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Software License and Services Subcontract - Digital Biometrics Inc. and ImageWare Software Inc.

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SOFTWARE LICENSE AND SERVICES SUBCONTRACT

BETWEEN

DIGITAL BIOMETRICS, INC.

AND

IMAGEWARE SOFTWARE, INC.

Table of Contents

<TABLE>
<S> <C> <C>
1. Definitions ............................................................1
2. Scope of services.......................................................1
3. Type of contract........................................................1
4. Software license agreement..............................................2
5. Payments................................................................3
6. Invoices................................................................4
7. Year 2000 performance warranty..........................................4
8. Hardware warranty.......................................................5
9. Software warranty.......................................................5
10. Inspection and acceptance...............................................5
11. Insurance...............................................................6
12. Compliance with laws, regulations and ethics............................6
13. Limitation of liability.................................................6
14. General relationship....................................................6
15. Indemnification.........................................................7
16. Termination; Breach.....................................................7
17. Disputes, Binding arbitration, Attorneys' fees..........................8
18. Contract administration.................................................8
19. Miscellaneous...........................................................9
</TABLE>

EXHIBITS

<TABLE>
<S> <C>
Exhibit A IWS Pricing Proposal. Dated 5/24/1999.
Exhibit B DBI contract overview. Dated 7/06/99.
Exhibit C LASD Workplan. Dated 5/24/99.
Exhibit D Scope of work. Dated 7/06/99.
Exhibit E System Acceptance. To be delivered to conform to Exhibit F.
Exhibit F PHOTO IMAGING SYSTEM, Proposal to Digital Biometrics, Inc. for
Los Angeles County Sheriff's Department. Dated 3/22/99.
</TABLE>

<PAGE>

SOFTWARE LICENSE AND SERVICES SUBCONTRACT

THIS SUBCONTRACT is made and entered into with an effective date of
July 23, 1999, by and between Digital Biometrics, Inc. having offices at
__________________________________(hereinafter "DBI") and ImageWare Software
Inc. having offices at 10883 Thornmint Road, San Diego, CA 92127 (hereinafter
"IWS").

DBI desires to contract IWS in order to provide IWS investigative product to
improve the LASD Live-Scan Fingerprinting Network System.

The parties agree as follows:

1. DEFINITIONS

As used herein, the following terms have the following meanings:
"Prime Contract" means LASD/DBI Agreement.
"Contractor" means DBI or its authorized Contracting Official.
"Subcontractor" means ImageWare Software, or its authorized representative.
"Customer" means the Los Angeles Sheriff's Department (LASD).
"Electronic Digital Mug System", means the Crime Capture System investigative
software, including Face ID and developed interfaces.
"The Software" means all software developed by IWS and offered to LASD as
defined in Exhibit A and Exhibit F.

2. SCOPE OF SERVICES

IWS shall performance services and deliver equipment in accordance with
Exhibit A - "IWS Pricing Proposal", Exhibit B - "DBI contract overview",
Exhibit C - "LASD Workplan", Exhibit E - "System Acceptance", Exhibit D -
"Scope of Work" and Exhibit F. The term of this Subcontract Agreement is
valid through final acceptance of the delivered system, or for termination
for other than default. IWS agrees to offer maintenance, customer and product
support for the system for at least five years after installation subject to
LASD entering into an IWS Maintenance Agreement during that five years. Any
such Maintenance Agreement is optional for LASD and requires LASD to pay an
additional fee. Through the term of this Maintenance Agreement LASD shall be
entitled to all the Software updates, including bug fixes and generic
upgrades provided to other IWS customers. Upgrades that represent feature
enhancements shall not be included.

3. TYPE OF CONTRACT

This Subcontract is a Firm Fixed Price agreement which provides for IWS to
furnish the items described under the Scope of Work, Exhibit D, at the fixed
unit prices set forth in

DBI-IWS Agreement Page 1

<PAGE>

Exhibit A - "IWS Pricing Proposal", all in accordance with the terms,
conditions and provisions included in this Subcontract, or incorporated as
Exhibit hereto and made a part hereof. There shall be no charge for software
and services provided by IWS unless specifically set forth under this
Subcontract.

4. SOFTWARE LICENSE AGREEMENT

IWS grants to DBI the right to sublicense the Software to LASD. The Software
shall be and remain the sole and exclusive products of IWS. DBI shall have no
rights in or to the Software.

The Software may not be copied or modified, in whole or in part, for any
purpose whatsoever. The Software may not be reversed, compiled, dissembled,
or otherwise reverse engineered in whole or in part. The Software and its
associated documentation shall be used only with the designed equipment for
which, or with which, it was acquired. The parties acknowledge that during
performance under this contract, new technologies, proprietary and
confidential concepts, methods, techniques, processes and ideas, whether or
not patentable or copyrightable, and whether or not constituting inventions
may result which the parties now agree shall constitute protectable
Intellectual Property. All right, title and interest, including trademarks,
copyright interests and other forms of intellectual property, in and to such
new technologies, proprietary and confidential concepts, methods, techniques,
processes and ideas developed and funded under this contract shall be the
exclusive property of IWS. All right, title and interest, including
trademarks, copyright interests and other forms of intellectual property, in
and to such intellectual property developed by IWS, its employees, IWSs,
vendors or agents, in the performance of this agreement shall be the property
of IWS, with LASD being granted, through license, use thereof.

Upon final acceptance, IWS hereby grants to LASD a perpetual, non-exclusive,
royalty-free, irrevocable, fully-paid license to all Software and its
associated documentation. No title to or ownership of the Software or any of
its parts is transferred to LASD. Title to the Software and all patents,
copyrights, trade secrets, and any other applicable intellectual property
rights shall remain with IWS and/or its vendors whether developed prior to or
during the performance of this contract.

DBI or LASD funded products and inventions developed subsequently to this
agreement that are not based on IWS patents, trade secrets or any other
applicable intellectual, property rights shall be considered DBI or LASD
property respectively.

The database contents (Records and images) shall remain the property of LASD
and shall not be released or transferred without LASD project manager
approval. The database structure contains IWS trade secrets and intellectual
property rights and therefor shall remain the property of IWS.

DBI-IWS Agreement Page 2

<PAGE>

CONFIDENTIAL
5. PAYMENTS

The total price for the System is $428,483.61 as set forth in Exhibit-A.
Payment shall be according to the following schedule and be made within 30
days of receipt of IWS's invoice and notice of the listed event:

--------------------------------------------------------------------------------------------
EVENT* PAYMENTS AMOUNT**
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PHASE I DELIVERABLES
--------------------------------------------------------------------------------------------
01 System Acceptance Test Plan $0.00
--------------------------------------------------------------------------------------------
02 Server installed and configured with CCS Upon LASD manager $81,635.11
software acceptance of delivery
--------------------------------------------------------------------------------------------
03 Interconnect with DBI store and forward Upon LASD manager $21,132.00
acceptance
--------------------------------------------------------------------------------------------
04 Conversion of Photos and Records Upon LASD manager $36,332.00
acceptance
--------------------------------------------------------------------------------------------
05 De-duplication of Database Upon LASD manager $4,293.00
acceptance
--------------------------------------------------------------------------------------------
06 Installation of Investigative Software in Upon LASD manager $56,273.25
10 sites (Includes Sybase licenses) acceptance
--------------------------------------------------------------------------------------------
07 10% Holdback Upon LASD manager $21,342.01
acceptance of Phase I
--------------------------------------------------------------------------------------------
08 Training Phase I Upon completion of $3,750.00
training
--------------------------------------------------------------------------------------------
PHASE II DELIVERABLES
--------------------------------------------------------------------------------------------
09 Installation of Investigative Software in Upon LASD manager $28,563.12
5 sites (Includes Sybase licenses) acceptance
--------------------------------------------------------------------------------------------
10 Installation of Investigative Software in Upon LASD manager $28,563.12
5 sites (Includes Sybase licenses) acceptance
--------------------------------------------------------------------------------------------
11 Conversion of data from Sybase to Oracle Upon LASD manager $9,000.00
acceptance
--------------------------------------------------------------------------------------------
</TABLE>

DBI-IWS Agreement Page 3

<PAGE>

--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12 Web Investigative Interface Upon LASD manager $70,740.00
acceptance
--------------------------------------------------------------------------------------------
13 CAL-PHOTO Upon LASD manager $6,120.00
acceptance
--------------------------------------------------------------------------------------------
14 CAL-GANG Upon LASD manager $6,120.00
acceptance
--------------------------------------------------------------------------------------------
15 CCHRS Upon LASD manager $18,630.00
acceptance
--------------------------------------------------------------------------------------------
16 LARCIS Upon LASD manager $18,630.00
acceptance
--------------------------------------------------------------------------------------------
17 10% Holdback Upon LASD manager $14,360.00
Acceptance of Phase II
--------------------------------------------------------------------------------------------
18 Training Phase II Upon completion of $3,000.00
training
--------------------------------------------------------------------------------------------
</TABLE>

* All the deliverables include respective shipping, handling, installation
charges, and IWS project management.

** Most of the amounts reflect a 10% holdback payable at the end of the
respective phases after final testing. There is not a 10% holdback in
items 07, 08, 09, 10, 17 and 18.

All other orders resulting from the follow-up contract pricing shall be
invoiced directly to the corresponding agency upon acceptance of software.
Payment shall be made by the agency within 30 days of receipt of IWS's
invoice.

6. INVOICES

Invoices when applicable shall be mailed to:
Digital Biometrics, Inc.
NW 7090 PO Box 1450
Minneapolis, MN. 55485-7090

7. YEAR 2000 PERFORMANCE WARRANTY

IWS agrees to warrant that each hardware, software, and firmware product
delivered under this agreement and listed herein shall be able to accurately
process date/time data (including, but not limited to, calculating,
comparing, and sequencing) from, into, and between the

DBI-IWS Agreement Page 4

<PAGE>

twentieth and twenty-first centuries, and the years 1999 and 2000 and
leap-year calculations, to the extent that other information technology, used
in combination with the information technology being provided hereunder,
properly exchanges date/time data with it. The remedies available to DBI
under this warranty shall include, but not be limited to, repair or replacement
of any listed product. Nothing in this warranty shall be construed to limit
any rights or remedies DBI may otherwise have under this agreement with
respect to defects other than year 2000 performance.

8. HARDWARE WARRANTY

IWS represents and warrants (1) that all hardware delivered pursuant hereto
will be new and shall be free from defects in material; that all items will
conform to the specifications as set forth in Exhibit A - "IWS Pricing
Proposal", Exhibit B - "DBI contract overview" and Exhibit D - "Scope of
Work", and Exhibit F; and (3) that all hardware warranty services performed
pursuant hereto will be free from defects in material and workmanship and
will be performed in accordance with the specifications and instructions of
LASD. However, IWS retains discretion and control with respect to the manner
and means of performing such services and shall at all times remain an
independent contractor. This warranty will cover one (1) year from time of
System Acceptance.

9. SOFTWARE WARRANTY

IWS represents and warrants (1) that all software related materials under
this Agreement are in conformance with requirements set forth in Exhibit A -
"IWS Pricing Proposal", Exhibit B - "DBI contract overview" and Exhibit D -
"Scope of Work"; and (2) that the software is fit for the intended purpose of
which is sold. IWS warrants that the Software will perform the functions set
forth in Exhibit B, and Exhibit F of this Agreement so long as the software
is unmodified and operated in accordance with the instructions of IWS. IWS's
sole obligation under this warranty shall be to provide corrections to the
Software to cause it to perform as specified in Exhibit B and Exhibit F. This
warranty will cover one (1) year from time of System Acceptance.

10. INSPECTION AND ACCEPTANCE

IWS will provide a System Acceptance Test Plan as a formal deliverable for
Customer acceptance, which is not to be unreasonably held. The plan will
conform to requirements from Exhibit A and Exhibit F.

The Functional Acceptance test for each deliverable will take place after
ImageWare has verified that the installation of all necessary hardware and
software is complete and ready for testing. The Functional Acceptance test
for each deliverable will be considered successful if the requirements
defined in the System Acceptance Test Plan are satisfied.

DBI-IWS Agreement Page 5

<PAGE>

In addition to the functional acceptance for each deliverable, at the end of
each of the phases there will be a final testing of all deliverables.

11. INSURANCE

IWS will provide and maintain at its own expense the following programs of
insurance covering its operations hereunder. Certificates of insurance will
be delivered to LASD prior to commencing service under this Agreement. Such
insurance shall be endorsed naming the County of Los Angeles as an additional
insured where indicated and shall include (a) General Liability insurance
policy with a minimum policy limit of $1,000,000 per occurrence (b)
Automobile Liability insurance policy with a combined singled limit not less
than $300,000 per occurrence, and (c) worker's Compensation in an amount and
form to meet all applicable requirements of the California Labor Code
including Employers liability with a $1,000,000 limit, covering all persons
performing work on behalf of IWS and all risks to such persons under this
Agreement.

12. COMPLIANCE WITH LAWS, REGULATIONS AND ETHICS

In addition to the obligations in this Agreement and generally in performing
the Services both Parties accept that their individual conduct shall at all
times comply with all laws, rules and regulations of government and other
bodies having jurisdiction over the area in which the services are being
conducted.

13. LIMITATION OF LIABILITY

Notwithstanding any provisions of this contract to the contrary, IWS hereby
acknowledges and agrees that DBI's total liability to IWS under this contract
shall in no circumstance exceed the aggregate of the amounts paid to it for
services and products pursuant to this contract.

14. GENERAL RELATIONSHIP

IWS agrees that in all matters relating to this subcontract Agreement it
shall be acting as an independent contractor and shall assume and pay all
liabilities and perform all obligations imposed with respect to the
performance of this Subcontract Agreement.

DBI-IWS Agreement Page 6

<PAGE>

15. INDEMNIFICATION

OBLIGATIONS -- DBI :
DBI agrees to protect and hold IWS harmless from any and all claims, suits,
actions and procedures brought or filed by third parties and from all
damages, penalties, losses, costs and expenses (including attorney's fees)
arising out of, or related to, any act or omission of DBI, its employees, or
agents.
OBLIGATIONS -- IWS
IWS agrees to protect and hold DBI harmless from any and all claims, suits,
actions and procedures brought or filed by third parties and from all
damages, penalties, losses, costs and expenses (including attorney's fees)
arising out of, or related to, any act or omission of IWS, its employees, or
agents.

In addition IWS agrees to protect and hold DBI harmless from any claims
brought against DBI alleging that the System Software infringes a 3rd party's
patents or copyright, provided that IWS is notified promptly by DBI of any
such claim (including any threatened claim) and IWS has sole control of the
defense with respect to such claims. The preceding indemnification by IWS
will not apply to any claim based, in whole or in part, on any modification
of the Software made by any person other than IWS. If a final injunction is
issued, or, IWS believes, is likely to be entered, prohibiting the use of the
Software by DBI, IWS will, at its sole discretion and expense, either: (i)
procure for DBI the right to use the Software as provided herein, (ii)
replace the Software with non-infringing, functionally equivalent product;
(iii) suitably modify the Software so that it is not infringing and provides
similar functionality; or (iv) accept return of the Software and refund the
purchase price. IWS's LIABILITY FOR ANY INFRINGING SOFTWARE IS STRICTLY
LIMITED TO THE FOREGOING.

16. TERMINATION; BREACH

TERMINATION
Either party may terminate this Agreement upon a breach by the other party
which is not cured in a timely manner as provided for below. Otherwise, this
Agreement will terminate upon both parties' fulfilling all of their
obligations under it.

BREACH
In the event of any material breach of this Agreement by either party, the
aggrieved party must give written notice thereof, including a reasonably
detailed statement of the nature of such breach, to the breaching party. The
breaching party has thirty (30) days to cure such breach. In the case of a
breach that cannot reasonably be cured within 30 days, the breaching party
will provide a written estimate of the time needed to cure such breach, will
commence

DBI-IWS Agreement Page 7

<PAGE>

to cure such breach within thirty (30) days of notice from the aggrieved
party, and will diligently continue to cure such breach to completion. If the
breaching party fails to cure, to commence cure, or diligently prosecute such
cure to completion, the aggrieved party shall be entitled to suspend its
performance under this Agreement for as long as the breach remains
uncorrected, and avail itself the remedies provided by this Agreement.

17. DISPUTES; BINDING ARBITRATION; ATTORNEYS' FEES

DISPUTES
In the event that any dispute or controversy arises between IWS and DBI, IWS
and DBI agree to first attempt to resolve the matter through discussions
between them directly.

BINDING ARBITRATION
In the event IWS and DBI are unable to resolve any matter through
discussions, they agree to resolve the matter through binding arbitration.
IWS and DBI will agree upon the location and rules for the arbitration, and,
if they are unable to agree, will follow the rules of the American
Arbitration Association.

ATTORNEYS' FEES
In the event of arbitration or any court proceedings notwithstanding
subsection (b), above, the court or arbitrator may award reasonable attorneys
fees and costs to the prevailing party in addition to any other relief which
the party is entitled.

18. CONTRACT ADMINISTRATION

In regard to administrative and contractual matters relating to this
Subcontract, the parties hereby appoint the persons listed below, or their
duly authorized designees, as the only persons empowered to make written
commitments on behalf of their respective organizations to effect changes to
any portion of this Subcontract.

FOR DBI:
Project Director
Mr. Barry Fisher
Digital Biometrics, Inc.

Project Manager
Mr. Allen Sypherd

FOR IWS:
Project Director
Mr. Robert Bannan

DBI-IWS Agreement Page 8

<PAGE>

Project Manager
Ms. Carmen Errejon

Sales Rep
Mr. Erik Carlgren

19. MISCELLANEOUS

A) INCORPORATED EXHIBITS

The following documents are hereby incorporated into this Agreement by
reference:

Exhibit A IWS Pricing Proposal. Dated 5/24/1999.
Exhibit B DBI contract overview. Dated 7/06/99.
Exhibit C LASD Workplan. Dated 5/24/99.
Exhibit D Scope of work. Dated 7/06/99.
Exhibit E System Acceptance. To be delivered to conform to Exhibit F.
Exhibit F PHOTO IMAGING SYSTEM, Proposal to Digital Biometrics, Inc. for
Los Angeles County Sheriff's Department. Dated 3/22/99.

B) SOURCE CODE PROTECTION

IWS agrees to deposit the source code, documentation and related materials of
the System (Deposit Materials) with an Escrow Agent subject to LASD entering
into Software Escrow Agreement. The Deposit Materials will be made available
to LASD for the purpose of self support if certain events named in the
Software Escrow Agreement occur. IWS will provide a copy of its current
Software Escrow Agreement to LASD when requested.

C) NOTICES. Whenever under this Subcontract one party is required or
permitted to give notice to the other, such notice shall be in writing and
shall be deemed to have been given when delivered in hand, by facsimile, or
when sent by registered or certified United States mail, return receipt
requested, postage prepaid, and addressed as follows:

1. In the case of DBI:
Mr. Barry Fisher
Digital Biometrics, Inc. NW 7090 PO Box 1450 Minneapolis, MN.
55485-7090

2. In the case of IWS:
Ms. Carmen Errejon
ImageWare Software, Inc.

DBI-IWS Agreement Page 9

<PAGE>

10883 Thornmint, San Diego, CA 92127

D) ENTIRE AGREEMENT. This Subcontract constitutes the complete agreement
between the parties and supersedes all previous agreements or
representations, written or oral, with respect to the Programs and services
specified herein. This Subcontract may not be modified or amended except in a
writing signed by a duly authorized representative of each party and with
approval of the LASD AFIS project manager.

It is expressly agreed that any terms and conditions of any Delivery Order,
purchase order or other ordering document shall be considered void and
superseded in their entirety by the terms and conditions of this Subcontract.
This Subcontract shall also supersede the terms of any unsigned license
agreement included in any package for software.

E) GOVERNING LAW. The construction, enforceability, validity and
interpretation of this Subcontract shall be in accordance with the laws of
the State of California.

F) HEADINGS AND INTERPRETATIONS. The article and section headings and table
of contents used herein are for reference and convenience only and shall not
enter into the interpretation thereof.

G) SEVERABILITY. If any of the provisions of this Subcontract or part of
such provisions are or become invalid or unenforceable, the remaining
provisions shall continue to be effective to the extent that these portions
of this Subcontract embodying the material intent of the parties remain
unaffected.

H) WAIVERS. No waiver by a party of any of its rights or remedies hereunder
shall be construed as a waiver by such party of any other rights or remedies
that such party may have under this Subcontract.

I) NEGATION OF THE FORMATION OF A BUSINESS ORGANIZATION. This Subcontract
shall not constitute, create, or in any way be interpreted to create a
partnership, joint venture, or formal business organization of any kind
between IWS and DBI.

J) PUBLICITY. No publicity or advertising regarding this Subcontract shall be
released without the reasonable prior written approval of DBI, and with
approval of the LASD AFIS project manager except that this Subcontract may be
made known to the U.S. Contracting Agency/Organization, and except such
publicity as may be required to comply with federal and state securities
laws. Any consent with regard to this clause shall not be unreasonably
withheld.

