Document:

ex-10_28.htm

 

Lithium Technology Corporation 8-K

 

 

Exhibit 10.28

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION.

LITHIUM TECHNOLOGY CORPORATION

WARRANT

This Warrant is issued to ___________________________________ (the “Holder”) pursuant to the Amended and Restated Transaction Bonus Plan of LITHIUM TECHNOLOGY CORPORATION, a Delaware corporation (the “Company”) and is subject to the terms, definitions and provisions of such plan as adopted by the Company and amended from time to time (the “Plan”), which Plan is incorporated herein by reference. Capitalized terms used herein, but not otherwise defined, shall have the meaning given to them in the Plan.

WHEREAS, the Company has executed an Agreement on Key Terms dated September 28, 2010 (the “Term Sheet”) between the Company and the strategic party named therein (the “Strategic Investor”) relating to a series of strategic transactions (the “Acquisition Transaction”) pursuant to which the Strategic Party may over the time period set forth in the Term Sheet increase its equity ownership in the Company to more than 50% of the outstanding securities of the Company (the “Control Shares”).

WHEREAS, the Plan is designated to provide an incentive bonus to persons providing services to the Company in connection with the Strategic Transaction, including the Holder.

WHEREAS, the Company has authorized the issuance of this Warrant to the Holder pursuant to the Plan.

NOW, THEREFORE,

THIS CERTIFIES THAT, for value received, the Holder or his or its registered assigns is entitled to purchase from the Company at any time or from time to time during the period specified in Paragraph 2 hereof at an exercise price per share equal to $0.0247 (the “Exercise Price”) 67,449,427 shares of the Company’s Common Stock, $0.01 par value per share (the “Common Stock”).

The term “Warrant Shares,” as used herein, refers to the shares of Common Stock purchasable hereunder.  The Warrant Shares and the Exercise Price are subject to adjustment as provided in Paragraph 4 hereof.  This Warrant is subject to the following terms, provisions, and conditions:

  

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1.           Manner of Exercise; Issuance of Certificates; Payment for Shares.  Subject to the provisions hereof, this Warrant may be exercised by the Holder hereof, in whole or in part, by the surrender of this Warrant, together with a completed exercise agreement in the form attached hereto (the “Exercise Agreement”), to the Company during normal business hours on any business day at the Company’s principal executive offices (or such other office or agency of the Company as it may designate by notice to the Holder hereof), and upon (i) payment to the Company in cash, by certified or offi­cial bank check or by wire transfer for the account of the Company of the Exercise Price for the Warrant Shares specified in the Exercise Agreement or (ii) delivery to the Company of a written notice of an election to effect a “Cashless Exercise” (as defined in Section 11(c) below) for the Warrant Shares specified in the Exercise Agreement.  The Warrant Shares so purchased shall be deemed to be issued to the Holder hereof or such Holder’s designee, as the record owner of such shares, as of the close of business on the date on which this Warrant shall have been surrendered, the completed Exercise Agreement shall have been deliv­ered, and payment shall have been made for such shares as set forth above.  Certifi­cates for the Warrant Shares so purchased, representing the aggregate number of shares specified in the Exercise Agreement, shall be delivered to the Holder hereof within a reasonable time after this Warrant shall have been so exercised.  The certificates so delivered shall be in such denominations as may be requested by the Holder hereof and shall be registered in the name of such Holder or such other name as shall be designated by such Holder.  If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the Holder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised.

2.           Vesting.

(a)           This Warrant shall vest and shall be exercisable at any time or from time to time on or after the date subsequent to the date hereof that the Company executes the definitive agreements (the “Strategic Investor Agreements”) relating to the Acquisition Transaction (the “Vesting Date”) provided that (i) this Warrant is reviewed and found to be fair to the Company by an independent person or firm with expertise in the area of transaction bonus compensation and (ii) the Holder is providing services to the Company on the Vesting Date.  Notwithstanding the foregoing, this Warrant shall nonetheless vest on the Vesting Date if on or before the Vesting Date (1) the Holder or the Participant Consulting Entity (as defined in the Plan) was terminated by the Company other than for Cause (as defined in the Plan), (2) the Holder or Participant Consulting Entity was terminated by the Company as a result of Disability (as defined in the Plan) or death of the Holder, or (3) the Holder or the Participant Consulting Entity has terminated his or its services to the Company for Good Reason  (as defined in the Plan).

 

(b)           In the event of the death or Disability of any of the Holder on or before the Vesting Date, the Holder or the estate of the deceased Holder, as the case may be, shall vest in the Warrants on the Vesting Date notwithstanding the failure of the Holder to remain in the service of the Company.

