company shall have the right to terminate the employment of
Employee hereunder at any time for Cause (as hereinafter defined)
without prior notice (except as otherwise hereinafter provided). For
purposes of this Agreement "Cause" shall mean and include the
occurrence of any of the following acts or events by or relating to the
Employee: (i) any material misrepresentation by Employee in this
Agreement; (ii) any material breach of any obligations of Employee
under this Agreement which remains uncured for more than twenty (20)
days after written notice thereof by Company to Employee or if the
default is such that it cannot be cured within such 20-day period, upon
said breach; (iii) habitual insobriety or substance abuse of Employee
while performing his duties hereunder; (iv) theft or embezzlement from
Company or any other material acts of dishonesty; (v) repeated
insubordination respecting reasonable orders or directions of Company's
Board of Directors; (vi) conviction of a crime (other than traffic
violations and minor misdemeanors) or (vii) if Employee becomes the
subject of any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from, or otherwise limiting,
engaging in any activity in connection with the purchase or sale of any
security or commodity or in connection with any violation of Federal or
state securities laws or Federal commodities. In the event of
termination for Cause, Employee's Fixed Salary shall terminate as of
the effective date of termination of employment.
4.02 Without Cause. Company may not terminate the employment of Employee,
except for Cause notwithstanding Article IV; Section 4.01 of Company's
by-laws.
4.03 Disability. If Employee, by reason of illness, mental or physical
incapacity or other disability, is unable to perform his regular duties
hereunder (as may be determined by the Board of Directors), Company
shall continue to pay half of Employee's salary for the balance of the
term of this Agreement, provided, however, in the event Employee
recovers from any such illness, mental or physical incapacity or other
disability (as may be determined by an independent physician to which
Employee shall make himself available for examination at the reasonable
request of the Board of Directors), Employee shall immediately resume
his regular duties hereunder. Any payments to Employee under any
disability insurance or plan maintained by Company shall be applied
against and shall reduce the amount of the salary payable by Company
under this Agreement. If at any time during the year the Employee has
suffered a complete and total disability, defined as the inability to
perform his/her duties from any location, then the provisions of
paragraph 3.03 shall be pro-rated so as not to provide for incentive
compensation for the period of complete and total disability.
4.04 Death. In the event of Employee's death, Company shall continue to pay
half of the Employee's Fixed Salary for the balance of the term of this
Agreement to Employee's surviving spouse, provided, however, that, if
Company is the beneficiary of life insurance on Employee's life, it
shall use the proceeds of such insurance promptly upon the receipt
thereof to prepay (in inverse order to maturity), half of the Fixed
Salary remaining to be paid discounted to present value using an
assumed interest rate of 8% per annum. Company shall have the right
(but not the obligation) to obtain a life insurance policy on
Employee's life. The proceeds of any such life insurance policy shall
be payable to Company. Employee shall cooperate with Company and
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use his best efforts in all respects and regard to obtaining a life
insurance policy, including, without limitation, undergoing a physical
examination upon reasonable request.
Article V
Confidential Information; Non-Competition
5.01 Confidential Information. Employee shall not, at any time during or
following termination or expiration of the term of this Agreement,
directly or indirectly, disclose, publish or divulge to any person
(except in the regular course of Company's business), or appropriate,
use or cause, permit or induce any person to appropriate or use, any
proprietary, secret or confidential information of Company including,
without limitation, knowledge or information relating to its trade
secrets, business methods, the names or requirements of customers or
the prices, credit or other terms extended to its customers, all of
which Employee agrees are and will be of great value to Company and
shall at all times be kept confidential. Upon termination or expiration
of this Agreement, Employee shall promptly deliver or return to Company
all materials of a proprietary, secret or confidential nature relating
to Company together with any other property of Company which may have
theretofore been delivered to or may be in possession of Employee.
5.02 Non-Competition. During the term of this Agreement and for a period of
two years after the sooner of the expiration date of this Agreement or
the date when Employee ceases to be employed by Company as a result of
either a voluntary termination of his employment or a termination for
cause, Employee shall not, within the United States, its territories
and/or, possessions and countries in which the Company does business,
without the prior written consent of Company in each instance, directly
or indirectly, in any manner or capacity, whether for himself or any
other person and whether as proprietor, principal, owner, shareholder,
partner, investor, director, officer, employee, representative,
distributor consultant, independent contractor or otherwise engage or
have any interest in any entity which is engaged in any business or
activity then conducted or engaged in by Company. The two-year period
referred to in the preceding sentence shall be reduced by two months
for each full year that elapses after the commencement date of this
Agreement. Notwithstanding the foregoing, however, Employee may at any
time own in the aggregate as a passive (but not active) investment not
more than 5% of the stock or other equity interest of any
publicly-traded entity which engages in a business competitive with
Company.