K) SUPERSEDING EFFECT. This Subcontract supersedes all written and oral
agreements. Further, this agreement constitutes the entire Subcontract
between the parties hereto with

DBI-IWS Agreement Page 10

<PAGE>

respect to this Subcontract. All work performed by IWS, actions taken, and
payments made, if any, under any other prior written, or oral Subcontracts,
with respect to this Subcontract, shall be deemed to have been work
performed, actions, taken, or payments made under this Subcontract.

L) ASSIGNMENT. Neither this Subcontract nor any interest hereunder may be
assigned or otherwise transferred by either party to third parties other than
corporate affiliates of either party without the prior written consent of the
other party and LASD project manager, which consent shall not be unreasonably
withheld. This Subcontract shall be binding upon and inure to the benefit of
the heirs, successors, assigns, and delegates of the parties hereto.

EXECUTION OF AGREEMENT OF SUBCONTRACT

IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed as of the day and year first above written.

DBI FWS

BY: /s/ James C. Granger BY: /s/ Jim Miller
------------------------------- -------------------------------

NAME: James C. Granger NAME: Jim Miller
----------------------------- ------------------------------

TITLE: Pres. & CEO TITLE: Chmn & CEO
---------------------------- -----------------------------

DATE: July 26, 1999 DATE: July 23, 1999
----------------------------- ------------------------------

DBI-IWS Agreement Page 11
<PAGE>

EXHIBIT A - IWS PRICING PROPOSAL MAY 24, 1999

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION QTY UNIT EXT TOTAL
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CENTRAL IMAGE SERVER
-----------------------------------------------------------------------------------------------------------------------------------
NETFINITY 7000 M10 400MHZ (QUAD PROCESSOR) RAID V
-----------------------------------------------------------------------------------------------------------------------------------
IBM Netfinity 7000 M10 400/512KB Xeon, 128MB 1 $11,839.50 $11,839.50
-----------------------------------------------------------------------------------------------------------------------------------
ECC OPEN, 32X, PCI (Rack 11U)
-----------------------------------------------------------------------------------------------------------------------------------
(Std) 128MB (4x32MB) EDO DRAM DIMM - 50ns
-----------------------------------------------------------------------------------------------------------------------------------
(Std) IBM 1.44MB 3.5-inch Diskette Drive
-----------------------------------------------------------------------------------------------------------------------------------
(Std) Integrated IDE Controller
-----------------------------------------------------------------------------------------------------------------------------------
(Std) Internal IDE CD-ROM Drive
-----------------------------------------------------------------------------------------------------------------------------------
(Std) Netfinity 400W Hot-Swap Power Supply
-----------------------------------------------------------------------------------------------------------------------------------
(Std) Netfinity 7000 400MHz/512KB PII Xeon Processor
-----------------------------------------------------------------------------------------------------------------------------------
(Std) Planar Integrated Wide Ultra SCSI
-----------------------------------------------------------------------------------------------------------------------------------
(Std) Planar Integrated Wide Ultra SCSI for External Devices
-----------------------------------------------------------------------------------------------------------------------------------
(Std) S3 Trio 64V2 Graphics - 1MB SGRAM
-----------------------------------------------------------------------------------------------------------------------------------
(Std) Systems Management Processor
-----------------------------------------------------------------------------------------------------------------------------------
3520-2RU Netfinity EXP 15 Storage Expansion Unit 1 $ 3,321.00 $ 3,321.00
-----------------------------------------------------------------------------------------------------------------------------------
(Std) 3520 Enclosure Hot-Swap Backplane 1 $ 2,160.00 $ 2,160.00
-----------------------------------------------------------------------------------------------------------------------------------
IBM 35/70GB DLT SCSI Tape Drive - External 1 $ 7,458.75 $ 7,458.75
-----------------------------------------------------------------------------------------------------------------------------------
IBM Netfinity ServerRAID-3L Ultra2 SCSI Adapter 1 $ 945.00 $ 945.00
-----------------------------------------------------------------------------------------------------------------------------------
IBM Netfinity 400W Hot-Swap Redundant Power Supply II (2 total) 1 $ 810.00 $ 810.00
-----------------------------------------------------------------------------------------------------------------------------------
IBM Netfinity 7000 M10 Rack-to-Tower Conversion Kit 1 $ 540.00 $ 540.00
-----------------------------------------------------------------------------------------------------------------------------------
Netfinity 7000 400MHz/512KB Xeon Processor (4 total) 3 $ 2,160.00 $ 6,480.00
-----------------------------------------------------------------------------------------------------------------------------------
IBM 8mm to 68pin Converter for external cables 1 $ 52.65 $ 52.65
-----------------------------------------------------------------------------------------------------------------------------------
1GB (4x256MB) EDO DRAM DIMM - 50ns 1 $ 7,341.30 $ 7,341.30
-----------------------------------------------------------------------------------------------------------------------------------
IBM Netfinity 18.2GB Wide Ultra SCSI SCA-2 HDD (HH) 8 $ 1,618.65 $12,949.20
-----------------------------------------------------------------------------------------------------------------------------------
IBM Netfinity 2M Ultra2 SCSI Cable 2 $ 93.15 $ 186.30
-----------------------------------------------------------------------------------------------------------------------------------
Netfinity NetBAY3 2 $ 117.45 $ 234.90
-----------------------------------------------------------------------------------------------------------------------------------
Black Sleek Mouse 1 $ 28.35 $ 28.35
-----------------------------------------------------------------------------------------------------------------------------------
IBM Netfinity 10/100 Ethernet Adapter (PCI) 1 $ 128.25 $ 128.25
-----------------------------------------------------------------------------------------------------------------------------------
G72 - 17(15.7) in. Color Monitor, 69KHz, Stealth Gray 1 $ 476.55 $ 476.55
-----------------------------------------------------------------------------------------------------------------------------------
IBM Standard Black 104-Key Keyboard 1 $ 60.75 $ 60.75
-----------------------------------------------------------------------------------------------------------------------------------
OBI External V.34 Data/Fax Modem 1 $ 496.80 $ 496.80
-----------------------------------------------------------------------------------------------------------------------------------
IBM Netfinity 4.5GB Wide Ultra SCSI SCA-2 Hot-Swap Hard Disk Drive (SL) 2 $ 565.65 $ 1,131.30
-----------------------------------------------------------------------------------------------------------------------------------
External F/W to F/W Cable-Standard with 01K1174 Tape Drive 1 $ 128.25 $ 128.25
-----------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL $ 56,768.85
-----------------------------------------------------------------------------------------------------------------------------------
SOFTWARE
-----------------------------------------------------------------------------------------------------------------------------------
CCS Server Software 1 $20,000.00 $20,000.00
-----------------------------------------------------------------------------------------------------------------------------------
CCS Investigative Display Software 20 $ 4,900.00 $98,000.00
-----------------------------------------------------------------------------------------------------------------------------------
Suspect ID (Composite Software) 20 $ 0.00 $ 0.00
-----------------------------------------------------------------------------------------------------------------------------------
Crime Lab (Image Editing Software) 20 $ 0.00 $ 0.00
-----------------------------------------------------------------------------------------------------------------------------------
Vehicle ID 20 $ 0.00 $ 0.00
-----------------------------------------------------------------------------------------------------------------------------------
Custom NIST Import from DBI Store and Forward 1 $20,000.00 $20,000.00
-----------------------------------------------------------------------------------------------------------------------------------
Face ID Server Software (Includes Conversion and auto enrollment) 1 $ 0.00 $ 0.00
-----------------------------------------------------------------------------------------------------------------------------------
Face ID Client Software 4 $ 0.00 $ 0.00
-----------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL $138,000.00
-----------------------------------------------------------------------------------------------------------------------------------
CCHRS & LARCIS INTERFACE
-----------------------------------------------------------------------------------------------------------------------------------
Systems Integration/Setup 40 $ 900.00 $36,000.00
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

CONFIDENTIAL

EXHIBIT A - IWS PRICING PROPOSAL MAY 24, 1999

<TABLE>
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
Project Management 6 $900.00 $5,400.00
---------------------------------------------------------------------------------------------------------
SUBTOTAL $41,400.00
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
CAL-PHOTO/CAL-GANG INTERFACE
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
NIST or Flat File Export for Cal-Photo ID 1 $5,000.00 $5,000.00
---------------------------------------------------------------------------------------------------------
NIST or Flat File Export for Cal-Gang 1 $5,000.00 $5,000.00
---------------------------------------------------------------------------------------------------------
Project Management 4 $900.00 $3,600.00
---------------------------------------------------------------------------------------------------------
SUBTOTAL $13,600.00
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
WEB INVESTIGATIVE INTERFACE
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
WEB enabled CCS Investigative Software (LA Country and 1 $75,000.00 $75,000.00
Orange County
---------------------------------------------------------------------------------------------------------
Project Management 4 $900.00 $3,600.00
---------------------------------------------------------------------------------------------------------
SUBTOTAL $78,600.00
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
TOTAL HARDWARE/SOFTWARE $328.368.85
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
SERVICES
---------------------------------------------------------------------------------------------------------
De-duplication of Database 5 $900.00 $4,500.00
---------------------------------------------------------------------------------------------------------
Conversion of Existing Photos & Records (approx. 250,000) 250,000 $0.15 $37,500.00
---------------------------------------------------------------------------------------------------------
*Conversion of data on Mug Server from Sybase to Oracle 1 $10,000.00 $10,000.00
---------------------------------------------------------------------------------------------------------
Project Management/Specifications Gathering 15 $900.00 $13,500.00
---------------------------------------------------------------------------------------------------------
SUBTOTAL $65,500.00
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
LICENSES
---------------------------------------------------------------------------------------------------------
Sybase License 6.0 Server + 5 users 1 $1,248.75 $1,248.75
---------------------------------------------------------------------------------------------------------
Sybase License 6.0 (20 User) 1 $3,243.75 $3,243.75
---------------------------------------------------------------------------------------------------------
Windows Licenses TBD
---------------------------------------------------------------------------------------------------------
SUBTOTAL $4,492.50
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
SUBTOTAL $398,361.35
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
SHIPPING/HANDLING/INSTALLATION $23,372.26
---------------------------------------------------------------------------------------------------------
TRAINING 9 $750.00 $6,750.00 $6,750.00
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
TOTAL $428,483.61
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
FOLLOW-UP CONTRACT PRICING
---------------------------------------------------------------------------------------------------------
Per our agreement with LASD this pricing will be made available to all
agencies in Los Angeles County for a period of two years, subject to the
agency terms and conditions.
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
SOFTWARE
---------------------------------------------------------------------------------------------------------
CCS Investigative Display Software $4,900.00
---------------------------------------------------------------------------------------------------------
Suspect ID (Composite Software) $2,000.00
---------------------------------------------------------------------------------------------------------
Crime Lab (Image Editing Software) $300.00
---------------------------------------------------------------------------------------------------------
Vehicle ID $1,000.00
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

EXHIBIT A - IWS PRICING PROPOSAL MAY 24, 1999

<TABLE>
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
ADDITIONAL FACE ID CLIENT COSTS:
---------------------------------------------------------------------------------------------------------
1-10 copies $15,000.00
---------------------------------------------------------------------------------------------------------
11-50 copies $12,500.00
---------------------------------------------------------------------------------------------------------
51-100 copies $9,000.00
---------------------------------------------------------------------------------------------------------
over 100 $6,000.00
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
WARRANTY
---------------------------------------------------------------------------------------------------------
ImageWare offers a complete one year
warranty on all hardware and software
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
MAINTENANCE
---------------------------------------------------------------------------------------------------------
*ImageWare Customer Service (Year 1) $59,106.39
---------------------------------------------------------------------------------------------------------
STARTS THE DAY AFTER FINAL SYSTEM ACCEPTANCE
---------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

EXHIBIT B - DBI CONTRACT OVERVIEW JULY 6, 1999

DBI CONTRACT OVERVIEW

This proposal is in response to a request by the Identification Unit of
the Los Angeles County Sheriff's Department, Exhibit F. It addresses and
provides solutions for many needs. Overall, it is a complete turn-key
solution that has been designed to eliminate these needs. The proposal
has no hidden costs and leaves many options.

Because of the many requirements that must be satisfied, this section is
broken into several phases in addition to providing system interfaces.
These phases flow in logical order and associated costs are paralleled
in the Cost Proposal.

PROJECT OVERVIEW

The heart of this project is a central mugshot server that must power
investigative clients throughout the County and the State. The server is
fully scaleable and capable of processing and distributing information
to a large number of client sources. The software that will drive this
solution is ImageWare's Crime Capture System (CCS). CCS runs on the
Windows NT 4.0 platform and will utilize Oracle 8.0 database software
as required by the County. CCS will either feed or be queried by a
minimum of five different subsystems including: CCHRS, LARCIS, CAL-PHOTO
ID, CAL-GANG, and via secure Intra-net. The system proposed is a
complete turn-key solution that meets current needs and provides many
options for the future. The entire system is fully Year 2000 compliant
and meets all State and Federal ANSI/NIST standards.

The system components will connect to the existing network directly,
with each agency or the county being responsible to provide LAN
connections for the new equipment. The operating system for the central
server will be Microsoft Windows NT 4.0. The protocol will be TCP/IP.
All connections to either the network or additional devices will be
industry standard connections.

Data archive and backup shall be accomplished on-line.

System security will make use of both operating system permissions as
well as database software security. This will allow access to certain
functions and data to be controlled by the system administrator. These
privileges and permissions will be given and controlled by user login.
There will be an administrative function available only to the system
administrator, where these permissions and privileges are maintained.

PHASE I

In the initial phase, ImageWare will install an IBM Netfinity 7000 M10
mug server that will eventually act in place of the current mugshot
server in Los Angeles County. IWS will convert the existing images and
data (approx. 250,000) and populate the current version of CCS, which
runs on Windows NT 4.0 and Sybase 6.0 database software. The purpose for
installing and converting the existing images on Sybase before CCS is
ported to Oracle is to satisfy the immediate needs for the County.
Examples would be creating

<PAGE>

EXHIBIT B - DBI CONTRACT OVERVIEW JULY 6, 1999

photo line-ups or searching, viewing and printing mugshots. In addition
to converting the existing database, we will also de-duplicate it.
Because of certain limitations to the existing photo database software,
there are duplicate records and photos of a good percentage of the
entire database. A de-duplication procedure that is agreed upon by both
IWS and the County will eliminate the unwanted photos and, or records.

While the conversion is taking place, IWS will complete the interface
with the DBI store and forward. The CCS server will identify, read and
export standard NIST type 1, 2 and Type 10 data packages from the
existing DBI store and forward server. Completion of this interface will
effectively replace the existing DBI Photo RAID. The existing images
will have been converted and all new records will be delivered directly
from the DBI Tenprinters to the CCS database.

Once the NIST packages populate the CCS database, the records and photos
can be searched by CCS Investigative software. This software will be
responsible for satisfying the County's immediate investigative needs.
Phase I includes 20 copies of CCS Investigative software and 20 copies
of Suspect ID composite software.

Face ID-Registered Trademark- facial recognition server software is also
being offered with this proposal, at no charge! We are offering to
convert the existing images into Face ID as well as provide software
that enrolls all new captured images into Face ID. Basically, all images
that populate the CCS database will also be enrolled into Face ID.

At no cost to the County, IWS will install Face ID server software and
convert all existing images to Face ID. All new images will be
automatically enrolled in Face ID and IWS will provide 4 copies of Face
ID client software. Upon approval from LA County and DOJ, IWS will
enroll Megan's Law images into a separate Face ID database at no charge.
IWS may provide updates of Face ID database charging a fee to be agreed
with LASD and will discuss the possibility of creating a customized
product to import future versions of Megan's Law images. All Face ID
client sites will then have facial recognition capabilities against the
Megan's Law database.

Several other LA County law enforcement agencies have shown interest in
purchasing Face ID client software as well. There is an issue as to how
will these Face ID clients effect the load on the CCS server. Will it
slow it down? The answer is no! We are going to isolate just one of the
four processors in the Netfinity server for Face ID crunching. When the
extracted facial data from the suspect mugshots is being searched by a
Face ID client, only one server processor will be used. The remaining
three processors are more than enough to handle all the queries and
changes to the CCS database.

<PAGE>

EXHIBIT B - DBI CONTRACT OVERVIEW JULY 6, 1999

searched by Face ID clients. "Swarm" machines distribute the Face ID
processing workload. The more "swarm" machines added to the system,
the more the workload is distributed. Search times will go down as
clients and "swarms" are added.

SERVER SPECIFICATIONS
The proposed server is an IBM Netfinity 7000 M10 Server. The image
server will be running Windows NT 4.0 that provides a second level of
system security and stability. Initially, the server will be running
the current Sybase version of CCS. Phase 2 converts this database to
Oracle.

The database is all open architecture, ODBC compliant, allowing for
ease of data sharing with other ODBC compliant systems. The server is
capable of storing the mug photo's and text data in Los Angeles County
booking system for a minimum of five years.

The server is a high performance 400 MHz Quad XEON Processor system.
It has RAID V hot swap drive array and Mirrored OS. It is sized with
today's performance and tomorrow's growth in mind. Installing a RAID V
system provides a very high fault tolerant data storage system while
not degrading performance and allows the storage of business-critical
data with confidence.

A UPS will protect the system from power fluctuations and momentary
outages. The system will have a redundant power supply. The server
will be equipped with a modem and remote diagnostic software, allowing
for quicker response and problem resolution. The system also includes
a DLT tape drive for back-ups and a CD ROM Drive. The server will
utilize the existing network which utilizes the TCP/IP protocol.

SOFTWARE CAPABILITIES

The CCS central server software includes several administrative
functions, including the setup and maintenance of all drop down menus
and pick lists, the archive function, and the assignment of names and
passwords. The 4 User Defined fields are also edited from here.

IBM Netfinity Management software will be used to remotely monitor and
maintain the CCS server.

Client Investigative application will not be installed on server.

CCS INVESTIGATIVE SOFTWARE
CCS Investigative workstation software includes the client software
necessary to search the database based on demographic information,
create photo line-ups, view photo mug books, and print. Any printer
that includes a Windows NT driver may be utilized. The software can
connect with and make use of peripherals with TWAIN drivers (such as

<PAGE>

EXHIBIT B - DBI CONTRACT OVERVIEW JULY 6, 1999

scanners), and have the ability to import images from files that are
.JPG or .BMP and add to existing records. The client software also
allows for the export of images in either .JPG or .BMP files. All of
these functions can be authorized or not authorized based on User ID
authorization.

Searches may be accomplished using NCIC standard demographic codes,
from user maintained tables.

The software will create photo line-ups with a specified amount of
images. The Crime Capture System will retrieve and display the images
of all subjects with characteristics that match, or substantially
match, those of the line-up subject. The user will be able to select
or reject from the images retrieved up to twenty, that together with
the subject's constitute the line-up. The line-up will be random
ordered, and may be saved for future retrieval. These photo line-ups
are also printable.

Portions of an image may be "roped" for enlargement for viewing
purposes.

The print function is available for any image with its associated
demographic data.

The search function includes very flexible ad hoc inquiries, including
many Boolean logic functions, including AND, OR, GREATER THAN, LESS
THAN, EQUAL TO, etc.

Each agency will be able to search the database and obtain information
about the total number of bookings by date, by officer ID, by charge
code, etc.

Any text fields entered into a booking record will be searchable,
including any comment fields.

Fields describing SMT data will be searchable.

Images of SMT are printable, either color or black and white.

The search software will process hyphenated and/or multiple last,
first, and middle names correctly.

The search software will use "soundex" to find similar named
individuals.

Investigative workstations will have the ability to scan photos into
the system, import them, and link them with booking records. For
example, crime scene photos can be imported into booking records, as
well as weapons photos, vehicle photos, residence photos, year book
photos, etc. This function may be turned off by the system
administrator.

FACE ID
Face ID is a state-of-the-art facial recognition and retrieval program
that helps officers positively identify both unknown suspects and
criminals with multiple aliases. Suspect

<PAGE>

EXHIBIT B - DBI CONTRACT OVERVIEW JULY 6, 1999

images that have been captured on a surveillance video, suspect
composite or photograph can be searched against any digital database of
faces. The search returns a group of images whose facial
characteristics closely resemble that of the search photograph. This
feature can also be used at the time of booking to immediately identify
criminals with multiple aliases. Face ID saves the officer tremendous
amounts of time when scanning through large databases. The ability to
key in text data description in addition to the facial search makes
searching large databases possible.

Suspect ID/Registered Trademark/

Suspect ID is the composite module of the C.R.I.M.E.S. software
family. Using an online cognitive interview process, officers,
witnesses and victims can accurately create full-color, photo-realistic
suspect composites within minutes. The digital composites are
constructed from catalogs of facial features. The catalogs are
comprised of actual photographs, not hand-drawn sketches, so composites
from Suspect ID look like people, not like pencil sketches. Suspect ID
can interface directly with Face ID. Upon completion, a composite can
be immediately searched against the Face ID database. This search
returns a number of suspect photos from within the LA booking database.