  

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(c)           In the event the Strategic Investor does not acquire or vest in all of the Control Shares provided for in the Acquisition Transaction, the Warrants shall nevertheless vest on the Vesting Date and shall remain vested provided the conditions of Section 2(a) are satisfied.

 

(d)           This Warrant shall be exercisable until December 31, 2014 (the “Exercise Period”).

 

3.           Certain Agreements of the Company.  The Company hereby covenants and agrees as follows:

 

(a)           Shares to be Fully Paid.  All Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be validly issued, fully paid, and nonassessable and free from all taxes, liens, and charges with respect to the issue thereof.

 

(b)           Reservation of Shares.  During the Exercise Period, the Company shall at all times have authorized, and reserved for the purpose of issuance upon exercise of this Warrant, a suf­ficient number of shares of Common Stock to provide for the exercise of this Warrant.

 

(c)           Successors and Assigns.  This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation, or acquisition of all or sub­stantially all the Company’s assets.

 

4.           Adjustment and Antidilution Provisions.  On or after the date of issuance of this Warrant, the Warrant Exercise Price and number of shares issuable pursuant to this Warrant shall be subject to adjustment as follows:

 

(a)           In case the Company shall (i) declare a dividend or make a distribution on its outstanding shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into a greater number of shares, or (iii) combine or reclassify its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, combination or reclassification shall be adjusted so that it shall equal the price determined by multiplying the Exercise Price by a fraction, the denominator of which shall be the number of shares of Common Stock outstanding after giving effect to such action, and the numerator of which shall be the number of shares of Common Stock immediately prior to such action. Such adjustment shall be made each time any event listed above shall occur.

 

(b)           Whenever the Exercise Price payable upon exercise of each Warrant is adjusted pursuant to Subsection (a) above, the number of shares purchasable upon exercise of this Warrant shall simultaneously be adjusted by multiplying the number of shares initially issuable upon exercise of this Warrant by the Exercise Price in effect on the date hereof and dividing the product so obtained by the Exercise Price, as adjusted.

 

(c)           All calculations under this Section 4 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be.  Anything in this Section 4 to the contrary notwithstanding, the Company shall be entitled, but shall not be required, to make such changes in the Exercise Price in addition to those required by this Section 4, as it shall determine, in its sole discretion, to be advisable in order that any dividend or distribution in shares of Common Stock, or any subdivision, reclassification or combination of Common Stock, hereafter made by the Corporation shall not result in any Federal Income tax liability to the holders of the Common Stock or securities convertible into Common Stock (including warrant).

  

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(d)           Whenever the Exercise Price is adjusted, as herein provided, the Corporation shall promptly cause a notice setting forth the adjusted Exercise Price and adjusted number of shares issuable upon exercise of each Warrant to be mailed to the Holder, at its last address appearing in the Company’s Warrant Register. The Company may retain a firm of independent certified public accountants selected by the Board of Directors (who may be the regular accountants employed by the Company) to make any computation required by this Section 4, and a certificate signed by such firm shall be conclusive evidence of the correctness of such adjustment.

 

5.           Issuance Tax.  The issuance of certificates for Warrant Shares upon the exercise of this Warrant shall be made without charge to the Holder of this Warrant or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than the Holder of this Warrant.

6.           No Rights or Liabilities as a Shareholder.  This Warrant shall not entitle the Holder hereof to any voting rights or other rights as a shareholder of the Company.  No provision of this Warrant, in the absence of affirmative action by the Holder hereof to purchase Warrant Shares, and no mere enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of such Holder for the Exercise Price or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

7.           Transfer, Exchange, and Replacement of Warrant.

 

(a)           Restriction on Transfer.  On or after the Vesting Date, this Warrant and the rights granted to the Holder hereof are transferable, in whole or in part, upon surrender of this Warrant, together with a properly executed assignment in the form attached hereto, at the office or agency of the Company referred to in Paragraph 7(e) below, pro­vided, however, that any transfer or assignment shall be subject to the conditions set forth in Paragraph 7(f) hereof.  Until due presentment for registration of transfer on the books of the Company, the Company may treat the registered Holder hereof as the owner and Holder hereof for all purposes, and the Company shall not be affected by any notice to the con­trary.

 

(b)           Warrant Exchangeable for Different Denomina­tions.  This Warrant is exchange­able, upon the surrender hereof by the Holder hereof at the office or agency of the Company referred to in Paragraph 7(e) below, for new Warrant of like tenor representing in the aggregate the right to purchase the number of shares of Common Stock which may be purchased hereunder, each of such new Warrant to represent the right to purchase such number of shares as shall be designated by the Holder hereof at the time of such surrender.

 

  

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(c)           Replacement of Warrant.  Upon receipt of evi­dence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft, or destruc­tion, upon delivery of an indemnity agreement reason­ably satisfactory in form and amount to the Company, or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Company, at its expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor.

