EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the "Agreement"), is made by and between Image
Sensing Systems, Inc., and its subsidiaries and divisions (collectively, "ISS"),
and Frank Hallowell ("Hallowell") as of the 29th day of April, 2019 (the
"Effective Date").

RECITALS:

 

A.                 ISS has offered Hallowell, and Hallowell has accepted, the
position of Chief Financial Officer of ISS under the terms of this Agreement.

 

B.                  ISS and Hallowell mutually agree to the terms set forth in
this Agreement.

 

NOW THEREFORE, in consideration of the covenants and conditions contained in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, ISS and Hallowell agree as
follows:

 

AGREEMENT:

1. Employment; Definitions.

 

(a) Employment. Hallowell is an at-will employee, and his employment may be
terminated by either Hallowell or ISS at any time, with or without cause.

 

(b) Definitions. For purposes of this Agreement, the following terms shall have
the following meanings:

 

(i)                 "Code" means the Internal Revenue Code, as amended, and the
regulations, notices and other guidance of general applicability issued
thereunder.

 

(ii)                "Fair Market Value" means the per share closing price of
ISS's common stock or any other securities into which ISS's common stock has
been converted that are subject to Options, Awards of Restricted Stock, or
Restricted Stock Units to be granted or held by Hallowell as quoted on the
NASDAQ Stock Market or any other exchange on which such common stock or other
securities are principally traded or, if such common stock or securities are not
traded on any exchange, the fair market value of such common stock or securities
as determined in good faith by the Board of Directors of ISS or its successor.

 

(iii)              "Good Reason" means Hallowell has provided written notice to
ISS within 90 days following the occurrence of any of the following events,
provided the event results in a negative change to Hallowell, which notice
describes the event in reasonable detail and the facts and circumstances claimed
by Hallowell to constitute Good Reason, and ISS has not cured the event within
30 days after receiving such notice from Hallowell:

 

(A)                 the assignment of Hallowell without Hallowell's consent to a
position with material responsibilities or duties of a lesser status or degree
than the position of Chief Financial Officer;

 

(B)                  the relocation of Hallowell's principal office for ISS 
business, without Hallowell's consent, to a location more than 50 miles outside
Hallowell's work location as of the date of this Agreement;

 

(C)                  a material reduction, in the aggregate, in base salary,
variable pay opportunities or the employee benefits in which Hallowell is
entitled to participate irrespective of any standard waiting periods with
respect to the same, unless such material reduction is generally applicable to
all employees of ISS with a similar ranking to Hallowell; or

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(D)                  a material breach or a material adverse modification of
this Agreement by ISS without Hallowell's consent.

          Termination for "Good Reason" shall not include Hallowell's death or a
termination for any reason other than one of the events described in clauses (A)
through (D) of this Section l(b)(iii).

(iv)              "Termination Date" means the date upon which Hallowell's
"separation from service" with ISS within the meaning of Section
409A(a)(2)(A)(i) of the Code (with "ISS" for purposes of this paragraph to
include any business entity that is treated as a single employer with ISS under
the rules of Section 414(b) and (c) of the Code).

(v)         "With Cause" means the occurrence of any of the following events:

(A)           the conviction of Hallowell of, or a plea of "guilty" or "no
contest" by Hallowell to, a felony under the laws of the United States or any
state thereof or the conviction of Hallowell of, or a plea of "guilty" or "no
contest" by Hallowell to, any act involving moral turpitude;

 

(B)            Hallowell's breach of fiduciary duty involving personal profit;

 

(C)             Hallowell's willful and material misconduct in the performance
of duties assigned to Hallowell as the Chief Financial Officer of ISS;

(D)             Hallowell's consistent failure to perform the reasonable stated
duties assigned to Hallowell under this Agreement; or

(E)             Illegal or unethical business practices by Hallowell including,
but not limited to, the commission of fraud, misappropriation or embezzlement in
connection with ISS's business.

 

2.                  Duties. Hallowell will devote his full professional time,
attention and eff01ts to the business and affairs of ISS during his employment
with ISS, and Hallowell agrees that, to the best of his ability and experience,
and at all times, he will conscientiously perform the duties and obligations
assigned to him.

