Document:

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                                                                    Exhibit 10.1

                             IMAGEWARE SYSTEMS, INC.
                              EMPLOYMENT AGREEMENT
                            (AMENDED SEPTEMBER 2000)

         THIS EMPLOYMENT AGREEMENT ("Agreement"), which was entered into as of
January 1, 1996 by and between ImageWare Systems, Inc., a California Corporation
(herein the "Company") and S. James Miller, Jr. (herein "Miller"), and replaced
the Employment Agreement entered into with Miller as of January 1, 1995, is
hereby amended to read in full as hereinafter set forth.

         It is hereby agreed as follows:

         1. EMPLOYMENT AND TERM. The Company hereby employs Miller as Chairman,
President and Chief Executive Officer of the company, and Miller agrees to his
employment by the Company as its Chairman, President and Chief Executive
Officer, the term of which employment shall be a period of three years
commencing September 21, 2000 and ending September 21, 2003.

         2. DUTIES. During the term of this Agreement, Miller shall devote
substantially all of his working time, energies and skills to the management of
the Company's business. Miller shall render services consistent with those of
the Chief Executive Officer 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. Miller's compensation under this Agreement shall be as
follows:

                  (a) BASE SALARY. The Company shall pay to Miller, a base
salary (the "Base Salary") of $234,000 per year from September 21, 2000 through
September 21, 2003, subject to periodic review by the Compensation Committee of
the Board. In addition, each year during the term of this Agreement, Miller
shall receive a cost-of-living increase equal to the percentage by which the
Consumer Price Index applicable to the San Diego 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, Miller shall be
eligible to participate in any Company Bonus Plan, adopted from time to time by
the Board of Directors.

         4. EXPENSES AND BENEFITS. Miller is authorized to incur reasonable
expenses in connection with the business of the Company, including expenses for

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entertainment, travel and similar matters. The Company will reimburse Miller for
such expenses upon presentation by Miller of such accounts and records as the
Company shall from time to time reasonably require. The Company also agrees to
provide Miller with the following benefits:

                  (a) INSURANCE. Major medical health insurance and disability
insurance which shall provide not less than two-thirds of Miller'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 Miller'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. Miller shall be entitled to a paid vacation for
a period in each calendar year of not less than four weeks, to be taken at such
times as mutually agreed with the Company.

                  (d) PHYSICAL EXAMINATION. Not more than once every two years,
Miller shall be entitled to receive a physical examination at Company expense;
and at the Company's request, will take a physical examination annually and
provide the results to 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 Miller. However, nothing contained in this
Section 5 shall be construed to abrogate the obligations of the Company to
Miller, 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 Miller becomes permanently disabled
during the term of this Agreement, then Miller 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 Miller receives from worker's
compensation, social security, state disability programs or the disability
insurance provided by the Company to Miller. In such event, Miller'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 Miller; and during such period of time Miller shall not be entitled to
payment of expenses or benefits specified in Section 4 hereof, except that the
Company shall continue to provide Miller with the insurance benefits specified
in Section 4 hereof.

                  (a) DEFINITION OF DISABILITY. As used in this Agreement, the
term "permanent disability" shall mean three (3) months of substantially
continuous disability. Disability shall be deemed "substantially continuous" if,
as a practical matter, Miller 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
Miller if he

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is a director, whose decision shall be final and binding upon Miller. Miller
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 Miller's employment as Chairman, President, and Chief Executive
Officer of the Company for "Cause," in which event no compensation shall be paid
or other benefits furnished to Miller after termination for Cause. Whether Cause
exists shall be determined in good faith by the Board of Directors of Company
and shall require a vote of note less than 75% of such Directors, excluding
Miller if he is a director. Termination for Cause shall be effective immediately
upon notice being sent to Miller.