The Suspect ID module was designed specifically for use by law
enforcement agencies. Even officers with little or no computer
knowledge or artistic talent can complete a suspect composite simply by
pointing and clicking with a mouse. Suspect ID is a standard PC-based
software application that can be installed on a laptop computer and
taken into the field, allowing officers to conduct interviews before
the witnesses' and victims' memories fade. For rapid identification,
officers can distribute completed composites within minutes via radio,
fax or e-mail.

PHASE 2

Phase 2 will convert the installed Sybase version of CCS to the latest
version of Oracle. Once in Oracle, the remaining interfaces shall be
accomplished. ImageWare has made the decision to fast forward our
Oracle solution in order to meet the requirements set forth by Los
Angeles County. LA County is currently an Oracle house and it is
logical that their requirements include an Oracle database.

ImageWare does not intend to charge Los Angeles County with any costs
associated with our development of the Oracle platform. Converting the
installed system from Sybase to Oracle does, however, have costs
associated. ImageWare engineers will design the new system so that the
conversion process creates very little down time.

The GUI interface throughout the network will not change and no
additional training of users will be required. Face ID will also be
converted to Oracle.

5
<PAGE>

EXHIBIT B - DBI CONTRACT OVERVIEW JULY 6, 1999

PHASE 3 (NOT ACCEPTED BY LASO)

The last phase is a simple, but large expansion of the investigative
product. ImageWare will provide CCS Investigative software and Suspect
ID to an additional 60 sites throughout the county. With all phases
complete, Los Angeles County will have the ability to view and print
records and lineups of every person booked in Los Angeles County within
the DBI Tenprinter network.

INTERFACES

It will be the responsibility of each of the integrated systems to
properly read the photo from the CCS server, decompress the JPEG, and
display the photo on the screen to the user. The CCS server data will
be kept in sync with AJIS by the NIST data feed from the DBI store and
forward integration. Any duplicate records from DBI will be
synchronized with existing records causing an update to existing
records not duplication of data. All records will be tied together
between the systems with a common unique identifier such as a record
number and each person will be given a unique identifier, such as a
state ID number. These will be used to identify a unique record for an
individual between all integrated systems as well as identify a
person's record history.

The interface will basically allow both the CCHRS and LARCIS
sub-systems to display a photograph of the subject by selecting a
defined number of data tables.

CAL-PHOTO ID & CAL-GANG
ImageWare offers a single solution for both of these interfaces as
well, only duplicated for each. When a record is completed within CCS,
the server will export a flat text file or a NIST package to the local
CAL-ID or CAL-GANG Web Server. This flat file will contain demographic
text data as well as the photo's location or URL. Once the State
parses this information into its main query engine, the images will be
searchable via the CAL-ID or CAL-GANG intra-net.

<PAGE>

EXHIBIT B - DBI CONTRACT OVERVIEW JULY 6, 1999

IWS will discuss with the State, the type and size of the server needed
to accomplish the requirements for Cal-Photo ID. When the time comes,
we would be pleased to provide a quote for that server and the
maintenance thereof. The cost for feeding the server is outlined in the
Cost Proposal. ImageWare will work with the State to isolate a means
for maintaining the Cal-Photo ID software.

WEB INVESTIGATIVE INTERFACE
ImageWare is offering a site license to be used within the Los Angeles
County and Orange County intra-net for a product that is currently
under development. The site license will enable the EDMS database to be
searched by a standard web browser within the local network. The basic
concept of this product is to provide a Web Interface that enables
standard web browser search engines to query the Mugshot database
through a limited amount of text fields and descriptors. The fields
that are to be searched have yet to be defined, however, it is expected
that 5-7 fields will be appropriate. 6-pack lineups will also be a
feature.

IWS is willing to discuss the development of an additional Web Product
capable of retrieving a single photo based on name and booking number
queries.

7
<PAGE>

EXHIBIT C - LASD EDMS WORKPLAN July 6, 1999

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Contract Award Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------
PHASE 1 X *************************
-----------------------------------------------------------------------------------------------------------------------
PHASE 2 X *******
-----------------------------------------------------------------------------------------------------------------------
Required Interfaces ***************************
-----------------------------------------------------------------------------------------------------------------------

</TABLE>

<PAGE>

EXHIBIT D - SCOPE OF WORK JULY 6, 1999

LOS ANGELES COUNTY SHERIFF'S DEPARTMENT ELECTRONIC DIGITAL MUSHOT
SYSTEM

SCOPE OF WORK

This document identifies the product to be delivered and specifies
work to be performed by the Contractor during the implementation of
ImageWare's Crime Capture System and related development as well as
outlines those tasks which are the responsibility of Los Angeles
County Sheriff's Department.

PROJECT OVERVIEW
The heart of this project is a central mugshot server that must power
investigative clients throughout the County and the State. The server
is fully scaleable and capable of processing and distributing
information to a large number of client sources. The software that
will drive this solution is ImageWare's Crime Capture System (CCS).
CCS runs on the Windows NT 4.0 platform and will utilize Oracle 8.0
databases software as required by the County. CCS will either feed or
be queried by a minimum of five different sub-systems including:
CCHRS, LARCIS, CAL-PHOTO ID, CAL-GANG, and via secure Intra-net. The
system proposed is a complete turn-key solution that meets current
needs and provides many options for the future. The entire system is
fully Year 2000 compliant and meets all State and Federal ANSI/NIST
standards.

The system components will connect to the existing network directly,
with each agency or the county being responsible to provide LAN
connections for the new equipment. The operating system for the
central server will be Microsoft Windows NT 4.0. The protocol will be
TCP/IP. All connections to either the network or additional devices
will be industry standard connections.

Data archive and backup shall be accomplished on-line.

1. WORK TO BE COMPLETED BY IMAGEWARE

PHASE I: Completion within 90 days from contract signing.

1
<PAGE>

EXHIBIT D - SCOPE OF WORK JULY 6, 1999

- System Acceptance Test Plan
- CCS Server configuration and installation
- Interconnect with existing DBI store & forward
- Conversion of existing images and data into CCS and Face ID
- De-duplication of existing database
- Installation of investigative software (includes Face ID)
- Training

PHASE II: Completion within 6 months from contract signing.
- Port installed CCS system from Sybase to Oracle

DEVELOPMENT OF REQUIRED INTERFACES: Completion within 9 months from
contract signing
- Development of CCHRS
- Development of LARCIS
- Development of Cal-Photo ID
- Development of Cal-GANG
- Installation of WEB enabled CCS
- Training

Priority to be determined by LASD project manager

II. HARDWARE/SOFTWARE

1. ImageWare will provide the hardware listed in the IWS proposal to
DBI:
- Server, Netfinity 7000

2. ImageWare will provide 20 copies of the following software:
- CCS Investigative
- Suspect ID (Composite)
- Vehicle ID
- Crime Lab

5. ImageWare will provide 4 copies of Face ID Client software

III. INTEGRATION AND TEST

ImageWare will configure, integrate, install and test all hardware and
software prior to System Acceptance Test.

IV. DATA CONVERSION

All data and images in the current DBI system will be converted and
transferred to the EDMS. After conversion, IWS will (with cooperation
from LASD) eliminate duplicate photos and records.

V. PLATFORM CONVERSION

2
<PAGE>

EXHIBIT D - SCOPE OF WORK JULY 6, 1999

ImageWare will convert the EDMS to the Oracle platform as outlined in
IWS proposal to DBI, Exhibit F.

VI. INTERCONNECTS

ImageWare is responsible for porting over to CCS any current
interconnects with the DBI store & forward. In addition, ImageWare
will develop interconnects with CCHRS, LARCIS, Cal-GANG and Cal-Photo
ID.

VII. WEB PRODUCT

ImageWare will test and install the CCS Web interface

VIII. TRAINING

ImageWare will provide training as outlined in IWS proposal to LASO,
Exhibit F.

IX. DOCUMENTATION

ImageWare will provide one manual per capture and per investigative
station. LASD (and police employees at LIT sites) are authorized to
make copies for training purposes.

X. TASKS FOR LOS ANGELES COUNTY SHERIFF'S OFFICE

1. Network connections

2. Sites must be clean and ready for installation

3. Phone lines for remote access of system management of server.

4. Personnel available for technical questions

5. Facilitate specifications on interconnects

6. Facilitate technical cooperation from DBI and Sierra systems for
conversion purposes

7. Facilitate technical expertise from DBI and NIST interconnect to
store & forward

8. Proper electrical availability

9. Space and tables for computers and printers

10. IP addresses

<PAGE>

PROPOSAL TO DIGITAL BIOMETRICS, INC.
FOR LOS ANGELES COUNTY SHERIFF'S DEPARTMENT
MARCH 22, 1999

PROPOSAL CONTENT

PART I

Original Proposal submitted to Los Angeles County Sheriff's Department on
March 9, 1999. A turn-key solution to satisfy the needs of Los Angeles County
and DBI.

PART II

Answers to questions about original proposal, posed by Sgt. Paul Alexander in
an e-mail dated 3/19/99.

PART II

Point by point answers to statement of work questions written by Sgt. Paul
Alexander. Any question that have been previously answered will be responded
to with the corresponding page # of the original proposal.

PART IV

Changes to Original Proposal. This includes additional software and
capabilities as well as clarification of a few issues on original proposal.

PART V

Updated Cost Proposal Exhibit A.

<PAGE>

TABLE OF CONTENTS

COMPANY PROFILE & QUALIFICATIONS __________________________________________ 3

ImageWare History ______________________________________________________ 4

Products _______________________________________________________________ 5

SUSPECT ID -Registered Trademark - __________________________________ 5

CRIME LAB -Registered Trademark- ____________________________________ 5

VEHICLE ID -TM- _____________________________________________________ 6

PACE ID -TM- ________________________________________________________ 6

CRIME CAPTURE SYSTEM -TM-__ _________________________________________ 6

Milestones _____________________________________________________________ 7

Notable Customers ______________________________________________________ 7

PERSONNEL QUALIFICATIONS __________________________________________________ 8

ImageWare Executives ___________________________________________________ 8

Key Project Staff ______________________________________________________ 9

OVERVIEW / PROJECT APPROACH _______________________________________________ 16

Project Overview _______________________________________________________ 16

Phase 1 ___________________________________________________________________ 17

SERVER SPECIFICATIONS _______________________________________________ 18

SOFTWARE CAPABILITIES _______________________________________________ 19

CCS INVESTIGATIVE SOFTWARE __________________________________________ 20

FACE ID _____________________________________________________________ 21

SUSPECT ID -Registered Trademark - __________________________________ 21

PHASE 2 ___________________________________________________________________ 21

PHASE 3 ___________________________________________________________________ 22

INTERFACES ________________________________________________________________ 22

CCHRS & LARCIS ______________________________________________________ 22

CAL-PHOTO ID & CAL-GANG _____________________________________________ 23

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

WEB INVESTIGATIVE INTERFACE _________________________________________ 23

Implementation Schedule ___________________________________________________ 24

Approach in Project ____________________________________________________ 24

REFERENCES ________________________________________________________________ 27

ARIZONA DEPARTMENT OF PUBLIC SAFETY _________________________________ 27

LOS ANGELES COUNTY CITY OF LAKEWOOD _________________________________ 32

NEW YORK CITY POLICE DEPARTMENT _____________________________________ 35

HENEPIN COUNTY SHERIFF'S OFFICE (MINNEAPOLIS) _______________________ 35

PIERCE COUNTY WA ____________________________________________________ 35

Reference Contacts _____________________________________________________ 36

Other C.R.I.M.E.S. References __________________________________________ 37

FINANCIAL STATEMENT ____________________________________________________ 38

EXHIBIT A - COST PROPOSAL _________________________________________________ 39

EXHIBIT B - MAINTENANCE & WARRANTIES ______________________________________ 46

Product and Customer Support ___________________________________________ 49

Hardware Warranties ____________________________________________________ 49

Hardware Maintenance ___________________________________________________ 49

Software Warranties ____________________________________________________ 50

Source Code ____________________________________________________________ 50

Software On-Going Maintenance and Support ______________________________ 50

EXHIBIT C - TRAINING ______________________________________________________ 52

CRIME CAPTURE SYSTEM TRAINING OUTLINE __________________________________ 52

IMAGEWARE SOFTWARE INC. 2 PHONE 619-673-8600
10883 THORNMINT ROAD FAX 619-673-1770
SAN DIEGO, CA 92127

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEMS

COMPANY PROFILE & QUALIFICATIONS
-------------------------------------------------------------------------------

ImageWare Software, Inc., a San Diego, California based company is a leader
and innovator in the emerging technology of PC-based digital imaging, with
its primary focus on law enforcement software. Our corporate offices are at
the following address. This same address is also used for sales, technical
services and billing.

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

Phone: 619-673-8600; 800-842-4199
FAX: 619-673-1770

ImageWare has, through its efforts, gained respect within the Law Enforcement
arena and is quickly being recognized as a leader in the handling of large
mugshot databases as well as the powerful investigative software that runs
them. We were recently awarded a contract by the State of Arizona and the
system is meeting all of its expectations. The Arizona Department of Public
Safety enjoys a powerful network of photo and data information, with
extremely limited down time. It seamlessly interfaces with several disparate
systems and provides a smooth and synchronized data flow throughout. Very
recently, in partnership with NEC and PRC/Litton, IWS was awarded the digital
imaging contract for Las Vegas Metro PD.

One year ago ImageWare acquired XImage Corporation, a San Jose, California
based company also specializing in law enforcement software. XImage
Corporation is a company strong in the installation and management of very
large booking installations. The company has developed its products using
Sun SPARC servers and workstations on a UNIX operating system. Its flagship
installation is New York City Police Department as well as Henepin County MN
(Minneapolis), Indianapolis PD and Portland Police Bureau. The NYC system
spans 76 precincts in 5 boroughs, including 100 capture stations and
redundant central servers. XImage/ImageWare had a large customer support
staff with 24 hours a day, 7 days a week availability.

ImageWare and XImage combined to form a company that is strong, technically
proficient, and leading the way in the development of tools for the law
enforcement industry. The skills of one company compliment those of the
other. The strengths and experience of XImage will enable the new company to
bypass many pitfalls, during the introduction of new Windows based products
under the expertise of ImageWare.

On March 18, 1999, ImageWare will receive financial backing in the form of a
$10,000,000 funding from an international group of investors led by JP
Morgan. This backing combined with our large maintained customer base and
success in the placement of large mugshot databases ensures the highest
quality products and services for many years to come.

IMAGEWARE SOFTWARE, INC. 3 Phone: 619-673-8600
10883 THORNMINT ROAD FAX: 619-673-1770
SAN DIEGO, CA 92127

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEMS

CCS runs on the Microsoft Windows operating system, specifically Windows 95,
98 and Windows NT 4.0. We configure systems using all IBM components,
ensuring our customers of state-of-the-art architecture, durability,
reliability. By teaming with IBM as a business partner, ImageWare can and
does offer the highest quality PC products, systems software and customer
service available. PC platforms being used include multiple Pentium Pro
processing servers, redundant servers, Xeon processors and Pentium II capture
and investigative workstations. In many cases, current hardware can be
utilized and hardware may be purchased off existing County contracts.

Support is handled on a 24/7 basis with our support offices being in San
Diego. There is a one hour call back response time and on-site response times
can be negotiated. In some cases, on-site personnel can be hired. Servers and
workstation software can be maintained remotely using sophisticated IBM
Netfinity Management software. If a server goes down, it does not effect the
capture workstations. All capture stations have the ability to store data and
images locally until the server is back on-line.

IWS core products are Crime Capture System (CCS), and Face ID-Registered
Trademark- (FID). CCS is a powerful flexible and easy to use digital booking,
identification and retrieval system. Face ID-Registered Trademark- is a
state-of-the-art facial recognition and retrieval program that is re-defining
what a mugshot database is capable of. Face ID-Registered Trademark-
integrates with both ImageWare's and XImage's bookings systems, giving the
company a very distinct, and unique product line.

IMAGEWARE HISTORY

Incorporated in 1987, ImageWare initially focused on the entertainment
industry.The company's patented imaging technology was first used in photo
imaging kiosks at theme parks and tourist attractions in the U.S., Canada,
Mexico, Japan and the United Kingdom. The kiosks produced People
Postcards!-Registered Trademark- by superimposing customers' images onto
amusing or picturesque backgrounds.

At the 1992 COMDEX Show, ImageWare introduced its first retail product,
ImageWizard. At the show, the revolutionary image manipulation and processing
program was nominated one of the "Best New Software Programs" of the year.
ImageWizard was the first application to incorporate multiple image objects
for fast and easy image enhancement and editing. In early 1994, ImageWare
released a companion program to ImageWizard called MorphWizard-Registered
Trademark-. A powerful morphing application, MorphWizard allows users to
manipulate and force transformation between multiple images. Both ImageWizard
and MorphWizard sold domestically and in Japan through Canon Sales Co.

Concurrent with the release of MorphWizard ImageWare shifted its focus from
the entertainment and retail markets to the institutional enforcement arena.
The C.R.M.E.S.

IMAGEWARE SOFTWARE, INC. 4 Phone: 619-673-8600
10883 THORNMINT ROAD FAX: 619-673-1770
SAN DIEGO, CA 92127

<PAGE>
CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

(Crime Reduction, Image Management and Enhancement System), software suite
was unveiled in October 1994.

Since 1994, ImageWare has placed software in over 650 law enforcement
agencies around the country and internationally. Currently, there are over
100 departments using XImage or ImageWare mug photo systems, with more coming
on-line every day.

PRODUCTS

C.R.I.M.E.S. is a modular family of affordable, easy-to-use software
applications that aid law enforcement with the criminal investigative
process. Currently there are five Windows-TM- based C.R.I.M.E.S. modules;
Suspect ID, Crime Lab, Vehicle ID, Face ID and the Crime Capture System. The
multiple module system is fully integrated so information entered into one
module is reflected in all others, thus eliminating the time and expense
required to interface programs designed by different software companies.

SUSPECT ID-Registered Trademark-

Suspect ID is the composite module of the C.R.I.M.E.S. software family.
Using an online cognitive interview process, officers, witnesses and victims
can accurately create full-color, photo-realistic suspect composites within
minutes. The digital composites are constructed from catalog of facial
features. The catalogs are comprised of actual photographs, not hand-drawn
sketches, so composites from Suspect ID look like people, not like pencil
sketches. Suspect ID can interface directly with Face ID. Upon completion, a
composite can be immediately searched against the Face ID database. This
search returns a number of suspect photos from within the LA booking database.

The Suspect ID module was designed specifically for use by law
enforcement agencies. Even officers with little or no computer knowledge or
artistic talent can complete a suspect composite simply by pointing and
clicking with a mouse. Suspect ID is a standard PC-based software application
that can be installed on a laptop computer and taken into the field, allowing
officers to conduct interviews before the witnesses' and victims' memories
fade. For rapid identification, officers can distribute completed composites
within minutes via radio, fax or e-mail.

CRIME LAB-Registered Trademark-

The second module of the C.R.I.M.E.S. family, Crime Lab, is a
sophisticated image enhancement and editing program used to fulfill a host of
investigative imaging needs such as updating old photos, creating
non-prejudicial line-ups, removing distracting backgrounds and enhancing
surveillance videos. Crime Lab interfaces with each of the modules to provide
enhanced capability to each.

IMAGEWARE SOFTWARE INC. 5 Phone 619-673-8600
10883 THORNMINT ROAD FAX 619-673-1770
SAN DIEGO, CA 92127

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

VEHICLE ID-TM-

Vehicle ID is a revolutionary photo-based software program that helps
officers quickly identify and disseminate vehicle information for the purpose
of locating a stolen car or a vehicle involved in a crime. Vehicle ID's
comprehensive database of over 1,000 vehicles can be searched by features,
description, or VIN (Vehicle Identification Number). To ensure a more
accurate identification, vehicles matching the query description can be
viewed from front, rear, side or three quarter angles. The program also
includes a custom paint shop for depicting the exact color of the vehicle. A
color copy of the suspect vehicle can then be produced and immediately
broadcast, printed or faxed to officers in the field to quickly apprehend
suspected criminals.

Information from NICB's (National Insurance Crime Bureau) VINassist-TM-
program has been incorporated into Vehicle ID, enabling officers to obtain
images of vehicles based on VIN translation codes. This feature helps
officers identify stolen vehicles in cases of switched VINs.

FACE ID-TM-

Face ID is a state-of-the-art facial recognition and retrieval program
that helps officers positively identify both unknown suspects and criminals
with multiple aliases. Suspect images that have been captured on a
surveillance video, suspect composite or photograph can be searched against
any digital database of faces. This search returns a group of images whose
facial characteristics closely resemble that of the search photograph. This
feature can also be used at the time of booking to immediately identify
criminals with multiple aliases. Face ID saves the officer tremendous amounts
of time when scanning through large databases. This ability to key in text
data descriptors in addition to the facial search make searching large
databases possible.

CRIME CAPTURE SYSTEM-TM-

Crime Capture System is a flexible, easy-to-use, and affordable digital
imaging solution for automated capture, storage and retrieval of booking
images and related information. The Crime Capture System utilizes
off-the-shelf hardware that complies with open industry standards and easily
integrates with an agency's records or AFIS system (Automated Fingerprint
Identification System). Utilizing client/server architecture, the Crime
Capture System can operate on an array of systems ranging from a stand alone
PC to a wide area network.

