Sample Business Contracts

Valued Added Reseller (VAR) Agreement - ImageWare Software Inc. and Visionics Corp.

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         This Agreement is made as of the 7th day of October 1998, by
ImageWare Software, ("VAR"), with offices at 15373 Innovation Drive, Suite
120, San Diego, California 92128-3424 and Visionics Corporation, a
corporation organized under the laws of New Jersey ("Licensor"), with offices
at 1 Exchange Place, Jersey City, NJ 07302 USA.

         WHEREAS, Visionics owns or controls the rights in certain face
recognition technology and products (as defined below);

         WHEREAS, VAR desires a business relationship to distribute and sell
Visionics products in accordance with and subject to all of the provisions of
this Agreement;

         NOW, THEREFORE, for the consideration stated in this Agreement, the
parties hereby agree as follows:

                                   SECTION 1.

     The following words shall, where the context allows, have the
     following meanings whether such words shall appear in lower case or
     with the first letter of each word capitalized:

     a)   "ENGINE" shall mean Visionics' face detection and recognition
          technology as encapsulated in the FaceIt Developer Kit.

     b)   "VISIONICS' FINISHED PRODUCTS (VFP)" shall mean products built by
          Visionics based on the Engine and offered to VAR for resale. Current
          list of Visionics' Finished Products(s) that will be subject to this
          Agreement is given in Exhibit A, Section 1. This list can be updated
          and modified from time to time by written consent of both parties.

     c)   "OPEN-SOURCE PRODUCTS (OSP)" shall mean VFPS that Visionics
          designates as Open Source by providing Preferred VARs access to
          the application source code for the purpose of customizing the
          applications to the specific needs of their customers. Current
          list of OSPs is given in Exhibit A, Section 2. This list can be
          updated from time to time by mutual written agreement of both

     d)   "VAR CUSTOMIZED PRODUCT (VCP)" shall mean the product which results
          from ImageWare's customization of the OSP, Engine or from the
          integration of the OSP with other value added components - example
          ImageWare's FaceID program (part of the C.R.I.M.E.S. product suite).

     e)   "APPLICATIONS" shall be defined as product applications that the
          VAR is allowed to pursue subject to the terms of this Agreement. The
          Applications are set in Exhibit A, Section 3. This list can be
          updated by mutual written agreement by both parties.

     f)   "TERRITORY" shall mean the world.

     g)   "TRADEMARK" shall be defined as any trademarks(s) owned by Visionics
          from time to time.

     h)   "CUSTOMERS" shall be defined as end-user customers that VAR sells
          the VCP product to.

     i)   "SDK" Visionics' FaceIt software developer kit.


                                   SECTION 2.
                                GRANT OF LICENSE

2.1  For the term of this Agreement, Visionics hereby grants to VAR and
     VAR hereby accepts:

     a)   A limited, non-exclusive license throughout the Territory to market
          and resell VFPs.

     b)   The right to customize the OSPs to produce a VAR Customized Product
          (VCP), provided that such customization shall be done (i) within
          the guidelines permitted by Visionics' SDK and the application
          source code for the OSPs, (ii) in order to meet specific needs of

2.2  In connection with the exercise of the rights granted in paragraph
     (2.1a, b) above the VAR:

     a)   Acknowledges that it has no right under this current Agreement to
          sublicense the Engine, or the OSPs to any third party, other than as
          incorporated in a VAR customized product.

     b)   Understands and accepts that the Engine in the form of the SDK is
          provided for the purpose of facilitating the customization of OSP
          and that the VAR does not have the right to resell the SDK or the
          Engine independently without prior written approval of Visionics.

