IMAGEWARE SYSTEMS, INC. AMENDED AND RESTATED CONSULTING AGREEMENT
Exhibit
10.1
IMAGEWARE SYSTEMS, INC.
AMENDED
AND RESTATED CONSULTING AGREEMENT
This
Amended and Restated Consulting Agreement (the “Agreement”) is made and
entered into effective as of November 13, 2020 (the
“Effective
Date”), by and between Mr. S. Xxxxx Xxxxxx, Jr. (the
“Consultant”) and
ImageWare Systems, Inc., a Delaware corporation (the
“Company”).
RECITALS
WHEREAS, Consultant and the Company are
currently parties to that certain Transition Services Agreement
dated March 2, 2020 (the “Current Agreement”)
whereby Consultant serves as the Company’s Executive Chairman
of the Board;
WHEREAS, in connection with
Consultant’s retirement from the Company, the parties desire
to transition Consultant from the Executive Chairman of the Board
to a full time consulting position to provide certain consulting
services to the Company; and
WHEREAS, the parties have mutually
agreed to terminate the Current Agreement and enter into this
Agreement to govern the consulting relationship between Consultant
and the Company.
AGREEMENT
In
consideration of the mutual covenants herein contained, the parties
agree as follows:
1.
Termination of Current
Agreement. Upon the Effective Date, the Current Agreement
will be terminated in its entirety and this Agreement shall
supersede the Current Agreement in all respects. In connection with
the termination of the Current Agreement, the Company shall pay to
Consultant, on the Effective Date, the following: (i) any unpaid
base salary due to Consultant under the Current Agreement for all
periods prior to the Effective Date, (ii) all amounts due for
accrued and unused vacation through the Effective Date, and (iii)
all amounts for reimbursement of all expenses incurred by
Consultant in connection with his employment with the Company for
all periods prior to the Effective Date, each of which amounts
described in clauses (i), (ii) and (iii) above are set forth on
Exhibit A and
hereby agreed by the parties.
2. Services
of Consultant. Subject at all times to the Company’s
right to terminate this Agreement, as set forth in Section 4, the
Consultant shall provide such consulting and other services from
time to time as reasonably requested by the Company’s Chief
Executive Officer which are commensurate with Consultant’s
skills and experience and be substantially similar to the services
Consultant was providing to the Company prior to the date hereof,
it being understood that Consultant’s role and
responsibilities shall principally be in the areas of sales and
business development (the “Services”).
Notwithstanding the following, Consultant shall only be required to
provide the Services from the Company’s headquarters in San
Diego, California or the Consultant’s home residence, at the
discretion of the Consultant. The parties agree and acknowledge
that, Consultant shall provide Services to the Company from time to
time as requested by the Company up to a maximum of sixteen (16)
hours per week (the “Hours Cap”) in fulfilling
his obligations hereunder. As an independent contractor, Consultant
is free to provide services to other entities during the Term as
long as Consultant does not violate any of the terms of this
Agreement; provided,
however, during the Term, Consultant shall not provide
advisory, consulting or other services to any entity that directly
or indirectly competes with the Company. Subject to the Hours Cap,
Consultant agrees to attend such meetings as the Chief Executive
Officer may reasonably request for proper communication of his
advice and consultation. Consultant shall coordinate the furnishing
of Consultant’s Services pursuant to this Agreement with the
Company in order that such Services can be provided in such a way
as to generally conform to the business schedules of the Company,
but the method of performance, time of performance, place of
performance, hours utilized in such performance, and other details
of the manner of performance of Consultant’s services
hereunder shall be within the sole discretion of
Consultant.
3. Resignation
from the Board of Directors. As of the Effective Date,
Consultant hereby resigns from the Board of Directors of the
Company.
4. Term
of Engagement. Subject to Company’s right to terminate
this Agreement pursuant to this Section 4, the term of
Consultant’s engagement under this Agreement shall commence
on the Effective Date and shall continue for a full five (5) month
term (such period being referred to herein as the
“Term”,
and such date, the “Termination
Date”).
