Exhibit 10.14
EMPLOYMENT
AGREEMENT
AGREEMENT made as of the 1st day of February 2002 between INTELLI-CHECK,
INC. ("Company"), a Delaware Corporation having an office at 000 Xxxxxxxxx Xxxx
Xxxx, Xxxxxxxx, X.X. 00000xxx XXXXX XXXXXXXXXX ("Employee"), residing at 000
Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000.
WHEREAS, Employee is currently employed as Chairman-CEO pursuant to an
Employment Agreement dated January 1, 1999 and which expired on December 31,
2001.
WHEREAS, Company and Employee wish to enter into a new Employment
Agreement pursuant to which Employee will continue as Chairman-CEO 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") retroactive to January 1, 2002 and
ending December 31, 2004 subject, however, to earlier termination in
accordance with the provisions of this Agreement.
Article II
Duties
2.01 General. Employee shall be the Chief Executive Officer 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.
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-competitive 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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(a) 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.
(b) 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 $250,000 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.
3.01(d) Bonus. Employee shall be entitled to receive bonus compensation in an
amount as approved by the Company's Board of Directors based upon
performance criteria as may be established by the Compensation
Committee from time to time. Such bonuses may be in the form of cash or
the Company's restricted stock.
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 shall issue Employee 350,000 stock options
under the following terms and conditions: All options shall be granted
at an exercise price of $12.10 per share, the closing price of the
Company's stock on February 1, 2002 (the date this was approved by the
Company's compensation committee). 125,000 options shall be issued
immediately pursuant to the Company's 2001 Stock Option Plan and the
remaining 225,000 options shall be granted outside the plan and shall
contain a provision to be included in any future registration
statements or inclusion in
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any future Stock Option plans. The remaining 225,000 options shall vest
at the rate of 75,000 per year on December 31 2002, 2003 and 2004. In
the event of a change in control as defined in 4.05 hereafter, all
unvested options under this agreement shall vest. In the event of
termination of employment for cause, Employee's right to receive stock
options hereunder shall terminate as of the effective date of such
termination. Employee shall enter into a stock option agreement with
Company, substantially in the form of Exhibit A attached hereto,
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) four (4) 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 Two Hundred and Fifty Dollars ($1,500) per
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 of 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 not withstanding 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
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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 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.
4.05 Change of Control. If during the term of this Agreement, there shall
occur a Change of Control, Employee may terminate his employment
hereunder for Good Reason (as in hereinafter defined) at any time
during the term of this Agreement in which case he shall be entitled to
receive a payment equal to 2.99 times Employee's average annual
compensation paid by Company (including bonuses, if any) during the
three years preceding the date of termination (the "Severance
Payment"), provided, however, that such Severance Payment shall be
reduced if and only to the extent necessary to avoid the imposition of
an excise tax on such Severance Payment under Section 4999 of the
Internal Revenue Code of 1986, as amended. The Severance Payment shall
be payable to Employee on the date of termination as follows:
(i) an amount equal to three months Fixed Salary at the rate
prevailing on the date of termination, provided, however, that
such amount shall be reduced if three times such amount would
cause Company to be in default of any of its convenants to any
of its lenders, in which event the amount payable to Employee
shall be reduced so that three times such amount would not cause
such default; and
(ii) the balance remaining after the payment set forth in (i) above
shall be paid by Company by issuing to Employee that number of
its unregistered common shares as shall equal the balance
divided by $12.10
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For purposes of this Agreement, a "Change of Control" shall be deemed to
have occurred on the first day on which a majority of the Directors of
the Company do not consist of individuals recommended by Employee, and
one outside Director of the Company or if the Company is sold.
For purposes of this Agreement, "Good Reason: shall mean any of the
following (without Employee's express prior written consent):
(a) The assignment to Employee by Company of duties inconsistent
with Employee's then positions, duties, responsibilities, titles
or offices or any reduction in his duties or responsibilities or
any removal of Employee from or any failure to re-elect Employee
to any of such positions, except in connection with the
termination of Employee's employment for Cause, or disability
(as described in Section 4.03 herein) or as a result of
Employee's death or by termination of employment by Employee
other than for Good Reason, however, nothing herein prevents the
current Board from exercising its right to elect officers.
(b) A relocation of Company's principal executive offices to a
location greater than 50 miles from the current operating
address of the Company or the Company requiring Employee to be
based anywhere other than the location at which Employee on the
date hereof performs Employee's duties, except for required
travel on Company's business to an extent substantially
consistent with Employee's business travel obligations on the
date hereof or any adverse change in the office assignment or
secretarial and other support accorded to Employee on the date
hereof;
(c) A failure by Company to continue in effect any benefit or
compensation plan (including any pension, profit-sharing, bonus,
life, medical, disability and other insurance and employee
benefit plans and programs) in which Employee is then
participating or plans providing Employee with substantially
similar benefits or the taking of any action by Company which
would adversely affect Employee's participation in or reduce
Employee's benefits under any of such plans;
(d) The taking of any action by Company which would deprive Employee
of any material fringe benefit enjoyed by Employee on the date
hereof;
(e) The failure by Company to obtain the specific assumption of this
Agreement by any successor or assign of Company or any person
acquiring substantially all of Company's assets;
(f) Any material breach by Company of any provision of the
Agreement.
4.06 Registration of Common Shares. Employee shall have the right to require
Company to file one registration statement for, or otherwise register,
all and not less than all of the common shares received pursuant to
Section 4.05 (ii) provided that he notifies Company of his desire to
have these shares registered herein within 45 days of the end of the
Company's fiscal year. Company agrees to use its best efforts to
register these shares at its own cost and expense. Employee recognizes
that Company may include these shares together with other shares in any
registration statement.
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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,
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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.
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.
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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.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
INTELLI-CHECK, INC.
By
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Xxxxx Xxxxxxxxxx
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