 

(d)           Cancellation; Payment of Expenses.  Upon the surrender of this Warrant in connection with any trans­fer, exchange, or replacement as provided in this Paragraph 7, this Warrant shall be promptly canceled by the Company.  The Company shall pay all taxes (other than securities transfer taxes) and all other expenses (other than legal expenses, if any, incurred by the Holder or transferees) and charges payable in connection with the preparation, execution, and delivery of Warrant pursuant to this Paragraph 7.

 

(e)           Register.  The Company shall maintain, at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the Holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee and each prior owner of this Warrant.

 

(f)           Exercise or Transfer Without Registration.  If, at the time of the surrender of this Warrant in connection with any exercise, transfer, or exchange of this Warrant, this Warrant (or, in the case of any exercise, the Warrant Shares issuable hereunder), shall not be registered under the Securities Act of 1933, as amended (the “Securities Act”) and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such exercise, transfer, or exchange, (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel, which opinion and counsel are acceptable to the Company, to the effect that such exercise, transfer, or exchange may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the Holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited holder” as defined in Rule 501(a) promulgated under the Securities Act; provided that no such opinion, letter or status as an “accredited holder” shall be required in connection with a transfer pursuant to Rule 144 under the Securities Act.  The first Holder of this Warrant, by taking and holding the same, represents to the Company that such Holder is acquiring this Warrant for investment and not with a view to the distribution thereof.

8.           Registration Rights.  The Holder of this Warrant (and its assignees thereof) shall have piggyback registration rights with respect to the Warrant Shares.

9.           Notices.  All notices, requests, and other communications required or permitted to be given or delivered hereunder to the Holder of this Warrant shall be in writing, and shall be personally delivered, or shall be sent by certified or registered mail or by recognized overnight mail courier, postage prepaid and addressed, to such Holder at the address shown for such Holder on the books of the Company, or at such other address as shall have been furnished to the Company by notice from such Holder.  All notices, requests, and other communications required or permitted to be given or delivered hereunder to the Company shall be in writing, and shall be personally delivered, or shall be sent by certified or registered mail or by recognized overnight mail courier, postage prepaid and addressed, to the office of the Company at 5115 Campus Drive, Plymouth Meeting, Pennsylvania 19462, Attention:  Chief Financial Officer, or at such other address as shall have been furnished to the Holder of this Warrant by notice from the Company.  Any such notice, request, or other communication may be sent by facsimile, but shall in such case be subsequently confirmed by a writing personally delivered or sent by certified or registered mail or by recognized overnight mail courier as provided above.  All notices, requests, and other communications shall be deemed to have been given either at the time of the receipt thereof by the person entitled to re­ceive such notice at the address of such person for purposes of this Paragraph 9, or, if mailed by registered or certified mail or with a recognized overnight mail courier upon deposit with the United States Post Office or such overnight mail courier, if postage is prepaid and the mailing is properly addressed, as the case may be.

 

  

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10.           Governing Law.  THIS WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.  THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.  BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING.  NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER THIS WARRANT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE.

11.           Miscellaneous.

 

(a)           Amendments.  This Warrant and any provision hereof may only be amended by an instrument in writing signed by the Company and the Holder.

 

(b)           Descriptive Headings. The descriptive headings of the several paragraphs of this Warrant are in­serted for purposes of reference only, and shall not affect the meaning or construction of any of the provisions hereof.

  

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(c)           Cashless Exercise. Notwithstanding anything to the contrary contained in this Warrant, this Warrant may be exercised by presentation and surrender of this Warrant to the Company at its principal executive offices with a written notice of the Holder’s intention to effect a cashless exercise, including a calculation of the number of shares of Common Stock to be issued upon such exercise in accordance with the terms hereof (a “Cashless Exercise”).  In the event of a Cashless Exercise, in lieu of paying the Exercise Price in cash, the Holder shall surrender this Warrant for that number of shares of Common Stock determined by multiplying the number of Warrant Shares to which it would otherwise be entitled by a fraction, the numerator of which shall be the difference between the then current Market Price per share of the Common Stock and the Exercise Price,  and the denominator of which shall be the then current Market Price per share of Common Stock.  For example, if the Holder is exercising 100,000 warrants with a per warrant exercise price of $0.75 per share through a cashless exercise when the Common Stock’s current Market Price per share is $2.00 per share, then upon such Cashless Exercise the Holder will receive 62,500 shares of Common Stock.