(a) Termination
for Breach. Either party may terminate this Agreement if the
other party breaches any material term of this Agreement and fails
to cure such breach within ten (10) days following written notice
thereof from the non-breaching party.
(b) Effect
of Termination. Upon the expiration or termination of this
Agreement for any reason: (i) Consultant will promptly deliver
to Company all Consultant Work Product, including all work in
progress on any Consultant Work Product not previously delivered to
Company, if any; (ii) Consultant will promptly deliver to
Company all Confidential Information in Consultant’s
possession or control; and (iii) Company will pay Consultant
any accrued but unpaid fees due and payable to Consultant pursuant
to Section 5.
5. Compensation
and Benefits.
(a) Consultant
shall be paid a monthly consulting fee (“Consulting Fee”), and
shall be entitled to certain benefits, each as more particularly
set forth in Exhibit
A attached hereto and incorporated by reference herein. The
Consulting Fee shall be paid on the 1st day of each month
following the date of this Agreement (pro-rated for any portion of
a month following the Effective Date). The Company shall arrange
for all payments due hereunder to be paid automatically, at the
times set forth above, through the Company’s accounts payable
system.
(b) The
Company has accrued 787,000 restricted stock units of the Company
(the “RSUs”) issuable to
Consultant. Upon the Effective Date of this Agreement 525,000 RSUs
shall be issued by the Company to Consultant and shall become fully
vested as of the effective date. The remaining 262,000 unvested
RSUs shall terminate and be of no further force and
effect.
(c) Consultant and the
Company acknowledge and agree that (a) the Company is not
required to, and shall not, withhold federal or state income, gross
receipts or similar taxes from the Consulting Fee paid to
Consultant hereunder and the Company is not otherwise required to
comply with any state or federal law concerning the collection of
income, gross receipts or similar taxes at the source of payment of
wages, (b) the Company is not required under the Federal
Unemployment Tax Act or the Federal Insurance Contribution Act to
pay or withhold taxes for unemployment compensation or for social
security on behalf of Consultant with respect to the Consulting Fee
and (c) the Company is not required under the laws of any
state to obtain workers’ compensation insurance or to make
state unemployment compensation contributions on behalf of
Consultant.
6. No Authorization to Engage in
Management Activities. No provision of this Agreement shall
be interpreted to imply such authorization or obligation on the
part of the Consultant to have any management responsibilities,
authority or activities including planning, organizing, directing,
coordinating, and controlling with respect to all or part of the
Company, unless such activities are directed by the Chief Executive
Officer of the Company.
7. Release.
For and in consideration for the agreements of the parties set
forth herein, the parties hereto, on each party’s own behalf
and on behalf such party’s successors and assigns (as the
case may be, collectively referred to as “Releasor”), hereby
releases and forever discharges the other party, its predecessors,
successors, corporate affiliates, parent entities and subsidiaries
and its officers, directors, agents, representatives, employees,
consultants and advisors (as the case may be, collectively referred
to as “Releasee”), from any and
all claims, counterclaims, demands, debts, actions, causes of
action, suits, expenses, costs, attorneys’ fees, damages,
indemnities, obligations and/or liabilities of any nature
whatsoever (“Release”), whether known
or unknown, which Releasor ever had, now has or hereafter can,
shall or may have against Releasee, for, upon or by reason of any
matter, cause or thing whatsoever from the beginning of the world
to the date of this Release, including, but not limited to, the
following: (i) all such claims and demands directly or indirectly
arising out of or in any way connected with Consultant’s
employment with the Company and/or its affiliated entities, parents
and subsidiaries or the termination of that employment, (ii) all
such claims and demands related to salary, bonuses, commissions,
restricted stock, unvested stock options or unvested warrants, or
any other benefits or compensation which have, are or may be due to
Consultant or his beneficiaries from the Company and/or its
affiliated entities, parents and subsidiaries, including vacation
pay, fringe benefits, expense reimbursements, severance pay and/or
any other form of compensation; (iii) any claims arising under any
federal, state or local law, statute or ordinance; and (iv) any
claims for breach of contract related to Consultant’s
employment, express or implied, including any claim for breach of
any implied covenant of good faith and fair dealing, wrongful
discharge, discrimination, harassment, fraud, defamation,
intentional tort, emotional distress and negligence.
