Exhibit 10.5
IMAGEWARE SYSTEMS, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), which was entered into as of
April 15, 2001 by and between ImageWare Systems, Inc., a California Corporation
(herein the "Company") and Xxxx Xxxxxxxxx, (herein "Xxxxxxxxx"), is amended to
read in full as hereinafter set forth.
It is hereby agreed as follows:
1. EMPLOYMENT AND TERM. The Company hereby employs Xxxxxxxxx as
Vice President, Sales and Marketing of the Company and Xxxxxxxxx agrees to her
employment by the Company as its "Vice President, Sales and Marketing " the term
of which employment shall be a period of three years commencing April 15, 2001
and ending April 15, 2004.
2. DUTIES. During the term of this Agreement, Xxxxxxxxx shall
devote substantially all of her working time, energies and skills to the
management of the Company's business. Xxxxxxxxx shall render services consistent
with those of the Vice President, Sales and Marketing of a corporation and shall
perform all duties incident to such office and all such further similar duties
that may from time to time be assigned to him by the President of the Company.
3. COMPENSATION. Xxxxxxxxx'x compensation under this Agreement
shall be as follows:
(a) BASE SALARY. The Company shall pay to Xxxxxxxxx, a
base salary (the "Base Salary") of $130,000 per year from April 15,
2001 through April 15, 2004. In addition, each year during the term of
this Agreement, Xxxxxxxxx shall be reviewed for purposes of determining
the appropriateness of increasing her salary hereunder, provided that
in any event, Xxxxxxxxx shall receive a cost-of-living increase equal
to the percentage by which the Consumer Price Index applicable to the
San Diego, California area increased during the prior fiscal year. Such
Base Salary shall be payable in semi-monthly installments in accordance
with the regular employee payment practice of the Company. All payments
shall be subject to the deduction of payroll taxes and similar
assessments as required by law.
(b) BONUS. In addition to her Base Salary, Xxxxxxxxx
shall be eligible to participate in any Company Bonus Plan, adopted
from time to time by the Board of Directors. The Company and Xxxxxxxxx
will, within 45 days of this agreement, establish the targets from
which incentive compensation will be measured.
4. EXPENSES AND BENEFITS. Xxxxxxxxx is authorized to incur
reasonable expenses in connection with the business of the Company, including
expenses for entertainment, travel and similar matters. The Company will
reimburse Xxxxxxxxx for such expenses upon presentation by Xxxxxxxxx of such
accounts and records as the
Company shall from time to time reasonably require. The Company also agrees to
provide Xxxxxxxxx with the following benefits:
(a) INSURANCE. Major medical health insurance and
disability insurance which shall provide not less than two-thirds of
Xxxxxxxxx'x then current Base Salary in disability payments commencing
three months after permanent or partial disability occurs and life
group or term life insurance in an amount equal to two times
Xxxxxxxxx'x Base Salary.
(b) EMPLOYEE BENEFIT PLANS. Participation in any other
employee benefit plans now existing or hereafter adopted by the Company
for its employees.
(c) VACATIONS. Xxxxxxxxx shall be entitled to a paid
vacation for a period in each calendar year of not less than three
weeks, to be taken at such times as mutually agreed with the Company.
5. TERMINATION. Except as otherwise provided herein, this
Agreement shall terminate upon the first to occur of the expiration of the term
provided for in Section 1 or the death of Xxxxxxxxx. However, nothing contained
in this Section 5 shall be construed to abrogate the obligations of the Company
to Xxxxxxxxx, or her personal representative, or her heirs, as the case may be,
in respect of all rights which shall accrue prior or subsequent to termination.
6. DISABILITY. In the event that Xxxxxxxxx becomes permanently
disabled during the term of this Agreement, then Xxxxxxxxx shall continue in the
employ of the Company, but her compensation hereunder shall be limited to the
amount of her Base Salary then in effect, as set forth in Section 3(a) hereof,
which compensation shall be reduced by any amounts which Xxxxxxxxx receives from
worker's compensation, social security, state disability programs or the
disability insurance provided by the Company to Xxxxxxxxx. In such event,
Xxxxxxxxx'x employment hereunder shall continue after her permanent disability
and until the first to occur of (a) the expiration of the term specified in
Section 1, or (b) the death of Xxxxxxxxx; and during such period of time
Xxxxxxxxx shall not be entitled to payment of expenses or benefits specified in
Section 4 hereof, except that the Company shall continue to provide Xxxxxxxxx
with the insurance benefits specified in Section 4(b) hereof.
DEFINITION OF DISABILITY. As used in this Paragraph 6,
"permanent disability" shall mean three (3) months of
substantially continuous disability. Disability shall be
deemed "substantially continuous" if, as a practical matter,
Xxxxxxxxx by reason of her mental or physical health, is
unable to sustain reasonably long periods of substantial
performance of her duties. Frequent long illnesses, though
different from the preceding illness and though separated by
relatively short periods of performance, may be deemed to be
"substantially continuous." Disability shall be determined in
good faith by a vote of not less than 75% of the Board of
Directors of the Company, excluding Xxxxxxxxx if she is a
director, whose decision shall be final and binding upon
Xxxxxxxxx. Xxxxxxxxx hereby consents to medical examinations
by such physicians and medical consultants as the Company
shall from time to time require.