 

3.                  Compensation.

 

(a)                Salary. ISS will pay Hallowell a base salary at a rate
of$9,166.67 per semi-monthly pay period, which is equal to $220,000.00
annualized, for the remainder of the 2019 calendar year or until the earlier
termination of Hallowell's employment under this Agreement, less all required
withholdings and deductions, payable in accordance with ISS's standard payroll
procedures in effect from time to time. Hallowell's performance will be
evaluated by ISS's Board of Directors from time to time in its discretion but no
less often than annually.

 

(b)                Grant of Restricted Stock. On the Effective Date, ISS will
grant to Hallowell a one-time grant of shares of Restricted Stock under the
terms of the Image Sensing Systems, Inc. 2014 Stock Option and Incentive Plan
effective as of April 9, 2014, as amended (the "Plan"), with a Fair Market Value
of$55,000.00 on the Effective Date, which will vest as to one-third of the
shares of ISS's common stock subject to such Award of Restricted Stock over a
three-year period on each anniversary date of the Effective Date in 2020, 2021
and 2022 if Hallowell is then an employee of ISS. The grant of any future
Restricted Stock, Restricted Stock Units, Options or other Awards to Hallowell
under the Plan or otherwise will be in the discretion of ISS's Board of
Directors or other person or party with authority to grant such future
Restricted Stock, Restricted Stock Units, Options or other Awards. For purposes
of this Agreement, the terms "Option," "Restricted Stock," "Restricted Stock
Units" and "Award" shall have the meaning set fo1th in the Plan or any successor
or replacement plan of a similar nature.

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(c)                 Bonuses. Hallowell will be eligible to participate in an
annual cash incentive award of a target bonus equal to 25% of Hallowell's annual
base salary for the previous calendar year, proportionately pro-rated for any
p011ion of the previous calendar year that he worked. Such annual cash incentive
award will be based on the attainment of gross profit and operating income
performance goals for the previous calendar year set by ISS's Board of Directors
or other person or party with authority to determine such bonus in its
discretion and will be payable upon completion of the audit of ISS's financial
statements for the previous calendar year.

 

(d)                Employee Benefits. Hallowell will be entitled to insurance
and other benefits in accordance with ISS's standard and executive benefits in
effect from time to time. These benefits include several elections that must be
made by Hallowell. Plan books, Summary Plan Descriptions, and Plan Legal
Documents containing formal descriptions of all available benefits have been or
will be provided to Hallowell. ISS is entitled to change, modify, or discontinue
such benefits at its sole discretion.

 

(e)                Vacation. Hallowell is entitled to vacation each year in
accordance with ISS's vacation policy in effect from time to time.

 

4.                   Reimbursement of Reasonable Travel and Business Expenses.
ISS will, in accordance with its policies in effect from time to time, reimburse
Hallowell for all reasonable business expenses incurred by Hallowell in
connection with the performance of his duties under this Agreement, upon
submission of the necessary documentation required pursuant to ISS's standard
policies and record keeping procedures. Hallowell also agrees that he will
adhere to ISS's travel policy, which is subject to amendment from time to time.

 

5.                   Confidentiality, Noncompetition and Invention Assignment.
Hallowell has reviewed and, on the Effective Date, has signed Appendix A to this
Agreement.

 

6.                  Severance upon Termination of Employment.

 

(a)                Voluntary Termination. Should Hallowell terminate his
employment for any reason other than for Good Reason as provided in Section
l(b)(iii) of this Agreement, (i) ISS shall pay Hallowell all earned and unpaid
amounts due to him for salary through the termination date; (ii) Hallowell shall
have 90 days after the date of the termination of his employment (or such
shorter period as is provided in the Plan, or any successor or replacement plan
of a similar nature, or an agreement governing an Option or other Award) to
exercise all Options registered in Hallowell 's name that are exercisable as of
such termination date; and (iii) any other Options, Restricted Stock, Restricted
Stock Units and Awards registered in Hallowell's name and that are not vested
and not exercisable by Hallowell shall automatically terminate. Except as
expressly provided herein, to the extent that there is any conflict between the
provisions of this Section 6(a) and the provisions of the Plan or any agreement
governing Options, Restricted Stock, Restricted Stock Units or other Awards
registered in Hallowell's name, the provisions of this Section 6(a) shall
govern.

