Document:

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Exhibit 10.1

                     INTELLECTUAL PROPERTY LICENSE AGREEMENT

                                     BETWEEN

                               INTELLI-CHECK, INC.

                                       AND

                                  CARDCOM, INC.

                         EFFECTIVE AS OF MARCH 12, 2003

                      RELATING TO AGE VERIFICATION PRODUCTS

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INTELLI-CHECK - CARDCOM

                            PATENT LICENSE AGREEMENT

                                TABLE OF CONTENTS

ARTICLE I - GRANTS OF LICENSES

1.01         Grant
1.02         Duration
1.03         Publicity

ARTICLE II - ROYALTY AND PAYMENTS

2.01         Royalty Calculation
2.02         Accrual
2.03         Records and Adjustments
2.04         Reports and Payments

ARTICLE III - TERMINATION

3.01         Breach
3.02         Voluntary Termination
3.03         Survival

ARTICLE IV - MISCELLANEOUS PROVISIONS

4.01         Disclaimer
4.02         Nonassignability
4.03         Addresses
4.04         Taxes
4.05         Choice of Law
4.06         Integration
4.07         Releases
4.08         Acknowledgment of Validity
4.09         Counterparts

DEFINITIONS APPENDIX

                                       i
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INTELLI-CHECK - CARDCOM

                     INTELLECTUAL PROPERTY LICENSE AGREEMENT

Effective as of March 12,  2003,  Intelli-Check  Inc.,  a Delaware  corporation,
("INTELLI-CHECK"),  having an office at 246 Crossways Park West,  Woodbury,  New
York 11797 and  Cardcom,  Inc., a California  corporation  ("the  CORPORATION"),
having an office at 6301  Beach  Blvd Ste 216,  Buena  Park,  CA 90621  agree as
follows*:

                                    ARTICLE I

                               GRANTS OF LICENSES

1.01 GRANT

(a)  INTELLI-CHECK  grants  to the  CORPORATION  under  INTELLI-CHECK's  PATENTS
personal,  nonexclusive  and  nontransferable  licenses to make, have made, use,
sell,  offer  to  sell,  lease  and  import  AGE  VERIFICATION  PRODUCTS  in THE
TERRITORY.

(b) The licenses  granted in this  Section 1.01 extend only to AGE  VERIFICATION
products and not to other products.

1.02 DURATION

All licenses  granted  herein shall  commence on the effective date and continue
for the LICENSE PERIOD.  At the expiration of the LICENSE  PERIOD,  all licenses
granted  herein  shall  terminate.   Notwithstanding   the  foregoing,   if  the
CORPORATION  desires  that  the  licenses  granted  herein  continue  after  the
expiration of the LICENSE PERIOD, the CORPORATION shall notify  INTELLI-CHECK in
writing of this desire at least ninety (90) days prior to the end of the LICENSE
PERIOD.  Upon receiving such notice,  the parties agree to enter into good faith
negotiations  for the terms and conditions of a "New  Agreement"  which would be
effective upon the expiration of the LICENSE PERIOD and under which the licenses
and rights granted by  INTELLI-CHECK  to the CORPORATION  herein would continue.
However,  it is understood that all negotiations  relative to this New Agreement
shall be concluded by the end of the LICENSE PERIOD and INTELLI-CHECK shall have
no obligations to continue  negotiations  with the CORPORATION  after the end of
the LICENSE PERIOD.

--------
*ANY TERM IN CAPITAL LETTERS WHICH IS DEFINED IN THE DEFINITIONS  APPENDIX SHALL
HAVE THE MEANING SPECIFIED THEREIN.

                                       1
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INTELLI-CHECK-CARDCOM

1.03 PUBLICITY

Nothing in this Agreement  shall be construed as conferring upon the CORPORATION
any right to include in advertising,  packaging or other  commercial  activities
related to any product or service,  any  reference to  INTELLI-CHECK,  its trade
names,  trademarks  or service  marks in a manner which would be likely to cause
confusion or to indicate that such product or service is in any way certified by
INTELLI-CHECK.

Upon EXECUTION, the CORPORATION agrees to cease all advertisements that state or
imply  that any of its  products  provide  document  verification,  or  document
authentication,  or the like. It shall be  permissible  for the  CORPORATION  to
advertise  that  any  product   provides  age   verification  so  long  as  such
advertisement does not claim that such product provides document verification or
document authentication.

                                   ARTICLE II
                              ROYALTY AND PAYMENTS

2.01 ROYALTY CALCULATION

(a) In  consideration  of the rights  granted  herein under  Section  1.01,  the
CORPORATION agrees to pay INTELLI-CHECK a royalty equal to the lesser of:

              (i) ten percent  (10%)  applied to the NET SALES PRICE of each AGE
VERIFICATION PRODUCT which is sold, leased or put into use by the CORPORATION.

              (ii) One hundred  and  thirty-five  United  States  dollars  (U.S.
$135.00) for each AGE VERIFICATION PRODUCT which is sold, leased or put into use
by the CORPORATION.

(b) In  further  consideration  of the  licenses  and  rights  granted  in  this
Agreement,  the CORPORATION agrees to provide contract manufacturing and product
development for INTELLI-CHECK under terms and conditions to be incorporated in a
written "Contract Manufacturing Agreement".  This written Contract Manufacturing
Agreement  shall include a provision  allowing for termination in the event of a
material breach and further  including  "notice and cure  provisions" The notice
provision  shall  provide  that if a party  considers  the other  party to be in
material breach of its obligations under the Contract  Manufacturing  Agreement,
such party ("the notifying party") shall inform the other party of this position
in a writing  which shall specify the nature of the breach.  The cure  provision
shall then give such other party a period of not less than  forty-five (45) days
from the date of the  notice to cure the  breach  and if the breach is not cured
within the forty-five day

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INTELLI-CHECK-CARDCOM

period,  the  notifying  party may hold the other  party to be in default of its
obligations under the Contract Manufacturing  Agreement.  Any such manufacturing
and/or product development shall arise only upon INTELLI-CHECK's  election, such
election being communicated in writing to the CORPORATION.  INTELLI-CHECK  shall
have no liability to the  CORPORATION  if  INTELLI-CHECK  decides not to use the
CORPORATION for contract manufacturing and/or product development.