Notwithstanding the foregoing, Releasor does not release any rights
or claims against Releasee that may arise under the terms of this
Agreement.
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Consultant
and the Company do not intend to release claims that Consultant may
not release as a matter of law, including but not limited to claims
for indemnity under California Labor Code Section
2802.
Notwithstanding the foregoing, Consultant is not releasing, and the
Release shall not include, any claims by Consultant for
indemnification to which Consultant may be entitled as a current or
former director or officer of the Company under the Company’s
certificate of incorporation, bylaws or any indemnification
agreement between Consultant and the Company, in each case, as they
exist as of the date of this Agreement.
Nothing
in this Section 7 shall prohibit or impair Consultant or the
Company from complying with all applicable laws, nor shall this
Agreement be construed to obligate either party to commit (or aid
or abet in the commission of) any unlawful act.
8. Non-Disparagement. Consultant
agrees not
to make, or cause any other person to make, any public statement
that is intended to criticize or disparage the Company, any of its
affiliates, or any of their respective officers, managers or
directors. The Company agrees to use commercially reasonable
efforts to cause its officers and members of its Board of Directors
not to intentionally make, or intentionally cause any other person
to make, any public statement that is intended to criticize or
disparage Consultant. This Section 8 shall not be construed to
prohibit any person from responding publicly to incorrect public
statements or from making truthful statements when required by law,
subpoena, court order, or the like.
9. Prohibited Activities. Without
the Company’s prior written consent, for a period of two (2)
years from the Effective Date, Consultant shall not (i) solicit,
directly or indirectly, or cause to be solicited the employment of
or employ any person who is now employed by Company (or whose
activities are dedicated to the Company); (ii) engage, directly
or indirectly, in or with any business that competes directly or
indirectly with the business of the Company; or (iii)
solicit any current or prospective customer of the Company, the
result of which is that the Company’s business with such
current or prospective customer is harmed.
10. Independent Contractor. At all
times during the Term, Consultant shall be an independent
contractor of the Company. In no event shall Consultant be deemed
to be an employee of the Company, and Consultant shall not at any
time be entitled to any employment rights or benefits from the
Company or be deemed to be an agent of the Company or have any
power to bind or commit the Company or otherwise act on its behalf,
other than as specifically set forth on Exhibit A attached hereto.
Consultant acknowledges and agrees that, as a non-employee,
Consultant is not eligible for any benefits sponsored by the
Company or any other benefit from the Company, other than as
specifically set forth on Exhibit A attached hereto, and,
accordingly, Consultant shall not participate in any pension or
welfare benefit plans, programs or arrangements of the Company.
Consultant shall not at any time communicate or represent to any
third party, or cause or knowingly permit any third-party to
assume, that in performing the Consulting Services hereunder,
Consultant is an employee, agent or other representative of the
Company or has any authority to bind the Company or act on behalf
of the Company. Consultant shall be solely responsible for making
all of Consultant’s applicable tax filings and remittances
with respect to amounts paid to Consultant pursuant to this
Agreement and shall indemnify and hold harmless the Company and its
respective representatives for all claims, damages, costs and
liabilities arising from Consultant’s failure to do so. It is
not the purpose or intention of this Agreement or the parties to
create, and the same shall not be construed as creating, any
partnership, partnership relation, joint venture, agency, or
employment relationship.