 

(b)                Termination by ISS "With Cause." Should ISS terminate
Hallowell's employment With Cause, Hallowell shall not be entitled to any
severance, and all of the Options, Restricted Stock and Restricted Stock Units
registered in Hallowell's name, whether or not vested and whether or not
exercisable, shall automatically terminate; provided, however, that Hallowell
shall have ten (10) days to cure any alleged breach, failure, or misconduct
under Section l(b)(v)(D) of this Agreement, if such alleged breach, failure or
misconduct is curable, after ISS provides Hallowell written notice of the
actions or omissions constituting such breach, failure, or misconduct. Except as
expressly provided herein, to the extent that there is any conflict between the
provisions of this Section 6(b) and the provisions of the Plan or any agreement
governing Options, Restricted Stock, Restricted Stock Units or other Awards
registered in Hallowell's name, the provisions of this Section 6(b) shall
govern.

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(c)                Termination by ISS "Without Cause." Should ISS terminate
Hallowell's employment for any reason other than (I) With Cause, or (2) because
of Hallowell's inability to perform his duties because of death or disability,
upon entry into a release agreement substantially in the form attached to this
Agreement as Appendix B (the "Release Agreement"), (i) Hallowell shall be
entitled to three months of salary continuation, without eligibility for bonus;
and (ii) he shall have 90 days after the date of the termination of his
employment (or such shorter period as is provided in the Plan, or any successor
or replacement plan of a similar nature, or an agreement governing the Option)
to exercise all Options registered  in Hallowell's  name that are vested and
exercisable as of such Termination Date. Any other Options, Restricted Stock,
Restricted Stock Units and Awards registered in Hallowell's name that are not
vested and not exercisable shall automatically terminate upon termination of
Hallowell's employment under this Section 6(c). ISS and Hallowell have the
ability, however, at any time, to terminate this Agreement by mutual written
agreement, with or without the severance benefit. Except as expressly provided
herein, to the extent that there is any conflict between the provisions of this
Section 6(c) and the provisions of the Plan or any agreement governing Options,
Restricted Stock, Restricted Stock Units or other Awards owned by Hallowell, the
provisions of this Section 6(c) shall govern.

 

(d)                Post-Termination Obligations and Conditions. In the event of
the termination of Hallowell's employment with ISS, the sole obligation of !SS
to Hallowell will be ISS's obligation to make any payments it is required to
make to Hallowell as provided in this Agreement, and ISS will have no other
obligation to Hallowell or to Hallowell's beneficiary(ies) or estate.

 

(i)                 Notwithstanding the provisions of Section 6(c) of this
Agreement, ISS will not be obligated to make any payments to Hallowell under
Section 6(c) unless: (A) Hallowell has signed the Release Agreement within 25
days following his Termination Date; (B) any and all applicable rescission
periods provided by law for releases of claims shall have expired and Hallowell
shall have signed and not rescinded the release of claims; and (C) Hallowell is
in strict compliance with the terms of this Agreement as of the date(s) of such
payments.

 

(ii)                Any salary continuation provided under Section 6(c) of this
Agreement shall be paid in equal installments over the period in accordance with
the normal payroll practices for ISS, with the first such installment to
commence with the first normal payroll for ISS that follows the execution of the
Release Agreement and expiration of all applicable rescission periods without
rescission; provided that: (A) the first installment payment shall include all
amounts of that would otherwise have been paid to Hallowell during the period
beginning on the Termination Date and ending on the first payment date if no
delay had been imposed; and (B) If the period during which the first installment
payment potentially could be made (as determined on the Termination Date) spans
two calendar years, the first installment payment shall not be made until the
first normal payroll for  ISS in the second of the calendar years.

 

(iii)               Immediately upon the termination of Hallowell's employment
with ISS for any reason, Hallowell will resign all positions then held as an
officer, director or manager of ISS and of affiliated entities of ISS.

 

(e)                Withholding Taxes. ISS shall be entitled to deduct from all
payments or benefits provided for under this Agreement any federal, state or
local income and employment-related taxes required by law to be withheld with
respect to such payments or benefits.

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(f)                 Compliance with Code Section 409A.

 

(i)                 The parties to this Agreement intend that the payments
described in Section 6(c) of this Agreement shall be excluded from deferred
compensation as a "short-term deferral" under Treas. Reg. § l.409A-l (b)(4). The
parties to this Agreement intend that the continuation of any health and dental
benefits under this Agreement shall be excluded from deferred compensation
pursuant to the medical benefits exception for separation pay plans under Treas.
Reg. §l.409A-l(b)(9)(v)(B).