2.02 ACCRUAL

(a) Royalty shall accrue on any AGE  VERIFICATION  PRODUCT upon its  manufacture
and shall become payable upon the first sale,  lease or putting into use of such
product.  (Rebuilding or enlarging any product,  but not repair, shall be deemed
to be a first  putting  into use of such product  Repair of an AGE  VERIFICATION
PRODUCT is the  replacement  of a worn out or broken part in such product or the
replacement  of this  entire  product  such  that (i)  there is no change in the
functionality or capability of the product from that originally  provided by the
CORPORATION  and (ii) there is no charge for such  service  other than  shipping
and/or taxes. Rebuilding or enlarging of an AGE VERIFICATION PRODUCT is a change
to such product other than repair.)  Obligations to pay accrued  royalties shall
survive termination of licenses and rights pursuant to Article III.

(b) Notwithstanding any other provisions hereunder,  royalty shall accrue and be
payable only to the extent that enforcement of the  CORPORATION's  obligation to
pay such royalty would not be prohibited by applicable law.

2.03 RECORDS AND ADJUSTMENTS

The CORPORATION  shall keep full, clear and accurate records with respect to all
AGE VERIFICATION  PRODUCTS and shall furnish any information which INTELLI-CHECK
may reasonably  prescribe from time to time to enable INTELLI-CHECK to ascertain
the proper  royalty due  hereunder on account of products  sold,  leased and put
into use by the  CORPORATION.  The  CORPORATION  shall  retain such records with
respect to each AGE  VERIFICATION  PRODUCT  for at least five (5) years from the
sale,  lease or  putting  into  use of such  product.  After  14  days'  notice,
INTELLI-CHECK  shall have the right through its  accredited  auditors to make an
examination,  during normal business hours, of all records and accounts  bearing
upon the amount of royalty payable to it hereunder.  Prompt  adjustment shall be
made to compensate  for any errors or omissions  disclosed by such  examination.
All  documents,  materials and  information  provided by the  CORPORATION to the
auditors shall be kept confidential. INTELLI-CHECK will pay for the costs of any
audit unless such audit reveals  underpayment  by the CORPORATION of ten percent
(10%) or more, in which case the CORPORATION  shall reimburse  INTELLI-CHECK for
the costs of any audit.

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INTELLI-CHECK-CARDOM

2.04 REPORTS AND PAYMENTS

(a) Within fifteen (15) days after the end of each quarter ending on March 31st,
June 30th,  September  30th and December 31st of each calendar  year,  beginning
with the quarter in which this  Agreement  is executed by the  CORPORATION,  the
CORPORATION  shall furnish to INTELLI-CHECK at the address  specified in Section
4.03 a statement certified by a responsible  official of the CORPORATION showing
in a reasonable manner:

           (i) all AGE VERIFICATION PRODUCTS which were sold, leased or put into
               use during such quarter;

           (ii) the NET SALES PRICE of each such product; and

           (iii) the amount of royalty payable thereon.

If no AGE  VERIFICATION  PRODUCT has been so sold,  leased or put into use,  the
statement  shall show that fact.  The first  quarterly  report shall  include an
accounting and royalties for AGE  VERIFICATION  PRODUCTS in that quarter as well
as an accounting  and royalty  payment for such products from the effective date
of this Agreement to the beginning of that quarter. All such statements shall be
kept confidential.

(b) No  later  than  fifteen  (15)  days  after  the  end of each  quarter,  the
CORPORATION  shall pay in United States dollars to  INTELLI-CHECK at the address
specified  in  Section  4.03 the  royalties  payable  in  accordance  with  such
statement.

(c)  Overdue  payments  hereunder  shall be  subject  to a late  payment  charge
calculated at an annual rate of three percentage points (3%) over the prime rate
or successive  prime rates (as posted in New York City) during  delinquency.  If
the amount of such late  payment  charge  exceeds the maximum  permitted by law,
such charge shall be reduced to such maximum.

                                   ARTICLE III

                                   TERMINATION

3.01 BREACH

(a) In the event of a  material  breach of this  Agreement  by the  CORPORATION,
INTELLI-CHECK  may, in addition to any other  remedies  that it may have, at any
time  terminate all licenses and rights granted by it hereunder by not less than
one (1) month's written notice specifying such breach,  unless within the period
of such notice all breaches  specified  therein shall have been  remedied.  If a
written

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INTELLI-CHECK-CARDOM

Contract Manufacturing  Agreement,  as referenced in Section 2.01(b) is executed
by  both  parties  and  the  CORPORATION  then  materially  breaches  any of its
obligations under the Contract Manufacturing Agreement,  then INTELLI-CHECK,  at
its sole option,  shall have the right to terminate all licenses and rights that
it has granted to the CORPORATION under this Agreement.

(b) In the event of any material breach of this Agreement by INTELLI-CHECK or of
any loss or injury to the CORPORATION  arising out of this Agreement,  for which
INTELLI-CHECK  is liable to the  CORPORATION,  INTELLI-CHECK's  total cumulative
liability to the CORPORATION for all such breaches, losses and injuries shall be
the lesser of (i) the actual value of the injury or loss to the  CORPORATION  or
(ii) the total royalties paid to INTELLI-CHECK.