7. TERMINATION BY COMPANY FOR CAUSE. The Company shall have the right
to terminate Xxxxxxxxx'x employment as Vice President, Sales and Marketing of
the Company for "Cause," in which event no compensation shall be paid or other
benefits furnished to Xxxxxxxxx after termination for Cause. Termination for
Cause shall be effective immediately upon notice being sent to Xxxxxxxxx.
DEFINITION OF CAUSE. For purposes of this Agreement, the term "Cause"
shall mean (1) any material act of dishonesty by Xxxxxxxxx against the
Company; or (2) willful misconduct or gross negligence by Xxxxxxxxx in
carrying out her duties as Vice President, Sales and Marketing of the
Company; or (3) material breach of this Agreement by Xxxxxxxxx; or (4)
misconduct by Xxxxxxxxx, such as intoxication or other misconduct which
has a substantial adverse effect on the business of the Company, or (5)
other circumstances indicative of Xxxxxxxxx'x failure materially to
comply with the terms of her employment and which have had or may have
a substantial adverse effect on the business of the Company.
8. TERMINATION BY COMPANY OTHER THAN FOR CAUSE. The Company shall
have the right to terminate Xxxxxxxxx'x employment prior to its normal
expiration under this Agreement, without cause, in which event the Company shall
pay Xxxxxxxxx in one lump sum, an amount equal to the full amount of her Base
Salary for a period of one year from the date of her termination of employment.
9. RESIGNATION BY XXXXXXXXX FOR CAUSE - CHANGE IN CONTROL OR
DIMINUTION IN DUTIES. In the event that there is a change in Control of the
Company or in the event that the Board of Directors materially reduces the scope
and/or authority of Xxxxxxxxx'x duties as a Vice President, Sales and Marketing,
then Xxxxxxxxx may terminate her employment by giving the Company 30 days
advance written notice. In such event, Xxxxxxxxx shall be entitled to payment of
her entire unpaid Base Salary for a period of one year from the date of her
termination of employment.
(a) As used in this Agreement, the term "Change of
Control" shall mean the occurrence of any of the following events during the
term hereof:
(i) Any "person" (such as that term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, or securities of the Company
representing 50% or more of the total voting power represented by the Company's
then outstanding voting securities; or
(ii) Any merger or consolidation of the Company
with any other corporation, other than a merger or consolidation that would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent 50% or more of the total voting power
represented by the Company's then outstanding voting securities (either by
remaining outstanding or by being converted into voting securities of the
Company or such other surviving entity outstanding immediately after such merger
or consolidation); or
(iii) a majority of the directors of the Company
which were not nominated by the Company's management (or were nominated by
management pursuant to an agreement with persons that acquired sufficient voting
securities of the Company to de facto control it) are elected to the Board of
Directors by the Company's shareholders; or
(iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the company of all or substantially all of the Company's assets.
10. INDEMNIFICATION. The Company shall enter into an Officers and
Directors Indemnification Agreement with Xxxxxxxxx that shall provide the
Executive with the maximum amount of protection allowed under the laws of
California to the extent that they are not inconsistent with the Company's
Articles of Incorporation or Bylaws with respect to such subject matter.
11. NO PROSELYTIZING OF EMPLOYEES. During the term of Xxxxxxxxx'x
employment and for a period of 24 months following termination of her employment
(for whatever reason), Xxxxxxxxx shall not, on her own behalf or on behalf of
any other person or entity, directly or indirectly, solicit or encourage any
person then an employee of the Company to leave the employ of the Company for
the purpose of forming of joining another business.
12. NO SOLICITATION OF CUSTOMERS. During the term of Xxxxxxxxx'x
employment and for a period of 24 months following termination of her employment
(for whatever reason), Xxxxxxxxx shall not, on her own behalf or on behalf of
any other person or entity, directly or indirectly, solicit, entice away or
divert any person or entity then a client of customer of the Company to become a
client or customer of any other person or entity.
13. GENERAL PROVISIONS.
(a) NOTICES. Any notices to be given hereunder by either
party to the other shall be in writing and may be effected either by personal
delivery or by fax, private courier, or certified mail, postage prepaid with
return receipt requested. Mailed notices shall be addressed to the parties at
the addresses set forth below, but each party may change her or its address by
written notice in accordance with this Section 11(a). Notices delivered
personally shall be deemed communicated as of actual receipt; faxes, private
courier deliveries or mailed notices shall be deemed communicated as of one day
after faxing, delivery by a private courier or mailing.
If to Xxxxxxxxx:
Xxxx Xxxxxxxxx
0000 Xxxxxxx Xxxxx Xxxxxx
Xx Xxxxx, XX 00000
If to the Company:
ImageWare Systems, Inc.
00000 Xxxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
(b) SEVERABILITY. If any provision in this Agreement is
held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions shall nevertheless continue in
full force without being impaired or invalidated in any way.
(c) LAW GOVERNING AGREEMENT. This Agreement shall be
governed by and construed in accordance with the laws of the State of
California.
(d) ASSIGNMENT. This Agreement shall inure to the benefit
of and bind the parties hereto and their representative legal
representatives, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
/s/ Xxx Xxxxxx /s/ Xxxx Xxxxxxxxx
--------------------------------- -----------------------------------
Xxx Xxxxxx Xxxx Xxxxxxxxx
Chairman and CEO Vice President, Sales and Marketing