     c)   Can use its own tradename for the VCP provided that the VAR uses the
          FaceIt logo(s) and/or the expression "with FaceIt -Registered
          Trademark- Technology" or "Powered by FaceIt" or "with FaceIt
          -Registered Trademark- Face Recognition Technology" or equivalent
          expressions that acknowledge that the face recognition technology in
          the VCP is FaceIt from Visionics on where appropriate on its VCP
          Product packaging and advertising, splash screen etc, with all such
          use to inure to the benefit of Visionics or its suppliers. VAR is to
          provide Visionics with samples of its packaging and advertisement
          that mention FaceIt technology before the manufacture, sale or
          distribution of (whichever occurs first) of its VCP.

     d)   VAR explicitly acknowledges that the grant in paragraph (2.1a,b)
          will not in any way be interpreted as granting ownership rights in
          any intellectual property associated with the ENGINE, THE VFPS OR
          THE OSPS. All such ownership shall remain solely with Visionics.

     e)   Notwithstanding any other provisions contained in the Agreement,
          all intellectual property created by VAR previous to or during the
          course of this agreement, including but not limited to that
          contained in VCP, shall be owned exclusively by VAR except those
          reserved in paragraph (2.2d).

2.3  Notwithstanding any other provisions contained in this Agreement,
     Visionics and its suppliers reserve all rights not expressly granted
     herein to VAR.

                                   SECTION 3.
                             VISIONIC'S OBLIGATIONS

3.1  Unless the VAR has already received the SDK, Visionics shall deliver
     to VAR a copy of the SDK within ten (10) business days following the
     execution of this Agreement. The SDK will be invoiced NET 30 for the
     amount of $4,495 ($US) (discount rates are not applicable to SDKs).

3.2  Visionics shall deliver to VAR, within 30 days of release, the VFPs
     for evaluation and demonstration to Customers by VAR.


3.3  Visionics shall deliver to VAR, within 30 days of release, the
     application source code for the OSPs.

                                   SECTION 4.
                                VAR'S OBLIGATIONS

4.1  VAR shall, subject to the terms of this Agreement, use reasonable
     commercial efforts to promote, market, sell and support the VFPs and to
     develop and commercialize the VCPs throughout the Territory.

4.2  VAR shall cause Visionics copyright, patent and trademark notices to
     appear on or within each unit of the VCP Product and/or each item of
     packaging and promotional material as may be designated and approved
     by Visionics.

4.3  VAR shall keep Visionic reasonably informed regarding its marketing and
     business development plans relating solely to the VCPs and VFPs, to the
     extent that those plans include the sale of any of Visionics' products
     and their customizations.

4.4  VAR shall reasonably cooperate with Visionics in protecting
     Visionics' Engine, VFPs and intellectual property, at Visionics'
     expense, and shall promptly supply Visionics, at Visioncs' expense,
     with any information or materials reasonably required by Visionics. If
     VAR is notified in writing or becomes aware of any unauthorized use of
     the Engine in the Territory, VAR shall so advise Visionics. Visionics
     may, in its discretion, take, or elect not to take, such action as it
     deems advisable against any infringing party. If Visionics fails, or
     elects not to take action against an infringing party within 30
     business days after receipt by Visionics of VAR's notice to Visionics
     of such unauthorized use, VAR shall have the right, at VAR's expense,
     to commence an action against the infringer in VAR's name and/or in
     Visionics' name and Visionics shall cooperate with VAR, at VAR's
     expense, in connection therewith. VAR shall not enter into any
     settlements of infringements without Visionics' consent, which shall
     not be unreasonably withheld.

4.5  VAR agrees to reasonably assist Visionics in protecting the distributon
     of the VFPs and Engine from unlawful duplication. VAR shall furnish
     Visionics with samples of proposed advertising, packaging and wrapping
     materials for the VCP Products before manufacture, sale or distribution
     (whichever first occurs) of the same.

                                   SECTION 5.
                               PROPRIETARY RIGHTS

5.1  Visionics or its suppliers shall own the copyright and all other rights
     to the Engine, and VFP, and VAR shall not challenge, or cause any third
     party to challenge, the rights of Visionics or its suppliers anywhere
     in the world.