3.02 VOLUNTARY TERMINATION

Upon EXECUTION, the CORPORATION shall have no right to voluntarily terminate its
licenses and rights under this Agreement unless:

       (i) all claims of U.S. Patent No. 6,463,416 are declared to be invalid by
a final judgment of a U.S. Federal Court; or

       (ii) this  Agreement is not terminated by  INTELLI-CHECK  pursuant to the
provisions of this Agreement and nevertheless  INTELLI-CHECK brings suit against
the  CORPORATION  alleging  infringement of  INTELLI-CHECK'S  PATENTS during the
LICENSE PERIOD.

3.03 SURVIVAL

Any termination of licenses and rights of the  CORPORATION  under the provisions
of this  Article  III shall not affect the  CORPORATION's  licenses,  rights and
obligations  with  respect to any AGE  VERIFICATION  PRODUCT  made prior to such
termination.

                                   ARTICLE IV

                            MISCELLANEOUS PROVISIONS

4.01 DISCLAIMER

INTELLI-CHECK  MAKES NO  REPRESENTATIONS,  EXTENDS ANY  WARRANTIES  OF ANY KIND,
ASSUMES ANY  RESPONSIBILITY  OR  OBLIGATIONS  WHATEVER,  OR CONFERS ANY RIGHT BY
IMPLICATION,  ESTOPPEL OR  OTHERWISE,  OTHER THAN THE LICENSES AND RIGHTS HEREIN
EXPRESSLY GRANTED.

                                       5

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INTELLI-CHECK-CARDOM

4.02 NONASSIGNABILITY

(a)  INTELLI-CHECK  has entered into this Agreement in contemplation of personal
performance  by the  CORPORATION  and  it is  INTELLI-CHECK's  intention  that a
transfer   of  the   CORPORATION's   licenses   or  rights  not  occur   without
INTELLI-CHECK's   express  written   consent  and  any  such  transfer   without
INTELLI-CHECK's  written consent shall be null and void.  INTELLI-CHECK shall be
under no obligation whatsoever to grant its consent.

(b) The licenses and rights granted by  INTELLI-CHECK  to the CORPORATION  shall
immediately  terminate  if there is a change in  ownership  of a majority of the
shares of the CORPORATION at any time during the LICENSE PERIOD.

4.03 ADDRESSES

(a) Any notice or other  communication  hereunder shall be sufficiently given to
the  CORPORATION  when sent by  certified  mail  addressed  to Mitch Shin at the
CORPORATION's  office  above  specified,  or to  INTELLI-CHECK  addressed  to Ed
Winiarz at INTELLI-CHECK's office above specified. Changes in such addresses may
be specified by written notice.

(b) Payments by the CORPORATION  shall be made by check to  INTELLI-CHECK at its
offices  above  specified,  Attention:  Ed Winiarz.  Changes in such  address or
account may be specified by written notice.

4.04 TAXES

The CORPORATION  shall pay any tax, duty,  levy,  customs fee, or similar charge
("taxes"), including interest and penalties thereon, however designated, imposed
as a  result  of the  operation  or  existence  of  this  Agreement  except  for
INTELLI-CHECK's  U.S.  income taxes (both federal and state).  The provisions of
Section 4.04 shall only apply to the CORPORATION's business activities.

4.05 CHOICE OF LAW AND VENUE

The parties are familiar  with the  principles of New York  commercial  law, and
desire  and agree that the law of New York shall  apply in any  dispute  arising
with respect to this Agreement.  Further, any proceeding brought by either party
arising from this agreement shall be venued in New York City.

4.06 INTEGRATION

This Agreement  sets forth the entire  agreement and  understanding  between the
parties as to the subject matter hereof and merges all prior discussions between
them. Neither of the parties shall be bound by any warranties, understandings or
representations  with  respect to such  subject  matter  other than as expressly
provided herein or in a writing signed with or subsequent to execution hereof by
an authorized representative of the party to be bound thereby.

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INTELLI-CHECK-CARDOM

4.07 RELEASES

Effective  upon  EXECUTION,   INTELLI-CHECK  hereby  releases  the  CORPORATION,
including  its  officers,   employees  and   shareholders,   and  all  customers
(purchasers  and users),  suppliers  and  distributors  of products of the kinds
herein  licensed as of the effective  date hereof to the  CORPORATION,  from all
claims,  demands and rights of action which INTELLI-CHECK may have on account of
any  infringement  or alleged  infringement  of the patents  licensed  herein by
reason of the manufacture or any past or future use, lease,  sale, offer to sell
or  importation  of any of such  products  which,  prior to the  effective  date
hereof,  were made,  sold,  used,  offered  for sale,  leased or imported by the
CORPORATION.   Effective  upon  EXECUTION,   the  CORPORATION   hereby  releases
INTELLI-CHECK,  including its  officers,  employees  and  shareholders,  and all
customers  (purchasers and users),  suppliers and distributors of any product or
service used or furnished by INTELLI-CHECK,  from all claims, demands and rights
of action  which the  CORPORATION  may have on  account of any  infringement  or
alleged  infringement  of any patent by reason of the manufacture or any past or
future  use,  lease,  sale,  offer to sell or  importation  of any of product or
service,  which,  prior to the effective date hereof,  were used or furnished by
INTELLI-CHECK.

4.08 ACKNOWLEDGMENT OF VALIDITY

The CORPORATION  hereby expressly  acknowledges in all respects the validity and
enforceability of INTELLI-CHECK's  PATENTS and the CORPORATION's  obligations to
pay  royalties  as  specified  herein  for the  LICENSE  PERIOD  shall  continue
notwithstanding  the fact that  INTELLI-CHECK's  PATENTS are held invalid and/or
unenforceable in any proceeding after EXECUTION,  except that the  CORPORATION's
royalty obligations shall terminate if the CORPORATION's licenses and rights are
terminated in accordance with Section 3.02. The CORPORATION  also agrees that it
shall not in any way challenge, or assist others in challenging, the validity or
enforceability of INTELLI-CHECK's  PATENTS.  The provisions of this Section 4.09
shall survive (i) any  termination of the licenses and rights granted under this
Agreement  as  provided  for in this  Agreement  or (ii) the  expiration  of the
LICENSE PERIOD.