 

(ii)                The parties to this Agreement intend that the continuation
of any life and disability insurance benefits under this Agreement shall be
excluded from deferred compensation as separation pay due to an involuntary
separation from service under Treas. Reg. § l .409A- l(b )(9)(iii), and the
amounts payable for any such continuation of life and disability insurance
coverage shall not exceed two times the lesser of (A) Hallowell's annualized
compensation based on the annual rate of pay for services to ISS for the
calendar year prior to the calendar year in which the Termination

 

Date occurs (adjusted for any increase during the year that was expected to
continue indefinitely if Hallowell had not separated from service) or (B) the
compensation limit under Section 40l(a)(l 7) of the Code for the year in which
the Termination Date occurs.

 

(iii)              Notwithstanding the foregoing, if any of the payments
described in Section 6(c) of this Agreement are subject to the requirements of
Code Section 409A, and ISS determines that Hallowell is a "specified employee"
as defined in Code Section 409A as of Hallowell's Termination Date, such
payments shall not be paid or commence earlier than the date that is six months
after the Termination Date, but shall be paid or commence during the calendar
year following the year in which the Termination  Date occurs and within 30 days
of the earliest possible date permitted under Code Section 409A.

 

7.                   Miscellaneous.

 

(a)                Notices. Any and all notices permitted or required to be
given under this Agreement must be in writing. Notices will be deemed given (i)
when personally received or when sent by facsimile transmission (to the
receiving party's facsimile number), (ii) on the first business day after having
been sent by commercial overnight courier with written verification of receipt,
or (iii) on the third business day after having been sent by registered or
certified mail from a location on the United States mainland, return receipt
requested, postage prepaid, whichever occurs first, at the address set forth
below or at any new address, notice of which will have been given in accordance
with this Paragraph:

 

If to ISS: Chad A. Stelzig
500 Spruce Tree Centre
 1600 University Ave. West

St. Paul, MN 55104
by (or other address as is notified in writing from time to time by ISS to
Hallowell return receipt requested, postage prepaid post)

 

If to Hallowell: Frank Hallowell 6957

6957 Tartan Curve
Eden Prairie, MN 55346 by

(or other address as is notified in writing from time to time by Hallowell to
ISS return receipt requested, postage prepaid post)

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(b)                Amendments. Except as provided in the next sentence, this
Agreement may not be changed or modified in whole or in part except by a writing
signed by ISS and Hallowell. Notwithstanding anything in this Agreement to the
contrary, ISS and Hallowell agree that ISS has the right to amend this Agreement
without Hallowell's consent to the extent necessary or desirable to comply with
Code Section 409A, provided that no such amendment may reduce the amount of any
benefits payable to Hallowell without Hallowell's consent.

 

(c)                Governing Law. This Agreement will be governed by and
interpreted according to the laws of the State of Minnesota without regard to
its conflicts law.

 

(d)                No Waiver. The failure of either party to this Agreement to
insist on strict compliance with any of the terms of this Agreement in any
instance or instances will not be deemed to be a waiver of any term of this
Agreement or of that party's right to require strict compliance with the terms
of this Agreement in any

other instance.

 

(e)                 Severability. Hallowell and ISS recognize that the
limitations contained in this Agreement are reasonably and properly required for
the adequate protection of the interests of ISS. If for any reason a court of
competent jurisdiction or binding arbitration proceeding finds any provision of
this Agreement, or the application of any part of this Agreement, to be
unenforceable, the remaining provisions of this Agreement will be interpreted so
as best to reasonably effect the intent of the parties to this Agreement. The
parties to this Agreement further agree that the court or arbitrator shall
replace any such invalid or unenforceable provisions with valid and enforceable
provisions designed to achieve, to the extent possible, the business purposes
and intent of such unenforceable provisions.

 

(f)                 Entire Agreement. With the exception of the Plan and any
agreement or other document setting forth the terms of an "Award" granted to
Hallowell under the Plan (as the term "Award" is defined in the Plan), this
Agreement constitutes the entire understanding and agreement of the parties
hereto with respect to the subject matter of this Agreement and, with the
foregoing exceptions, supersedes all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
including, without limitation, between the parties to this Agreement with
respect to the subject matter of this Agreement.

 

(g)                Term of Agreement. This Agreement shall commence on the
Effective Date and shall continue in effect until the date on which Hallowell's
employment with ISS terminates for any reason whatsoever; provided, that any
rights and obligations accruing upon or prior to the termination or expiration
of this Agreement shall survive to the extent necessary to enforce such rights
and obligations.