11. Confidentiality
and Non-Disclosure
(a) Through the
performance of the Consulting Services hereunder, Consultant shall
have access to confidential and proprietary information of the
Company, including some or all of the following documents,
materials and information of the Company (collectively
the “Confidential
Information”): (i) business strategies, corporate
opportunities, research, financial and sales data, pricing terms,
evaluations, opinions, interpretations and acquisition prospects,
(ii) information relating to the identity of customers or their
requirements, the identity of key contacts within customers’
organizations or within the organization of acquisition prospects,
(iii) information about, marketing and production plans or
techniques; (iv) customer and supplier lists, prospective customer
information, current and anticipated customer requirements,
distribution networks, price lists, market studies and business
plans; (v) historical and projected sales data, financial data and
projections, capital spending budgets and operating budgets; (vi)
employee and agent training techniques and materials and personnel
files, (vii) research and development plans or results, and (viii)
all other non-public information that gives the Company a
competitive advantage by virtue of its not being publicly
known.
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(b) Consultant hereby
acknowledges and agrees that the protection of the Confidential
Information is necessary to protect and preserve the value of the
Company and its business. Accordingly, subject to the terms and
conditions of this Section 11, Consultant hereby covenants and
agrees that, without the prior written consent of the Company,
Consultant shall not directly or indirectly disclose any
Confidential Information to any person or entity outside of the
Company and shall not use any Confidential Information other than
for the purpose of performing the Consulting Services
hereunder.
(c) The provisions of
Section 11(b) shall not apply to information (i) that is or
becomes generally known to, and available for use by, the public
other than as a result of the breach of this Agreement or any other
obligation that Consultant owes the Company, (ii) that is
available to Consultant on a non-confidential basis from a source
that is not prohibited from disclosing such information to
Consultant by a contractual, legal, or fiduciary obligation to the
Company, (iii) that is required to be disclosed by applicable
law, or (iv) the disclosure of which by Consultant is
reasonably necessary for Consultant to satisfy and perform
Consultant’s obligations under this Agreement. If Consultant
becomes compelled by applicable law or court or arbitrator’s
order to disclose any Confidential Information, Consultant shall
provide the Company with prompt written notice of such requirement
so that the Company may seek a protective order or other remedy
prior to, and in respect of, such disclosure. If such a protective
order or other remedy is not obtained by, or is not available to
the Company, then Consultant shall use commercially reasonable
efforts to ensure that only the minimum portion of such
Confidential Information that is legally required to be disclosed
is so disclosed, and Consultant shall use commercially reasonable
efforts to obtain assurances that confidential treatment shall be
given to such Confidential Information. Company agrees to furnish
Consultant with a list of sources prohibited by the Company from
disclosing Confidential information.
12. Non-Circumvention. The parties
agree that they will work through each other in all circumstances
as to third parties which are introduced through the efforts of one
of the parties hereto and agree not to circumvent each other in
that regard without permission of the other party
hereto.
13. Successors.
(a) Company's Successors. Any
successor to the Company (whether direct or indirect and whether by
purchase, lease, merger, consolidation, liquidation or otherwise)
to all or substantially all of the Company's business and/or assets
shall assume the Company's obligations under this Agreement and
agree expressly to perform the Company's obligations under this
Agreement in the same manner and to the same extent as the Company
would be required to perform such obligations in the absence of a
succession. For all purposes under this Agreement, the term
“Company” shall include
any successor to the Company's business and/or assets (including
any parent company to the Company) which executes and delivers the
assumption agreement described in this subsection (a) or which
becomes bound by the terms of this Agreement by operation of
law.
(b) Consultant’s Successors.
Without the written consent of the Company, Consultant shall not
assign or transfer this Agreement or any right or obligation under
this Agreement to any other person or entity. Notwithstanding the
foregoing, the terms of this Agreement and all rights of Consultant
hereunder shall inure to the benefit of, and be enforceable by,
Consultant’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees.
14. Notices. Notices and all other
communications contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given when personally
delivered (if to the Company, addressed to its Secretary at the
Company’s principal place of business on a non-holiday
weekday between the hours of 9 a.m. and 5 p.m.; if to Consultant,
via personal service to his last known residence) or when mailed by
U.S. registered or certified mail, return receipt requested and
postage prepaid.
15. Indemnity. Consultant will
defend, indemnify and hold Company harmless from and against all
claims, damages, liabilities, losses, expenses and costs (including
reasonable fees and expenses of attorneys and other professionals)
arising out of or resulting fromany breach by Consultant of any of
Consultant’s covenants in this Agreement.