4.09 COUNTERPARTS.

This Agreement may be executed in multiple counterparts,  each of which shall be
deemed an original but all of which together  shall  constitute one and the same
instrument.

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INTELLI-CHECK-CARDOM

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
in duplicate originals by its duly authorized  representatives on the respective
dates entered below.

             INTELLI-CHECK, INC.

             By:   /s/ Frank Mandelbaum
                 -------------------------------------------------------------

             Title:  Chief Executive Officer
                    ----------------------------------------------------------

             Date:    6-19-03
                   -----------------------------------------------------------

             CARDCOM, INC.

             By:    /s/ Mitch C. Shin
                 -------------------------------------------------------------

             Title: President
                    ----------------------------------------------------------

             Date:  6-19-03
                   -----------------------------------------------------------

              THIS AGREEMENT DOES NOT BIND OR OBLIGATE EITHER PARTY
                IN ANY MANNER UNLESS DULY EXECUTED BY AUTHORIZED
                        REPRESENTATIVES OF BOTH PARTIES.

                                       8

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INTELLI-CHECK-CARDOM

                              DEFINITIONS APPENDIX

GENERAL DEFINITIONS:

AGE  VERIFICATION  PRODUCTS  means  any  product  that  reads  information  on a
document,  such information being in human recognizable  and/or machine readable
form, and then performs an age calculation  based on the  information  read. AGE
VERIFICATION PRODUCTS may provide additional functionality but in no event shall
such products  include  DOCUMENT  VERIFICATION OR  AUTHENTICATION  PRODUCTS.  In
addition to the foregoing,  AGE VERIFICATION  PRODUCTS may provide the following
functions (i) calculate a checksum on all three tracks of any examined  document
for the  purpose  of  verifying  that the  magnetic  track  data  bits have been
correctly inputted, (ii) read the Issuer Identification Number or "IIN" or other
jurisdiction  identifying  data from any document and (iii)  determine the total
number  of bytes on a bar code or on  track 2 of a  document  having a  magnetic
stripe,  provided  that  (ii)  and  (iii)  are  used  for  the  purpose  of  age
verification  and  not  document  verification.   The  term  "product"  in  this
definition is not limited to form and includes, but is not limited to, hardware,
software,  firmware,  and any combination of the foregoing.  An AGE VERIFICATION
PRODUCT  may be  embodied  in either a unitary  structure  or a  combination  of
separate structures.  Further, for purposes of calculating  royalties under this
Agreement,  AGE  VERIFICATION  PRODUCTS  includes  any  attachment  or ancillary
device,  product,  or system intended for connection or use with one or more AGE
VERIFICATION PRODUCTS.

DOCUMENT  VERIFICATION OR  AUTHENTICATION  PRODUCTS means any product that reads
information on a document,  such information being in human recognizable  and/or
machine  readable  form,  and makes a  determination  of whether the document is
valid or  authentic.  A DOCUMENT  VERIFICATION  OR  AUTHENTICATION  PRODUCT  may
provide additional functionality and may encompass an AGE VERIFICATION PRODUCT.

EXECUTION means the date the last party signs this Agreement.

INTELLI-CHECK'S  PATENTS means U.S. Patent No. 6,463,416 ("the `416 Patent") and
any parent application and any continuation,  continuation-in-part,  divisional,
reissue of the `416 Patent and all foreign counterparts of any of the foregoing.
The  inclusion  of  patents  other  than the `416  Patent in the  definition  of
INTELLI-CHECK's  PATENTS  are only to the extent  that such other  patents  have
claims that cover AGE VERIFICATION PRODUCTS,  there being no intent to grant any
licenses  to  the   CORPORATION   with  respect  to  DOCUMENT   VERIFICATION  or
AUTHENTICATION PRODUCTS.

LICENSE  PERIOD means a period of three (3) years  commencing  on the  effective
date of this Agreement.

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INTELLI-CHECK-CARDOM

NET SALES PRICE  means,  with  respect to any AGE  VERIFICATION  PRODUCT that is
made,  have  made,  sold,  offered  for  sale,  leased  or put  into  use in The
TERRITORY,  the price received by the  CORPORATION  for each such product in the
form in which it is provided by the  CORPORATION,  whether or not assembled (and
without  excluding  therefrom any components or subassemblies  thereof which are
included in such price). In determining "price" the following shall be excluded:

                      (a) usual trade discounts actually allowed to unaffiliated
                          persons or entities;
                      (b) costs of insurance and shipping costs; and
                      (c) export, sales and value added taxes, and
                          customs duties.

Notwithstanding  the  foregoing,  in the event that the purchasing or leasing of
any AGE VERIFICATION  PRODUCT is from the CORPORATION to an "affiliated entity",
such entity being either an individual or a company,  such that the  transaction
is not an "arm's  length"  business  transaction,  NET SALES  PRICE shall be the
greater  of (i) the  price as set  forth  in the  preceding  provisions  of this
definition and (ii) that price which the CORPORATION would have realized from an
unaffiliated  entity in an arm's length  transaction of an identical item in the
same quantity and at the same time and place as the transaction to an affiliated
entity.  Examples of affiliated entities include,  but are not limited to, those
entities which are family members or personal friends of any officer or Director
of the  Corporation or companies,  regardless of form, in which any such persons
directly or indirectly own or control a substantial  equitable  interest as well
as those transactions in which AGE VERIFICATION  PRODUCTS are provided for other
than  money  or  money  in  combination  with  returned  products  or  services.
INTELLI-CHECK,  pursuant to Section  2.03,  shall have the right to  investigate
those transactions that it believes are to an "affiliated" entity".