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(h)                Successors and Assigns. This Agreement shall inure to the
benefit of and shall be enforceable by Hallowell, his heirs and the personal
representative(s) of his estate, and it shall be binding upon and inure to the
benefit of ISS and its successors and assigns. ISS will require the transferee
of any sale of all or substantially all of the business and assets of ISS or the
survivor of any merger, consolidation or other transaction expressly to agree to
honor this Agreement in the same manner and to the same extent that ISS would be
required to perform this Agreement if no such event had taken place. The failure
of ISS to obtain such agreement before the effective date of such event shall be
a material breach of this Agreement by ISS within the meaning of Section l
(b)(iii)(D) of this Agreement.

 

(i)                  Captions. The headings or captions set forth in this
Agreement are for convenience only and shall not affect the meaning or
interpretation of this Agreement.

 

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

 

(k)                Representation by Legal Counsel. Hallowell acknowledges that
this Agreement was prepared by Winthrop & Weinstine, P.A., as legal counsel for
ISS, which does not represent Hallowell; Hallowell has consulted with and has
been represented by legal counsel of Hallowell's own choice in connection with
the meaning, interpretation, negotiation, drafting and effect of this Agreement
or has had to opportunity to do so but has chosen not to do so; and the normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement or any exhibits or amendments hereto.

 

IN WITNESS WHEREOF, Hallowell and ISS have caused this Agreement to be duly
executed and delivered as of the Effective Date. 

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APPENDIX A

TO THE EMPLOYMENT AGREEMENT BETWEEN IMAGE SENSING SYSTEMS, INC., AND FRANK
HALLOWELL

 

CONFIDENTIALITY, NONCOMPETITION AND INVENTION ASSIGNMENT AGREEMENT

 

This CONFIDENTIALITY, NONCOMPETITION, AND INVENTION ASSIGNMENT AGREEMENT

("Agreement") between Image Sensing Systems, Inc. ("ISS"), and Frank Hallowell
("Employee") is signed and dated as of April 29, 2019.

 

As an express condition of Employee's employment with ISS, for his receipt of
ISS benefits, and other valuable consideration, and in exchange for other
premises and mutual promises contained in this Agreement, ISS and Employee agree
as follows:

 

I.                   Confidential and Proprietary Information.

 

(a)                 Employee understands and agrees that, during the course of
his employment with ISS, he will receive proprietary, confidential, and trade
secret information - all of which has special value to and constitutes a unique
asset of ISS (collectively referred to in this Agreement as "Confidential &
Proprietary Information"). Employee agrees that he will not disclose such
Confidential & Proprietary Information during the period of his employment or
after the termination of his employment for any reason whatsoever and that he
will not use or share the same with any person, firm, or corporation without
first obtaining ISS's written consent.

 

(b)                For these purposes, "Confidential and Proprietary
Information" includes, but is not limited to, confidential information relating
to ISS's business, products and services, customers, or vendors; trade secrets,
data, specifications, developments, inventions, patents, patent materials,
copyrightable subject matter and ideas, processes, know-how, designs, computer
systems, and research activity; marketing and sales strategies, marketing and
product plans, information, pricing strategies, and techniques; long and short
term business plans; existing and prospective client, vendor, and employee
lists, contacts, and information; financial and personnel information; any
information and/or applications relating to ISS's internal information systems;
and any other information concerning the business of ISS which is not disclosed
to the general public or known in the industry, except for disclosure necessary
in the course of Employee's duties or with the express written consent of ISS.
All Confidential and Proprietary Information, including all copies, notes
regarding, correspondence and/or electronic communications regarding, and
replications of such Confidential and Proprietary Information will remain the
sole property of ISS and must be returned to ISS immediately upon termination of
Employee's employment.

 

(c)                 Employee acknowledges that ISS's Confidential and
Proprietary Information constitutes a unique and valuable asset of ISS and
represents a substantial investment of time and expense by ISS, and that any
disclosure or use of such knowledge or information other than for the sole
benefit of ISS would be wrongful and would cause irreparable harm to ISS.

 

(d)                The foregoing obligations of confidentiality do not apply to
any knowledge or information that is now published or which subsequently becomes
generally publicly known in the form in which it was obtained from ISS, other
than as a direct or indirect result of the breach of this Agreement by Employee.