16. Disclosure of Work Product.
Consultant will, as an integral part of the performance of
Services, disclose in writing to Company all inventions, products,
designs, drawings, notes, documents, information, documentation,
improvements, works of authorship, processes, techniques, know-how,
algorithms, specifications, biological or chemical specimens or
samples, hardware, circuits, computer programs, databases, user
interfaces, encoding techniques, and other materials of any kind
that Consultant may make, conceive, develop or reduce to practice,
alone or jointly with others, in connection with performing
Services, or that result from or that are related to such Services,
whether or not they are eligible for patent, copyright, mask work,
trade secret, trademark or other legal protection (collectively,
“Consultant Work
Product”).
17. Ownership of Consultant Work
Product. Consultant and Company agree that, to the fullest
extent permitted by applicable law, each item of Consultant Work
Product will be a work made for hire owned exclusively by Company.
Consultant agrees that all Consultant Work Product will be the sole
and exclusive property of Company. Consultant hereby irrevocably
transfers and assigns to Company, and agrees to irrevocably
transfer and assign to Company, all right, title and interest in
and to the Consultant Work Product, including all worldwide patent
rights (including patent applications and disclosures), copyright
rights, mask work rights, trade secret rights, know-how, and any
and all other intellectual property or proprietary rights
(collectively, “Intellectual Property
Rights”) therein. At Company’s request and
expense, during and after the term of this Agreement, Consultant
will assist and cooperate with Company in all respects, and will
execute documents, and will take such further acts reasonably
requested by Company to enable Company to acquire, transfer,
maintain, perfect and enforce its Intellectual Property Rights and
other legal protections for the Consultant Work Product. Consultant
hereby appoints the officers of Company as Consultant’s
attorney-in-fact to execute documents on behalf of Consultant for
this limited purpose.
18. Miscellaneous
Provisions.
(a) Consultant’s Legal Fees.
The Company shall reimburse Consultant for all legal fees incurred
by Consultant in connection with the matters contemplated by this
Agreement, not to exceed $10,000. Any such amounts shall be paid by
the Company to Consultant within five business days of the
Consultant providing the Company with an invoice from
Consultant’s legal counsel.
(b) Waiver. No provision of this
Agreement may be modified, waived or discharged unless the
modification, waiver or discharge is agreed to in writing and
signed by the Consultant and by an authorized officer of the
Company (other than the Consultant). No waiver by either party of
any breach of, or of compliance with, any condition or provision of
this Agreement by the other party shall be considered a waiver of
any other condition or provision or of the same condition or
provision at another time.
(c) Entire Agreement; Amendments.
This Agreement constitutes the entire and final agreement between
the parties with respect to the subject matter hereof and
supersedes any and all other written or oral agreements or
understandings between the parties. Notwithstanding the foregoing,
this Agreement shall not affect any non-disclosure, invention
assignment, confidentiality or other agreements executed by the
parties governing the termination of Consultant’s employment
with the Company, which agreements by their terms survive the
termination of Consultant’s employment with the Company. This
Agreement may not be amended, supplemented, or otherwise modified
except by a written agreement executed by the parties
(d) Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of
the State of California, without regard to choice of law
principles.
(e) Severability. The invalidity or
unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other
provision hereof, which shall remain in full force and
effect.
(f) Counterparts. This Agreement
may be executed in separate counterparts, any one of which need not
contain signatures of more than one party, and may be delivered by
facsimile or other electronic means, but all of which shall be
deemed originals and taken together will constitute one and the
same Agreement.
(g) Headings. The headings of the
Articles and Sections hereof are inserted for convenience only and
shall not be deemed to constitute a part hereof nor to affect the
meaning thereof.
(h) Construction of Agreement. In
the event of a conflict between the text of the Agreement and any
summary, description or other information regarding the Agreement,
the text of the Agreement shall control.
(i) Survival. Sections 7, 8, 9, 11,
15 and 16 of this Agreement shall survive its termination for any
reason.
