Exhibit 10.1

EMPLOYMENT AGREEMENT

          This EMPLOYMENT AGREEMENT (the “Agreement”) is made by and between
Image Sensing Systems, Inc. and its subsidiaries and divisions (collectively,
“ISS”) and Dale E. Parker (“Parker”) as of the 25th day of June, 2013
(“Effective Date”).

RECITALS:

          A.         ISS wishes to hire Parker to serve as its Chief Operating
Officer, Chief Financial Officer and Treasurer, and Parker wishes to serve in
that capacity.

          B.         ISS and Parker have negotiated the terms of Parker’s
employment as Chief Operating Officer, Chief Financial Officer and Treasurer of
ISS and have memorialized those terms in this Agreement.

          C.         ISS and Parker mutually agree to the terms set forth in
this Agreement.

AGREEMENT:

          1.         Employment. Parker will be an at-will employee, and his
employment may be terminated by either party at any time, with or without cause.
Parker will serve as ISS’s Chief Operating Officer, Chief Financial Officer and
Treasurer.

          2.         Duties. Parker will devote his full professional time,
attention and efforts to the business and affairs of ISS during his employment
with ISS and Parker 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. Parker’s base salary will be $200,000.00 per year, less all required
withholdings and deductions, payable in accordance with ISS’s standard payroll
procedures in effect from time to time. Parker’s performance will be evaluated
by the Board from time to time in its discretion but no less often than
annually.

 

 

 

 

(b)

Bonuses. Parker is eligible to participate in the “2013 Image Sensing Systems
Incentive Bonus Plan Amended” (the “Bonus Plan”), which has been amended to
reflect his participation; provided, however, that any bonus to which he is
entitled under the Bonus Plan will be determined on a pro rata basis based on
the total number of days in 2013 that Parker is an employee of ISS. For example,
if the total available bonus pool under the Bonus Plan was $350,000.00 and
Parker was employed by ISS for 191 days during 2013, he would be entitled to
$27,472.60, consisting of the product of $350,000.00, 0.15 (which is Parker’s
share of the bonus pool under the Bonus Plan) and 191/365. Parker’s eligibility
for any other bonuses will be determined by the ISS Board of Directors in its
sole discretion.

 

 

 

 

(c)

Employee Benefits. Parker 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 Parker.
Planbooks, Summary Plan Descriptions, and Plan Legal Documents containing formal
descriptions of all available benefits have been or will be provided to Parker.
ISS is entitled to change, modify, or discontinue such benefits at its sole
discretion.

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(d)

Vacation. Parker is entitled to up to four weeks of vacation each year in
accordance with ISS’s vacation policy in effect from time to time.

 

 

 

           4.      Reimbursement of Reasonable Travel, Business and Relocation
Expenses. ISS will, in accordance with its policies in effect from time to time,
reimburse Parker for all reasonable business expenses incurred by Parker 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. Parker also agrees that he will adhere
to ISS’s travel policy in effect from time to time. ISS will reimburse Parker
for reasonable relocation expenses associated with the reasonable costs of
relocating to Minnesota, up to a total of $33,000.00. Such relocation expenses
will be reimbursed in accordance with ISS’s relocation expense policy in effect
from time to time.

 

 

 

           5.      Confidentiality, Noncompetition and Invention Assignment.
Parker expressly agrees to the terms set forth in Appendix A, which the parties
understand and acknowledge to be a vital part of this Agreement and that Parker
has accepted as a condition to his employment as provided in this Agreement.

 

 

 

 

6.

Severance upon Termination of Employment.

 

 

 

 

(a)

Voluntary Termination. Should Parker terminate his employment for any reason,
ISS shall pay Parker all earned and unpaid amounts due to him for salary through
the termination date and a pro-rata portion of any incentive pay to which, at
ISS’s discretion, Parker would have been paid had he remained in ISS’s employ.