5.03 Reasonableness. Employee agrees that each of the provisions of this
Section 5 is reasonable and necessary for the protection of Company;
that each such provision is and is intended to be divisible; that if
any such provision (including any sentence, clause or part) shall be
held contrary to law or invalid or unenforceable in any respect in any
jurisdiction, or as to any one or more periods of time, areas of
business activities, or any part thereof, the remaining provisions
shall not be affected but shall remain in full force and effect as to
the other and remaining parts; and that any invalid or unenforceable
provision shall be deemed, without further action on the part of the
parties hereto, modified, amended and limited to the extent necessary
to render the same valid and enforceable in such jurisdiction. Employee
further recognizes and agrees that any violation of any of his
agreements in this Section 5 would cause such damage or injury to
Company as would be irreparable and the exact amount of which would be
impossible to ascertain and that, for such reason, among others,
Company shall be entitled, as a matter of course, to injunctive relief
from any court of competent jurisdiction restraining any further
violation. Such right to injunctive relief shall be cumulative and in
addition to, and not in limitation of, all other rights and remedies
which Company may possess.
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5.04 Survival. The provisions of this Section 5 shall survive the expiration
or termination of this Agreement for any reason.
Article VI
Miscellaneous
6.01 Notices. All notices under this Agreement shall be in writing and shall
be deemed to have been duly given if personally delivered against
receipt or if mailed by first class registered or certified mail,
return receipt requested, addressed to Company and to Employee at their
respective addresses set forth on the first page of this Agreement, or
to such other person or address as may be designated by like notice
hereunder. Any such notice shall be deemed to have been given on the
day delivered, if personally delivered, or on the third day after the
date of mailing if mailed.
6.02 Parties in Interest. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their
respective heirs, legal representatives, successors and, in the case of
the Company, assigns, but no other person shall acquire or have any
rights under or by virtue of this Agreement, and the obligations of
Employee under this Agreement may not be assigned or delegated.
6.03 Governing Law; Severability. This Agreement shall be governed by and
construed and enforced in accordance with the laws and decisions of the
State of New York applicable to contracts made and to be performed
therein without giving effect to the principles of conflict of laws. In
addition to the provisions of 5.03 above, the invalidity or
unenforceability of any other provision of this Agreement, or the
application thereof to any person or circumstance, in any jurisdiction
shall in no way impair, affect or prejudice the balance of this
Agreement, which shall remain in full force and effect, or the
application thereof to other persons and circumstances.
6.04 Entire Agreement; Modification; Waiver; Interpretation. This Agreement
contains the entire agreement and understanding between the parties
with respect to the subject matter hereof and supersedes all prior
negotiations and oral understandings, if any. Neither this Agreement
nor any of its provisions may be modified, amended, waived, discharged
or terminated, in whole or in part, except in writing signed by the
party to be charged. No waiver of any such provision or any breach of
or default under this Agreement shall be deemed or shall constitute a
waiver of any other provision, breach or default. All pronouns and
words used in this Agreement shall be read in the appropriate number
and gender, the masculine, feminine and neuter shall be interpreted
interchangeably and the singular shall include the plural and vice
versa, as the circumstances may require.
6.05 Indemnification. Employee shall indemnify and hold Company free and
harmless from and against and shall reimburse it for any and all
claims, liabilities, damages, losses, judgments, costs and expenses
(including reasonable counsel fees and other reasonable out-of-pocket
expenses) arising out of or resulting from any breach or default of any
of his representations, warranties and agreements in this Agreement.
Company shall indemnify and hold Employee free and harmless from and
against and shall reimburse him for any and all claims, liabilities,
damages, losses, judgments, costs and expenses (including reasonable
counsel fees and other reasonable out-of-pocket expenses) arising out
of or resulting from any breach or default of any of its
representations, warranties and agreements in this Agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
INTELLI-CHECK, INC.
