EX-10.2
EMPLOYMENT
AGREEMENT
AGREEMENT made as of the 1st day of January, 1999 between
INTELLI-CHECK, INC. ("Company"), a New York Corporation having an office at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ("Employee"),
residing at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
WHEREAS, Employee is currently employed as Chairman-CEO pursuant to an
Employment Agreement dated June 24, 1996 and which currently expires on October
31, 1999.
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") commencing on January 1, 1999 and ending December 31,
2001 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. 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 Senior Executive 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-competitive Company so long as he devotes substantially all of
his business
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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:
(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 $225,000 per annum (the "Fixed
Salary"). At each anniversary of this contract, the Fixed Salary
shall be augmented by a bonus of $50,000 if gross sales of Company
products have reached $2,000,000 for the previous year, plus 1% of
the amount of gross sales in excess of $2,000,000 for that year.
It is further agreed that no salary increase above $150,000 shall
occur until such time as the Company receives payment for gross
sales of at least $1,000,000.
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
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Employee's duties upon submission of appropriate vouchers and
other supporting data therefore.
3.03 Stock Options. For each fiscal year ending during the term of this
Agreement, Company will grant Employee an option to purchase the
greater of (i) 25,000 of Company's common shares at Fair Market
Value (as hereinafter defined) on the date of grant or (ii) 10,000
of Company's common shares at Fair Market Value on the date of
grant for each full $250,000 by which Pre-Tax Profits for each
fiscal year (commencing with the fiscal year ending December 31,
1999) exceeds Pre-Tax Profits for the prior fiscal year, provided,
however, that in no event shall Employee be granted options
hereunder to purchase more than 150,000 of Company's common shares
with respect to any one fiscal year. The stock options
contemplated hereby shall be granted at or concurrently with a
meeting of the Board of Directors first following the end of the
fiscal year when audited financial statements of the Company's
results of operations for the prior fiscal year are made
available. If there shall not be sufficient common shares
available for the grant of stock options to Employee pursuant to
Company's 1998 Stock Option Plan (or a later Stock Option Plan
approved by Company's shareholders) for any fiscal year ending
during the term of this Agreement, Company shall, at the Annual
Meeting of Shareholders first following the end of such fiscal
year, submit to its shareholders for approval a stock option plan
to authorize the issuance of at least that number of common shares
necessary to grant Employee's stock options for such fiscal year
as contemplated hereby. In the event Company's shareholders do not
approve such a stock option plan, then Employee shall receive only
a pro-rata share of stock options from options, if any, available
for grant from prior years' plans which were approved by Company's
shareholders after 1998. The pro-rata share shall be determined by
dividing the number of shares available for grant by the number of
Employees eligible for grants under employment agreements with the
Company. In the event of termination of employment, 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, each time options are granted to
Employee hereunder. For purposes of this Agreement, the term "Fair
Market Value" shall mean the mean between dealer closing "bid" and
"ask" on the last day on which Company's common shares were traded
immediately preceding the date such options are granted, as
reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), or NASDAQ's successor.
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 ($1,250) per
month to cover cost of the vehicle, insurance, repairs and other
expenses, pertaining thereto.
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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 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
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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 $2.00.
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 Company do not consist of individuals recommended
by Employee, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and one outside Director of 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
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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.
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.
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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.
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
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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.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
INTELLI-CHECK, INC.
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By____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
____________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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EXHIBIT A
STOCK OPTION AGREEMEMT
Intelli-Check, Inc., a New York corporation (the "Company"), as of
the____day of ____________, 1998 hereby grants
to_________________________("Optionee"), residing at 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__________________shares ("Shares") of the Company's common stock, par value
$.01 per share ("Common Stock"), on the terms and conditions hereinafter set
forth:
1. Purchase Price. The purchase price for the Shares shall be
$_____________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 in full on the date hereof.
(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 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.
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(c) If Optionee shall die while in the employ of the Company, the
Option may be exercised by 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.
(d) This Option is granted pursuant to an Employment Agreement between
Company and Optionee dated 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, or the purchase price per share, or both, shall be
adjusted by the Board of Directors of the Company ("Board") in
such
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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 1998 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