 

 

 

 

(b)

Termination by ISS “With Cause.” Should ISS terminate Parker’s employment for
any of the following reasons, Parker shall not be entitled to any severance:

 

 

 

 

 

(i)

Conviction of, or a plea of “guilty” or “no contest” to, a felony under the laws
of the United States or any state thereof or conviction of, or a plea of
“guilty” or “no contest” to, any act involving moral turpitude;

 

 

 

 

 

 

(ii)

Breach of fiduciary duty involving personal profit;

 

 

 

 

 

 

(iii)

Willful and material misconduct in the performance of duties assigned to Parker
as the Chief Operating Officer, Chief Financial Officer and Treasurer of ISS;

 

 

 

 

 

 

(iv)

Consistent failure to perform the reasonable stated duties assigned to Parker
under this Agreement; or

 

 

 

 

 

 

(v)

Illegal or unethical business practices, including but not limited to the
commission of fraud, misappropriation or embezzlement in connection with ISS’s
business.

 

 

 

 

 

 

Parker shall have thirty (30) days to cure any alleged breach, failure, or
misconduct under Subsection (iv) above, if such alleged breach, failure or
misconduct is curable, after ISS provides Parker written notice of the actions
or omissions constituting such breach, failure, or misconduct.

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(c)

Termination by ISS “Without Cause.” Should ISS terminate Parker’s employment for
any reason other than (1) those reasons set forth in subparagraph (b) above, or
(2) because of Parker’s inability to perform his duties because of death or
disability, Parker shall be entitled to 12 months of salary continuation,
without eligibility for bonus, upon entry into a release agreement provided by
ISS (in a form substantially similar to that set forth at Appendix B to this
Agreement). ISS and Parker have the ability, however, at any time, to terminate
this Agreement by mutual written agreement, with or without the severance
benefit.

 

 

 

 

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 (1) when personally
received or when sent by facsimile transmission (to the receiving party’s
facsimile number), (2) on the first business day after having been sent by
commercial overnight courier with written verification of receipt, or (3) 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:

Kris B. Tufto

 

 

 

500 Spruce Tree Centre

 

 

 

1600 University Ave. West

 

 

 

St. Paul, MN 55104

 

 

 

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

 

 

 

If to Parker:

Dale E. Parker

 

 

 

658 Astor Lane

 

 

 

Wheeling, IL 60090

 

 

 

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

 

 

 

 

(b)

Amendments. This Agreement may not be changed or modified in whole or in part
except by a writing signed by ISS and Parker.

 

 

 

 

(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 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. Parker 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. The parties 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.

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(f)

Entire Agreement. This Agreement (including its Appendices) constitutes the
entire understanding and agreement of the parties hereto with respect to the
subject matter of this Agreement and supersedes all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect to the subject matter of this
Agreement.

 

 

 

 

This Agreement is made and effective as of the Effective Date above.

Image Sensing Systems, Inc.

 

 

 

 

By:

/s/ Kris B. Tufto

 

 

/s/ Dale E. Parker

 

Kris B. Tufto

 

Dale E. Parker

Its:

President and Chief Executive Officer

 

 

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APPENDIX A
TO THE EMPLOYMENT AGREEMENT BETWEEN
IMAGE SENSING SYSTEMS, INC., AND DALE E. PARKER

CONFIDENTIALITY, NONCOMPETITION AND
INVENTION ASSIGNMENT AGREEMENT

          This CONFIDENTIALITY, NONCOMPETITION, AND INVENTION ASSIGNMENT
AGREEMENT (“Agreement”) between Image Sensing Systems, Inc. (“ISS”), and Dale E.
Parker (“Employee”) is signed and dated as of June 25, 2013.

          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:

          1.          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.

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          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
certain 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 and 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.

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          4.          Assignment of Inventions. 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 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 (1) 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.

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          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.

                       (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.

 

 

 

 

 

 

 

 

Image Sensing Systems, Inc.