 

2.                  Return of Company Property. Upon termination of employment
with ISS for whatever reason, or at any other time at the request of ISS,
Employee will deliver to a designated Company representative all records,
documents, hardware, software, and all other Company property and all copies of
such Company property in Employee's possession. Employee acknowledges and agrees
that all such materials are the sole property of ISS and that he will certify in
writing to ISS at the time of delivery that he has complied with this
obligation.

 

3.                   Noncompetition Covenant. ISS and Employee agree that, due
to Employee's position with ISS,

Employee will have access to ISS's Confidential and Proprietary Information and
has developed and will continue

to develop ce1iain goodwill and relationships on behalf of ISS. Employee
acknowledges that ISS will only release its Confidential and Proprietary
Information, and will only permit Employee to continue to generate this goodwill
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these relationships, upon the receipt of assurances that Employee will not use
the information, goodwill, or relationships to ISS's disadvantage and,
accordingly, agrees to the following provisions:

 

(a)                Agreement Not to Compete. During the term of his employment 
with ISS, and for a period of twelve (12) months after the termination of such
employment for any reason, Employee will not, directly or indirectly, serve as
an employee, agent, consultant, director, stockholder or owner, or render
services to any Conflicting Organization. Employee also will not direct any
other individual or business enterprise to engage in such competition with ISS.
For the purposes of this Agreement, "Conflicting Organization" means companies
and other organizations engaged in or which have plans to engage in
software-based computer enabled detection products and solutions for the
intelligent transportation industry and adjacent security and law enforcement
markets.

 

(b)                Nonsolicitation of Customers or Suppliers. During the term of
his employment with ISS, and for a period of twelve (12) months after the
termination of such employment for any reason, Employee agrees that he will not,
directly or indirectly, divert, solicit, approach, contact, call upon, accept
business from, or sell or render services to any client/customer or prospective
client/customer of ISS who was solicited  or serviced  directly by Employee at
any time during the twelve (12) months prior to his termination from employment,
or where he supervised, directly or indirectly, in whole or in part, the
solicitation or service activities related to such clients or prospects during
the same twelve-month period. Employee also will not, directly or indirectly,
aid or assist any other person, firm, or corporation in doing what he himself
cannot do under the terms of this Agreement. Employee will not in any way
interfere or attempt to interfere with ISS's relationships with any of its
actual or potential customers, suppliers, or subcontractors.

 

(c)                  Nonsolicitation of Employees. Employee recognizes that
ISS's work force constitutes an important and vital aspect of its business.
During the term of his employment with ISS, and for a period of twelve (12)
months after the termination of such employment for any reason, Employee will
not, directly or indirectly, hire, solicit, employ, or attempt to employ, any
employee or director of ISS, or otherwise directly or indirectly interfere with
or disrupt relationships, contractual or otherwise, between ISS and any of its
employees, directors, or consultants.

 

(d)                 Acknowledgment. Employee agrees that the restrictions and
agreements contained in this Agreement (and particularly in this Paragraph 3)
are reasonable and necessary to protect the legitimate interests of ISS, and
that any violation of this Agreement will cause substantial and irreparable harm
to ISS that would not be quantifiable and for which no adequate remedy would
exist at law. Employee further acknowledges that he has had the opportunity to
request that legal counsel review this Agreement and, having exhausted such
right, agrees to the terms herein without reservation. Accordingly, Employee
authorizes the issuance of injunctive relief by any court of appropriate
jurisdiction, without the requirement of posting bond, for any violation of this
Agreement, and agrees that ISS shall be entitled to the recovery of reasonable
attorneys' fees incurred in the enforcement of this Agreement. 

 

4.                   Assignment of lnventions. Employee agrees to promptly
disclose to ISS inventions, ideas, processes, writings, designs, developments
and improvements, whether or not protectable under the applicable patent,
trademark or copyright statutes, which Employee makes, conceives, reduces to
practice, or learns during his/her employment by ISS, either alone or jointly
with others, relating to any business in which ISS is or may be concerned
("Inventions"). Such disclosures will be made by Employee to ISS in a written
report, setting forth in detail the structures, procedures and methodology
employed and the results achieved.

 

(a)                To the extent that any Invention qualifies as "work made for
hire" as defined in 17 U.S.C.