 

(d)           Compliance with Laws.  The Company may postpone the time of delivery of certificate(s) for Warrant Shares for such additional time as the Company shall deem necessary or desirable to enable it to comply with the requirements of any securities exchange upon which the Company’s Common Stock may be listed, or the requirements of the Securities Act, the Securities Exchange Act of 1934, as amended, any rules or regulations of the Securities and Exchange Commission promulgated thereunder, or any applicable state laws relating to the authorization, issuance or sale of securities.

 

(e)           Remedies.  The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby.  Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Warrant will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Warrant, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Warrant and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required.

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer as of the _____ day of November, 2010.

 

 

	  	  	
LITHIUM TECHNOLOGY CORPORATION

	  	  	  
	  	  	
By:

	  
	  	  	
Name:  

	  
	  	  	
Title:

	  

 

ACCEPTED AND AGREED:

_________________________

Print Name:

  

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FORM OF EXERCISE AGREEMENT

 

 

Dated:  ________ __, 200_

 

To:           ______________________

 

 

The undersigned, pursuant to the provisions set forth in the within Warrant, hereby agrees to purchase ________ shares of Common Stock covered by such Warrant, and makes pay­ment herewith in full therefor at the price per share provided by such Warrant in cash or by certified or official bank check in the amount of $________, or, by surrender of securities issued by the Company (including a portion of the Warrant) having a market value (in the case of a portion of this Warrant, determined in accordance with Section 11(c) of the Warrant) equal to $_________.  Please issue a certificate or certifi­cates for such shares of Common Stock in the name of and pay any cash for any fractional share to:

 

	  	  	
Name:

	  
	  	  	  	  
	  	  	  	  
	  	  	
Signature:  

	  
	  	  	
Address:

	  
	  	  	  	  
	  	  	  	  
	  	  	  	
Note:    

	
The above signature should correspond exactly with the name on the face of the within Warrant, if applicable.

 

and, if said number of shares of Common Stock shall not be all the shares purchasable under the within Warrant, a new Warrant is to be issued in the name of said undersigned covering the balance of the shares purchasable thereunder less any frac­tion of a share paid in cash.

  

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FORM OF ASSIGNMENT

 

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers all the rights of the undersigned under the within Warrant, with respect to the number of shares of Common Stock covered thereby set forth hereinbelow, to:

 

	
Name of Assignee

	 	
Address

	 	
No. of Shares

 

, and hereby irrevocably constitutes and appoints ___________________________________ as agent and attorney-in-fact to trans­fer said Warrant on the books of the within-named corporation, with full power of substitution in the premises.

 

Dated:           ________ __, 200_

 

 

	
In the presence of:

	  	  	  
	  	  	
Name:

	  
	  	  	  	  
	  	  	  	  
	  	  	
Signature:  

	  
	  	  	
Title of Signing Officer or Agent (if any):

	  	  	  	  
	  	  	  	  
	  	  	
Address:

	  
	  	  	  	  
	  	  	  	  
	  	  	  	
Note:  

	
The above signature should correspond exactly with the name on the face of the within Warrant, if applicable.

 

 

10Exhibit 10.1

Exhibit 10.1

POSITIVE ID CORPORATION

EMPLOYMENT AND NON-COMPETE AGREEMENT

AGREEMENT made this 11th day of November, 2010 and effective as of January 1, 2011 (the “Effective Date”), by and between the parties to this Agreement (hereinafter individually referred to as “Party” and collectively referred to as “Parties”), POSITIVEID CORPORATION, a Delaware Business Corporation (hereinafter referred to as “PSID”), and SCOTT R. SILVERMAN (hereinafter referred to as “Executive”). 

WHEREAS, PSID is a leader in innovative healthcare products and applications and also has operations focused on identity security solutions (the “Business”); and

WHEREAS, Executive has contributed meaningfully in his capacity as Chairman and CEO of PSID, f/k/a VeriChip Corporation (“VeriChip”) and other predecessor companies; and

WHEREAS, PSID finds it is in its best interest to enhance Executive’s contribution to the Business, to protect its technologies and business relationships, and to continue engage Executive’s services as Chairman and Chief Executive Officer of PSID; and

WHEREAS, Executive is willing to continue the fulltime role as PSID’s Chairman and Chief Executive Officer.

NOW THEREFORE, in consideration of the promises and the mutual obligations set

forth in this Agreement, the Parties agree as follows:

1.

Employment.  PSID agrees to continue to employ Executive, and Executive agrees to continue such employment by PSID, pursuant to the terms and conditions set forth in this Agreement.

2.

Position and Responsibilities.  During the term of this Agreement, as defined below, Executive shall serve as Chairman and Chief Executive Officer of PSID and will perform such duties and exercise such supervision with regard to the business of PSID as are associated with such positions, as well as such additional duties as may be reasonably prescribed from time to time by PSID’s Board of Directors (the “Board”).  Executive agrees to render services to the best of Executive’s ability for and on behalf of PSID.  Executive agrees to devote his full business time to rendering such services on behalf of PSID.  