5.2  VAR shall own the copyright and other rights to any packaging,
     advertising and promotional material produced by VAR for the VCP
     Product only to the extent that they are not derivative works of the
     material provided by Visionics to VAR. VAR acknowledges that is not,
     by virtue of this Agreement, acquiring from Visionics the right to
     create or utilize derivative works from the Engine or VFPs after the
     expiration of the term of this agreement.


                                    SECTION 6

6.1  Each party acknowledges that it may be provided with information
     about, and during the course of this Agreement will be brought into
     close contact with many confidential affairs of the other Party,
     including proprietary information about operational methods,
     technical processes and other business affairs and methods, plans
     for future developments and other information not readily available
     to the public, including but not limited to source code for OSPs,
     user and maintenance manuals, performance curves etc, all of which
     are highly confidential and proprietary and all of which were
     developed by the parties at great effort and expense. In recognition
     of the foregoing, Each Party covenants and agrees:

     (a)  That it will keep secret all confidential matters of the party and
          not disclose them to anyone outside of the receiving Party, except
          with the disclosing Party's prior written consent;

     (b)  That it will not make use of any of such confidential matters for its
          own purposes or the benefit of anyone other than the disclosing
          Party, other than in accordance with the terms of this Agreement;

     (c)  That it will deliver promptly to the disclosing Party at any time
          the disclosing Party may so request, all confidential memoranda,
          notes, records, reports and other confidential documents (and all
          copies thereof) relating to the business of the disclosing Party,
          which it may then possess or have under its control.

6.2  Each Party hereto shall keep in confidence and not disclose to any
     third Party, without the written permission of the other party, the
     terms of this agreement.

6.3  This requirement of confidentiality shall not apply to information
     that is (a) in the public domain through no wrongful act of the
     receiving party; (b) rightfully received by the receiving party from
     a third party who is not bound by a restriction of nondisclosure;
     (c) is required to be disclosed by applicable rules and regulations
     of government agencies or judicial bodies; (d) was already in
     possession of the receiving party as of the date of the receipt of
     Visionics Engine, (Documented date of ImageWare's receipt of the
     Engine from Visionics is April 24, 1998).

6.4  This obligation of confidentiality shall survive the termination of
     this Agreement.

                                    SECTION 7
                               COMPETING PRODUCTS
7.1  VAR agrees to refrain from direct communication with Visionics'
     competitors regarding the Engine and VFPs, including but not limited
     to its features, performance benchmarks, user feedback, product
     roadmap and any other information not readily available to third
     party. This shall apply to information that may not be considered

                                    SECTION 8
                                  PAYMENT TERMS

8.1  VAR shall during the term of this agreement or after the term of
     this agreement in the instance of residual product stock, pay to
     Visionics royalties for each unit of the product sold in accordance
     with the Pricing&Royalties Schedule in Exhibit B hereof by check or
     wire transfer in U.S. Dollars, according to instructions given to
     VAR by Visionics.


8.2  VAR shall pay to Visionics Maintenance Fees and Upgrade Fees as set in
     Exhibit C.

     Under the terms of this Agreement, VAR is entitled to a 40% discount from
     Visionics Published List Prices in accordance with the Pricing&Royalties
     Schedule. In consideration of said discount, VAR agrees to a minimum
     royalty payment of $10,000 per year. The minimum royalty shall be
     pro-rated to a quarterly minimum payment of $2,500 and is due 30 days
     after the close of each quarter. The accounting period shall coincide
     with the fiscal accounting period.

8.3  VAR will bear all reasonable related bank charges. Any late payment will
     accrue interest at a rate of 1.5% per month. VAR will pay any late
     payment charge upon remitting the principle amount to Visionics.

8.4  Statements as to Royalties shall be sent by VAR to Visionics within 30
     days following the end of each quarterly calendar period for such
     preceding quarterly period together with payment of Royalties, if any,
     shown to be due thereon.

