Sample Business Contracts


Employment Agreement - ImageWare Systems Inc. and William Ibbetson

Employment Forms

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                             IMAGEWARE SYSTEMS, INC.
                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT ("Agreement"), which was entered into as of
November 15, 2000 by and between ImageWare Systems, Inc., a California
Corporation (herein the "Company") and William Ibbetson, (herein "Ibbetson"), is
amended to read in full as hereinafter set forth.

         It is hereby agreed as follows:

         1.       EMPLOYMENT AND TERM. The Company hereby employs Ibbetson as
Vice President and Chief Technical Officer of the Company and Ibbetson agrees to
his employment by the Company as its "CTO" the term of which employment shall be
a period of three years commencing November 15, 2000 and ending November 15,
2003.

         2.       DUTIES. During the term of this Agreement, Ibbetson shall
devote substantially all of his working time, energies and skills to the
management of the Company's business. Ibbetson shall render services consistent
with those of the Vice President and CTO 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 Board of Directors of the Company.

         3.       COMPENSATION. Ibbetson's compensation under this Agreement
shall be as follows:

                  (A)      BASE SALARY. The Company shall pay to Ibbetson, a
         base salary (the "Base Salary") of $125,000 per year from November 15,
         2000 through November 15, 2003. In addition, each year during the term
         of this Agreement, Ibbetson shall be reviewed for purposes of
         determining the appropriateness of increasing his salary hereunder,
         provided that in any event, Ibbetson 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 his Base Salary, Ibbetson shall
         be eligible to participate in any Company Bonus Plan, adopted from time
         to time by the Board of Directors.

         4.       EXPENSES AND BENEFITS. Ibbetson 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 Ibbetson for such expenses upon presentation by Ibbetson of such
accounts and records as the Company shall from time to time reasonably require.
The Company also agrees to provide Ibbetson with the following benefits:


<PAGE>

                  (A)      INSURANCE. Major medical health insurance and
         disability insurance which shall provide not less than two-thirds of
         Ibbetson's 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 Ibbetson's
         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. Ibbetson 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 Ibbetson. However, nothing contained
in this Section 5 shall be construed to abrogate the obligations of the Company
to Ibbetson, or his personal representative, or his 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 Ibbetson becomes permanently
disabled during the term of this Agreement, then Ibbetson shall continue in the
employ of the Company, but his compensation hereunder shall be limited to the
amount of his Base Salary then in effect, as set forth in Section 3(a) hereof,
which compensation shall be reduced by any amounts which Ibbetson receives from
worker's compensation, social security, state disability programs or the
disability insurance provided by the Company to Ibbetson. In such event,
Ibbetson's employment hereunder shall continue after his permanent disability
and until the first to occur of (a) the expiration of the term specified in
Section 1, or (b) the death of Ibbetson; and during such period of time Ibbetson
shall not be entitled to payment of expenses or benefits specified in Section 4
hereof, except that the Company shall continue to provide Ibbetson with the
insurance benefits specified in Section 4(b) hereof.

                  (A) 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, Ibbetson by reason of his mental or physical
                      health, is unable to sustain reasonably long periods of
                      substantial performance of his 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 Ibbetson if he is a director,
                      whose decision shall be final and binding upon Ibbetson.
                      Ibbetson 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 Ibbetson's employment as Vice President and CTO of the
Company for "Cause," in


<PAGE>


which event no compensation shall be paid or other benefits furnished to
Ibbetson after termination for Cause. Termination for Cause shall be effective
immediately upon notice being sent to Ibbetson.

                  (I)      DEFINITION OF CAUSE. For purposes of this Agreement,
         the term "Cause" shall mean (1) any material act of dishonesty by
         Ibbetson against the Company; or (2) willful misconduct or gross
         negligence by Ibbetson in carrying out his duties as Vice President and
         CTO of the Company; or (3) material breach of this Agreement by
         Ibbetson; or (4) misconduct by Ibbetson, such as intoxication or other
         misconduct which has a substantial adverse effect on the business of
         the Company, or (5) other circumstances indicative of Ibbetson's
         failure materially to comply with the terms of his 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 Ibbetson's employment prior to its normal expiration
under this Agreement, without cause, in which event the Company shall pay
Ibbetson in one lump sum, an amount equal to the full amount of his Base Salary
for a period of one year from the date of his termination of employment.

         9.       RESIGNATION BY IBBETSON 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 Ibbetson's duties as a Vice President and Chief Technical
Officer, then Ibbetson may terminate his employment by giving the Company 30
days advance written notice. In such event, Ibbetson shall be entitled to
payment of his entire unpaid Base Salary for a period of one year from the date
of his 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


<PAGE>



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 Ibbetson 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 Ibbetson's
employment and for a period of 24 months following termination of his employment
(for whatever reason), Ibbetson shall not, on his 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 Ibbetson's
employment and for a period of 24 months following termination of his employment
(for whatever reason), Ibbetson shall not, on his 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 his 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.

<PAGE>

                  If to Ibbetson:

                           William Ibbetson
                           11212 Constellation Drive
                           El Cajon, CA  92020


                  If to the Company:

                           ImageWare Systems, Inc.
                           10883 Thornmint Road
                           San Diego, CA  92127

                  (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/  JIM MILLER                        /S/  WILLIAM IBBETSON
-----------------------------------    --------------------------------------
Jim Miller                              William Ibbetson
Chairman and CEO                        Vice President, Chief Technical Officer


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