3.

Term.  Except as otherwise provided in this Section 3 or Section 8(c) of this Agreement, the term of this Agreement (the “Term”) shall commence on the Effective Date and shall continue in force thereafter for a period of five (5) years from the Effective Date.  Notwithstanding the foregoing, upon the happening of any of the following events, this Agreement shall terminate (unless otherwise provided herein for a termination after a period of time) and Executive shall cease to be an employee of PSID: 

(a)

Executive’s resignation upon sixty (60) days advance written notice;

(b)

Executive’s Total Disability upon PSID’s election.  For purposes of this Agreement, “Total Disability” shall be defined as Executive’s inability, due to illness, accident or any other physical or mental incapacity, to perform Executive’s usual responsibilities performed by Executive for PSID prior to the onset of such disability, for one hundred eighty (180) consecutive days during the Term.  PSID may elect, by written notice to Executive, within thirty (30) days of the end of such period of Total Disability defined above, to terminate Executive’s employment herein;

(c)

the death of Executive; 

(d)

Executive’s Constructive Termination.  For purposes of this Agreement, “Constructive Termination” shall be defined as a material breach by PSID of its obligations under this Agreement (including but not limited to any reduction of Executive’s Base Salary, bonuses or incentive compensation as provided herein).  If Executive chooses to treat such material breach as a Constructive Termination, Executive shall provide PSID with written notice describing the circumstances being relied upon by Executive for such termination with respect to this Agreement within thirty (30) days after the event giving rise to the Constructive Termination.  PSID shall have thirty (30) days after receipt of such notice to remedy the situation prior to the Constructive Termination being deemed final; or 

(e)

PSID terminates this Agreement for cause, with said cause being defined as a conviction of a felony or Executive being prevented from providing services hereunder as a result of Executive’s violation of any law, regulation and/or rule.

(f)

Nothing in this Agreement is intended to limit the rights of PSID to terminate this Agreement under applicable bankruptcy laws in the event that PSID files for protection under the United States Bankruptcy Code.

4.

Annual Compensation.  (a)

During the Term, Executive shall be entitled to compensation for all services performed by Executive pursuant to this Agreement (“Compensation”) as follows:

(1)

Executive shall be entitled to a base salary (the “Base Salary”) equal to that of Executive’s base salary for the 2010 calendar year (THREE HUNDRED SEVENTY-FIVE THOUSAND ($375,000.00) DOLLARS) for the 2011 calendar year, payable according to the customary payroll practices of PSID for the then current period.  The Base Salary shall increase a minimum of five percent (5%) per annum during each calendar year during the Term or in such greater amount  (but not decreased) as may be determined in the reasonable discretion of the Compensation Committee appointed  by the Board (the “Compensation Committee”).  The “Base Salary” shall, for all purposes of this Agreement, mean the Base Salary then being paid by PSID to Executive.

(2)

During the Term, Executive shall be receive an annual bonus for each calendar year of an amount equal to a minimum of one (1) times the Base Salary, or such other greater multiple as reasonably determined in the discretion of the Compensation Committee, which shall consider bonuses paid by similarly situated employers to similarly situated employees and Executive’s prior annual bonuses received from PSID and VeriChip.

(3)

During the Term, in addition to the bonus in the preceding section (2), Executive shall be eligible for discretionary incentive bonus compensation for each calendar year, to be reasonably determined by the Compensation Committee, which shall consider bonuses paid by similarly situated employers to similarly situated employees and Executive’s prior discretionary incentive bonus compensation received from PSID and VeriChip.

(b)

PSID shall deduct from the Compensation all taxes and other deductions which are required to be deducted or withheld under any provision of any federal, state, or local law now in effect or which may become effective at any time during the Term.

5.

Fringe Benefits.  During the Term, Executive shall be entitled to all fringe benefits (the “Fringe Benefits”) provided to senior executive employees of PSID, as reasonably determined by the Compensation Committee.  The Fringe Benefits shall specifically include executive health benefits which shall entitle Executive to full reimbursement for all physical examinations and other related services and use of an automobile leased by PSID for use by Executive.  In addition, PSID shall utilize its commercially reasonable efforts to obtain and maintain, at its sole cost and expense, disability insurance coverage that shall provide Executive with up to TWENTY-TWO THOUSAND SEVEN HUNDRED FIFTY ($22,750.00) DOLLARS in monthly salary continuation payments, subject to applicable limitation periods and the availability of such coverage, in the event of the disability of Executive.

6.