THE TERRITORY means the United States of America and Canada.

                                       10

<PAGE>Exhibit 10L

                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT made the 1st day of October, 2001 by and between
STAKE TECHNOLOGY LTD., a corporation incorporated under the laws of Canada (the
"Company") and JEREMY N. KENDALL, an Ontario resident ("Employee");

      WHEREAS, Employee desires to be employed by the Company, and the Company
desires to employ the Employee, all as herein provided;

      NOW THEREFORE for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:

Article I. Definitions

      Capitalized terms used in this Agreement shall have their defined meaning
throughout the Agreement. The following terms shall have the meanings set forth
below, unless the context clearly requires otherwise.

      1.01 "Agreement" means this Employment Agreement, as from time to time
amended;

      1.02 "Base Salary" means the total annual cash compensation payable on a
regular periodic basis, without regard to voluntary or mandatory deferrals, as
set forth at Section 3.01 of this Agreement;

      1.03 "Board" means the Board of Directors of the Company;

      1.04 "Bonus" means the bonus compensation payable as provided in Section
3.02 of this Agreement;

      1.05 "Cause" means termination of Employee's employment by the Company
based on any one or more of the following:

                  (a)   an act or acts of personal dishonesty taken by Employee
                        and intended to result in substantial personal
                        enrichment of Employee at the expense of the Company;

                  (b)   violations by the Employee of his obligations and duties
                        under Section 2.02 which are demonstrably willful and
                        deliberate on Employee's part and which are not remedied
                        within a reasonable period after Employee's receipt of
                        notice of such violations from the Company; or

                  (c)   the willful engaging by Employee in illegal conduct that
                        is injurious to the Company;

      No act, or failure to act, on Employee's part shall be considered
      "dishonest",

<PAGE>

      "willful" or "deliberate" unless done, or omitted to be done, by Employee
      in bad faith and without reasonable belief that Employee's action or
      omission was in, or opposed to, the best interests of the Company. Any
      act, or failure to act, based upon authority given pursuant to a
      resolution duly adopted by the board or based upon the advice of counsel
      for the Company shall be conclusively presumed to be done, or omitted to
      be done, by Employee in good faith and in the best interests of the
      Company.

      1.06 "Company" means Stake Technology Ltd., a corporation incorporated
under the laws of Canada.

      1.07 "Confidential Information" means information that is proprietary to
the Company or proprietary to others and entrusted to the Company, whether or
not trade secrets. Confidential Information includes, but is not limited to,
information relating to business plans and to business as conducted or
anticipated to be conducted, and to past or current or anticipated products.
Confidential Information also includes, without limitation, information
concerning research, development, purchasing, accounting, marketing, selling and
services. All information that Employee has a reasonable basis to consider
confidential is Confidential Information, whether or not originated by Employee
and without regard to the manner in which Employee obtains access to this and
any other proprietary information.

      1.08 "Disability" means the unwillingness or inability of Employee to
perform Employee's duties under this Agreement because of incapacity due to
physical or mental illness, bodily injury or disease for a period of 180
consecutive days.

      1.09 "Disability Payment Date" shall mean the day which is twelve (12)
months following the 180 consecutive days of incapacity required under the
definition of "Disability".

      1.10 "Dispute" means any claim, controversy or dispute arising between the
parties with respect to this Agreement.

      1.11 "Employee" means Jeremy N. Kendall, an Ontario resident.

      1.12 "Good Reason" means termination of employment by Employee based on
any one or more of the following (which termination must occur within ninety
(90) days of such event):

            (a)   an adverse change in Employee's status or position with the
                  Company, including, without limitation, any adverse change in
                  Employee's status or position as a result of a material
                  diminution in Employee's duties, responsibilities or authority
                  as of the date of this Agreement (or any status or position to
                  which Employee may be promoted after the date hereof) or the
                  assignment to Employee of any duties or responsibilities which
                  are inconsistent with Employee's status or position (except in
                  connection with the

<PAGE>

                  termination of Employee's employment for Cause, Disability or
                  death, as herein provided);

            (b)   a reduction by the Company in Employee's Base Salary as the
                  same may be increased from time to time, except in
                  semi-retirement or retirement;

            (c)   the Company requiring Employee to be based anywhere other than
                  where Employee's office is located as of the date of this
                  Agreement, except for required travel on the Company's
                  business;

            (d)   any purported termination by the Company of this Agreement or
                  the employment of the Employee by the Company in a position
                  which is not expressly authorized by this Agreement or any
                  breach of this Agreement by the Company other than an
                  isolated, insubstantial and inadvertent failure not occurring
                  in bad faith and which is remedied by the Company within a
                  reasonable period of time after the Company's receipt of
                  notice thereof from Employee; or

            (e)   a successor succeeds to the interests of the Company and the
                  directors implement or threaten to implement one or all of(a),
                  (b), (c) or (d) above.

      1.13 "Successor" means any corporation, individual, group, association,
partnership, firm, venture or other entity or person that, subsequent to the
date hereof, succeeds to the actual or practical ability to control (either
immediately or with the passage of time), all or substantially all of the
Company's business and/or assets, directly or indirectly, by merger,
consolidation, recapitalization, purchase, liquidation, redemption, assignment,
similar corporate transaction, operation of law or otherwise.

Article II Employment, Duties and Term

      2.01 Employment. Upon the terms and conditions set forth in this
Agreement, the Company hereby employs Employee, and Employee accepts such
employment, as Chairman and Chief Executive Officer of Stake Technology Ltd.