San Diego based ImageWare Software, Inc. is privately held.

IMAGEWARE SOFTWARE INC. 6 Phone 619-673-8600
10883 THORNMINT ROAD FAX 619-673-1770
SAN DIEGO, CA 92127

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

MILESTONES

There are currently:

- over 4 million arrestees that have booked using ImageWare systems
throughout North America
- over 5 million images stored on ImageWare systems worldwide
- over 150,000 lineups that have been created on ImageWare systems
- over 100,000 people booked in the first 4 months of operation using
the New York City PD ImageWare system
- over 1 million images stored in the state of Florida on ImageWare
systems
- over 800,000 images stored in the state of Washington on ImageWare
systems &
- over 434,000 bookings stored on the Orange County, Florida
ImageWare system

NOTABLE CUSTOMERS

- Las Vegas Metro PD (Awarded) - Dakota County
- Indianapolis PD - Orange County
- King County (Seattle) - Clackamas County
- Multnomah County (Portland) - Marion County
- Sonoma County - Yolo County

IMAGEWARE SOFTWARE INC. 7 Phone 619-673-8600
10883 THORNMINT ROAD FAX 619-673-1770
SAN DIEGO, CA 92127

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

PERSONNEL QUALIFICATIONS
------------------------------------------------------------------------------

IMAGEWARE EXECUTIVES

S. JAMES MILLER, JR. CHAIRMAN & CEO

Mr. Miller came to ImageWare in 1990 after 11 years at Oak Industries,
Inc. Most recently a Senior Vice President for the publicly traded company,
Mr. Miller also served as Chief Legal Officer, Chief Administrative Officer
and President of the company's Far East manufacturing subsidiaries. At Oak
Industries, Mr. Miller's responsibilities included business acquisitions,
divestitures and financing. He also headed the negotiation of technology
licensing arrangements. Mr. Miller holds a J.D. in Law (WITH HONORS) from the
University of San Diego School of Law, and a B.A. in History and Economics
(SUMMA CUM LAUDE) from the University of California at San Diego.

WAYNE G. WETHERELL, VICE PRESIDENT OF FINANCE & CFO

Prior to becoming ImageWare's Vice President of Finance and CFO, Mr.
Wetherell served in a similar capacity at Bilstein Corporation of America (a
subsidiary of the Krupp Group) for nearly five years. Before joining
Bilstein, he spent 10 years with Oak Industries, Inc., where he served in
various capacities, including Director of Finance and Director of Financial
Planning and Analysis. His responsibilities included management reporting,
financial and strategic planning, and business development. Mr. Wetherell
holds a M.S. in Finance and a B.S. in Management from San Diego State
University.

PAUL J. DEVERMANN, VICE PRESIDENT OF SALES & BUSINESS DEVELOPMENT

Prior to joining ImageWare in 1996, Mr. Devermann was the Managing
Director and Founding Partner of InTra-International Trade & Transactions, an
international consulting and trading company specializing in facilitating
business transactions between the U.S. and Japan. Prior to that, Mr.
Devermann held the position of Senior Vice President of the San Diego
Economic Development Corporation where he was responsible for marketing and
development from 1985 to 1990. Mr. Devermann spent the previous ten years
with Oak Communications in various capacities of sales, sales management,
marketing and business development positions. He holds a B.S. in Marketing
from Northern Illinois University and a M.B.A. from the University of Puget
Sound.

IMAGEWARE SOFTWARE INC. 8 Phone 619-673-8600
10883 THORNMINT ROAD FAX 619-673-1770
SAN DIEGO, CA 92127

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

KEY PROJECT STAFF

Project Coordinator: ERIK CARLGREN

Telephone Number: (619) 673-8600

FAX Number: (619) 673-1770

<TABLE>
<CAPTION>
Name Years With Project Role
Company
------------------------------------------------------------------------------
<S> <C> <C>
JOHN CANEPA 6 Software Developer

RENEE GUTIERREZ 4 Documentation & Testing

TRACY TOETTCHER 6 Training Manager

BILL IBBERSON 6 Director of R&D
</TABLE>

Other staff, including Oracle experts, will be identified after contract
award.

IMAGEWARE SOFTWARE INC. 9 Phone 619-673-8600
10883 THORNMINT ROAD FAX 619-673-1770
SAN DIEGO, CA 92127

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

WILLIAM J. IBBETSON
3520 Mission Mesa Way
San Diego, CA 92120
(619) 582-0830

------------------------------------------------------------------------------
------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Employment IMAGEWARE SOFTWARE, INC., SAN DIEGO, CA
Experience MARCH 1992 TO PRESENT
<S> <C>

Chief Technical Officer
- Responsible for all technical aspects of the company.
- Direct technical solutions and industry positioning of
products.

Manager, Research and Development
- Manage software development team.
- Design software applications and utilities.
- Conduct new product feasibility studies.
- Analyse product/project costs and schedules.

Photo Imaging Specialist
- Develop patented imaging technology.
- Design digital image algorithms.
- Integrate imaging technologies into software
applications.

INDEPENDENT CONSULTANT, SAN DIEGO, CA
JUNE 1987 TO PRESENT

Admit 1 Technologies
- Designed and developed graphic based screensaver.
- Created animation and imaging for screensaver.

RESOURCE SUPPLY, INC.
- Designed accounts payable/receivable database
applications.
- Created an Inventory Control System.

Publications - WROX PRESS - TECHNICAL EDITOR
Beginners Guide to Visual C++, January 1996
- VISUAL BASIC PROGRAMMING JOURNAL - CO-AUTHOR
Animation Techniques in VB, February 1996
</TABLE>

IMAGEWARE SOFTWARE INC. 10 Phone 619-673-8600
10883 THORNMINT ROAD FAX 619-673-1770
SAN DIEGO, CA 92127

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

<TABLE>

<S> <C>
Patents - METHOD AND APPARATUS FOR THE ELECTRONIC TRANSMISSION OF
AN IMAGE FROM A PHOTO KIOSK - INVENTOR
Patent Pending
- IMAGEWAREGS PATENT PORTFOLIO - TECHNICAL LIAISON
U.S. Patent No. 5,345,313 - Image editing system
U.S. Patent No. 5,469,536 - Color masking system
U.S. Patent No. 5,577,179 - Object layering
U.S. Patent No. 5,343,386 - Electronically produced
postcards

------------------------------------------------------------------------------
------------------------------------------------------------------------------

Specialized - C/C++ PROGRAMMING
Skills - MICROSOFT FOUNDATION CLASSES (MFC)
- VISUAL BASIC PROGRAMMING
- RDBMS DESIGN, INTEGRATION AND MANAGEMENT
- DIGITAL PHOTO IMAGING MANIPULATION/ENHANCEMENT
- NOVELL/NT SERVER CONFIGURATION, CONNECTIVITY AND
ADMINISTRATION
- INTERNET/INTRANET APPLICATION DEVELOPMENT

Education COLEMAN COLLEGE COMPUTER ELECTRONICS TECHNOLOGY
GRADUATE 1992 1990-1992
Honors - Top 5% of class Computer Hardware Specialist
Deans List - 3.947 GPA

Additional - NETSCAPE DEVELOPERS CONFERENCE
Training - MICROSOFT MFC DEVELOPERS CONFERENCE
- MICROSOFT INTERACTIVE MULTIMEDIA CONFERENCE
</TABLE>

IMAGEWARE SOFTWARE INC. 11 Phone 619-673-8600
10883 THORNMINT ROAD FAX 619-673-1770
SAN DIEGO, CA 92127

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

JOHN J. CANEPA

SENIOR SOFTWARE ENGINEER

SUMMARY OF EXPERIENCE

Five years experience in the imaging software industry. Senior developer for
windows based law enforcement applications. Designed user interface, database
search tools and data acquisition screens for digital booking and
investigative applications. Worked directly with the State of Arizona in
design, development and acceptance of the AZAFIS Mug Photo System.

EMPLOYMENT HISTORY

FEBRUARY 1993 TO PRESENT. SOFTWARE ENGINEER, IMAGEWARE SOFTWARE, INC.
Hired for quality assurance and software support. Moved into programming to
modify existing code for product updates. Experience using VB, C++, MFC,
ODBC, and SQL on Windows 3.1., Windows 95 and Windows NT. Developed data
acquisition applications for in house utilities. Designed algorithm to rotate
2D raster objects in 3D using OpenGL. Senior software engineer for the
development of the Crime Capture System (CCS). Experienced in developing user
interface, data entry and database query applications using ODBC and MFC.
Developed multithreaded Windows 95/NT law enforcement investigative
application for searching UNIX booking database.

OCTOBER 1991 TO NOVEMBER 1992. MARKETING MANAGER, DESIGN DRAFTING AND
ENGINEERING, INC.

Designed and maintained customer contract management software and database.
Managed direct marketing for the sales of CAD/CAM software.

EDUCATION

B.A. Applied Mathematics, University of California, San Diego, 1993.

IMAGEWARE SOFTWARE, INC. 12 Phone 619-673-8600
10883 THORNMINT ROAD FAX 619-673-1770
SAN DIEGO, CA 92127

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

ERIK CARLGREN

NW SALES REPRESENTATIVE - PROJECT COORDINATOR

SUMMARY OF EXPERIENCE

Nine years experience in photo imaging, three of those in the law enforcement
industry. Technically oriented in sales and account management. Oversee all
phases of account development from identification of account and needs
assessment to contract negotiations.

EMPLOYMENT HISTORY

MAY 1996 TO PRESENT. SALES REP./PROJECT COORDINATOR, IMAGEWARE SOFTWARE, INC.

Hired originally as a sales representative for the Southeastern U.S..
Currently the representative for the Northwestern territories. Also handles
certain international accounts. Current responsibilities include systems
design, customer relations, sales and marketing. Responsible for accounts
from start to finish. Skilled in a multitude of Microsoft applications as
well as graphics programs and capabilities. Pays particular attention to
customers needs. Thoroughly trained in all ImageWare applications and
proficient with designs of disparaging systems and interfaces. Familiar with
state requirements and systems design.

OCTOBER 1992 TO APRIL 1996. TECHNICAL MANAGER, KING VISUAL TECHNOLOGY, INC.

Managed the digital photo department of fast paced professional photo lab.
Hired to build a digital imaging department and transition the company from a
traditional photo lab to a highly technical digital photo service. Required
to find a market, design, produce and print state-of-the-art digital photo
prints. Very fast paced and deadline oriented structure.

JUNE 1990 TO SEPTEMBER 1992. ACCOUNT MANAGER/DESIGNER, RYAN KING RENNINGER,
INC.

Responsible for managing all aspects of marketing of accounts. Familiar with
most design applications. Managed handling of project from design through
printed piece. Wrote and designed marketing campaigns for Hecht's Co.,
Washington Bullets and the U.S. Navy.

EDUCATION

B.A. Printing, Rochester Institute of Technology, Rochester, NY 1990.

IMAGEWARE SOFTWARE, INC. 13 Phone 619-673-8600
10883 THORNMINT ROAD FAX 619-673-1770
SAN DIEGO, CA 92127

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

RENEE GUTIERREZ

TECHNICAL DOCUMENTATION DEVELOPER

SUMMARY OF EXPERIENCE
Ms. Gutierrez has 8 years of experience in the computer software industry.
She has 7 years of documentation and user interface design experience with
extensive recent experience in the usability of law enforcement software.

EMPLOYMENT HISTORY

MAY 1995 TO PRESENT. IMAGEWARE SOFTWARE, INC.
- Create software user manuals, including research, writing, and design.
Test software for usability and develop hypertext On-line Help.
Coordinate with clients and R&D and Marketing departments to design
print reports, user interface and icons for all law enforcement
applications.
- Responsible for all Webmaster duties, including design and creation of
HTML pages, graphics, photo-imaging, and Web conferencing maintenance.

NOVEMBER 1994 TO PRESENT. INDEPENDENT CONTRACTOR
- CASIO, INC. - Created software user manual and On-Line Help file for
Windows interface to the Casio B.O.S.S.
- ABACUS DATA SYSTEMS - Created software user manuals for Windows based
legal/attorney software.
- WINDOWS LINK, INC. - Created software user manual and On-Line Help file
for Windows interface to Royal and Sharp handheld organizers.
- PERSONAL RESOURCE SYSTEMS - Created software user manual and On-Line
Help file for Windows Time Management software.
- EAGLE INTERNATIONAL - Created software user manual and On-Line Help file
for Windows PIM.
- KINGSLEY MACHINE COMPANY - Created software user manual and On-Line Help
file for Windows desktop publishing program. In addition created manual
for foil stamping hardware.

NOVEMBER 1994 TO MAY 1995. STELLCOM TECHNOLOGIES
Independent Contractor. Works as a contract Technical Writer and Quality
Assurance Engineer.

- EDITPRO CORPORATION - Created software user manual and On-Line Help
file for Windows program editor.
- INTUIT - Performed Quality Assurance testing on in-house Windows
referral program. Wrote training documentation and trained staff in use
of the Partners-TM- program.

IMAGEWARE SOFTWARE, INC. 14 Phone 619-673-8600
10883 THORNMINT ROAD FAX 619-673-1770
SAN DIEGO, CA 92127

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

- HORIZONS TECHNOLOGY, INC. - Created documentation for CD Rom Maps
software and LAN auditing software.

JULY 1993 TO OCTOBER 1994. POLARIS SOFTWARE, INC.
- Manager, Information Development. Created software user manuals,
including research, writing and design. Tested software for usability
and developed hypertext On-line Help. Coordinated with Usability,
Development, and Marketing departments on design and implementation.

MARCH 1991 TO JULY 1993. MIDRANGE COMPUTING
- Assistant Director Software Division. Coordinated all software sales,
technical support, and marketing. Senior technical writer of software
manuals. Administered technical support through diagnostics and
troubleshooting. Trained and supervised technical support and sales
staffs.
- Assistant Manager, Business to Business Sales. Trained and supervised
staff in sales of technical manuals, software, and trade journal.
Coordinated trade shows and training seminars.

EDUCATION

B.A., English, University of Arizona, Tucson, AZ, 1985

IMAGEWARE SOFTWARE, INC. 15 Phone 619-673-8600
10883 THORNMINT ROAD FAX 619-673-1770
SAN DIEGO, CA 92127

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

OVERVIEW/PROJECT APPROACH

This proposal is in response to a request by the Identification Unit of the
Los Angeles County Sheriff's Department. It addresses and provides solutions
for many needs. Overall, it is a complete turn key solution that has been
designed to eliminate these needs. The proposal has no hidden costs and
leaves many options.

Because of the many requirements that must be satisfied, this section is
broken into several phases in addition to providing systems interfaces. These
phases flow in logical order and associated costs are paralleled in the Cost
Proposal (Exhibit A).

PROJECT OVERVIEW

The heart of this project is a central mugshot server that must power
investigative clients throughout the County and the State. The server is
fully scaleable and capable of processing and distributing information to a
large number of client sources. The software that will drive this solution is
Image Ware's Crime Capture System (CCS). CCS runs on the Windows NT 4.0
platform and will utilize Oracle 8.0 database software as required by the
County. CCS will either feed or be queried by a minimum of five different
sub-systems including: CCHRS LARCIS, CAL-PHOTO ID, CAL GANG, and via secure
Intra net. The system proposed is a complete turn-key solution that meets
current needs and provides many options for the future. The entire system is
fully Year 2000 compliant and meets all State and Federal ANSI/NIST standards.

The system components will connect to the existing network directly, with
each agency or the county being responsible to provide LAN connections for
the new equipment. The operating system for the central server will be
Microsoft Windows NT 4.0. The protocol will be TCP/IP. All connections to
either the network or additional devices will be industry standard
connections.

Data archive and backup can be accomplished on-line.

System security will make use of both operating system permissions as well as
database software security. This will allow access to certain functions and
data to be controlled by the system administrator. These privileges and
permissions will be given and controlled by user login. There will be an
administrative function available only to the system administrator, where
these permissions and privileges are maintained.

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

Phase 1
------------------------------------------------------------------------------
In the initial phase, ImageWare will install an IBM Netfinity 7000MG mug
server that will eventually act in place of the current mugshot server in Los
Angeles County. IWS will convert the existing images and data (approx.
250,000) and populate the current version of CCS which runs on Windows NT 4.0
and Sybase 6.0 database software. The purpose for installing and converting
the existing images on Sybase before CCS is ported to Oracle is to satisfy the
IMMEDIATE needs for the County. Examples would be creating photo line-ups or
searching viewing and printing mugshots. In addition to converting the
existing database, we will also de-duplicate it. Because of certain
limitations to the existing photo database software, there are duplicate
records and photos of a good percentage of the entire database. A
de-duplication procedure that is agreed upon by both IWS and the County will
eliminate unwanted photos and, or records.

While the conversion is taking place, IWS will complete the interface with
the DBI store and forward. The CCS server will identify and read standard
NIST type 1, 2 and Type 10 data packages from the existing DBI store and
forward server. Completion of this interface will effectively replace the
existing DBI Photo RAID. The existing images will have been converted and all
new records will be delivered directly from the DBI Telprinters to the CCS
database.

Once the NIST packages populate the CCS database, the records and photos can
be searched by CCS Investigative software. This software will be responsible
for satisfying the County's immediate investigative needs. Phase 1 includes
20 copies of CCS Investigative software and 20 copies of Suspect ID composite
software.

Face ID-Registered Trademark- facial recognition software is also being
offered with this proposal, at no charge! We are offering to convert the
existing images into Face ID as well as provide software that enrolls all new
captured images into Face ID. Basically, all images that populate the CCS
database will also be enrolled into Face ID.

No Face ID client software is being offered in this proposal. However, the
city of Lakewood, CA has already purchased Face ID client software and has
shown great interest in connecting their client with this proposed FACE ID
database. Currently, Lakewood is searching a very limited subset of the
current LA County database and has had great success. With 6 times the number
of images to search, Lakewood expects 6 times the success rate.

Several other LA County law enforcement agencies have shown interest in
purchasing Face ID client software as well. There is an issue as to how will
these Face ID clients effect the load on the CCS server. Will it slow down?
The answer is no! We are going to isolate just one of the four processors in
the Netfinity server for Face ID crunching. When the extracted facial data
from the suspect mugshots is being searched by a Face ID client only one
server processor will be used. The remaining processors are more than enough
to handle all the queries and changes to the CCS database.

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

When the Face ID clients grow too large in number or when the database gets
too large for one processor to sort in a desirable amount of time, then
ImageWare will require new Face ID client customers to add "swarm" machines
to the server solution. "Swarm" machines are basically PC boxes that contain
at least one standard Pentium II or greater processor and a certain amount of
RAM. They are then configured to process data being searched by Face ID
clients. "Swarm" machines distribute the Face ID processing workload. The
more "swarm" machines added to the system, the more the workload is
distributed. Search times will go down as clients and "swarms" are added.

Server Specifications
The proposed server is an IBM Netfinity 7000 M10 Server. The image server
will be running Windows NT 4.0 that provides a second level of system
security and stability. Initially, the server will be running the current
Sybase version of CCS. Phase 2 converts this database to Oracle.

The database is all open architecture, ODBC compliant, allowing for case of
data sharing with other ODBC compliant systems. The server is capable of
storing the mug photo's and text data in Los Angeles County booking system
for a minimum of five years.

The server is a high performance 400 MHz Quad XEON Processor system. It has
RAID V hot swap drive array and Mirrored OS. It is sized with today's
performance and tomorrow's growth in mind. Installing a RAID V system
provides a very high fault tolerant data storage system while not degrading
performance and allows the storage of business-critical data with confidence.

A UPS will protect the system from power fluctuations and momentary outages.
The system will have a redundant power supply. The server will be equipped
with a modem and remote diagnostic software, allowing for quicker response
and problem resolution. The system also includes a DLT tape drive for
back-ups and a CD ROM Drive. The server will utilize the existing network
which utilizes the TCP/IP protocol.