 

By:

/s/ Dale E. Parker

 

By:

/s/ Kris Tufto

 

 

 

Its:

Pres. & CEO

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APPENDIX B
TO THE EMPLOYMENT AGREEMENT BETWEEN
IMAGE SENSING SYSTEMS, INC., AND DALE E. PARKER

          WHEREAS, the parties entered into an Employment Agreement which became
effective as of June 25, 2013; and

          WHEREAS, in order to receive certain severance payments and related
benefits under Paragraph 6 of that Employment Agreement, the parties agreed that
Parker would be required to sign a release of claims at the time of the event
contemplated by that Paragraph; and

          WHEREAS, the parties have agreed to a form of release substantially
similar to that set forth in this Appendix B; and

          WHEREAS, under the terms of this Appendix B, Parker agrees to release
all claims – whether known or unknown – that he may have against ISS, or any of
its respective officers, directors, members, managers, employees or agents,
parents or affiliates, through the date of his signature on this Appendix B;

          NOW, THEREFORE, it is mutually agreed by and between the parties for
good and valuable consideration as follows:

          A.          Parker affirms that he is signing this Appendix B on or
after the termination of his employment, as described in Paragraph 6 of the
Employment Agreement.

          B.          Parker, for good and valuable consideration, does hereby
fully and completely release and waive any and all claims, complaints, causes of
action, demands, suits, and damages, of any kind or character, which he has or
may have against ISS, or any of its respective officers, directors, members,
managers, employees or agents, parents or affiliates arising out of any acts,
omissions, conduct, decisions, behavior, or events occurring up through the date
of his signature on this Appendix B.

          Parker understands that he is giving up any and all claims (whether
now known or unknown) that he may have including (without limitation) claims
relating to his employment with ISS, and the cessation of his employment with
ISS, including, but not limited to, any claims arising under or based upon the
Minnesota Human Rights Act; Title VII of the Civil Rights Act of 1964, as
amended; the Americans With Disabilities Act (“ADA”); the Family & Medical Leave
Act (“FMLA”); the Age Discrimination in Employment Act (“ADEA”), as amended by
the Older Workers Benefit Protection Act; or any other federal, state, or local
statute, ordinance, or law. Parker also understands that he is giving up all
other claims, including those grounded in contract or tort theories, including
but not limited to breach of contract; tortious interference with contractual
relations; promissory estoppel; breach of manuals or other policies; assault;
battery; fraud; false imprisonment; invasion of privacy; intentional or
negligent misrepresentation; defamation, including libel, slander, defamation
and self-publication defamation; intentional or negligent infliction of
emotional distress; sexual harassment; or any other theory.

          Parker further understands that he is releasing, and does hereby
release, any claims for damages, by charge or otherwise, whether brought by him
or on his behalf by any other party, governmental or otherwise, and agrees not
to institute any claims for damages via administrative or legal proceedings
against ISS, or any of its respective officers, directors, members, managers,
employees or agents, parents or affiliates. Parker understands that, while he
retains his right to bring an administrative charge with the Equal Employment
Opportunity Commission or the Minnesota Department of Human Rights, he waives
and releases any and all rights to money damages or other legal relief awarded
by any governmental agency related to any charge or claim.

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          C.          Parker understands that he has the right to seek legal
counsel before entering into this Appendix B and that he has 21 days from the
date of his termination to execute this Appendix B.

          D.          Parker understands that he may revoke this release
(Appendix B) (1) with respect to potential age-related claims within the
seven-day period following the date he signs it and (2) with respect to
potential claims under the Minnesota Human Rights Act within the fifteen-day
period following the date he signs it. Parker also understands that, if he does
revoke this release (Appendix B), he gives up any right to the consideration
provided to him the benefits described in Paragraph 6 of the Employment
Agreement.

          E.          Parker acknowledges that he has read this Appendix B, that
he understands it, and that he enters into Appendix B voluntarily.

 

 

 

 

 

Dated:

 

 

By:

 

 

 

 

 

Dale E. Parker

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