      2.02 Duties. During the term of this Agreement, and excluding any periods
of vacation, sick, disability or other leave to which Employee is entitled,
Employee agrees to devote his reasonable full time and attention during normal
business hours to the business and affairs of the Company and, to the extent
necessary, to discharge the r~ponsibilities assigned to Employee hereunder by
the board of directors and to use Employee's reasonable best efforts to perform
faithfully and efficiently such responsibilities. Employee's responsibilities
and duties shall be as mutually agreed upon

<PAGE>

from time to time by the Employee and the Board but shall initially include
those items listed on Exhibit "A" attached hereto. Employee shall comply with
the Company's policies and procedures; provided that, to the extent such
policies and procedures are inconsistent with this Agreement, the provisions of
this Agreement shall control. The Company acknowledges that the Employee has
business and personal interests he carries on in his own time and the Board is
aware of such activities and has no objection to the same.

      2.03 Certain Proprietary Information. If Employee possesses any
proprietary information of another person or entity as a result of prior
employment or relationship, Employee shall honour any legal obligation that
Employee has with that person or entity with respect to such proprietary
information.

      2.04 Term. Subject to the continuing provisions of Sections 5.01 and 6.01,
the term of employment of Employee under this agreement shall be nineteen (19)
years and five (5) months to February 26, 2020. Nothwithstanding anything other
in this Agreement contained, the Company acknowledges to, and covenants to the
Employee that all compensation provisions of this Agreement, whether the same
relate to the period prior to February 26th 2005 or thereafter to February 26,
2020, shall remain in full force and effect notwithstanding that the Company
shall have terminated the employment of the employee as provided in Article IV
hereof or a Successor succeeds to the interests of the Company.

      2.05 Early Retirement. The Employee shall carry out his duties as provided
in Section 2.02 hereof until he reaches the age of 65 on the 26th day of
February, 2005.

Notwithstanding the foregoing, however, the Employee may seek early retirement
and carry out his duties on a part time basis by giving the Board of Stake at
least one year's notice of his intention to do so. If such notice be given then,
at the conclusion of the notice period, the salary of the Employee shall be
reduced to $75,000 per annum payable in equal consecutive semimonthly periods,
in arrears, and he shall be entitled to a performance bonus of up to 50% of such
salary and the life insurance maintained by the Company on his life in the
amount of $1,000,000 shall continue until the contract is complete on February
26, 2003. He shall also continue to be entitled to receive directors' stock
options plus possible additions thereto as approved by the Board. All other
employee and automobile benefits to which the Employee shall be entitled shall
continue in full force. In exchange for compensation, the Employee shall provide
the Company with a minimum of fifty (50) days consulting services which shall
include his activities as a director of the Company. It is contemplated that the
Employee would continue as Chairman but not as Chief Executive Officer.

      2.06 Full Retirement. Between the said 26th day of February, 2005 and the
26th day of February, 2010, the Employee shall be paid a consulting retainer of
$75,000 per annum in equal consecutive monthly instalments in arrears. Between
the said 26th day of February, 2010 and the 26th day of February, 2015, the
Employee shall be paid a

<PAGE>

consulting retainer of $50,000 per annum in equal consecutive monthly
instalments in arrears subject to increase at the CPI rate commencing February
26, 2005. Between the said 26th day of February, 2015 and the 26th day of
February, 2020, the Employee shall be paid a consulting retainer of $25,000 per
annum in equal consecutive monthly instalments in arrears. If he remains on the
board of directors of the Company, the Employee shall continue to be entitled to
receive stock options on the same basis as the other directors and continue to
receive employee and automobile benefits to an annual maximum of $7,500,
adjusted for inflation at the CPI rate, commencing February 27th 2005. In
exchange for such compensation, the Employee shall provide the Company with a
minimum of one day per week consulting services for the period ending February
26, 2010.

      2.07 Retiring Allowance. Upon his Early Retirement or his Full Retirement
as defined in Articles 2.05 and 2.06 above, the Company shall on the date of
such retirement of the Employee, or as soon as possible thereafter, pay to the
Employee a "retiring allowance" as defined in Section 248 of the Income Tax
(Canada) to the maximum amount allowed by the provisions of such Act on such
date.

      2.08 Return of Proprietary Property. Employee agrees that all property in
Employee's possession belonging to the Company, including without limitation,
all software, documents, reports, manuals, memoranda, computer print outs,
custom lists, credit cards, keys, identification, products, access cards,
automobiles and all other property relating in any way to the business of the
Company are the exclusive property of the Company, even if Employee authored,
created or assisted in authoring or creating, such property. Employee shall
return to the Company all such documents and property immediately upon
termination of employment or at such earlier time as the Company may reasonably
request.

Article III. Compensation Benefits and Expenses

      3.01 Base Salary. During the term of Employee's full time employment under
this Agreement, the Company shall pay Employee a Base Salary at an annual rate
that is not less than $257,500 (Canadian) or such higher annual rate as may from
time to time be approved by the board, such Base Salary to be paid in
substantially equal regular periodic payments in accordance with the Company's
regular payroll practices. If Employee's Base Salary is increased from time to
time during the term of Employee's employment under this Agreement, the
increased amount shall become the Base Salary for the remainder of the term and
any extensions of Employee's term of employment under this Agreement.

      3.02 Performance Bonus. In addition to the remuneration to be paid to him
as set out in Section 3.01, Employee shall also be entitled to a Bonus of up to
70% of his Base Salary payable quarterly in arrears. Such Bonus shall follow the
same format of meeting and achieving budget and management goals as the bonus
plan of the Company.

<PAGE>

      3.03 Other Compensation and Benefits. During the term of Employee's
employment under this Agreement, the Company shall make available to Employee
all Plans in which Employee currently participates as an employee of Stake
Technology Ltd. In addition to any existing Plans in which Employee currently
participates, Employee shall be entitled to participate- in or receive benefits
under any Plan which is made available by the Company to other employees of the
Company who are similarly situated to Employee with respect to responsibility,
grade level, or other reasonable categorizations. Nothing paid to Employee under
any Plan shall be deemed to be in lieu of the Base Salary, Bonus, incentives or
compensation of any other nature otherwise payable to Employee.

