As previously reported, ImageWare Systems, Inc. (the "Company") appointed Kristin Taylor as President and Chief Executive Officer of the Company, effective March 2, 2020. In connection with Ms. Taylor's appointments, the Company and Ms. Taylor have entered into an agreement (the "Employment Agreement") that provides, among other things, for an annual base salary of $330,000 for a period of 24 months effective April 10, 2020.

The Employment Agreement is also provides for (i) the grant of a stock option to purchase 1.75 million shares of the Company's common stock par value $0.01 per share ("Common Stock"), which stock option shall vest in three equal annual installments beginning one year from the date of issuance; (ii) an annual bonus equal to 100% of Ms. Taylor's annual salary upon meeting the following performance objectives (a) the Company establishing a major partnership that generates $1.5 million in revenue during the calendar year 2020; (b) the Company achieving positive cash flow by the year ended December 31, 2020; (c) the Company's operating loss being reduced by a minimum of 50% by the year ended December 31, 2020; and (d) total sales exceeding $10.0 million in 2020, with each objective equal to 25% of the total bonus objective. If all performance objectives are met, Ms. Taylor will be granted an additional stock option to purchase 500,000 shares of Common Stock.

In the event of termination of her employment other than by reason of death or disability, or for cause, the employment agreement is also anticipated to provide Ms. Taylor with certain severance payments, including continuation of her salary for the greater of one year or the remaining term under her employment agreement.

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