(j) Cooperation with
Investigations. Consultant shall cooperate in good faith in
all respects with the Company in connection with any request by
Company, its current or former shareholders, officers, directors,
or auditors, or a federal or state governmental authority for
additional information and documents, or in any governmental
investigation, complaint, action or other inquiry.
[Remainder of Page Intentionally Left Blank]
IN
WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer, as of
the day and year first above written.
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COMPANY:
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IMAGEWARE SYSTEMS,
INC.
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By:
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/s/ Xxxxxxx
Xxxxxx
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Name: Xxxxxxx
Xxxxxx
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Title: Chief
Executive Officer
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CONSULTANT:
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/s/ Xxxxx
Xxxxxx
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S. Xxxxx Xxxxxx,
Jr.
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[Signature Page to Consultant Agreement]
EXHIBIT
A
BENEFITS
I. Compensation
and Benefits. Consultant’s compensation and other
benefits under this Agreement shall be as follows and is based on
the status change to terminated as of November 12,
2020:
A. $8,550
gross salary minus standard tax deductions and elected conributions
consisting of 401(k), flexible spending account, and portion of
spouse medical premium.
B. Unused
accrued Paid Time Off balance of 204 hours valued at
$39,314.88.
C. $767.76
has been paid via ACH on 9/23/20. This represents all outstanding
business-related expenses.
D. Consulting
Fee. The Company shall pay to Consultant a monthly
consulting fee (the “Consulting Fee”) of
$19,000.00 per Month from the Effective Date and thereafter monthly
for a period of five full months from the Effective Date. The
Consulting Fee shall be paid on the 1st day of each month
following the Effective Date (pro-rated for any portion of a month
following the Effective Date).
E. Commission.
In addition to his Consulting Fee, Consultant shall be eligible for
a commission equal to 1.00% of all amounts actually paid to the
Company resulting from contracts and or purchase orders received by
the Company prior to the Termination Date from the Government of
Mexico or its prime contractors for products and services from the
Company (“Qualifying
Payments”); provided,
however, Consultant’s entitlement to the foregoing
commission or any commission for Qualifying Payments under this
Paragraph E. shall only apply to Qualifying Payments actually
received by the Company in excess of $1.7 million; provided, further, that the maximum
amount of commissions payable hereunder shall not exceed $228,000;
provided, further, that
Consultant’s entitlement to, and the Company’s
responsibility to pay, the foregoing commission or any commission
for Qualifying Payments under this Paragraph E. resulting from
contracts or purchase orders received by the Company after the
Termination Date shall cease as of the Termination
Date.
F. Expenses.
Consultant shall be solely responsible for all expenses incurred
except those incurred at the request of and approved in advance by
the Chief Executive Officer. All air travel must be approved prior
to travel and such travel will be booked by the Company. All other
expenses incurred by Consultant require prior approval by the Chief
Executive Officer.The Company will reimburse Consultant for such
expenses within thirty (30) days following presentation by
Consultant of such accounts and records as the Company reasonably
requires for accounting purposes.
G. Benefits
and Insurance. Consultant’s eligibility for Company-
sponsored and paid group life, long term disability and accidental
death and dismemberment, 401K eligibility and flexible spending
account (Ameri-Flex) and related plans shall each terminate on the
Effective Date. During the Term, the Company shall provide to
Consultant and his dependents the same level of health insurance
benefits (medical, dental and vision) through COBRA continuation
paid for by the Company. The Company’s obligation to provide
the coverage referred to in the preceding sentence shall terminate
for Consultant and his dependents as of the Termination
Date.
II. Disability.
In the event that Consultant suffers from a permanent disability
during the Term of this Agreement, then Consultant shall continue
to receive his Consulting Fee for the entire remainder of the Term.
In such event, Consultant’s service to the Company hereunder
shall continue after his disability and until the first to occur of
(a) the Termination Date, or (b) the death of Consultant; and
during such period of time, Consultant shall not be entitled to
payment of expenses or benefits specified in Section
above.
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