      3.04 Vacation. For the 1999 fiscal year of the Company, and for each
subsequent fiscal year that begins during the term of Employee's employment
under this Agreement, Employee shall be entitled to five (5) weeks paid vacation
(prorated for any partial fiscal year). Carryover of unused vacation shall be in
accordance with the then existing Company policy.

      3.05 Business Expenses. During the term of Employee's employment under
this Agreement the Company shall, in accordance with and to the extent of, its
uniform policies in effect from time to time, bear all ordinary and necessary
business expenses incurred by Employee in performing Employee's duties as an
employee of the Company including, without limitation, all travel and living
expenses while away from home on business in the service of the Company,
provided that Employee accounts promptly for such expenses to the Company in the
manner reasonably prescribed from time to time by the Company.

      3.06 Automobile. During the term of Employee's employment under this
Agreement, the Company shall furnish Employee with the use of an automobile for
business purposes in accordance with the Company's automobile policy.

Article IV. Termination

      4.01 Cause. The Company may terminate the Employee's employment with the
Company for Cause. In the event of such termination, the Company shall pay all
Base Salary and benefits (but not Bonus), to Employee prorated through the date
of termination. Such payments shall be made according to the normal payroll
practices of the Company. Employee shall forfeit any of his unexercised stock
options at the date of termination for Cause.

      4.02 Good Reason. The Employee may terminate employment with the Company
under this Agreement with Good Reason. In the event of such termination, the
Company shall pay all Base Salary, Bonus and benefits to Employee as per this
contract until February 26, 2020. Such payment shall be made according to the
normal payroll practices of the Company. All Employee's Stock Options shall
remain effective subsequent to Employee's termination for Good Reason.

<PAGE>

      4.03 Death. This Agreement shall immediately terminate upon the death of
Employee. In the event of such termination, the Company shall pay all Base
Salary, Bonus and benefits to the Employee's estate prorated to the date of the
Employee's death. Such payment shall be made according to the normal payroll
practices of the Company. Employee's estate shall only have those rights to
exercise any vested unexercised stock options as are provided in the relevant
stock option plan.

      4.04 Disability. The Company may terminate the Employee or the Employee
may terminate his employment for Disability. In the event of such termination,
the Company shall pay all Base Salary, Bonus and benefits to the Employee
prorated through the Disability Payment Date. Such payments shall be made
according to the normal payroll practices of the Company. Employee shall forfeit
any unexercised stock options on the Disability Payment Date.

      4.05 Employee Resignation. In the event the Employee resigns from
employment with the Company for other than Good Reason, death or Disability,
then the Company shall pay all Base Salary and benefits (but not Bonus) to the
Employee through the date of resignation. Such payments shall be made according
to the normal payroll practices of the Company. Employee shall forfeit any
unexercised stock options on the date of Employee's resignation for other than
for Good Reason, death or Disability.

      4.06 Employee Dismissal. In the event the Employee's employment is
terminated by the Company for other than Cause, death or Disability, then the
Company shall pay all Base Salary, Bonus and benefits to Employee as per this
contract until February 26, 2020. Such payment shall be made according to the
normal payroll practices of the Company. All Employee's vested stock options
shall remain effective subsequent to Employee's dismissal for other than Cause,
death or Disability.

      4.07 Survival. Notwithstanding the provisions of clause 4.06 of this
Article IV, in the event that the Employee's employment is terminated by death
or Disability, and the Employee leaves his wife him surviving, then the Company
shall pay all Base Salary, Bonus and Benefits to the Employee as per this
contract until the death of Employee's said wife or February 26, 2020 whatever
shall first occur. Such payment shall be made according to the normal payroll
practices of the Company. All Employee's vested stock options shall remain
effective subsequent to Employee's dismall, death or disability during the
effective provisions of this clause.

      4.08 Buyout. At the option of the Company, in the event of the termination
of the Employee's employment for any of the reasons set out above in this
Article IV, the Company may pay in the manner and at the time contemplated by
clauses 4.01, 4.02, 4.03, 4.04, 4.05, 4.06 and 4.07 an amount equal to the
present value (as determined at the Company's expense by an actuary acceptable
to the Company and the Employee, which determination shall be final and binding)
of all Base Salary, Bonus and Benefits to Employee as they existed at the date
of termination, whichever is more favourable to the Employee.

<PAGE>

Article V. Confidential Information

      5.01 Prohibitions Against Use. Employee will not during or subsequent to
the termination of Employee's employment under this Agreement use or disclose,
other than in connection with Employee's employment with the Company, any
Confidential Information to any person not employed by the Company or not
authorized by the Company to receive such Confidential Information, without the
prior written consent of the Company. Employee will use reasonable and prudent
care to safeguard and protect and prevent the unauthorized use and disclosure of
Confidential Information. The obligations contained in this Section 5.01 will
survive- for as long as the Company in its sole judgment considers the
information to be Confidential Information. The obligations under this Section
5.01 will not apply to any Confidential Information that is now or becomes
generally available to the public through no fault of the Employee and will not
apply to Employee's disclosure of any Confidential Information required by law
or judicial or administrative process.

Article VI. Non-Competition

      6.01 Non-Competition. As further consideration for this Agreement,
Employee covenants and agrees that during the term of this Agreement until
February 26, 2020, and for a period of one (1) year thereafter, Employee shall
not directly or indirectly:

            (a)   accept other employment or any other engagement, appointment
                  or association of any nature whatsoever with, or become an
                  investor or otherwise interested or concerned in or with, any
                  individual person, proprietorship, partnership, limited
                  partnership, joint venture, corporation, association or other
                  entity of any nature which is a competitor, director or
                  indirectly, with the business of the Company as now conducted
                  or which hereafter may in any way be conducted or engaged in
                  by the Company; or

            (b)   engage in any other activity whatsoever (whether on his own
                  account or for another) which is competitive with the Company
                  during the term of this Agreement.