By/s/ Xxxxx Xxxxxxxxxx
-------------------------------
Xxxxx Xxxxxxxxxx, Chairman
/s/ Xxxxxx Xxxxxxxx
-------------------------------
Xxxxxx Xxxxxxxx
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EXHIBIT A
STOCK OPTION AGREEMEMT
Intelli-Check, Inc., a New York corporation (the "Company"), as of the
25th day of October, 1999 hereby grants to Xxxxxx Xxxxxxxx ("Optionee"),
residing at 2142 Singing Xxxxx Drive, Skaneateles, N.Y. 13152 in consideration
of services and advice rendered by Optionee to the Company, the irrevocable
right and option ("Option") to purchase all or part of an aggregate of 50,000
shares ("Shares") of the Company's common stock, par value $.001 per share
("Common Stock"), on the terms and conditions hereinafter set forth:
1. Purchase Price. The purchase price for the Shares shall be at the proposed
initial public offering price ("IPO") per share subject to adjustment as
provided in Paragraph 5 below.
2. Term of Option: Exercise.
(a) Subject to earlier termination pursuant hereto, the Option
shall terminate five (5) years from the date hereof. The
Option shall be exercisable as follows: 20,000 upon signing of
Employment Agreement, and 5,000 for each 10,000 sales of
ID-Check Products sold that exceed 10,000.
(b) The Option shall be exercised by fifteen (15) days written
notice to the Secretary or Treasurer of the Company at its
then principal office. The notice shall specify the number of
Shares as to which the Option is being exercised and shall be
accompanied by payment in full of the purchase price for such
Shares. The option price shall be payable in United States
dollars, and may be paid in cash or by certified check on a
United States bank or by other means acceptable to the
Company. In no event shall the Company be required to issue
any Shares (i) until counsel for the Company determines that
the Company has complied with all applicable securities
exchange or the National Association of Security Dealers
Automated Quotation System on which the Common Stock may then
be listed, and (ii) unless Optionee reimburses the Company for
any tax withholding required and supplies the Company with
such information and data as the Company may deem necessary.
(c) Optionee shall not, by virtue of the granting of the Option,
be entitled to any rights of a shareholder in the Company and
shall not be considered a record holder of any Shares
purchased by Optionee until the date on which Optionee shall
actually be recorded as the holder of such Shares upon the
stock records of the Company. The Company shall not be
required to issue any fractional Share upon exercise of the
Option and shall not be required to pay to Optionee the cash
equivalent of any fractional Share interest.
3. Restrictions on Transfer and Termination.
(a) No option shall be transferred by Optionee otherwise than by
will or by the laws of descent and distribution. During the
lifetime of Optionee the Option shall be exercisable only by
Optionee or by Optionee's legal representative.
(b) In the event of the termination of Optionee's employment by
the Company at any time for any reason (excluding termination
for cause, disability or death), the Option and all rights
thereunder shall be exercisable by Optionee at any time within
three (3) months thereafter, but not later than the
termination date of the Option. Notwithstanding the foregoing,
in the event Optionee is permanently and totally disabled
(within the meaning of Section 105(d) (4), or any successor
section, of the Internal Revenue Code), Optionee's Option and
all rights thereunder shall be exercisable by Optionee (or
Optionee's legal representative) at any time within six (6)
months of Optionee's termination of employment, but not later
than the termination date of the Option. The right of the
Optionee (or Optionee's legal representative) to exercise the
Option or any portion of the Option, shall apply only to that
portion of the Option which has accrued in accordance with
Section 2(a) of this Agreement and which the Optionee is
entitled to exercise as of the date of termination.
(c) If Optionee shall die while in the employ of the Company, the
Option may be exercised by
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Optionee's designated beneficiary or beneficiaries (or if none
have been effectively designated, by Optionee's executor,
administrator or the person to whom Optionee's rights under
the Option shall pass by Optionee's will or by the laws of
descent and distribution) at any time within six (6) months
after the date of Optionee's death, but not later than the
termination date of the Option. The right of the Optionee's
beneficiary or legal representative to exercise the Option or
any portion of the Option, shall apply only to that portion of
the Option which has accrued in accordance with Section 2(a)
of this Agreement and which Optionee was entitled to exercise
as of the date of death.
(d) In the event Optionee's employment is terminated for Cause,
the Option and all rights thereunder shall terminate at 5:00
p.m. on the date of termination of employment.
(e) This Option is granted pursuant to an Employment Agreement
between Company and Optionee dated October 25, 1999, which
Employment Agreement governs Optionee's rights and obligations
as an employee including, without limitation, Company's right
to terminate Optionee's employment under certain
circumstances, and nothing in this Agreement shall confer upon
Optionee any additional rights with respect to the terms and
conditions of Optionee's employment.