Server Includes:

Netfinity 7000 M10 400 MHz (Quad Processor) RAID V
IBM Netfinity 7000 M10 400/512KB Xeon, 128MB ECC,OPEN,32X,PCI (Rack 11U)
(Std) 128MB (4x32MB) EDO DRAM DIMM - 50ns
(Std) IBM 1.44MB 3.5-inch Diskette Drive
(Std) Integrated IDE Controller
(Std) Internal IDE CD-ROM Drive
(Std) Netfinity 400W Hot-Swap Power Supply
(Std) Netfinity 7000 400MHz/512KB PII Xeon Processor
(Std) Planar Integrated Wide Ultra SCSI
(Std) Planar Integrated Wide Ultra SCSI for External Devices

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

(Std) S3 Trio64V2 Graphics - 1MB SGRAM
(Std) Systems Management Processor
3520 2RU Netfinity EXP15 Storage Expansion Unit
(Std) 3520 Enclosure Hot-Swap Backplane
IBM 35/70GB DLT SCSI Tape Drive - External
IBM Netfinity ServerRAID-3L Ultra2 SCSI Adapter
IBM Netfinity 400W Hot-Swap Redundant Power Supply II (2 total)
IBM Netfinity 7000 M10 Rack-to-Tower Conversion Kit
Netfinity 7000 400MHz/512KB Xeon Processor (4 total)
IBM 8mm to 68pin Converter for external cables
1GB (4x256MB) EDO DRAM DIMM - 50ns
IBM Netfinity 18.2GB Wide Ultra SCSI SCA-2 HDD (HH)
IBM Netfinity 2M Ultra2 SCSI Cable
Netfinity NetBAY3
Black Sleek Mouse
IBM Netfinity 10/100 Ethernet Adapter (PCI)
G72 - 17(15.7) in. Color Monitor, 69 KHz, Stealth Gray
IBM Standard Black 104-Key Keyboard
OBI External V.34 Data/Fax Modem
IBM Netfinity 4 5GB Wide Ultra SCSI SCA-2 Hot-Swap Hard Disk Drive (SL)
External F/W to F/W Cable Standard with 01K1174 Tape Drive

Minimum requirements for investigative workstation hardware (Not included in
price)

Pentium Processor Computer
Windows NT, Windows 95 or Windows 98
32 MB RAM
CD-ROM Drive Internal 32X Max (Variable Speed)
Graphics card capable of at least 16,000 colors.
Monitor and graphics card with 600X800 resolution capability

Software Capabilities

The CCS central server software includes several administrative functions,
including the setup and maintenance of all drop down menus and pick lists,
the archive function and the assignment of names and passwords. The 4 User
Defined fields are also edited from here.

IBM Netfinity Management software will be used to remotely monitor and
maintain the CCS server.

The central server will not execute any client applications meaning all
searches, viewing, and printing or data from the mugshot database must be
accomplished via either CCS investigative station or one of the sub-system
interfaces.

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

CCS INVESTIGATIVE SOFTWARE

CCS investigative workstation software includes the client software
necessary to search the database based on demographic information, create
photo line-ups, view photo mug books and print. Any printer that includes a
Window NT driver may be utilized. The software can connect with and make use
of peripherals with TWAIN drivers (such as scanners), and have the ability to
import images from files that are JPG or BMP and add to existing records.
The client software also allows for the export of images in either JPG or BMP
files. All of these functions can be authorized or not authorized based on
User ID authorization.

Searches may be accomplished using NCIC standard demographic codes, from user
maintained tables.

The software will create photo line-ups with a specified amount of images. The
Crime Capture System will retrieve and display the images of all subjects
with characteristics that match, or substantially match, those of the line-up
subject. The user will be able to select or reject from the images retrieved
up to twenty, that together with the subject's constitute the line up. The
line-up will be random ordered, and may be saved for future retrieval. These
photo line-ups are also printable.

Portions of an image may be 'roped' for enlargement for viewing purposes.

The print function is available for any image with its associated
demographic data.

The search function includes very flexible ad hoc inquiries, including
many boolean logic functions, including AND, OR, GREATER THAN, LESS THAN,
EQUAL TO, etc.

Each agency will be able to search the database and obtain information
about the total number of bookings by date, by officer ID, by charge code,
etc.

Any text fields entered into a booking record will be searchable,
including any comment fields.

Fields describing SMT data will be searchable.

Images of SMT are printable, either color or black and white.

The search software will process hyphenated and/or multiple last, first,
and middle names correctly.

The search software will use 'soundex' to find similar named individuals.

Investigative workstations will have the ability to scan photos into the
system, import them, and link them with booking records. For example, crime
scene photos can be imported

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

into booking records, as well as weapons photos, vehicle photos, residence
photos, year book photos, etc. This function may be turned off by the system
administrator.

FACE ID
Face ID is a state-of-the-art facial recognition and retrieval program that
helps officers positively identify both unknown suspects and criminals with
multiple aliases. Suspect images that have been captured on a surveillance
video, suspect composite or photograph can be searched against any digital
database of faces. The search returns a group of images whose facial
characteristics closely resemble that of the search photograph. This feature
can also be used at the time of booking to immediately identify criminals with
multiple aliases. Face ID saves the officer tremendous amounts of time when
scanning through large databases. The ability to key in text data descriptors
in addition to the facial search makes searching large databases possible.

SUSPECT ID-Registered Trademark-
Suspect ID is the composite module of the C.R.I.M.E.S. software family.
Using an online cognitive interview process, officers, witnesses and victims
can accurately create full-color, photo-realistic suspect composites within
minutes. The digital composites are constructed from catalogs of facial
features. The catalogs are comprised of actual photographs, not hand-drawn
sketches, so composites from Suspect ID look like people, not like pencil
sketches. Suspect ID can interface directly with Face ID. Upon completion, a
composite can be immediately searched against the Face ID database. This
search returns a number of suspect photos from within the LA booking database.

The Suspect ID module was designed specifically for use by law enforcement
agencies. Even officers with little or no computer knowledge or artistic
talent can complete a suspect composite simply by pointing and clicking with
a mouse. Suspect ID is a standard PC-based software application that can be
installed on a laptop computer and taken into the field, allowing officers to
conduct interviews before the witnesses' and victims' memories fade. For
rapid identification, officers can distribute completed composites within
minutes via radio, fax or e-mail.

PHASE 2
-------------------------------------------------------------------------------

Phase 2 will convert the installed Sybase version of CCS to the latest
version of Oracle. Once in Oracle, the remaining interfaces can be
accomplished. ImageWare has made the decision to fast forward our Oracle
solution in order to meet the requirements set forth by Los Angels County. LA
County is currently an Oracle house and it is logical that their requirements
include an Oracle database.

ImageWare does not intend to charge Los Angeles County with any costs
associated with our development of the Oracle platform. Converting the
installed system from Sybase to Oracle

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

does, however, have costs associated. ImageWare engineers will design the new
system so that the conversion process creates very little down time.

The GUI interface throughout the network will not change and no additional
training of users will be required. Face ID will also be converted to Oracle.

PHASE 3
-------------------------------------------------------------------------------

The last phase is a simple, but large expansion of the investigative product
ImageWare will provide CCS Investigative software and Suspect ID to an
additional 60 sites throughout the county. With all phases complete, Los
Angeles County will have the ability to view and print records and lineups of
every person booked in Los Angeles County within the DBI Tenprinter network.

INTERFACES
-------------------------------------------------------------------------------

CCHRS & LARCIS
ImageWare offers a single integration technique for both the CCHRS system and
the LARCIS system. We are able to offer this due to the fact that all systems
will be running a single common RDBMS, Oracle 8.0. This will be accomplished
by enabling a login to CCS and allowing access to a mutually agreed upon set
of tables and stored procedures. (Open Architecture) This access will allow
CCHRS or LARSIS to query our database and retrieve the directory reference to
the photo stored on disk for a particular individual. All the particular
parameters and query result capabilities will be agreed upon during final
design discussions with the system architects of CCHRS and LARSIS. It will be
the responsibility of each of the integrated systems to properly read the
photo from the CCS server, decompress the JPEG, and display the photo on the
screen to the user. The CCS server data will be kept in sync with AJIS by the
NIST data feed from the DBI store and forward integration. Any duplicate
records from DBI will be synchronized with existing records causing an update
to existing records not duplication of data. All records will be tied
together between the systems with a common unique identifier such as a record
number and each person will be given a unique identifier, such as a state ID
number. These will be used to identify a unique record for an individual
between all integrated systems as well as identify a person's record history.

The interface will basically allow both the CCHRS and LARCIS sub-systems to
display a photograph of the subject by selecting a defined number of data
tables.

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

CAL-PHOTO ID & CAL-GANG
ImageWare offers a single solution for both of these interfaces as well, only
duplicated for each. When a record is completed within CCS, the server will
export either a flat text file or a NIST package to the local CAL-ID or
CAL-GANG Web Server. This flat file will contain demographic text data as
well as the photo's location or URL. Once the State parses this information
onto its main query engine, the images will be searchable via CAL-ID or
CAL-GANG intra-net.

At this point in time, ImageWare is not proposing to install or maintain the
local Web Server(s) for these applications. When the final design is approved
and the web server is identified, IWS will discuss maintenance of this server.

WEB INVESTIGATIVE INTERFACE
ImageWare is offering a site license to be used within the Los Angeles County
intra-net for a product that is currently under development. The site license
will enable the LA County CCS photo database to be searched by a standard web
browser within the local network. The basic concept of this product is to
provide a Web Interface that enables standard web browser search engines to
query the CCS database though a limited amount of text fields and
descriptors. The fields that are to be searched have yet to be defined,
however, it is expected that 5-7 fields will be appropriate.

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

IMPLEMENTATION SCHEDULE

A Project Manager will be named by ImageWare Software, Inc., to oversee and
manage the planning, monitoring, reporting, and acceptance of the system
outlined in the proposal if ImageWare is the successful vendor. This person's
resume will be supplied during contract negotiations. It is expected that the
LOS ANGELES COUNTY SHERIFF'S OFFICE will also name a Project Coordinator who
will work with the IWS Project Manager, who will be responsible for all tasks
outlined as COUNTY responsibility on the task list.

APPROACH TO PROJECT

ImageWare has a well defined, disciplined approach to program management
which includes:

- Attention to customer satisfaction
- Regular communications with customer via weekly status meetings,
monthly project status reports, and quarterly reviews
- Regularly scheduled status meetings with the project staff

ImageWare will avoid and mitigate risks by reviewing, prioritizing, and
monitoring key project risks throughout the project life cycle. Identified
project risks will be recorded and tracked to resolution. Identification of
risks and potential mitigation plans will be reviewed with the project staff
monthly, documented in the project reports, and presented to the LOS ANGELES
COUNTY SHERIFF'S OFFICE's Project Coordinator during the project reviews. By
identifying risks early before they have impacted the project, the actual
impact to the project can be decreased, if not totally eliminated. An
inescapable fact of project management is that there are always risks. The
key to ensuring a successful project is to manage them. This means the
following must be done early, before the risk actually impacts the project:

- Identify risks (technical, schedule, and cost)
- Prioritize and quantify risks
- Assign responsibility
- Mitigate (determine mitigation action, responsible person, due date)
- Track Progress

<PAGE>

LASO ImageWare Software 3/22/99
WorkPlan/Implementation

Contract Award Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
-------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PHASE 1 X /// /// ///

PHASE 2 X ///

PHASE 3 X ///

Required interfaces /// /// ///

</TABLE>

IMAGEWARE SOFTWARE, INC. Page 25 Phone 619-673-8600
10883 THORNMINT ROAD FAX 619-673-1770
SAN DIEGO, CA 92127

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFFS DEPARTMENT 3/22/99
PROPOSAL PHOTO IMAGING SYSTEM

<TABLE>
<CAPTION>
------------------------ ---------------------------- ---------- -------------------
Customization Definition Customization Implementation Deployment Maintenance Support
------------------------ ---------------------------- ---------- -------------------
<S> <C> <C> <C>
Phase 1: Tasks Phase 2: Tasks Phase 3: Tasks Phase 4: Tasks
-------------- -------------- -------------- --------------
- Database field definitions - Implement customized database - Integration - HW & SW Maintenance
- Define field validation rules - Implement field validation rules - Installation - Enhancements &
- Define code labels - Implement customized screens - Training upgrades (Option)
- Define print formats, Audit Trail - Implement Audit Trail reports - System Acceptance

- Define Mandatory Fields - Develop installation plan
- Develop acceptance test document
- Site Surveys - Develop training material
-Procure Components - Develop user manuals

Phase 1: Milestones Phase 2: Milestones Phase 3: Milestones Phase 4: Milestones
------------------- ------------------- ------------------- -------------------
- Specifications Review - Ready-To-Ship Review - Site Reviews - Maint. Plan Review
- Purchase Order Issued - Installation Schedule Review - Final System Acceptance

Phase 1: Deliverables Phase 2: Deliverables Phase 3: Deliverables Phase 4: Deliverables
--------------------- --------------------- --------------------- --------------------
- Specifications Document - Acceptance Test Plan - Site hardware - Help Desk Incidence
- Installation Schedule (preliminary) Installation Schedule - Site software Statistics
- Purchase Order - Training Material - Maint. Plan
- Use Manual
- System Administration Manual
</TABLE>

IMAGEWARE SOFTWARE, INC. 26 (619) 673-8600 voice
15373 INNOVATIVE DRIVE #120 (619) 619-673-1770 fax
SAN DIEGO, CA 92128
<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

REFERENCES
-------------------------------------------------------------------------------

ImageWare Software, Inc. has proven its ability to successfully complete
projects of the size and magnitude as the Los Angeles County system. IWS has
installed investigative software in more than 650 police departments and
digital photo software in more than 100 departments throughout the world. The
needs of Los Angeles County are similar to those of many of our customers,
but not exact. Each individual agency varies in their requirements and the
following customers are just a few examples of how we met those needs.

ARIZONA DEPARTMENT OF PUBLIC SAFETY

Description of Installed System and Its Features:
Central Server is IBM Netfinity server, dual host cluster, with automatic
fail-over in case of one system failure. Shared disk array with RAID level 5
implemented, 15 county intake facilities, with both capture and investigative
Crime Capture System workstations, 2 additional sites at county court
facilities. Features include an interface with the Identix livescan device,
taking all demographic data, creating the record and populating the data
fields, making the image capture portion the only step required by the
operator. All information and images are immediately available for all other
investigative workstations on the network. Arizona DPS has also recently
issued a purchase order for the addition of Face ID-Trademark- to be added to
the central server. Each county can then purchase the client software and
conduct facial recognition searches using images or composites produced by
Suspect ID-Trademark-. Crime Lab-Trademark-was also included in each
investigative workstation.

Fact Sheet
The State of Arizona in an effort to consolidate images and booking
information, has contracted with ImageWare Software, Inc. to install a
statewide digital mugshot repository called Mug Photo Interface (MPI). IN
those locations that are part of the system, the booking process begins at
the Identix livescan station where an operator captures the suspect's
fingerprints and enters required demographic and biographical information.
Once the information is entered into the livescan system, the data
automatically transfers to the MPI system via a common linking number. At the
MPI capture station, additional mandatory information is recorded, and
digital images of the suspect are taken. Upon completion of a record, the
information is immediately transmitted via the AZAFIS network to a central
repository housed at the Department of Public Safety. At this point, the data
is readily available for searching purposes by any agency in the state which
has access to the database.

An ImageWare supplied investigative station is used to perform several
functions including quick and advanced searches for querying the database,
mugbook searches and views for

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

witness identification of a suspect, line-ups, and in the near future, facial
recognition which is used to identify unknown suspects and criminals.

Arizona MPI Technical Break Down

Initial Number of Capture Stations: 17
Initial Number of Investigative Stations: 17
Approximate Number of Bookings Per Year: 350,000

Hardware
Central Site: 2 IBM Netfinity Servers running in a clustered environment and
sharing a RAID level 5 array of 82 GB for database storage. Each server has 4
Pentium Pro Processors, 1 GB of RAM memory and 13 GB of internal system disk
space. The system drives are mirrored. If the active server fails to reset a
heartbeat, the failover takes place automatically, and the drive array fails
over to the control of the now active server. There is dial-in capability for
diagnostic purposes. The operating system is Windows NT Server 4.0 Enterprise
Edition with Microsoft Cluster Server.

Capture & Investigative Stations: Each Investigative Station is a IBM 300XL
PC with 64MB RAM and 6.1 GB of hard disk storage. The capture camera is a
Pulnix TMC-73M with a Computar zoom lens. The camera and lens are mounted on a
Hitachi pan and tilt device. The capture card is an Integral Technology
MV-Pro. The camera is mounted on it's side to accommodate the NIST Best
Practice Recommendations and proprietary software does a rotation of the
Video live feed before it is displayed by the graphics card. Printing and
scanning take place on an Epson Stylus 800 printer and an Epson 636
Expressions scanner (SCSI connection). The operating system is Windows NT
Workstation 4.0. Each capture and investigative station is connected to the
central servers via a wide area network utilizing Ethernet and TCP/IP
protocol. Each station runs client software that connects to the central
server's database.

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

For Immediate Release
---------------------
Arizona Department of Public Safety Awards Statewide Mug Photo
Interface Contract to ImageWare Software, Inc.

IMAGEWARE'S CRIME CAPTURE SYSTEM-TM- TO HELP ARIZONA LAW ENFORCEMENT
AGENCIES APPREHEND CRIMINALS.

San Diego, California - January 15, 1998. After an extensive evaluation
process, the State of Arizona announced Wednesday that they had awarded the
Arizona Statewide Digital Mug Photo Interface Contract to ImageWare Software,
Inc. The contract is expected to exceed one million dollars and is the first
contract of its kind to be awarded for a statewide mugshot system. "We are
very pleased to provide Arizona law enforcement with a complete solution for
their mug photo needs," says Jim Miller, President and CEO of ImageWare
Software, Inc. "We feel the Crime Capture System will provide a quantum leap
forward for the State."

Under the terms of the contract, the State of Arizona will utilize
ImageWare's Crime Capture System (CCS), a state-of-the-art digital booking,
identification and retrieval program. The main CCS database will be housed at
the Arizona Department of Public Safety. Seventeen sites will be capable of
capturing mugshots, SMT (scars, marks, and tattoos) photos, and descriptive
data for each suspect they arrest. Each remote site will also receive an
investigative workstation capable of searching and viewing the mugshot
database and creating photo line-ups. Once information is entered into the
remote database, the central repository is immediately updated allowing all
agencies access to the most recent information. Officers and Detectives will
no longer have to spend hundreds of hours searching through file cabinets of
photographs to identify a suspect or generate a photo line up, instead they
will use CCS's central repository and systematically search the digital
database of images for similarities between suspects, thus speeding up case
processing. The new CCS system will also interface directly with the existing
Arizona Automated Fingerprint Identification System (AZAFIS) network.

The State of Arizona and ImageWare have agreed to an aggressive
implementation schedule which will have the system fully operational by June
1998. Once the first phase is complete, there are plans to move forward with
the implementation of additional C.R.I.M.E.S-TM- modules including, Suspect
ID-Registered Trademark- (a composite program), Crime Lab-Registered
Trademark- (an image enhancement and edit program), Vehicle ID-TM- (a vehicle
identification program), and what Ben Armstrong, the Lead Business Analyst
with the Maricopa County Sheriff's Office considers, "one of the most
promising law enforcement tools," Face ID-TM- (a facial recognition program).
All of these modules combined will create a fully integrated law enforcement
solution for the State of Arizona.

San Diego-based ImageWare Software, Inc. is a leader and innovator in
PC-based digital imaging, with its primary focus on law enforcement software.
Through its growing family of C.R.I.M.E.S. software modules, ImageWare is
effectively assisting in the resolution of crime worldwide. Currently, the
five C.R.I.M.E.S modules are being used by more than 500 law enforcement
agencies worldwide. ImageWare Software, Inc. is privately held.
###

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

THE ARIZONA REPUBLIC

POLICE SING PRAISES OF NEW STATEWIDE MUG SHOT SYSTEM
Published on Saturday, September 12, 1998

Byline: By Judi Villa, The Arizona Republic

In seconds, a suspect's booking mug can be seen by law enforcement agencies
throughout the state. A few computer keystrokes, and a detective can have
more pictures than he'll ever need for a photographic lineup. And if there is
no suspect, that same detective can type in a physical description and get a
list of potential bad guys in no time.

Welcome to the Mug Photo Interface, a subsystem of the Arizona Automated
Fingerprint Identification System. MPI uses electronic imaging to capture mug
shot photos and transmit them immediately to a statewide image database
operated by the state Department of Public Safety. "It is going to
revolutionize (police work) just like fingerprints did," said Clyde Tess, a
crime lab supervisor with the Maricopa County Sheriff's Office. "It'll solve
cases faster; It'll help in identifying suspects faster. "If a suspect is
entered into the database in Phoenix then goes down to Tucson and commits a
crime, the victim can identify the suspect the same day. Before an agency
would have to send a photo or fax it. Faxes aren't always that good, and the
mail takes a day or two. This is instant."

The MPI system went online Thursday in 10 counties. The first booking mug was
entered by the Santa Cruz County Sheriff's Office in Nogales. "It's pretty
nice," said Ramon Villela, a detention officer in Nogales. "It's going to make
our jobs easier and faster and the detectives are going to be able to do
lineups faster."

Arizona's program, funded by a grant from the Arizona Criminal Justice
Enhancement Fund, will be one of the most progressive in the county,
officials say. Although some cities, including San Diego and Boston, have
limited imaging databases, only Arkansas has a statewide system, and that one
collects information from only six sites. Seven more sites including police
departments in Mesa, Tempe, Phoenix, Scottsdale and Glendale, will be added
to MPI by next summer. And by the end of this year, five sheriff's
departments that already have their own mug photo systems will be linked to
the statewide system. A few agencies, like the Chandler Police Department,
have purchased their own equipment to boot into the system.