Article VII. Injunction.

      7.01 Injunction. Employee agrees that a breach or imminent breach of
Sections 5.01 or 6.01 above shall constitute a material breach of this Agreement
for which Company will have no adequate remedy at law. Employee agrees,
therefore, that Company's remedies upon a breach or imminent breach of Sections
5.01 or 6.01 above includes, but is not limited to, the right to preliminary and
permanent injunctive relief restraining Employee from further violation of such
Sections, as well as an equitable accounting of all profits or benefits arising
out of such breach, in addition to any other remedies available at law or in
equity or otherwise to Company or its affiliates.

<PAGE>

Article VIII. General Provisions

      8.01 Successors and Assigns.

            (a)   This Agreement shall be binding upon and enure to the benefit
                  of any Successor of the Company and any such Successor shall
                  absolutely and unconditionally assume all of the Company's
                  obligations hereunder.

            (b)   This Agreement and all rights of Employee hereunder shall
                  enure to the benefit of and be enforceable by Employee's
                  personal or legal representatives, executors, administrators,
                  successors, heirs, assigns, devisees and legatees. If Employee
                  should die while any amounts would still be payable to
                  Employee hereunder if Employee had continued to live, all such
                  amounts unless otherwise provided herein, shall be paid in
                  accordance with the terms of this Agreement to Employee's
                  devisee, legatee or other designee or, if there be no such
                  designee, to Employee's estate. Employee may not assign this
                  Agreement, in whole or in part, without the prior written
                  consent of the Company.

      8.02 Notices. All notices, requests and demands given to or made pursuant
hereto shall, except as otherwise specified herein, be in writing and be
personally delivered or mailed postage prepaid, registered mail, to any party at
his or its address set forth on the last page of this Agreement. Either party
may, by notice hereunder, designate a changed address. Any notice hereunder
shall be deemed effectively given and received: (a) if personally delivered,
upon delivery; or (b) if mailed, on the registered date or the date stamped on
the certified mail receipt.

      8.03 Withholding. To the extent required by any applicable law, including,
without limitation, any federal or provincial income tax or excise tax law or
laws, the Income Tax Act, the Employment Insurance Act or any comparable
federal, provincial or local laws, the Company retains the right to withhold
such portion of any amount or amounts payable to Employee under this Agreement
as the Company deems necessary.

      8.04 Captions. The various headings or captions in this Agreement are for
convenience only and shall not affect the meaning or interpretation of this
Agreement.

      8.05 Governing Law. The validity, interpretation, construction,
performance, enforcement and remedies of or relating to this Agreement, and the
rights and obligations of the parties hereunder, shall be governed by the
substantive laws of the Province of Ontario (without regard to the conflict of
laws, rules or statutes of any jurisdiction), and any and every legal proceeding
arising out of or in connection with this Agreement shall be brought in the
appropriate courts of the Province of Ontario, each of the parties hereby
consenting to the exclusive jurisdiction of said courts for this purpose.

<PAGE>

      8.06 Construction. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

      8.07 Waivers. No failure on the part of either party to exercise, and no
delay in exercising, any right or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right or remedy granted hereby or by any related document or by law.

      8.08 Modification. This Agreement may not be modified or amended except by
written instrument signed by the parties hereto.

      8.09 Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto in reference to all the matters herein
agreed upon.

      8.10 Counterparts. This Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one (1) and the same instrument.

      8.11 Survival. The parties expressly acknowledge and agree that the
provisions of this Agreement which by their express or implied terms extend
beyond the termination of Employee's employment hereunder shall continue in full
force and effect notwithstanding Employee's termination of employment hereunder
or the termination of this Agreement, respectively.

      8.12 Disputes. To the maximum extent allowed by applicable law, any claim
or dispute between the parties arising out of or relating to this agreement
shall be submitted to and resolved by binding arbitration. Either party may file
a written demand for arbitration with the other with respect to any dispute or
disagreement arising out of this agreement. In the United States, such demand
shall also be filed with the American Arbitration Association and the
arbitration shall be conducted pursuant to the terms of the Federal Arbitration
Act and the Commercial Arbitration Rules of the American Arbitration Association
pursuant to the expedited procedures of the commercial rules then in effect. In
Canada, such arbitration shall be conducted pursuant to the provisions of the
Arbitrations Act (Ontario). The venue for such arbitration shall be the City of
Toronto, Ontario.

<PAGE>

The arbitration shall be conducted before one arbitrator selected as follows:
within ten business days after the filing of the demand for arbitration, each
party shall designate a representative and, within ten business days after the
end of such ten day period, such representative shall select an arbitrator who
will serve as the sole arbitrator of the dispute. If the representatives of the
parties are in good faith unable to agree upon an arbitrator during the second
ten day period, the arbitrator, if the arbitration is to take place in the
United States, shall be selected through the American Arbitration Association's
arbitrator selection procedures arid, if the arbitration be taking place in
Canada, by a justice of the Ontario Superior Court of Justice, as provided in
the Arbitrations Act (Ontario).

The arbitrator so selected shall promptly fix the time, date and place of the
hearing and notify the parties accordingly. The arbitration shall be held and
the decision of the arbitrator shall be provided as quickly as is reasonably
possible and the arbitrator's decision may include an award of legal fees, costs
of arbitration and interest. The arbitrator shall promptly transmit an executed
copy of his decision and such decision shall be final, binding and conclusive
upon parties who shall have the right to enforce such decision by any court of
competent jurisdiction.

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.

                                            STAKE TECHNOLOGY LTD.

                                    Per:  "Cyril Ing"         Oct 17.01
                                    -----------------------------------

                                    Per   "Jeremy N. Kendall  Oct 19.01
                                    -----------------------------------

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