                  (i) DEFINITION OF CAUSE. For purposes of this Agreement, the
         term "Cause" shall mean (1) any material act of dishonesty by Miller
         against the Company; or (2) willful misconduct or gross negligence by
         Miller in carrying out his duties as Chairman, President, and Chief
         Executive Officer of the Company; or (3) material breach of this
         Agreement by Miller; or (4) misconduct by Miller, such as intoxication
         on the job, use of illegal drugs, insubordination or other misconduct
         which has a substantial adverse effect on the business of the Company,
         or (5) other circumstances indicative of Miller'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 Miller's employment as of or prior to its normal
expiration under this Agreement, without cause. In the event Miller's employment
is terminated effective prior to expiration of the term of his employment, then
the Company shall: (a) pay Miller in one lump sum, an amount equal to the full
amount of his Base Salary from the date of termination through the remainder of
the term of this Agreement; (b) vest all unvested options with sixty (60) days
to exercise same and, (c) continue all benefits specified in Section 4 for the
term of this Agreement.

         9. RESIGNATION BY MILLER 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 Miller's duties as President, Chief Executive Officer of the Company, then
Miller, within 30 days of such Change in Control, may terminate his employment
as of a date not more than 60 days from the date of such Change in Control, by
giving the Company 30 days advance written notice. In such event, Miller shall
be entitled to payment of his entire unpaid Base Salary for the remaining term
of this Agreement, which Base Salary shall be paid to him in one lump sum in
addition to, immediate vesting of all unvested options with, sixty days to
exercise same, and continuation of all benefits specified in Section 4 for a
period of three (3) years.

                  (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

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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 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. EVERGREEN EXTENSION OF AGREEMENT. On each anniversary of this
Agreement, the term of this Agreement shall be automatically extended for an
additional period of one year if notice of termination has not been given by the
Company to Miller at least one year in advance of such anniversary date. The
effect of this provision shall be that Miller's term of employment under this
Agreement shall always be at least three years. For example, (a) if notice of
termination of this Agreement is not given by December 31, 1996, then the term
of Miller's employment shall be extended from December 31, 1998 until December
31, 1999; or (b) if notice of termination of this Agreement is given on
September 30, 1997 and Miller is asked to leave the Company at such date, the
term of Miller's employment shall be extended from December 31, 1999 to December
31, 2000 and he shall be paid through December 31, 2000.

         11. OFFICES IN SAN DIEGO. The Company agrees that if it moves its
principal office out of San Diego County, then Miller will have the right to
terminate this Agreement, in which event the Company shall pay Miller in one
lump sum, an amount equal to the full amount of his Base Salary through the
remainder of the term of this Agreement, vest all unvested options and continue
benefits specified in Section 4 for the remaining term of this Agreement.

         12. INDEMNIFICATION. The Company shall enter into an Officers and
Directors Indemnification Agreement with Miller 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.

         13. NO PROSELYTIZING OF EMPLOYEES. During the term of Miller's
employment and for a period of 24 months following termination of his employment
(for

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whatever reason), Miller 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.

         14. NO SOLICITATION OF CUSTOMERS. During the term of Miller's
employment and for a period of 24 months following termination of his employment
(for whatever reason), Miller 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.

         15. 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 15(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.

                  If to Miller:

                           Mr. S. James Miller, Jr.
                           14395 Trailwind Road
                           Poway, California 92064

                  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.

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                  IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.

                                                ImageWare Systems, Inc.

                                           By  /s/ Patrick J. Downs
                                             -----------------------------------
                                                   Patrick J. Downs
                                           For the Compensation Committee of
                                                 The Board of Directors

                                               /s/ S. James Miller, Jr.
                                             -----------------------------------
                                                   S. James Miller, Jr.<PAGE>

                                                                 EXHIBIT 10.16

                         COMMERCIAL LEASE

APPEARED:

3840743 CANADA INC., a company legally incorporated under the Canadian
Business Corporations Act, by Certificate of Incorporation dated December 14,
2000, having the head office at 130 Jean-Proulix Street, Hull, Province of
Quebec, J8Z 1V3, represented herein by Charles Masse, duly authorized as he
so declares:

Hereinafter called the "LESSOR",

AND

I.W. SYSTEMS CANADA COMPANY, a company legally incorporated under the laws of
the Province of Nova Scotia on February 28, 2001, having its head office at
1959 Upper Water Street, Suite 900, Halifax, Province of Nova Scotia,
B3J 3N2, represented herein by Luc Duquette, Vice-President Finance, duly
authorized as he so declares;

Hereinafter called "LESSEE",

WHO HAVE HEREBY AGREED AS FOLLOWS:

1.       LEASE

         The Lessor has hereby leased to the Lessee, thereof accepting, with
warranty of peaceful enjoyment, an office space measuring approximately Ten
Thousand Square Feet (10,000 sq. ft.) hereinafter designated as the
"Premises", situated on the ground floor of an immovable property situated at
975 St-Joseph Boulevard, in the City of Hull, Province of Quebec, J82 1W8
and known and designated as lots number 1 090 415, 1 080 404 and 1 091 207 of
the cadestre of Quebec, land registry office of Hull, Province of Quebec.

         The Lessor, or the Lessee but only at the latter's expense, may have
the dimensions of the premises verified by the land surveyor or architect
chosen by the Lessor. If, as a result of the verification, the dimensions of
the premises are different from those indicated herein, the gross rent and
additional rent shall be readjusted as of the date of commencement of the
present Lessee.

2.       WORK

2.1      All work, alterations and improvements to the premises shall be made
in accordance with the plans and specifications submitted beforehand by the
Lessee to the Lessor and after the Lessee has received the written approval
of the Lessor. The said plans shall be drawn up by Marcel Landry, architect,
at the expense of both parties in equal parts.

2.2      The Lessor shall perform, at its cost and expense, the following
work:

2.2.1    The Lessor shall re-configure the existing heating, air-conditioning
and ventilation equipment in the premises, including the Lessee's servers'
air conditioning unit, in accordance with the plans submitted by the Lessee.

2.2.2    The Lessor shall tear down the following walls as indicated in the
plan annexed hereto;

2.2.2.1  the west wall of the hallway as indicated in the annexed plan as (1);

2.2.2.2  the east wall of the hallway as indicated in the annexed plan as (2);

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2.2.2.3  the south wall separating G&A imaging's present office and a small
vacant office as indicated in the annexed plan as (3);

2.2.2.4  part of a wall presently separating an insurance company's office and
a vacant office space as indicated in the annexed plan as (4).

2.2.3    The Lessor shall erect the following walls as indicated in the plan
annexed hereto;

2.2.3.1  a wall starting from the north-east corner of the elevators and
ending at the south wall of RBC Dominion Securities, an existing tenant, as
indicated in the annexed plan as (A);

2.2.3.2  a wall which closes the southern end of the existing and
above-described hallway, as indicated in the annexed plan as (B);

2.2.3.3  a wall which closes the northern end of the existing and
above-described hallway, as indicated in the annexed plan as (C).

2.2.4    The Lessor shall demolish the existing staircase, as indicated in
the annexed plan as (D), and patch and repair the ceiling where the said
staircase is situated.

2.2.5    The Lessor shall close the existing entrance of the small vacant
office described in sub-section 2.2.2.3 herein.

2.3      Save and except for sub-section 2.2 and subject to the provisions of
the present Lease, the Lessee shall execute and bear the cost of all work,
alterations and improvements he may require, including the installation of
doors in walls (B) and (C). Nonetheless, the Lessor shall give to the Lessee
a check in the amount of One Hundred and Ten Thousand Dollars ($110,000.00),
when the Lessor receives a written notice from the Lessee stipulating that
the Lessee's Work is completed, and sufficient proof, in the opinion of the
Lessor, that all of the Lessee's contractors, sub-contractors, agents and
suppliers have been paid in full. It is understood that the amount
hereinabove described shall not include any applicable taxes.