4. Securities Act Matters.
(a) Optionee represents that Shares issued upon any exercise of
the Option will be acquired for Optionee's own account for
investment only and not with a view to the distribution
thereof within the meaning of the Federal Securities Act of
1933, as amended (hereinafter, together with the rules and
regulations thereunder, collectively referred to as the
"Act"), and that Optionee does not intend to divide Optionee's
participation with others or transfer or otherwise dispose of
all or any Shares except as below set forth. As herein used
the terms "transfer" and "dispose" mean and include, without
limitation, any sale, offer for sale, assignment, gift, pledge
or other disposition or attempted disposition.
(b) Optionee understands that in the opinion of the Securities and
Exchange Commission ("SEC") Shares must be held by Optionee
for an indefinite period unless subsequently registered under
the Act or unless an exemption from registration thereunder is
available; that, under Rule 144 of the Act, after one or more
years from the date of payment for and issuance of the shares,
certain public sales thereof (which may be limited as to the
number of Shares) may be made in accordance with the subject
to the terms, conditions and restrictions of Rule 144, but
only if certain reporting and other requirements thereunder
have been complied with; and that should Rule 144 be
inapplicable, registration or the availability of an exemption
under the Act will be necessary in order to permit public
distribution of any Shares. Optionee also understands that the
Company is and will be under no obligation to register the
Shares or to comply with any exemption under the Act.
(c) Optionee shall not at any time transfer or dispose of any
Shares except pursuant to either (i) a registration statement
under the Act which registration statement has become
effective as to the Shares being sold or (ii) a specific
exemption from registration under the Act, but only after
Optionee has first obtained either a "no-action" letter from
the SEC, following full and adequate disclosure of all facts
relating to such proposed transfer, or a favorable opinion
from or acceptable to counsel to the Company that the proposed
transfer or other disposition complies with and is not in
violation of the Act or any applicable state "blue sky" or
securities laws.
5. Anti-Dilution Provisions.
(a) Subject to the provisions of Paragraph 5(b) below, if at any
time or from time to time prior to expiration of the Option
there shall occur any change in the outstanding Common Stock
of the Company by reason of any stock dividend, stock split,
combination or exchange of shares, merger, consolidation,
recapitalization, reorganization, liquidation or the like,
then and as often as the same shall occur, the kind and number
of Shares subject to the Option,
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or the purchase price per share, or both, shall be adjusted by
the Board of Directors of the Company ("Board") in such manner
as it may deem appropriate and equitable, the determination of
which Board shall be binding and conclusive. Failure of the
Board to provide for any such adjustment shall be conclusive
evidence that no adjustment is required.
(b) The Board shall have the right to engage a firm of independent
certified public accountants, which may be the Company's
regular auditors, to make any computation provided for in this
Section, and a certificate of that firm showing the required
adjustment shall be conclusive and binding.
6. Notices. All notices and other communications required or permitted under
this Agreement shall be in writing and shall be given either by (i) personal
delivery or regular mail, in each case against receipt, or (ii) first class
registered or certified mail, return receipt requested. Any such
communication shall be deemed to have been given (i) on the date of receipt
in the cases referred to in clause (i) of the preceding sentence and (ii) on
the second day after the date of mailing in the cases referred to in clause
(ii) of the preceding sentence. All such communications to the Company shall
be addressed to it, to the attention of its Secretary or Treasurer, at its
then principal office and to Optionee at the address set forth above or such
other address as may be designated by like notice hereunder.
7. Miscellaneous. This Agreement cannot be changed except in writing signed by
the party to be charged. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to
agreements made and to be performed exclusively in New York. The Option has
been granted pursuant to the Company's 1999 Stock Option Plan. This
Agreement is in all respects subject to the terms and conditions of said
Plan. The Option granted hereunder is intended to be a Non-Qualified Stock
Option. Optionee acknowledges that Optionee is not holding any other stock
options granted by the Company. Optionee shall execute this Agreement and
return it to the Company within thirty (30) days after the mailing or
delivery by the Company of this Agreement. If Optionee shall fail to execute
and return this Agreement to the Company within said thirty (30) day period,
the Option shall automatically terminate. The section headings in this
Agreement are solely for convenience of reference and shall not affect its
meaning or interpretation.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
INTELLI-CHECK, INC.
By:________________________________
Optionee:
_____________________________________
Name
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