"Here's a great thing," said Mark Hatcher, an identification supervisor for
the Mesa Police Department and chairman of the MPI Task Force. The task
force, a grass roots effort with members from five police agencies in Arizona
has been working for two years to implement

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

the technology. "This opens up communication from Yuma County to Navajo
County." Hatcher said, "Geographically, they're at different ends of the
state, but they can do a search just like they were here at DPS."

The system standardizes the way mug shots are taken and stored, sets up a
"major clearinghouse" for all photos and allows investigators anywhere in the
state to search for, retrieve and print out mugs and suspect information from
virtually anywhere in the state. It also can be used to create photo lineups
and books of mug shots for victims to look through. "Say a suspect does a
robbery with a mask, and he's got a tattoo on his arm," Villela said.
"Detectives can take that picture of that tattoo and scan it into the system,
and it'll give you everybody that has that tattoo." The system also is
capable of tracking gang affiliations, weapons and registered sex offenders.

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFFS DEPARTMENT 3/22/99
PROPOSAL PHOTO IMAGING SYSTEM

LOS ANGELES COUNTY, CITY OF LAKEWOOD

ImageWare Software has great experience in the area of composite creation and
the identification of suspects using those composites. The most recent and
important news involves the facial recognition software, Face ID. This
software was created using algorithms developed from MIT research, which
ImageWare has the exclusive right to offer to the law enforcement industry.
The software describes a portion of the face of an individual mathematically,
from the eyebrows to the lips. This represents the majority of facial
features used to differentiate individuals and discounts such things as hair
length and style, eyeglasses, hats, and other adornments.

Face ID is presently installed at the Lakewood substation of the Los Angeles
Sheriff's Department, and was recently used to capture a carjacking suspect.
The victim gave a very accurate description to the Sheriff's Department, and
a composite was created using ImageWare's Suspect ID. This composite was used
to then search their mugshot database using Face ID. The returned search
results contained a suspect that the victim identified from a lineup. This
search took approximately 30 seconds to perform, and caused the
identification and apprehension of the suspect, and subsequently the District
Attorney's office has filed charges against the suspect. The press release of
this incident follows along with a view of the composite and actual photo of
the suspect.

FOR IMMEDIATE RELEASE
Los Angeles Sheriff's Department Identifies Suspect
With New Nigh-tech Crime Fighting Software

DETECTIVES UTILIZE FACE ID-TM- FACIAL RECOGNITION SOFTWARE
TO ARREST CAR-JACKING AND BATTERY SUSPECT.

San Diego, California - November 3, 1997 - Just three days after installation
of their newest crime fighting weapon, detectives with the Los Angeles County
Sheriff's Department arrested a car jacking and battery suspect "that would
never had been identified without Face ID-TM- facial recognition software",
according to Sergeant Bill Conley of the Los Angeles Sheriff's Office. With
no leads, frustrated detectives had given up on the case weeks prior and
considered it dead until the installation of Face ID. Using a composite of
the suspect, detectives employed the facial recognition program to search
their digital mugshot database for possible matches. Within seconds the
automated search results displayed photos in rank order that were similar to
those of the composite. Detectives investigated the matches, created a
photo-line-up and two witnesses positively identified Eduardo Ochoa as the
suspect. Ochoa was arrested on October 30, 1997 and is being held in lieu of
$125,000 bail. Sergeant Conley

IMAGEWARE SOFTWARE, INC. 32 (619) 673-8600 voice
15373 INNOVATIVE DRIVE #120 (619) 673-1770 fax
SAN DIEGO, CA 92128

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFFS DEPARTMENT 3/22/99
PROPOSAL PHOTO IMAGING SYSTEM

was amazed and commented, "Face ID is one of the most innovative
breakthroughs in law enforcement technology."

Face ID, one of the modules of the C.R.I.M.E.S.-Registered Trademark- suite
of integrated law enforcement programs developed by ImageWare Software, Inc.,
is a state-of-the-art facial recognition and retrieval program. Now,
investigators no longer have to spend hundreds of hours trying to identify a
suspect. Detectives can take a suspect composite created in ImageWare's
Suspect ID-TM- program, and seamlessly export it to Face ID, which in turn
will systematically search any digital database of booking images to identify
possible suspects. Similarly, a suspect's image caught on a bank or
convenience store surveillance video can be run against a digital photo
database for possible identification. With Face ID, officers will be able to
utilize this facial recognition technology at the time of booking to
immediately identify a criminal with multiple identities or outstanding
warrants.

San Diego-based ImageWare Software, Inc. is a leader and innovator in
PC-based digital imaging, with its primary focus on public sector and law
enforcement software. Through its growing family of modules, ImageWare is
effectively creating a fully integrated solution to assist in the resolution
of crime worldwide. Currently, the C.R.I.M.E.S. suite consists of five
modules: Suspect ID (facial composite module), Crime Lab-TM- (an image
enhancement and edit program). Vehicle ID-TM- (vehicle identification
program), Face ID (facial recognition application) and Crime Capture System
(digital booking module) which are being used by more than 500 law
enforcement agencies worldwide. ImageWare Software, Inc. is a privately held
company.

IMAGEWARE SOFTWARE, INC. 33 (619) 673-8600 voice
15373 INNOVATIVE DRIVE #120 (619) 673-1770 fax
SAN DIEGO, CA 92128
<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

Los Angeles Sheriff's Department Identifies Suspect
With New High-tech Crime Fighting Software

San Diego, California - November 3, 1997 - Just three days after installation
of ImageWare's Face ID-TM-, the program proved itself to be the most effective
high-tech crime fighting software available. Using a composite of a suspect,
detectives employed Face ID to conduct an automated comparison search and
produced a number of photos which closely resembled the suspect in a
carjacking and battery case. Both the victim and witness positively
identified the suspect who was ranked highest in the comparison search.

[PHOTO]

The suspect would never had been
identified without FACE ID face
recognition software.

-SERGEANT BILL CONLEY-
LOS ANGELES COUNTY SHERIFF'S
DEPARTMENT

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

NEW YORK CITY POLICE DEPARTMENT

DESCRIPTION OF INSTALLED SYSTEM AND ITS FEATURES:
With over 400,000 bookings each year, the New York City Police Department is
the largest law enforcement agency in the world. The contract for booking
systems for the entire NYPD network clearly establishes ImageWare as the
leading company for mugshots. ImageWare was chosen for the high quality of
the system, the adaptability of the software with other technologies and its
ability to be scaled to the size of the project. The operating system is UNIX.

The New York City Police Department's booking system, spans 76 precincts in 5
boroughs, including 100 capture stations and redundant central servers.
ImageWare has a large customer support staff with 24 hours a day, 7 days a
week availability.

XImage worked as a subcontractor to the worldwide systems integrator, SAIC,
Science Applications International Corporation of McLean, VA. SAIC is an
established provider of computer and information solutions to governmental
agencies worldwide.

HENEPIN COUNTY SHERIFF'S OFFICE (MINNEAPOLIS)

DESCRIPTION OF INSTALLED SYSTEM AND ITS FEATURES:
This system is a UNIX installation with a single ImageBank server, but
servicing input and searching from 6 other agencies. There is also a Mail
Server within the system. There are a total of 18 workstation, 3 of which are
capture stations from within the Henepin County Sheriff's Office. The
database size is approximately 600,000 records at present. ImageWare has
recently received a purchase order from Henepin County to install Face
ID-TM- on the network. This will allow for the facial recognition of
subjects, based on a composite or image.

PIERCE COUNTY, WA

DESCRIPTION OF INSTALLED SYSTEM AND ITS FEATURES.
This system is currently a UNIX installation with a single ImageBank server,
but will be one of the first XImage installations to convert to the new CCS
Windows NT solution. This solution was chosen as a natural upgrade from their
existing system. They will enjoy lower maintenance costs, faster throughput,
more scaleability and a friendlier interface.

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

Reference Contacts

<TABLE>
<CAPTION>
Reference and Contact Tool Used RDBMS Environment
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Arizona Department of Public Safety C++ Sybase SQL Windows NT 4.0 Server
2310 N. 20th Ave. Anywhere Server Windows NT 4.0 clients
Phoenix, AZ 85005

CYNTHIA PELLIEN
PROJECT COORDINATOR
602-223-2401

-----------------------------------------------------------------------------------------------------
New York City Police Department C Sybase System 11 SUN Solaris Server
One Police Plaza MISD Room 700 SCO UNIX Clients
New York, NY 10038

BRIAN GRIFFIN
212-374-5020

---------------------------------------------------------------------------------------------------
Pierce County Sheriff's Office Switching Switching to CCS Soon to be Win NT 4.0
930 S. Tacoma Ave. to CCS,
Tacoma, WA 98402 C++

DAVE COTTON
253-798-7729

---------------------------------------------------------------------------------------------------
Los Angeles County Sheriff's Office - C++ Sybase SOL Windows NT 4.0 Server
City of Lakewood Anywhere Server Windows NT 4.0 clients

SGT. BILL CONLEY
562-866-9061

---------------------------------------------------------------------------------------------------
Falls Township PD C++ Sybase SQL Windows NT 4.0 Server
Anywhere Server Windows NT 4.0 clients

WYNNE CLOUD
215-949-9100

---------------------------------------------------------------------------------------------------
Chandler Police Department C++ Sybase SQL Windows NT 4.0 Server
Anywhere Server Windows NT 4.0 clients

SGT. BRIAN POTTER
602-782-4501

---------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

OTHER C.R.I.M.E.S. REFERENCES

<TABLE>
<S> <C> <C>
AZ DPS Cyndy Pellien 602-223-2401
Los Angeles SO Sgt. Bill Conley 562-866-9061
Corona PD CA Danny Verdugo 909-279-3642
Raynham PD MA Lou Pacheco 508-824-2727
Independence PD KS Harry Smith 316-332-1700
Little Rock PD AR Chuck Ray 501-371-4660
Long Island Railroad Police Kevin Farrell 718-558-3346
Navel Investigative Service Brandon Armstrong 619-556-1386
E. Providence PD RI Capt Broadmeadow 401-435-7626
San Diego PD CA David Cavanaugh 619-531-2623
San Diego SO CA Mark Kelly 619-258-3100
Monroe SO NY Jim Beikirch 716-428-5432
Placentia PD CA Matt Reynolds 714-993-8164
Austin PD TX Cheryl Bowne 512-480-5145
Visalia PD CA Det Sharon Brown 209-738-3235
Wilson County SO TN Lt Bob White 615-444-1459
San Bernardino SO CA Dep Karen Rice 909-387-8812
Los Angeles PD CA Det Tom Barnhart 818-756-8553
Bullhead City PD AZ Capt Rodney Head 520-763-9200
Arlington PD TX Det Pat Smith 817-459-5710
New York City Police Department Lt. Brian Griffin 212-374-5020
Clackamas County Sheriff's Office Joanne LeBreun 503-650-3155
Stanislaus County Sheriff's Office Gordon Brusso 209-525-7279
Santa Ana Police Department Lt. George Saadeh 714-245-8410
Henepin County Sheriff's Dept Sheryl Loose 612-348-9648
</TABLE>

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

FINANCIAL STATEMENT

IWS has included financial statements from 1996, 1997 and through November of
1998. When reviewing the attached financials for November 30, 1998 several
issues should be noted. On the Consolidating Income Statement included in the
11 months, results are approximately $1 million of one time costs related to
the acquisition and integration of XImage operations into ImageWare. When
reviewing the 11/30/98 Balance Sheet, the fact is that ImageWare is (as of
3/15/99) less than thirty days away from funding a $10,000,000 equity from a
group of institutional investors led by J. P. Morgan. A summarized pro-forma
balance sheet is provided below which shows the 11/30/98 balance sheet
assuming the equity investment and the planned immediate use of funds for
debt and liabilities had already taken place.

<TABLE>
<CAPTION>
Balance Sheet 11/30/98 Actual Pro-Forma
---------------- ---------------
<S> <C> <C>
Cash 223,627 5,623,627
Other Current Assets 1,538,815 1,538,815
Fixed Assets 273,876 273,876
Other Assets 3,133,738 3,133,738
--------- ----------
Total Assets 5,170,056 10,570,056

Current Liabilities 5,305,564 1,555,564
Long Term Liabilities 674,059 674,059
--------- ----------
Total Liabilities 5,979,623 2,229,623

Stockholders Equity (809,567) 8,340,433
--------- ----------
Total Liabilities and S. E. 5,170,056 10,570,056
--------- ----------
</TABLE>

<PAGE>

IMAGEWARE SOFTWARE, INC.

---------

REPORT ON AUDITED FINANCIAL STATEMENTS
For the Years Ended December 31, 1997 and 1996

---------

<PAGE>

[Logo]

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
ImageWare Software, Inc.

We have audited the accompanying balance sheets of ImageWare Software, Inc.
as of December 31, 1997 and 1996 and the related statements of operations,
stockholders' equity (deficit) and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ImageWare Software, Inc. at
December 31, 1997 and 1996 and the results of its operations and cash flows
for the years ended, in conformity with generally accepted accounting
principles.

/s/ COOPERS & LYBRAND L.L.P.

San Diego, California
March 13, 1998

<PAGE>

IMAGEWARE SOFTWARE, INC.

BALANCE SHEETS
December 31, 1997 and 1996

<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
ASSETS

Current assets:
Cash $ 2,309,859 $ 43,031
Accounts receivable - net of allowance for doubtful accounts
of $3,162 and $52,377 for 1997 and 1996, respectively 107,062 151,191
Other 361,631 30,137
------------ ------------
Total current assets 2,778,552 224,359

Property and equipment, net 246,258 191,972
Intangible assets, net of accumulated amortization of $300,181
and $213,787 for 1997 and 1996, respectively 200,469 50,252
------------ ------------
$ 3,225,279 $ 466,583
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Accounts payable $ 412,670 $ 344,600
Deferred revenue 16,000
Accrued compensation and other expenses 1,030,177 901,352
Accrued interest 36,607 43,260
Notes payable to stockholders 238,150 870,400
------------ ------------
Total current liabilities 1,733,604 2,159,612

Commitments

Stockholders' equity (deficit):
Series B convertible redeemable preferred stock, $.01 par
value, 750,000 shares authorized, 389,400 and 341,000 shares
issued and outstanding in 1997 and 1996, respectively,
$973,500 and $852,500 liquidation preference in 1997 and
1996, respectively 3,894 3,410
Common stock, $0.01 par value, 50,000,000 shares authorized,
4,458,240 and 3,230,038 shares issued and outstanding for
1997 and 1996, respectively 44,583 33,301
Additional paid-in capital 14,260,171 10,615,290
Accumulated deficit (12,816,973) (12,344,030)
------------ ------------
Total stockholders' equity (deficit) 1,491,675 (1,693,029)
------------ ------------
$ 3,225,279 $ 466,583
============ ============
</TABLE>

The accompanying notes are an integral part
of the financial statements.

<PAGE>

IMAGEWARE SOFTWARE, INC.

STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1997 and 1996

---------

1997 1996
---- ----
<S> <C> <C>
Revenues:
Software sales $ 461,968 $ 499,085
Royalties and other revenue 2,434,108 83,486
---------- -----------

2,896,076 582,571

Cost of products sold 44,384 10,063
---------- -----------

Gross margin 2,851,692 572,508
---------- -----------

Operating, general and administrative expenses 1,637,049 1,121,546
Sales and marketing expenses 918,557 412,394
Research and development expenses 482,834 510,078
Interest expense, net 90,091 93,789
---------- -----------

Total operating expenses 3,128,531 2,137,807
---------- -----------

Loss before income taxes (276,839) (1,565,299)
---------- -----------

Provision for income taxes 196,104 -
---------- -----------

Net loss $ (472,943) $(1,565,299)
---------- -----------
---------- -----------

</TABLE>

The accompanying notes are an integral part
of the financial statements.

<PAGE>

ImageWare Software, Inc.
Consolidating Balance Sheet
30 Nov-98

<TABLE>
<CAPTION>
IMAGEWARE XIMAGE
SOFTWARE CORPORATION ELIMINATIONS CONSOLIDATED
-------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS

CURRENT ASSETS:
Cash 212,611 11,016 223,627
Accounts receivable, net 794,805 332,639 1,127,445
Other receivables, net 69,429 1,000 70,429
Inventory, net of reserve 88,989 107,782 196,771
Prepaid expenses 139,664 4,507 144,171
----------- ---------- ---------- -----------
Total Current Assets 1,305,499 456,944 1,762,442
----------- ---------- ---------- -----------

FIXED ASSETS, AT COST: 807,076 350,584 1,157,660
Accumulated depreciation (569,808) (313,977) (883,785)
----------- ---------- ---------- -----------
Fixed Assets, net 237,268 36,607 273,876
----------- ---------- ---------- -----------

OTHER ASSETS
Patents, net of amortization 109,404 109,404
Goodwill 2,976,590 2,976,590
Investment in subsidiary 2,457,531 2,457,531
Interco receivable (payable) 447,221 (438,912) 8,309
Deposits and other 30,435 9,000 39,435
----------- ---------- ---------- -----------
Total Other Assets, net 3,044,591 (429,912) 519,059 3,133,738
----------- ---------- ---------- -----------

----------- ---------- ---------- -----------
TOTAL ASSETS 4,587,358 63,639 519,059 5,170,056
=========== ========== ========== ===========

LIABILITIES AND
STOCKHOLDERS' EQUITY:

CURRENT LIABILITIES:
Accounts Payable, trade 701,502 155,515 857,017
Accrued liabilities 999,710 641,299 1,641,009
Deferred revenues 297,700 301,336 599,036
Short term borrowings 2,005,000 203,500 2,208,500
----------- ---------- ---------- -----------
4,003,912 1,301,651 5,305,563
----------- ---------- ---------- -----------

LONG-TERM DEBT
Notes payable, stkhldrs 238,149 238,149
Notes payable, NBD 375,106 375,106
Other long-term liabilities 34,506 26,298 60,804
----------- ---------- ---------- -----------
647,761 26,298 674,059
----------- ---------- ---------- -----------

STOCKHOLDERS' EQUITY
Stock, Paid-in capital 14,655,648 1,414,249 (1,414,249) 14,655,648
Accumulated deficit (12,816,973) (2,755,189) 2,755,189 (12,816,973)
Current year net (loss) (1,902,990) 76,630 (821,881) (2,648,241)
----------- ---------- ---------- -----------
Total Stockholders' Equity (64,315) (1,264,310) 519,059 (809,567)

Total Liabilities and ----------- ---------- ---------- -----------
Stockholders' Equity 4,587,358 63,639 519,059 5,170,056
=========== ========== ========== ===========
</TABLE>

Page 1

<PAGE>

IMAGEWARE SOFTWARE, INC.
Consolidating Income Statement
For the Eleven Months Ended November 30, 1998

<TABLE>
<CAPTION>
IMAGEWARE XIMAGE
SOFTWARE CORPORATION ELIMINATIONS CONSOLIDATED
-----------------------------------------------------------
Note 1
<S> <C> <C> <C> <C>
Revenues 2,205,495 2,078,158 4,283,653

Cost of sales 389,935 1,260,395 1,650,330

-----------------------------------------------------------
Gross profit 1,815,560 817,763 2,633,323
-----------------------------------------------------------

Salaries (incl fringes) 1,665,901 453,545 2,119,445
Sales commissions 72,511 -- 72,511
Contract services 412,125 41,179 453,304
Consulting & prof services 216,194 16,715 232,909
Legal 113,828 855 114,683
Adverting, promo & printing 28,765 249 29,013
Trade shows 14,007 -- 14,007
Dues & subscriptions 3,836 1,750 5,586
Rent and utilities 223,099 86,048 309,147
Communications 102,644 49,662 152,306
Office expenses 124,478 30,304 154,782
Insurance 28,061 5,326 33,388
Travel 293,218 15,415 308,633
Depreciation & amortization 163,384 19,486 821,881 1,004,751
-----------------------------------------------------------
3,462,051 720,535 821,881 5,004,467
-----------------------------------------------------------

Interest (income) expense 221,417 18,328 239,745
Other (income) expense 35,082 2,271 37,353

-----------------------------------------------------------
Net income (1,902,990) 76,630 (821,881) (2,645,241)
-----------------------------------------------------------
-----------------------------------------------------------
</TABLE>

Note 1 Ximage Corporation results are for the period January 23, 1998 thru
February 25, 1998, January 23, 1998 is the effective date of the
merger

Page 1

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22-99
PROPOSAL PHOTO IMAGING SYSTEM

EXHIBIT A - COST PROPOSAL
-------------------------------------------------------------------------------

ImageWare Software Inc. 45 (619) 673-8600 voice
15373 Innovation Drive, #120 (619) 675-1700 Fax
San Diego, CA 92128
<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFFS DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

EXHIBIT B - Maintenance & Warranties
-------------------------------------------------------------------------------

Product and Customer Support
IWS will provide LOS ANGELES COUNTY SHERIFF'S DEPARTMENT with diagnostic
software and manuals necessary to operate and maintain the system, including
schematics diagnostic and maintenance manuals as provided by the manufacture.
During the Warranty period IWS will support the System without any cost to
the County. Also during the period IWS agrees to offer Customer Support for
an additional fee specified in Exhibit A, or at a cost per incident according
to the time and Materials Schedule. For the purpose of this Agreement
Customer Support is defined as all information calls related to operation of
the System and calls based upon user error. After the warranty period, IWS
agrees to offer maintenance, customer and product support for the System for
at least five years after installation subject to LOS ANGELES COUNTY
SHERIFF'S DEPARTMENT entering into an IWS Maintenance Agreement during the
five years. IWS will provide a copy of its current Maintenance Agreement to
LOS ANGELES COUNTY SHERIFF'S DEPARTMENT and requires LOS ANGELES COUNTY
SHERIFF'S DEPARTMENT to pay an additional fee. IWS reserves the right to
modify the terms and fees of its standard Maintenance Agreement at any time.