3.       TERM

         The term of the present Lease shall be FIVE (5) years. The Lease
shall commence on June 1, 2001 and terminate on May 31, 2006.

4.       RENT

4.1      The Lessee shall pay as gross rent a total of EIGHT HUNDRED THOUSAND
DOLLARS ($800,000.00), plus applicable taxes, of ONE HUNDRED AND SIXTY
THOUSAND DOLLARS ($160,00.00) per year, plus applicable taxes, calculated in
accordance with the area of the premises and taxed at SIXTEEN DOLLARS ($16.00)
per square foot per year, payable in advance by SIXTY (60) equal, consecutive
and monthly installments of THIRTEEN THOUSAND THREE HUNDRED AND THIRTY-THREE
DOLLARS AND THIRTY-THREE CENTS ($13,333.33), plus applicable taxes, on the
first day of each and every month. If the work described in Section 2 is not
completed on the date of commencement, the gross rent from the date of
commencement to the date of completion of the said work shall be TEN DOLLARS
AND FIFTY CENTS ($10.50) per square foot per year. Nonetheless, the Lessee
warrants that the work described in Sub-Section 2.3 will not be unduly or
unreasonably delayed.

4.2      The above mentioned gross rent includes the Lessee's base rent and
its Proportionate Share of the Operating Expenses, Taxes and Consumption of
electricity.

4.3      The Lessee shall pay as additional rent his proportionate share of
the non-residential immovable tax.

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5.       USE OF PREMISES

         For the duration of this Lease, the premises shall be used for the
purpose of developing software and software systems for digital
identification documents.

6.       ASSIGNMENT AND SUB-LEASE

         The Lessee may neither give away, transfer or otherwise assign the
present Lease, sub-let the premises, in whole or in part, nor allow any
change to affect the present Lease, the premises the lessee's improvements or
any part thereof, nor tolerate or permit the occupation of the premises, in
whole or in part, by other persons, without having obtained the prior written
consent of the Lessor, which consent may not be refused without serious
reason.

7.       LAWS

         The present Lease shall be governed by the laws in force in the
Province of Quebec. In the event that any provision of this Lease be declared
illegal or unenforceable according to the laws of the Province of Quebec, any
such provision shall be thereupon considered as not forming part of the
Lease, which shall remain in force and continue to bind the Parties as if
such provision had never formed part thereof.

8.       SURETYSHIP

         The Lessee hereby undertakes to obtain a guarantee of suretyship
from its parent company, IMAGEWARE SYSTEMS INC., a public company legally
incorporated under the laws of the State of California, United States of
America, and whose common stock is listed on the American Stock Exchange
under the symbol "IW", having its head office at 10883 Thornmint Road, San
Diego, California, U.S.A. 92127, which shall bind itself as surety for each
and every obligation contracted by the Lessee and more particularly, for the
payment of the rent. This guarantee of suretyship shall be executed and
incorporated in the Lessor's standard form of lease.

9.       FULL AGREEMENT

         The present Lease, including its schedules, constitutes the full
agreement between the parties and replaces for all purposes required by law
any prior verbal or written agreements or understandings between the parties
concerning the premises. The Lessee hereby binds itself to sign the Lessor's
standard form of lease within thirty (30) days of the signature of the
present lease.

AND THE PARTIES HAVE SIGNED THE PRESENT COMMERCIAL LEASE AS FOLLOWS ON THIS
TWELVETH (12th) DAY OF APRIL TWO THOUSAND ONE (2001) IN HULL, PROVINCE OF
QUEBEC.

LESSOR:

/s/    Charles Masse                         /s/  Steve Aubrey
-----------------------------                ---------------------------------
3840743 CANADA INC.                          Witness
By Charles Masse

LESSEE:

/s/   Luc Duquette                          /s/  Steve Aubrey
-----------------------------               ----------------------------------
I.W. SYSTEMS CANADA COMPANY                 Witness
By Luc Duquette

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