Business and Other Expenses.  PSID will reimburse Executive for all reasonable travel, entertainment and other expenses incurred by Executive in connection with the performance of his duties and obligations under this Agreement.  Executive will comply with all reasonable reporting requirements with respect to business expenses as may be established by PSID from time to time.  In addition, PSID shall pay to Executive FORTY-FIVE THOUSAND ($45,000.00) DOLLARS per year during the Term, payable in TWENTY-TWO THOUSAND FIVE HUNDRED ($22,500.00) DOLLAR installments on or before January 15 and July 15, representing non-allocable expenses that shall be deemed additional compensation to Executive.

7.

Additional Benefits.  (a)  Executive will be entitled to participate in all other compensation or employee benefit plans or programs and receive all benefits for which salaried employees of PSID generally are eligible under any plan or program now or later established by PSID on the same basis as similarly situated senior executives of PSID.  Executive will participate to the extent permissible under the terms and provisions of such plans or programs, in accordance with program provisions.

(b)

PSID shall issue 1,000,000 shares (the “Shares”) of restricted stock in PSID to Executive on the later to occur of: (i) stockholder approval of the amended and restated PSID 2009 Stock Incentive Plan, or (ii) the filing of the Form S-8, as amended, to reflect the amended and restated PSID 2009 Stock Incentive Plan, fifty (50%) percent of which shall vest on January 1, 2012 and fifty (50%) percent of which shall vest on January 1, 2013, provided that the Compensation Committee may, in its sole discretion, cause the Shares to vest on December 31, 2011 and December 31, 2012, respectively.  The Shares will be registered as soon as practicable, which is anticipated to be approximately six (6) months from the date of issuance of the Shares.  The Shares shall be subject to a substantial risk of forfeiture in the event that this Agreement is terminated on or before December 31, 2012 pursuant to subparagraphs (a) or (e) of Section 3 of this Agreement in which event the Shares shall immediately be forfeited.  

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8.

Payment Upon Termination of Agreement.  (a)  In the event this Agreement is terminated by Executive’s resignation pursuant to subparagraph (a) or (e) of Section 3 of this Agreement, PSID will pay to Executive any and all earned but unpaid Base Salary and earned but unpaid incentive bonus compensation as of the date of termination.  PSID shall pay such amounts due Executive within thirty (30) days of Executive’s last day of service.  In addition, any outstanding stock options held by Executive on Executive’s last day of service shall remain exercisable for the life of the option.  Further, Executive may, at his sole option, assume all obligations for the leased vehicle then used by Executive, which vehicle is being leased by PSID for use by Executive.

(b)

(i)

Subject to the provisions of Section 8(c)(iv) below, in the event this Agreement is terminated pursuant to any of subparagraphs (b) through (d) of Section 3 of this Agreement, or if PSID terminates this Agreement without cause, PSID will, in addition to maintaining the Fringe Benefits through December 31, 2015, pay to Executive the sum of (i) any and all earned but unpaid Base Salary and earned but unpaid incentive bonus compensation as of the date of termination; (ii) the greater of (A) the Base Salary from the date of termination through December 31, 2015, or (B) two (2) times the Base Salary; and (iii) the average bonus paid by PSID to Executive for the last three (3) full calendar years (or such lesser time period if the Agreement is terminated less than three (3) years from the Effective Date) immediately prior to the date of termination, (collectively, the “Termination Compensation”).

(ii)

The Termination Compensation shall be paid within sixty (60) days of Executive’s last day of service.  In addition, any outstanding stock options  and unvested restricted shares held by Executive on Executive’s last day of service pursuant to such termination shall become vested and exercisable as of such date of termination, and will remain exercisable for the life of the option.  Further, PSID shall continue to pay all monthly payments on the vehicle then owned and financed by Executive, which vehicle is being leased by PSID for use by Executive.  In addition, PSID shall maintain Executive on its group medical plan on the same conditions as if he were to remain employed by PSID, until Executive is eligible to be covered under another comparable group medical plan.

(c)

(i)

To the extent that during the Term there shall be Change in Control, as hereinafter defined, notwithstanding any term to the contrary in this Agreement, this Agreement shall terminate in which event, the Executive shall be entitled to receive the Change in Control Compensation, as hereafter defined.

(ii)

For all purposes of this Agreement, a Change in Control shall have the same definition as in the PSID 2009 Stock Incentive Plan, approved by the stockholders on November 10, 2009; provided, however, that in no event shall there be a Change of Control if there is a merger or consolidation in which PSID and Digital Angel Corporation are the sole parties to such merger or consolidation. 

