UNDERSTANDING OF EMPLOYMENT


To:      Frank Mandelbaum

From:    Regina Auletta

Date:    January 1, 2006

Re:      Understanding of Employment

================================================================================

The  following  is the  understanding  as to the  agreement  of  our  terms  and
conditions of employment as an Employee for Intelli-Check, Inc. (the "Company")

REPORTING STATUS

Your  position  with the  Company  will be Chief  Executive  Officer  (CEO)  and
Chairman, reporting directly to the Board of Directors.

SALARY

Effective  January 1, 2006,  you will receive an annual salary of  $250,000.00**
per year,  payable  bi-weekly  at the rate of  $9,615.38  per pay  period  which
includes any applicable taxes and/or deductions.

**Effective  February 1, 2006, your salary will be $255,604.00 per year, payable
bi-weekly at the rate of $9,830.92 per pay period which  includes any applicable
taxes and/or deductions.

Your next  performance  review by the Board will be on January 1, 2007 according
to company policy (see Employee Manual).

BONUS

Employee shall be entitled to receive bonus compensation in an amount of $75,000
based upon the Company completing a 12 consecutive month period during which the
Company  experiences  positive  cash flow.  This bonus will  survive  beyond the
agreement  period so long as the  beginning of the 12 month period is during the
term of this agreement and employee is still employed with the Company.

AUTO ALLOWANCE

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 five hundred  Dollars  ($1,500) per month to
cover cost of the vehicle,  insurance,  repairs and other  expenses,  pertaining
thereto.

<PAGE>

ENTERTAINMENT EXPENSES

The Company will  reimburse you 100% for all authorized  business  entertainment
expenses  incurred by you, in accordance with IRS guidelines (See Expense Report
Procedure for reimbursement policy).

BENEFITS

Medical                 You will be entitled to medical  benefits  according  to
                        Company policy.

Holidays                You  will  be  entitled  to  observed  Company  holidays
                        according to the Company policy.

Vacation                You will be entitled to vacation  pay  according  to the
                        Company policy. However, based on your position with the
                        Company,  we  will  add an  additional  week  above  the
                        current policy up to a maximum  benefit of (4) weeks per
                        year.

Personal Time           You will be eligible for personal time  according to the
                        Company policy

Bereavement             You will be entitled to bereavement pay according to the
                        Company policy

Jury  Duty              You will be  entitled  to serve as a juror in a court of
                        law with pay according to the Company policy


Stock  Options          The Company  issued and granted  25,000 stock options on
                        November 8, 2005 at fair market value as of the close on
                        November 8, 2005. Vesting will be as follows:  25,000 to
                        be vested immediately. Employee shall enter into a stock
                        option agreement with the Company, under separate cover.

SEVERANCE

(A)   Amount of  Severance to be granted to employee  upon  Company  terminating
      employee  for any reason  other  than cause  shall be 2 years of base cash
      compensation  at the  time  of  termination  paid  over 12  equal  monthly
      payments.

(B)   For Conditions relating to 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 covenants 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

<PAGE>

                  (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 the exercise  price of the
                        stock

                        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.

(C)   In no  event  may  the  employee  receive  severance  payment  under  both
      conditions (A) and (B) as stated above.

<PAGE>

All benefits  listed above may be changed  and/or deleted at any time as long as
it changes for the entire Company policy.  Please review the Employee Manual for
details.

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.  In no
event shall payment exceed 2 years of such disability  payments from the initial
date of such disability.

DEATH BENEFIT

In the event of Employee's  death, the Company shall pay the amount equal to six
(6) months of the  Employee's  current Fixed Base Annual Salary in equal monthly
payments.  This payment will be made only to the  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.

This  benefit  is only  payable  as long as the time of death  occurs  while the
Employee is still currently employed with the Company.

JOB RESPONSIBILITY

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.

Employee's job responsibilities  will be determined and directed by the Board of
Directors.

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.  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.

<PAGE>

SURVIVAL

The provisions of the Non-Competition section above shall survive the expiration
or termination of this Agreement for any reason.

MANDATORY FINAL AND BINDING ARBITRATION

By signing this document in the place designated on page 3 hereof,  the Employee
unconditionally  agrees  that all  disputes,  controversies,  disagreements,  or
claims of whatever nature,  whether  contractual or statutory,  or arising under
common law, except claims which would alter the employment at will  relationship
or claims  covering the  enforcement of a  non-competition  agreement,  shall be
resolved by mandatory final and binding arbitration in accordance with the final
and binding  arbitration  as defined  below  under  Arbitration  Process.  It is
expressly  provided  and  understood  that this  contemplates  inclusion  of all
claims, actions, suits,  administrative  proceedings or controversies created by
or arising  under Title VII of the Civil Rights Act, the Age  Discrimination  in
Employment Act, the Americans with Disabilities Act (42 U.S.C.  s1981),  the New
York Human  Rights law and all other  employment  or  employment  discrimination
statutes,  ordinances or regulations  promulgated  by the United States,  or any
other state, local or municipal or political  subdivision,  without exception. I
further  understand  that this document is not a contract of employment with the
Company and that my employment  with the Company is "at-will".  Either party may
terminate the employment relationship without notice for any reason.

ARBITRATION PROCESS

Any  tortuous  or  malicious  interference  with or without  intent  towards the
Company,  its  Employees,  its  Customers,  its Business  Relationships  and its
Operations is considered a violation of your Confidentiality  Agreement and upon
documentation of said interference,  employee hereby forfeits any and all rights
to compensatory and punitive damages.

All matters to be  arbitrated  under this  Agreement  shall be  accomplished  in
accordance  with  the  Labor  Arbitration  Rules  of  the  American  Arbitration
Association  (AAA),  as those  rules  and  regulations  may from time to time be
amended. All matters shall be submitted no later than one year after the accrual
of the claim.  All fees and expenses  associated with the arbitration  procedure
hereby  established  shall,  in the  first  instance,  be borne by the  Company.
However,  arbitrators  shall have full  discretion and authority to allocate the
costs of arbitration  between the Company and the Employee,  and such allocation
shall be part of any award made. The arbitrator shall have no authority to award
either party any punitive damages.

The costs and expenses of  arbitration,  including the filing fee charged by the
American Arbitration Association (AAA), the fee of the arbitrator, the cost of a
stenographic  transcript of the arbitration hearing, and the rental of a hearing
room, shall, in the first instance, be borne by the Company,  except for the sum
of  $100,  which  shall  be  contributed  in  advance  by the  Employee  seeking
arbitration.  The  arbitrator  as part of his/her final binding award shall make
the final allocation of expenses.

<PAGE>

EXCLUSIVE REMEDY

The parties agree that  arbitration  as herein  provided  shall be the exclusive
method for resolving all matters  outlined above, and no resort to courts or any
other methods of resolution,  whether  judicial,  administrative or contractual,
shall be permitted. If either party pursues a covered claim against the other by
any action,  method,  or legal  proceeding  other than the arbitration  provided
herein, the responding party shall be entitled to dismissal or injunctive relief
regarding  such action and  recovery  of all costs,  losses an  attorney's  fees
related to such other proceeding if such claim is dismissed or stayed.

I have  read the  foregoing  agreement  and  understand  that I am  agreeing  to
arbitrate any and all claims arising out of my employment with the Company,  any
successors, officers, directors, agents and shareholders.

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.

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.

/s/ Frank Mandelbaum
--------------------------------
Employee

/s/ Regina Auletta                              /s/ Edwin Winiarz
--------------------------------                --------------------------------
Human Resources Administrator                   Executive Officer