Hardware Warranties
All hardware that IWS supplies carries a full 1 Year warranty. IWS supports
only the hardware that it installs. Support for other systems not purchased
through Image Ware can be negotiated.

Hardware Maintenance
Maintenance for the system hardware will be 7 days per week, 24 hours per day
with all agencies in LOS ANGELES COUNTY SHERIFF'S OFFICE having just one toll
free number to call for service. Initial calls will be received by the IWS
Help Desk. If no one is available, a call back will be made within 1 hour.
Within a agreed upon period of time a hardware technician will be on-site to
troubleshoot and correct the problem.

If any installation within any agency will require access to restricted area
by IWS employees, it is expected that information will be given to Image Ware
during contract negotiations. ImagWare will make any and all information
available to the LOS ANGELES COUNTY SHERIFF'S OFFICE for each employee who
must have access to the restricted area.

ImageWare Software Inc.
15373 Innovation Drive. #120 (616)673-8600 voice
San Diego, CA 92178 (619)673-1770 Fax

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

The equipment and hardware supplied as part of this proposal will be fully
guaranteed for a minimum period of 12 months. All prices quoted as part of
this proposal are guaranteed for a period of 12 months.

The central server comes complete with dial-in modem, and the IBM Netfinity
Manager software and clients installed on each supplied workstation. This
will enable the customer service rep to access, and actually "take over"
workstations when necessary to diagnose and repair any problems.

Software support first level is via toll free number to phone support. This
customer service rep has the ability to escalate the problem up to level 2
support, which is an R&D engineer. If that person requires an on-site rep, one
will be dispatched. We also include IBM hardware support with each IBM
system. Sometimes, the ImageWare programmer just needs a set of hands and
eyes on-site, and an IBM technician will be dispatched. Dial in access is
available to both levels 1 and 2, and using Netfinity Manager, many problems
can be diagnosed and resolved by "taking over" the workstation that is
having problems, seeing the error happen, and resolving the situation
immediately via remote connection.

SOFTWARE WARRANTIES
All software has a one year warranty starting on the day of system acceptance

SOURCE CODE
The latest versions of all CRIMES modules, including CCS will be put into an
escrow account. The specifics of this escrow agreement will be outlined at
contract signing.

SOFTWARE ON-GOING MAINTENANCE AND SUPPORT
Maintenance for the system software will be 7 days per week, 24 hours per
day, with all agencies in LOS ANGELES COUNTY SHERIFF'S OFFICE having just one
toll-free number to call for service. ImageWare will meet the response times
as outlined by the County. Initial calls will be received by the IWS Help
Desk. If no one is available, a call back will be made within 1 hour. On-site
response times will be negotiated at contract signing. In previous contracts,
response times as fast as 4 hours have been accepted. Within this 4 hour
period, a hardware technician is on-site to trouble-shoot and correct the
problem.

If any installation within any agency will require access to restricted areas
by IWS employees it is expected that information will be given to ImageWare
during contract negotiations. ImageWare will make any and all information
available to the LOS ANGELES COUNTY SHERIFF'S OFFICE for each employee who
must have access to the restricted areas.

ImageWare Software Inc. 50 (619) 673-8600 voice
15373 Innovation Drive, #120 (619) 675-1700 Fax
San Diego, CA 92128
<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

The equipment and software supplied as part of this proposal will be fully
guaranteed for a minimum period of 12 months. All prices quoted as part of
this proposal are guaranteed for a period of 12 months.

Software support first level is via toll free number to phone support. This
customer service rep has the ability to escalate the problem up to level 2
support, which is an R&D engineer. If that person requires an on-site rep,
one will be dispatched. We also include IBM hardware support with each IBM
system. Sometimes, the ImageWare programmer just needs a set of hands and
eyes on-site, and an IBM technician will be dispatched. Dial-in access is
available to both levels 1 and 2, and using Netfinity Manager, many problems
can be diagnosed and resolved by taking over the workstation that is having
problems, seeing the errors happen, and resolving the situation immediately via
remote connection.

ImageWare Software Inc.
15375 Innovation Drive, #120 (619)673-8600 voice
San Diego, CA 92128 (619)673-1770 Fax

51
<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

EXHIBIT C - TRAINING

Training is purchased in increments. One increment is defined as one day of
on-site training with a maximum class size of 15. On-site training outlines
may vary. Example: Training system administrators on server functions will be
different than being trained on investigative software. A defined number of
training increments for this proposal can be found in the Cost Proposal
(Exhibit A). Follow-up training is available, either on-site or at the IWS
facilities.

Training time is kept to a minimum with the Crime Capture System, as it is so
easy to use.

Training will be accomplished at each agency location, using their system
equipment. All handout materials and reference materials will be furnished.
After the training session, users have lab time for hands-on familiarization.
It is recommended that at least one training session be video taped and
duplicated for each agency for on-going training purposes.

The length of each class is outlined below.

CRIME CAPTURE SYSTEM TRAINING OUTLINE

OBJECTIVE: By the end of the training session, students will know how to book
---------
a suspect, search a database, use the mug book function and create photo
line-ups.

CLASS SIZE: Maximum 15 students.
----------

TRAINING OUTLINE:
----------------

I. Starting the program 5 minutes

II. New Bookings 90 minutes
a. Adding a New Booking
b. Searching for Matches
1. Linking Records
2. Unlinking Records
c. Viewing Records
d. Viewing Multiple Bookings
e. Editing and Deleting Records
f. Printing Individual Records

III. Searching 45 minutes
a. Quick Search

ImageWare Software Inc.
15375 Innovation Drive, #120 (619)673-8600 voice
San Diego, CA 92128 (619)673-1770 Fax

<PAGE>

CONFIDENTIAL LOS ANGELES COUNTY SHERIFF'S DEPARTMENT 03/22/99
PROPOSAL PHOTO IMAGING SYSTEM

b. Advanced Search
c. Saving a Search
d. Running and Existing Search
e. Deleting and Existing Search
f. Printing Search Results

IV. Mug Book 30 minutes
a. Searching for Mugshot
b. Saving a Mug Book
c. Viewing an Existing Mug Book
d. Deleting a Mug Book

V. Photo Line-up 40 minutes
a. Creating a Photo Line-up
b. Saving a Photo Line-up
c. Viewing an Existing Photo Line-up
d. Deleting an Existing Photo Line-up
e. Printing a Photo Line-up

ImageWare Software Inc.
15375 Innovation Drive, #120 (619)673-8600 voice
San Diego, CA 92128 (619)673-1770 Fax

53
<PAGE>

PART II

Answers to questions about original proposal, posed by Sgt. Paul Alexander in
an e-mail dated 3/19/99.

Q. In your bid you made clear that facial recognition was not included. Would
you please give us the cost of Face ID as a single unit and the cost in
groups (like 10, 50, 100 licenses) etc.

R. THE ORIGINAL PROPOSAL INCLUDED FACIAL RECOGNITION INCLUDED FACIAL
RECOGNITION SERVER SOFTWARE AS WELL AS THE ENROLLMENT OF ALL IMAGES INTO
FACIAL RECOGNITION AT NO ADDITIONAL COST. IMAGEWARE IS NOW OFFERING AN
ADDITIONAL 4 COPIES OF FACE ID CLIENT SOFTWARE AT NO COST. THE TOTAL VALUE
OF THIS SOFTWARE AND SERVICES IS MORE THAN $127,000, AND IS BEING OFFERED TO
DBI AND THE COUNTRY IN THIS PROPOSAL AT NO ADDITIONAL CHARGE.

ADDITIONAL FACE ID CLIENT COSTS:

1-10 COPIES $15,000 EACH
10-50 COPIES $12,500 EACH
50-100 COPIES $9,000 EACH
OVER 100 $6,000 EACH

Q. There is what appears to be an addition error in your Phase I Software
which reads $118,000 ($138,000 by our calculation)

R. THERE IS AN ERROR IN THE ORIGINAL COST PROPOSAL. THE CHANGE HAS BEEN MADE
AND REFLECTED IN THE NEW COST PROPOSAL (PART V)

Q. Your bid says that we are getting some Suspect ID composite software. The
description of same says that the composite can be searched against the
photo database. Is that presuming that you have the facial recognition
software?

R. YES, IT IS PRESUMING THAT THE COUNTY HAS FACE ID CLIENT SOFTWARE. IWS IS
NOW INCLUDING 4 COPIES OF FACE ID CLIENT SOFTWARE TO THE COUNTY. AS
MENTIONED IN THE ORIGINAL PROPOSAL, THE CITY OF LAKEWOOD ALREADY HAS FACE
ID CLIENT SOFTWARE AND COULD ALSO HAVE THIS CAPABILITY.

Q. In your bid, you talk about Cal-Photo ID and Cal-Gang and say that you are
not proposing to install or maintain the local web servers for these
applications but will discuss it later. But the CAL-Photo ID server is an
integral portion of this project and we are relying on the successful
vendor to tell us what server we should get from DOJ (DOJ has offered to
furnish it) and to be prepared to maintain it. We need to know the
approximate costs of feeding and caring for this server.

R. IMAGEWARE WILL DISCUSS WITH THE STATE, THE TYPE AND SIZE OF THE SERVER
NEEDED TO ACCOMPLISH THE REQUIREMENTS FOR CAL-PHOTO ID. WHEN THE TIME
COMES, WE WOULD BE PLEASED TO PROVIDE A QUOTE FOR THAT SERVER AND THE
MAINTENANCE THEREOF. THE COST FOR FEEDING THE SERVER IS OUTLINED IN THE COST
PROPOSAL. IMAGEWARE WILL WORK WITH THE STATE TO ISOLATE A MEANS FOR
MAINTAINING THE CAL-PHOTO ID SOFTWARE.

Q. In your phase 2 breakdown, you specify $23,500 for Sybase to Oracle and in
phase 1 you specify $46,500 to convert the existing database. Could you
more fully explain how these functions are distinct from one another.

<PAGE>

R. PHASE 1 SERVICES INCLUDE CONVERSION OF THE EXISTING DATABASE,
DE-DUPLICATION OF THE DATABASE AND PROJECT MANAGEMENT TOTALING $46,500.
CONVERSION MEANS THE CONVERSION OF IMAGES AND DATA FROM THE DBI FORMAT TO CCS
FORMAT. DE-DUPLICATION IS THE PROCESS AND TIME IT WILL TAKE TO RID THE NEW
DATABASE OF DUPLICATE IMAGES AND TEST IMAGES.

PHASE 2 SERVICES INCLUDE THE CONVERSION OF DATA FROM SYBASE TO ORACLE
AND PROJECT MANAGEMENT TOTALING $23,500. THIS CONVERSION IS THE TIME AND
EFFORT IT WILL TAKE TO CONVERT THE SYSTEM FORM SYBASE TO ORACLE. IT HAS
NOTHING TO DO WITH THE CONVERSION OF IMAGES OR RECORDS. IT IS A PLATFORM
CONVERSION. IN NO WAY IS THIS COST ASSOCIATED WITH THE DEVELOPMENT OF ORACLE,
IT IS SIMPLY THE COST TO CONVERT ONE SYSTEM PLATFORM TO ANOTHER. PLEASE NOTE
THAT THE COST FOR THIS HAS BEEN LOWERED FROM $23,500 TO $19,000 IN THE NEW
COST PROPOSAL.

<PAGE>

PART III

Point by point answers to statement of work questions written by Sgt. Paul
Alexander and received by IWS on 3/19/99. Any questions that have been
previously answered will be responded to with the corresponding page # of
the original proposal.

Image Server(s)

1.1 To be brought into consistency with the LASD Sheriff's Data
Network (SDN)

IN ACCORDANCE WITH THE REQUIREMENTS SET FORTH BY THE LASD, IWS IS
CONVERTING CCS FROM SYBASE TO ORACLE. IWS HAS BEEN IN DISCUSSIONS
WITH LASD FOR MORE THAN TWO YEARS IN PREPARATION FOR THIS PROJECT.
THE PURPOSE OF THIS PROPOSAL IS TO OUTLINE A CLEAR UNDERSTANDING OF
HOW IWS INTENDS TO SUPPORT THE NEEDS OF LASD WELL INTO THE NEXT
CENTURY. THE CAPABILITIES OUTLINED IN THE PROPOSAL WILL ASSIST IN
MAKING LASD THE PREMIER LAW ENFORCEMENT AGENCY IN THE US.

1.1.1 Y2K Compliant (Must)

THIS REQUIREMENT WILL BE MET.

1.1.1 Meets all State/Federal ANSI/NIST standards (Must)

THIS REQUIREMENT WILL BE MET.

1.1.1 TCP/IP Protocol (must)

THIS REQUIREMENT WILL BE MET.

1.1.1 WindowsNT / Unix (must)

THIS REQUIREMENT WILL BE MET.

1.1.1 Oracle 8X (Must)

THIS REQUIREMENT WILL BE MET, AS DESCRIBED ON PAGE 21 OF THE
ORIGINAL PROPOSAL.

1.1.1 Conversion from the current RAID which is operating under UNIX and
using Oracle 7 DBMS. This conversion will require a re-parsing of
data fields from the current file structure (known to DBI) to be
incorporated into a new database structure which will allow for
queries and retrieval based on multiple fields both indexed and
non-indexed. The present database has duplicates, some erroneous
entries, and test photos that must be filtered out. (Must)

THIS REQUIREMENT WILL BE MET.

<PAGE>

1.1 The current RAID must be analyzed for adequacy in regards to its
capacity to support the ambitions of the enhanced EDMS and a
replacement system(s) suggested if a "better fit" would appear
appropriate.

IWS proposes to install a new server as outlined in the new Cost
Proposal and on pages 16-19 of the original proposal.

1.1.1. Vendors, in their system assessment, should contemplate the
following workload:

1.1.1.1. LASD contemplates 20,000 bookings per month.

THIS REQUIREMENT WILL BE MET.

1.1.1.1.1. Each booking will have a complete demographic record.

THIS REQUIREMENT WILL BE MET.

1.1.1.1.1. Each booking will usually have two (2) mug-shot JPG (40K images)
but may have as many as six (6) images if glasses / Scars /
Marks / Tatoos are present.

UNDERSTOOD.

1.1.1.1. The system will be the mug shot photo source for:
1.1.1.1.1. The Consolidated Criminal History and Records System (CHRSS)
thumbnail and photo upon demand.

THIS REQUIREMENT WILL BE MET. (PAGE 22)

1.1.1.1.1. The L.A. Regional Criminal Information System (LARCIS)
thumbnail and photo upon demand.

THIS REQUIREMENT WILL BE MET. (PAGE 22)

1.1.1.1.1. The feeder system for another web-server for CAL PHOTO ID*

THIS REQUIREMENT WILL BE MET. (PAGE 23)

* The CAL PHOTO ID is a project of California DOJ utilizing
web enabled servers outside of participating agencies'
security to share photos throughout the California Law
Enforcement Community. To participate, LASD will be provided a
server by DOJ. DBI's selected sub-contractor will be called
upon to specify/describe what server should be used for the
L.A. Node of Cal Photo and to make the LASD Mugshots and
demographics available to the Cal Photo Server. The vendor
will be expected to provide ongoing hardware and software
support for the CAL Photo server.

THIS REQUIREMENT WILL BE MET. IWS WILL DISCUSS WITH THE STATE
THE SPECIFICATIONS FOR
<PAGE>

THE WEB SERVER AND PROVIDE MAINTENANCE FOR THAT SERVER.

1.1.1.1.1 The Cal Gang Node maintained by LASD.
THIS REQUIREMENT WILL BE MET. (PAGE 23)

1.1.1.1.1 SDN users via enclosed intranet.

IWS WILL PROVIDE A SITE LICENSE FOR BOTH LA COUNTY AND ORANGE
COUNTY. STANDARD WEB BROWSERS MAY BE UTILIZED.

1.1.1.1.1.1 The approximate concurrent active logon sessions is anticipated
to @200.

UNDERSTOOD

1.1.1 LASD will require that DBI's selected sub-vendor must provide on-going
software and hardware maintenance for the EDMS system that will be
created beyond the present Store and forward. It is therefore required
that they (the vendor) shall specify the hardware devices that best
fit their comfort as to adequacy, reliability, and compatibility
with their EDMS solution.

IWS WILL PROVIDE MAINTENANCE FOR EVERYTHING PROVIDED WITHIN THE QUOTE.
THE HARDWARE THAT IMAGEWARE IS SUGGESTING IS IBM HARDWARE SIMILAR TO
THAT OF ARIZONA DPS. ARIZONA DPS IS EXTREMELY PLEASED WITH THE
PERFORMANCE OF THEIR SERVER. (PAGE 18, 27, 36)

1.1.1 Sub-vendors shall include with their proposal the cost of the hardware
device(s) that they are prepared to utilize and support.

SEE THE UPDATED COST PROPOSAL (PART V)

1.1.1 LASD desires to retain the right to purchase the devices specified by
the vendor directly rather then relying on DBI or the sub-vendor to
acquire and provide the hardware. If this is unacceptable, it must be
stated.

THE HARDWARE THAT IWS IS PROPOSING HAS BEEN THOROUGHLY TESTED FOR
QUALITY AND PERFORMANCE. IT IS OUR RECOMMENDED SOLUTION. ANY OTHER
SOLUTION MAY HAVE ADVERSE EFFECTS ON SYSTEM PERFORMANCE. IF THE COUNTY
CHOOSES TO PURCHASE THE HARDWARE FROM ANOTHER VENDOR THEN MANY ISSUES
COME INTO PLAY. (MAINTENANCE, RELIABILITY, ETC.) IWS IS AGREEABLE TO
DISCUSSING THIS POSSIBILITY, HOWEVER WE DO NOT RECOMMEND IT.

1.1.1 Response times: System abilities should contemplate multiple basic
searches and retrievals from remote sites.

THE SERVER WE ARE RECOMMENDING IS VERY ROBUST. THE FOUR 400 MHZ XEON
PROCESSORS, AND 1 GB OF RAM ARE MORE THAN ENOUGH TO HANDLE THE LOADS
THAT ARE EXPECTED ON THE SYSTEM. (PAGE 18)

1.1.1 Response times: System may require audit trail housekeeping
transactions.

<PAGE>

THIS IS EXPECTED AND ACCOUNTED FOR IN OUR PROPOSED SOLUTION.

1.1 Mug-shot Search/Display/Output

1.1.1 System shall have easy access and retrieval capabilities.

THIS REQUIREMENT WILL BE MET.

1.1.1 Provides searches on pre-established indexed fields.

THIS REQUIREMENT WILL BE MET.

1.1.1 Provides searches on all data fields

THIS REQUIREMENT WILL BE MET.

1.1.1 Accommodate Boolean expression searches on data fields: Indexed

THIS REQUIREMENT WILL BE MET.

1.1.1 Accommodate Boolean expression searches on data fields: Non-indexed

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to perform all search and retrieval functions from remote
workstations

THIS REQUIREMENT WILL BE MET.

1.1.1.1.1 If client software is required, site costs must be specified in
any proposals.

CLIENT COSTS ARE OUTLINED IN THE COST PROPOSAL (PART V)

1.1.1.1.1 If no client software is required or license fees are
contemplated, these facts need to be specified in any proposal.

A SITE LICENSE FOR BOTH LA COUNTY AND ORANGE COUNTY IS PROVIDED.
THE COSTS ARE OUTLINED IN THE COST PROPOSAL (PART V)

1.1.1 Provide mug-shot searches; Based on pre-established search statements

THIS REQUIREMENT WILL BE MET.

1.1.1 Provide mugshot searches; Based on ad-hoc search statements

THIS REQUIREMENT WILL BE MET.

<PAGE>

1.1.1 Provide mug-shot searches: Based on ad-hoc search statements

THIS REQUIREMENT WILL BE MET.

1.1.1 Retrieve all mug-shots for an individual

THIS REQUIREMENT WILL BE MET.

1.1.1 Provide the ability to save the search results on the client machine.

THIS REQUIREMENT WILL BE MET.

1.1.1 On the server, the ability to create and modify a "group" table
(i.e. Florencia Gang, Meghan's Law, etc.)

THIS REQUIREMENT WILL BE MET.

1.1.1 Provide the ability to save the search results as a member(s) of a
grouping on the photo server.

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to retrieve, as a group, photos enrolled or tagged as a
group member.

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to export the result of a search of photos and demographics
to NIST format.