(iii)

For all purposes of this Agreement, the Term Change in Control Compensation shall mean the sum of (A) any and all earned but unpaid Base Salary and earned but unpaid bonus compensation as of the date of the Change in Control; (B) five (5) times the Base Salary; and (C) five (5) times the average bonus paid by PSID and/or VeriChip to Executive for the three (3) full calendar years immediately prior to the Change in Control.  The Change in Control Compensation shall be paid to Executive within ten (10) days of the Change in Control.  In addition, any outstanding stock options and unvested restricted stock held by Executive as of the Change in Control shall become vested and exercisable as of such date, and shall remain exercisable as of the life of the option.  Further, PSID shall continue to pay all lease payments on the vehicle then used by Executive, which vehicle is being leased by PSID for use by Executive.

(iv)

For avoidance of confusion, in the event of a Change of Control, the Executive shall be entitled to the Change of Control Compensation and not the Termination Compensation.

9.

Confidential Information.  (a)  Executive recognizes and acknowledges that all information pertaining to this Agreement or to the affairs; business; results of operations; accounting methods, practices and procedures; shareholders; acquisition candidates; financial condition; clients; customers or other relationships of PSID or any of its affiliates (“Information”) is confidential and is a unique and valuable asset of PSID or any of its affiliates.  Access to and knowledge of the Information is essential to the performance of Executive’s duties under this Agreement.  Executive will not, during the Term or thereafter, except to the extent reasonably necessary in performance of his duties under this Agreement, give to any person, firm, association, corporation, or governmental agency any Information, except as may be required by law.  Executive will not make use of the Information for his own purposes or for the benefit of any person or organization other than PSID or any of its affiliates.  Executive will also use his best efforts to prevent the disclosure of this Information by others.  All records, memoranda, etc. relating to the business of PSID or its affiliates, whether made by Executive or otherwise coming into his possession, are confidential and will remain the property of PSID or its affiliates.

(b)

Executive will, with reasonable notice during or after the Term, furnish information as may be in his possession and fully cooperate with PSID and its affiliates as may be required in connection with any claims or legal action in which PSID or any of its affiliates is or may become a party.

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10.

Restrictions.  (a)  During the Term, and only to the extent that Executive submits his resignation in accordance with Section 3(a), thereafter for a two (2) year period (the “Restriction Period”), Executive agrees that, without the prior express written approval from the Board, he shall not compete with PSID and its affiliates by directly or indirectly engaging in the Business, either directly or indirectly, as an individual, partner, member, corporation, limited liability company, limited liability partnership, officer of a corporation or in any other capacity whatsoever at any location at which PSID or its affiliates conducts business and/or provides any services.

(b)

Executive acknowledges that the restrictions contained in this Section 10 of this Agreement, in view of the nature of the activities in which PSID and its affiliates are engaged, are reasonable and necessary in order to protect the legitimate interests of PSID and its affiliates, and that any violation thereof would result in irreparable injuries to PSID and/or its affiliate(s), as the case may be.  Executive, therefore, acknowledges that, in the event of the violation of any of these restrictions, PSID shall be entitled to obtain from any Court of competent jurisdiction preliminary and permanent injunctive relief, as well as attorneys fees and costs, damages and an equitable accounting of all earnings, profits and other benefits arising from such violation, which rights shall be cumulative, and in addition to any other rights or remedies to which PSID may be entitled.  

(c)

Executive agrees that the restrictions contained in this Section 10 of this Agreement are an essential element of Executive’s compensation that Executive is granted hereunder and, but for Executive’s agreement to comply with such restrictions, PSID would not have entered into this Agreement.

(d)

If any of the restrictions set forth in this Section 10 should, for any reason, be adjudged invalid or unreasonable in any proceeding, then the validity or enforceability of the remainder of such restrictions shall not be adversely affected.  If the Restriction Period or the area specified in this Section 10 of this Agreement shall be adjudged unreasonable in any proceeding, then the Restriction Period shall be reduced by such number of months, or the area shall be reduced by the elimination of such portion thereof or both, so that such restrictions may be enforced in such area and for such period of time as is adjudged to be reasonable.  If Executive violates any of the restrictions contained in this Section 10, the Restriction Period shall not run in favor of Executive from the time of commencement of any such violation until such time as such violation shall be cured by Executive to the satisfaction of PSID.

(e)

The terms of this Section 10 shall survive the termination of this Agreement. Executive acknowledges that he can be gainfully employed and still comply with the terms of this Section 10 and that it is not unduly inconvenient to him.

11.

Indemnification; Litigation.  (a)  PSID will indemnify Executive to the fullest extent permitted by the laws of the State of Florida in effect at that time, or the certificate of incorporation and by-laws of PSID, whichever affords the greater protection to Executive.  Executive will be entitled to any insurance policies PSID may elect to maintain generally for the benefit of its officers and directors against all costs, charges and expenses incurred in connection with any action, suit or proceeding to which he may be made a party by reason of being an officer of PSID.