§ 101 (1976), as amended, such Invention will be the exclusive property of ISS.
Moreover, Employee agrees to treat every work or idea created or acquired by or
on behalf of Employee for ISS as a "work made for hire." It is the intent of
both Employee and ISS that ISS have unrestricted ownership in all of such works
and to any derivative works thereof, without further compensation of any kind to
Employee or to those with whom Employee may work.

(b)                Consistent with and to the extent permitted by law, Employee
hereby assigns and agrees to assign to ISS all rights in and to these
Inventions, including, but not limited to, applications for United States and
foreign patents and resulting patents and to further cooperate with ISS in
maintaining, obtaining, and protecting such proprietary rights. Employee shall
execute all applications, assignments and other papers necessary to enable

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ISS to obtain full protection and title to such matter and inventions, and
Employee hereby waives any claim of moral right that Employee may have in or in
connection with any such work.

 

(c)                 Employee further acknowledges that he received notice from
ISS that his obligation to assign rights in and to any Inventions does not apply
to an Invention for which no equipment, supplies, facility or trade secret
information of ISS was used and which was developed entirely on Employee's own
time, and (I) which does not relate (A) directly to the business of ISS or (B)
to ISS's actual or demonstrably anticipated research or development, or (2)
which does not result from any work performed by Employee for ISS.

 

(d)                Employee has attached a complete list of all existing
patentable or non-patentable inventions, original works of authorship,
derivative works, trade secrets, trademarks, copyrights, service marks,
discoveries, patents, technology, algorithms, computer software, application
programming interfaces, protocols, formulas, compositions, ideas, designs,
processes, techniques, know-how, data, and all improvements thereto to which
Employee claims ownership as of the date of this Agreement and which Employee
desires to clarify are not subject to this Agreement ("Excluded Inventions"). If
no such list is attached to this Agreement, Employee represents that he has no
such Excluded Inventions at the time of signing this Agreement.

 

(e)                Employee further agrees that prior to separation from
employment with ISS for any reason, he will disclose to ISS, in a written
report, all Inventions, the rights to which he has agreed to assign to ISS under
(a) and (b) above, and which he has not previously disclosed.

 

(f)                 In the event of any dispute concerning whether an Invention
made or conceived by Employee is the property of ISS, such Invention will be
presumed to be the property of ISS, and Employee will bear the burden of
establishing otherwise in any arbitration, litigation, or similar proceeding.

 

5.                   Injunctive Relief. Because the Confidential and Proprietary
Information described above and the products derived therefrom are unique,
peculiar and of great value to ISS, ISS shall be entitled to injunctive relief
to restrain Employee from violating or threatening to violate any provisions
contained herein. The parties also agree that, because of the unique nature of
their relationship and the information and products to which Employee has been
exposed through this relationship, ISS shall be entitled to an injunction to be
issued by any Court of competent jurisdiction enjoining and restraining Employee
from committing any violation of this Agreement, and Employee hereby consents to
the issuance of such injunction. Proceedings may be initiated against Employee
or Employee's legal representatives or assigns. ISS shall be entitled to its
reasonable costs and attorneys' fees incurred in enforcing this provision.

 

6.                   Miscellaneous.

 

(a)                At-will Employment. Nothing in this Agreement creates any
rights of employment. Employee is, and remains, an "at-will" employee.

 

(b)                Severability. It is further agreed and understood by the
parties that if any part, term or provision of this Agreement should be
unenforceable, invalid, or illegal under any applicable law or rule, the
offending term or provision will be struck and the remaining provisions of the
Agreement will not be affected or impaired thereby.

 

(c)                 Assignability. The terms, conditions, and covenants of this
Agreement shall be assignable to the successors and assigns of ISS.

 

(d)                Waiver. Failure of ISS at any time to enforce any provision
of this Agreement shall not be interpreted as a waiver of any provision of ISS's
rights under this Agreement.

 

(e)                Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes any prior understandings, agreements or representations,
written or oral, relating to such subject matter.

 

(f)                 Modification, Amendment, Waiver or Termination. No provision
of this Agreement may be modified, amended, waived or terminated except by an
instrument in writing signed by the parties to this Agreement. No delay or
waiver, express or implied, by ISS of any right or any breach by Employee shall
constitute a waiver of any other right or breach by Employee.

 

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(g)                Governing Law. This Agreement will be governed by and
interpreted according to the substantive laws of the State of Minnesota without
regard to such state's conflicts law.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date memorialized in the first paragraph.

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