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to export the results of a search of photos AND LIMITED
DEMOGRAPHICS (SOME IDENTIFIER) to non-nist format.

THIS REQUIREMENT WILL BE MET.

1.1.1 Retrieval of any image when a correct unique identifier is entered
in any of the selected fields to be located and displayed within
acceptable response times

THIS REQUIREMENT WILL BE MET.

1.1.1 Provide for photo lineups of suspects by retrieving images and data
files using descriptors that closely fit the suspect's description.

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to import a JPEG photo from a source other then the LASD
EDMS database and mix it into a photo lineup.

<PAGE>

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to rearrange lineup photos

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to print mugshot photo and identifiers.

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to use standard WindowNt print resources / drivers.

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to print any display presented to a user on a workstation.
The display printouts shall include all header information, and
shall be readable and usable.

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to print to conventional output devices: Black and white
laser printer

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to print to conventional output devices: Color inkjet

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to print to conventional output devices: Color laser

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to print to conventional output devices: Dye sublimation
printer

THIS REQUIREMENT WILL BE MET.

1.1.1 Produce an output report after a mug-shot search that: Identifies
total number of mug-shots found in search

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to browse through mug-shots that represent possible "hits"
from a mug-shot search

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to browse through mug-shots thumbnails for "quality control"
consistency and to

<PAGE>

quickly determine the site and employee that submitted the photo.

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to print a collection of thumbnails as a document containing
thumbnails

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to print a collection of thumbnails as a document containing
thumbnails with identifiers referencing each photo

THIS REQUIREMENT WILL BE MET.

1.1.1 Provide simultaneous viewing of image and associated records

THIS REQUIREMENT WILL BE MET.

1.1.1 Ability to support soundex coding or similar phonetic type algorithm
name searches

THIS REQUIREMENT WILL BE MET.

1 SECURITY

1.1 A combination of an assigned log-on and a password shall be required
to sign on, and shall be validated by the system before access is
granted.

THIS REQUIREMENT WILL BE MET.

1.1 Each mugshot/record accessed will include the user ID, site, date,
time, reason reference, order of access, and printing event a system
audit trail.

THIS REQUIREMENT WILL BE MET.

1.1 All printouts of mugshots or any other image produced by the system
will include the user ID, site, date, time, reason reference, in a
system audit trail.

THIS REQUIREMENT WILL BE MET.

1.1 Ability to access must be limitable based on user's profile or role

THIS REQUIREMENT WILL BE MET.

1.1 Ability to provide an audit trail that is easily accessed by
administrator-users.

THIS REQUIREMENT WILL BE MET.

1.1 Ability to segregate or partition special classes, such as
juveniles, etc., and require

<PAGE>

separate or additional access privileges.

THIS REQUIREMENT WILL BE MET.

1.1 Firewall or other protection scheme between SDN and Cal Photo ID Web
Server.

THIS REQUIREMENT WILL BE MET.

1.1 Ability to monitor system usage historically by users

THIS REQUIREMENT WILL BE MET.

1.1 Ability to monitor system usage by site on SDN

THIS REQUIREMENT WILL BE MET.

1.1 Sub-contract vendor must be responsive to court appearances
regarding system integrity and safeguards, etc. at reasonable
witness rates.

THIS REQUIREMENT WILL BE MET.

1 OTHER FUNCTIONS

1.1 On-line, context-sensitive help screens accessible at any time
during program operation

THIS REQUIREMENT WILL BE MET.

1.1 Display error messages when improper key is hit or incorrect data is
entered

THIS REQUIREMENT WILL BE MET.

1.1 Provide ability to establish validation tables to govern all data
fields

THIS REQUIREMENT WILL BE MET.

1.1 Ability to purge records/images from the system: individually

THIS REQUIREMENT WILL BE MET.

1.1 Ability to purge records/images from the system: collectively - in a
batch dump

THIS REQUIREMENT WILL BE MET.

1.1 Ability to block access to an individual photo

THIS REQUIREMENT WILL BE MET.

<PAGE>

1.1 Ability to locate and block access of all photos of an individual

THIS REQUIREMENT WILL BE MET.

1.1 Ability to flag mugshot to prevent release of the image

THIS REQUIREMENT WILL BE MET.

1.1 Ability to flag mugshot to prevent retrieval of image

THIS REQUIREMENT WILL BE MET.

1.1 Ability to determine if mugshot has been altered (checksum?)

THIS REQUIREMENT WILL BE MET.

1.1 Ability to collect, save, and export to CD or e-mail mugshots
limited to specific originating sites.

THIS REQUIREMENT WILL BE MET.

1.1 Ability to adopt Scar, marks, and tattoo schemes

THIS REQUIREMENT WILL BE MET.

1.1 Photo recognition and retrieval of "matches" by photo recognition
algorithym

THIS REQUIREMENT WILL BE MET.

1.1 If no photo recognition offered, database design must contemplate
field space for enrollment schemes.

Facial Recognition is being offered.

1.1 Ability to create composites based on witness descriptions.

THIS REQUIREMENT WILL BE MET.

1.1 Ability to search for matches database based on composite

THIS REQUIREMENT WILL BE MET.

1.1.1 Using photo recognition software?

THIS REQUIREMENT WILL BE MET.

<PAGE>

1.1.1 Using some other search criteria for composite search?

THIS REQUIREMENT WILL BE MET.

1 HARDWARE / SOFTWARE MAINTENANCE MUST BE PROVIDED BY SUB-CONTRACT
VENDOR.

1.1 Must be provided for the EDMS beyond the present Store and Forward
which includes the EDMS photo server for the SDN and the Cal Photo
ID server.

SEE EXHIBIT B OF ORIGINAL PROPOSAL.

1.1 Annual Maintenance fees must be included in proposals.

SEE NEW COST PROPOSAL. PART V

1.1 24 hour / 7 days / 4 hour on site response (must)

THIS REQUIREMENT WILL BE MET.

1.1 Alarm on pager trouble alert

THIS REQUIREMENT WILL BE MET.

1.1 Backup capabilities (with responsibilities specified as to whether
done by LASD personnel or by vendor).

THIS REQUIREMENT WILL BE MET.

1.1 Archiving capability based on ad-hoc collection criteria.

THIS REQUIREMENT WILL BE MET.

1.1.1 Some remnant identifier in database to point to archives for
archived record.

ARCHIVED RECORDS WILL BE PLACED IN ANOTHER DIRECTORY. TO SEARCH THIS
DIRECTOR, SIMPLY IDENTIFY THE ARCHIVED DIRECTORY UPON ENTERING CCS.

1.1 Source code availability.

SOURCE CODE WILL BE PLACED IN AN ESCROW ACCOUNT.

1.1.1 Source code availability upon dissolution of company or other mishap

SOURCE CODE WILL BE PLACED IN AN ESCROW ACCOUNT.

1.1 Software integrity: If any function or incorporated portion of the
sub-vendor's software is

<PAGE>

dependent upon continued or renewing licensing agreements with
parties outside of LASD and DBI, that relationship must be disclosed.

UNDERSTOOD.

1 PROJECT PLAN

1.1 Project management (must) (who, what, when, where)

SEE PAGE 24 OF ORIGINAL PROPOSAL.

1.1 Completion date (whole project) from time of contract.

SEE PAGE 25 OF ORIGINAL PROPOSAL.

1.1 REQUIRED ADDITIONAL SOFTWARE:

1.1.1 Who purchases ? (must)

ALL SOFTWARE NEEDED IS INCLUDED IN THIS PROPOSAL WITH THE EXCEPTION
OF INTERNET BROWSER SOFTWARE AND CLIENT OPERATING SYSTEM SOFTWARE.

1.1.1 Approximation of what additional software may be needed (must be
stated)

LASD MUST PROVIDE INTERNET BROWSER SOFTWARE, CLIENT OPERATING SYSTEM
AND ORACLE LICENSES UNLESS OTHERWISE SPECIFIED BY THE COUNTY.

1.1.1.1 "Off the shelf product"?

LASD MUST PROVIDE INTERNET BROWSER SOFTWARE, CLIENT OPERATING SYSTEM
AND ORACLE LICENSES UNLESS OTHERWISE SPECIFIED BY THE COUNTY.

1.1.1.1 how many units / licenses? (Must)

ORACLE LICENSES WILL BE PROVIDED BY THE COUNTY. ALL OTHER LICENSES
ARE INCLUDED IN THE PROPOSAL.

1.1.1.1 If not "off the shelf", what custom programming is foreseeable or
contemplated (must)

ALL FORESEEABLE CUSTOMIZATION IS INCLUDED IN THE PROPOSAL.

1.1.1.1 programming fees / job rates? By whom?

ALL PROGRAMMING FEES AND JOB RATES ARE INCLUDED IN THE PROPOSAL.

1 TRAINING
1.1 Administrators

<PAGE>

1.2 Users
1.3 Onsite or away.
1.4 duration
1.5 Cost.

SEE EXHIBIT C AND PART V.

1 References:
1.1 Similar projects completed
1.2 Other special projects or systems that are relevant
1.3 Contact persons

SEE PAGE 27-36 OF THE ORIGINAL PROPOSAL.

<PAGE>

PART IV
-------

Changes to Original Proposal. This includes additional software and
capabilities as well as clarification of a few issues on original proposal.

1. An error was made on the original Cost Proposal. The Phase I Software
total which reads $118,000, should read $138,000 and has been corrected
in the new Cost Proposal in Part V.

2. Page 23 of the original proposal offers a site license to Los Angeles
County for the Web investigative interface. ImageWare is extending that site
license to Orange County at no additional cost. Value --- approx. $125,000

3. Page 17 of the original proposal indicates that no Face ID clients are
included with the system. ImageWare is now offering 4 copies of Face ID
client software at no additional cost. To summarize, at no cost to the
County, IWS will install Face ID server software and convert all existing
images to Face ID. All new images will be automatically enrolled into Face
ID and IWS will provide 4 copies of Face ID client software. Pricing for
additional copies of Face ID client software is included in the new Cost
Proposal. Value --- approx. $140,000

4. On Page 17 of the original proposal, IWS indicates that 20 copies of
Suspect ID composite software will be included in the system. IWS is now
offering an additional 20 copies of both Crime Lab and Vehicle ID at no
additional cost. Value --- approx. $66,000

5. IWS has provided sample prints of the several standard templates that are
included with the software being provided. These samples include:

- ID cards
- Inmate Wristbands
- Wanted Posters
- Line-ups
- Audit Reports
- Search Lists
- Record prints

6. Upon approval from LA county and DOJ, IWS will enroll Megan's Law images
into a separate Face ID database at no charge. All Face ID client sites
will then have facial recognition search capabilities against the Megan's
Law database. Value --- approx. $7,500

7. Award of this contract will fulfill all previous IWS obligations to the
County and the City of Lakewood at no cost to the County.

<PAGE>

Los Angeles County Exhibit A - PART V 3/22/99
Sheriff's Department Cost Proposal

PHASE 1

<TABLE>
<CAPTION>
DESCRIPTION QTY UNIT EXT TOTAL
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CENTRAL IMAGE SERVER
Netfinity 7000 M10 400 MHz (Quad Processor) RAID V
IBM Netfinity 7000 M10 400/512KB Xeon, 128MB ECC,OPEN,32X,PCI (Rack 1 $11,839.50 $11,839.50
(Std) 128MB (4x32MB) EDO DRAM DIMM - 50ns
(Std) IBM 1.44MB 3.5-inch Diskette Drive
(Std) Integrated IDE Controller
(Std) Internal IDE CD-ROM Drive
(Std) Netfinity 400W Hot-Swap Power Supply
(Std) Netfinity 7000 400MHz/512KB PII Xeon Processor
(Std) Planar Integrated Wide Ultra SCSI
(Std) Planar Integrated Wide Ultra SCSI for External Devices
(Std) S3 Trio64V2 Graphics - 1MB SGRAM
(Std) Systems Management Processor
3520 2RU Netfinity EXP15 Storage Expansion Unit 1 $3,321.00 $3,321.00
(Std) 3520 Enclosure Hot-Swap Backplane 1 $2,160.00 $2,160.00
IBM 35/70GB DLT SCSI Tape Drive - External 1 $7,458.75 $7,458.75
IBM Netfinity ServerRAID-3l Ultra2 SCSI Adapter 1 $945.00 $945.00
IBM Netfinity 400W Hot-Swap Redundant Power Supply II (2 total) 1 $810.00 $810.00
IBM Netfinity 7000 M10 Rack-to-Tower Conversion Kit 1 $540.00 $540.00
Netfinity 7000 400MHz/512KB Xeon Processor (4 total) 3 $2,160.00 $6,480.00
IBM 8mm to 68pin Converter for external cables 1 $52.65 $52.65
1GB (4x256MB) EDO DRAM DIMM - 50ns 1 $7,341.30 $7,341.30
IBM Netfinity 18.2GB Wide Ultra SCSI SCA-2 HDD (HH) 8 $1,618.65 $12,949.20
IBM Netfinity 2M Ultra2 SCSI Cable 2 $93.15 $186.30
Netfinity NetBAY3 2 $117.45 $234.90
Black Sleek Mouse 1 $28.35 $28.35
IBM Netfinity 10/100 Ethernet Adapter (PCI) 1 $128.25 $128.25
G72 - 17(15.7) in. Color Monitor, 69 KHz, Stealth Gray 1 $476.55 $476.55
IBM Standard Black 104-Key Keyboard 1 $60.75 $60.75
OBI External V.34 Data/Fax Modem 1 $496.80 $496.80
IBM Netfinity 4.5GB Wide Ultra SCSI SCA-2 Hot-Swap Hard Disk Drive (SL) 2 $565.65 $1,131.30
External F/W to F/W Cable-Standard with 01K1174 Tape Drive 1 $128.25 $128.25
SUBTOTAL $56,768.85

SOFTWARE
CCS Server Software 1 $20,000.00 $20,000.00
CCS Investigative Display Software 20 $4,900.00 $98,000.00
Suspect ID (Composite Software) 20 $0.00 $0.00
Crime Lab (Image Editing Software) 20 $0.00 $0.00
Vehicle ID 20 $0.00 $0.00
Custom NIST Import from DBI Store and Forward 1 $20,000.00 $20,000.00
Face ID Server Software (Includes Conversion and auto enrollment) 1 $0.00 $0.00
Face ID Client Software 4 $0.00 $0.00
SUBTOTAL $138,000.00

TOTAL HARDWARE/SOFTWARE $194,768.85

SERVICES
De-duplication of Database 5 $900.00 $4,500.00
Conversion of Existing Photos & Records (approx. 250,000) 250,000 $0.15 $37,500.00
Project Management/Specifications Gathering 5 $900.00 $4,500.00
SUBTOTAL $46,500.00

LICENSES
Sybase License 6.0 Server + 5 users 1 $1,248.75 $1,248.75
Sybase License 6.0 (20 User) 1 $3,243.75 $3,243.75
Windows Licenses TBD
SUBTOTAL $4,492.50

PHASE 1 SUBTOTAL $245,761.35
SHIPPING/HANDLING/INSTALLATION $23,372.26
TRAINING 4 $750.00 $3,000.00 $3,000.00

PHASE 1 TOTAL $272,133.61
</TABLE>

PHASE 2

Page 1

<PAGE>

Los Angeles County Exhibit A - Part V 3/22/99
Sheriff's Department Cost Proposal

<TABLE>
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Conversion of data on Mug Server 1 $10,000.00 $10,000.00
Project Management 10 $ 900.00 $ 9,000.00
SUBTOTAL $ 19,000.00
LICENSES
Oracle 8.0 Server License 1 TBD
Oracle Client Licenses 20 TBD
SUBTOTAL
---------------------------------------------------------------------------------------------------------------------------------
PHASE 2 SUBTOTAL $ 19,000.00
---------------------------------------------------------------------------------------------------------------------------------
TRAINING 1 $ 750.00 $ 750.00 $ 750.00

PHASE 2 TOTAL $ 19,750.00
---------------------------------------------------------------------------------------------------------------------------------

This is not related to development of the Oracle database. It is the code
time and effort that is needed to convert the Sybase database of a working
mug server to Oracle with very little down time.

---------------------------------------------------------------------------------------------------------------------------------
PHASE 3
---------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION QTY UNIT EXT TOTAL
---------------------------------------------------------------------------------------------------------------------------------

SOFTWARE
CCS Investigative Display Software 60 $ 4,900.00 $294,000.00
SUBTOTAL $294,000.00
LICENSES
Oracle Client Licenses 60 TBO

---------------------------------------------------------------------------------------------------------------------------------
PHASE 3 SUBTOTAL $294,000.00
---------------------------------------------------------------------------------------------------------------------------------
SHIPPING/HANDLING/START-UP $ 14,700.00
TRAINING 8 $ 750.00 $ 6,000.00 $ 6,000.00

---------------------------------------------------------------------------------------------------------------------------------
PHASE 3 TOTAL $314,700.00
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
TOTAL PHASE 1, 2 & 3
---------------------------------------------------------------------------------------------------------------------------------
TOTAL $606,583.61
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
REQUIRED INTERFACES
---------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION QTY UNIT EXT TOTAL
---------------------------------------------------------------------------------------------------------------------------------
CCHRS & LARCIS INTERFACE
---------------------------------------------------------------------------------------------------------------------------------

Systems Integration/Setup 40 $ 900.00 $36,000.00
Project Management 6 $ 900.00 $ 5,400.00
SUBTOTAL $ 41,400.00
---------------------------------------------------------------------------------------------------------------------------------
CAL-PHOTO/CAL-GANG INTERFACE
---------------------------------------------------------------------------------------------------------------------------------

NIST or Flat File Export for Cal-Photo ID 1 $ 5,000.00 $ 5,000.00
NIST or Flat File Export for Cal-Gang 1 $ 5,000.00 $ 5,000.00
Project Management 4 $ 900.00 $ 3,600.00
SUBTOTAL $ 13,600.00
---------------------------------------------------------------------------------------------------------------------------------
WEB INVESTIGATIVE INTERFACE
---------------------------------------------------------------------------------------------------------------------------------

WEB enabled CCS Investigative Software LA County and Orange County 1 $ 75,000.00 $ 75,000.00
Project Management 4 $ 900.00 $ 3,600.00

SUBTOTAL $ 78,600.00

---------------------------------------------------------------------------------------------------------------------------------
INTERFACE SUBTOTAL $133,600.00
---------------------------------------------------------------------------------------------------------------------------------
TRAINING 4 $ 750.00 $ 3,000.00 $ 3,000.00

---------------------------------------------------------------------------------------------------------------------------------
INTERFACE TOTAL $136,600.00
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Page 2

<PAGE>

Los Angeles County Exhibit A-Part V 3/22/99
Sheriff's Department Cost Proposal

* Final requirements are yet to be defined. Price is based on LA County and
Orange County site license and 5-7 search fields.

<TABLE>
<S> <C> <C>
COMPLETE SOLUTION
-----------------------------------------------------------------------------------------------------------------------
ALL PHASES AND INTERFACES TOTAL
TOTAL $743,183.61

WARRANTY Exhibit B
ImageWare offers a complete one year
warranty on all hardware and software

MAINTENANCE Exhibit B
ImageWare Customer Service (Year 1) $ 83,814.20
YEAR 1 STARTS ON THE DAY OF FINAL ACCEPTANCE
Maintenance & Technical Support (Year 2) $124,625.04
Maintenance & Technical Support (Year 3) $124,625.04
Maintenance & Technical Support (Year 4) $124,625.04
Maintenance & Technical Support (Year 5) $124,625.04
-----------------------------------------------------------------------------------------------------------------------

DISCOUNT EXPLAINATION

The above price quote reflects a cumulative discount of more than $500K
for DBI and Los Angeles County Sheriff's Office. Below are the standard
list prices for software and the corresponding discount that DBI and Los
Angeles County will receive.

-----------------------------------------------------------------------------------------------------------------------
Standard Pricing
SOFTWARE
CCS Server Software 1 $20,000.00 $20,000.00
CCS Investigative Display Software 80 $6,750.00 $540,000.00
Suspect ID (Composite Software) 20 $2,000.00 $40,000.00
Crime Lab (Image Editing Software) 20 $300.00 $6,000.00
Vehicle ID 20 $1,000.00 $20,000.00
Face ID Server Software 1 $67,000.00 $67,000.00
Face ID Client Software 4 $15,000.00 $60,000.00
Conversion of Existing Photos & Records (approx. 250,000) 250,000 $0.20 $50,000.00
STANDARD LIST PRICE SUBTOTAL $803,000.00
-----------------------------------------------------------------------------------------------------------------------

DBI DISCOUNT $333,500.00

FINAL QUOTE $469,500.00
-----------------------------------------------------------------------------------------------------------------------

THIS DISCOUNT DOES NOT INCLUDE THE SUBSTANTIAL DISCOUNTS GIVEN ON
HARDWARE, INTERFACES AND SERVICES. THE TOTAL PROJECT DISCOUNT EXCEEDS
$500,000.

Additional Face ID client costs:
1-10 copies $15,000.00
11-50 copies $12,500.00
51-100 copies $9,000.00
over 100 $6,000.00

</TABLE>

Page 3