(b)

In the event of any litigation or other proceeding between PSID and Executive with respect to the subject matter of this Agreement, PSID will reimburse Executive for all costs and expenses related to the litigation or proceedings, including attorney’s fees and expenses, providing that the litigation or proceedings results in either a settlement requiring PSID to make a payment to Executive or judgment in favor of Executive.

12.

Mitigation.  Executive will not be required to mitigate the amount of any payment provided for hereunder by seeking other employment or otherwise, nor will the amount of any such payment be reduced by any compensation earned by Executive as the result of employment by another employer after the date Executive’s employment hereunder terminates.

13.

Remedies.  (a)  In the event of a breach of this Agreement, the nonbreaching Party may maintain an action for specific performance against the Party who is alleged to have breached any of the terms of this Agreement.  This subparagraph (a) of this Section 13 of this Agreement will not be construed to limit in any manner any other rights or remedies an aggrieved Party may have by virtue of any breach of this Agreement. 

(b)

Each of the Parties has the right to waive compliance with any obligation of this Agreement, but a waiver by any Party of any obligation will not be deemed a waiver of compliance with any other obligation or of its right to seek redress for any breach of any obligation on any subsequent occasion, nor will any waiver be deemed effective unless in writing and signed by the Party so waiving.

14.

Attorney's Representations.  Executive acknowledges that PSID’s counsel, COOPER LEVENSON APRIL NIEDELMAN & WAGENHEIM, P.A., prepared this Agreement on behalf of and in the course of its representation of PSID, and that:

(a)

Executive has been advised to seek the advice of independent counsel; and

(b)

Executive has had the opportunity to seek and has, in fact, received the advice of independent counsel of his choosing.

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15.

Notices.  Any notices required or permitted by this Agreement or by law to be served on, or delivered to, any Party to this Agreement, shall be in writing and shall be signed by the Party giving or delivering it and sent by courier that guarantees overnight delivery, or by registered or certified mail, return receipt requested, addressed to the Party to whom any communication under this Agreement is to be made.  Notice given as provided herein shall be deemed to have been given on the mailing date and, unless otherwise provided herein, shall be effective from that date.  Notice shall be sent to the respective Party at the address set forth below.  Any Party may change its address for purposes of receiving notices by furnishing notice of such change in the manner set forth above.

If to PSID:

Positive ID Corporation

1690 South Congress Avenue- Suite 200

Delray Beach, Florida  33445

If to Executive:

Scott R. Silverman

955 Iris Drive

Delray Beach, Florida  33483

16.

Invalid Provisions.  The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and the Agreement shall be construed in all respects as though such invalid or unenforceable provisions were omitted. 

17.

Assignment.  This Agreement shall inure to the benefit of and be binding upon PSID, its successors and assigns, and Executive.  This Agreement, being for the personal services of Executive, shall not be assignable or subject to anticipation by Executive. 

18.

Amendments.  The terms and provisions of this Agreement may not be modified except by written instrument duly executed by the Parties. 

19.

Entire Agreement.  This Agreement supersedes all other oral and written agreements between the Parties with respect to the matters contained in this Agreement and, except as otherwise provided herein, this Agreement contains all of the covenants and agreements between the Parties with respect to those matters.

20.

Law Governing Agreement.  This Agreement shall be governed by and construed in accordance with the laws of the State of Florida.  Any terms and conditions of this Agreement which apply to Executive and/or govern Executive’s behavior after Executive’s termination of employment and/or after the termination of this Agreement shall automatically survive the termination of this Agreement.  

21.

Consent to Jurisdiction and Venue.  The Parties hereby consent and submit to the jurisdiction and venue of any state or federal court within the State of Florida, Palm Beach County in any litigation arising out of this Agreement. 

22.

Captions and Gender.  The headings contained in this Agreement are inserted for convenience and reference purposes only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provisions hereof, and shall not affect in any way the meaning or interpretation of this Agreement or any provisions hereof.  All personal pronouns used in this Agreement shall include the other genders whether used in the masculine or feminine or neuter gender, and the singular shall include the plural and vice versa whenever and as often as may be appropriate.

23.

Counterpart Execution.  This Agreement may be executed in two or more counterparts either by facsimile or otherwise, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the Parties hereto have set their hands and seals as of the date set forth on the first page of this Agreement.

ATTEST:

POSITIVE ID CORPORATION

			
	/s/ Allison Tomek

	 
	/s/ William J. Caragol

	Allison Tomek, Secretary

	 
	By:  William J. Caragol, President

	 
	 
	 

	 
	 
	 

	WITNESS:

	 
	EXECUTIVE:

	 
	 
	 

	 
	 
	 

	/s/ Courtney Cady

	 
	/s/ Scott R. Silverman

	Courtney Cady

	 
	SCOTT R. SILVERMAN

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