8.5  All statements of Royalties and all other accountings rendered by VAR
     hereunder shall be subject to objection, stating the basis thereof, by
     Visionics within three (3) years after the date rendered (including
     after termination or expiration of this Agreement).

8.6  VAR shall maintain, at its executive offices, books of account
     concerning sales of the VCP Product and the VFPs. Visionics or its agent
     may, at Visionics' sole expense, examine VAR's books relating to sales
     of the VCP Products and the VFP's solely for the purpose of verifying
     the accuracy thereof, during VAR's normal business hours and upon
     reasonable written notice. Such books relating to any particular royalty
     statement may be examined as aforesaid only within two years after the
     date rendered. Visionics shall notify VAR in writing within 90 days
     after such examination if Visionics believes that VAR's books are not
     accurate. Visionics and its agents shall keep all information obtained
     in such examination confidential and use such information solely for the
     purpose of this paragraph.

8.7  Visionics may change the List Prices as defined in Exhibit C,
     Maintenance Fees and Upgrade Fees, in whole or in part, at any time
     upon no less than 90 days prior notice to VAR, subject to any binding
     commitment that Visionics has made to VAR, but only if Visionics
     generally applies such changes to its other VARs. Visionics may also
     increase the Product Discount, Maintenance Discount or Upgrade Discount
     upon no less than 30 days prior notice to VAR.

8.8  All amounts payable by VAR under this Agreement are exclusive of any
     tax, levy or similar governmental charge that may be assessed by any
     jurisdiction, whether based on gross revenue, the delivery, possession
     or use of the VARs product, the execution or performance of this
     Agreement or otherwise, except for net income, net worth or franchise
     taxes assessed on VAR outside of the Territory. If, under the laws of the
     Territory, VAR is required to withhold any taxes on such payments, then
     the amount of the payment will be automatically increased to totally
     offset such tax, so that the amount actually remitted to Visionics, net
     of all taxes, equals the amount invoiced or otherwise due. VAR
     promptly furnish Visionics with the official receipt of payment of these
     taxes to the appropriate taxing authority. VAR will pay all other


     taxes, levies or similar governmental charges or provide Visionics with
     a certificate of exemption acceptable to the taxing authority.

                                  SECTION 9

9.1  VAR shall be responsible for all technical support inquiries relating to
     the VFPs and VCP which originate from VARs customers within the
     Territory. These services include, but are not limited to: adequate
     technical assistance, notification of upgrades, distribution of upgrades
     and updates, and obtaining bug fixes from Visionics and distributing
     them to the Customers.

     VAR shall put together an appropriate maintenance program that it will
     offer for a fee to its customers.

9.2  Visionics shall provide VAR personnel with reasonable training, such
     technical information, current maintenance documentation, and
     assistance, by E-Mail or by fax, by phone at VARs telephone expense, to
     enable VAR to provide adequate support services to Customers.

9.3  Visionics shall provide notice of upgrades, identified problems, and
     technical letters to VAR in a timely fashion.

                                  SECTION 10
                               TERM OF AGREEMENT

10.1 The term of this Agreement shall commence upon the Effective Date of
     this Agreement and shall expire in three years. This Agreement may be
     renewed at Visionics' option and in writing after a performance review
     to be conducted no later than 6 months before the Date of Expiration of
     this Agreement. The obligation to pay royalty on residual product stock
     that uses the Engine shall survive the termination of this Agreement.

                                  SECTION 11

11.1 In the event that (1) VAR fails to make any royalty payments to
     Visionics pursuant to the terms of this Agreement, (2) bankruptcy,
     insolvency or reorganization proceedings, or other proceedings analogous
     in nature or effect, are instituted against the VAR or by the VAR with
     respect to itself, or (3) VAR breaches any representation or warranty
     made herein, Visionics may terminate this Agreement forthwith upon
     written notice to VAR.

11.2 VAR has the right to terminate this Agreement without cause at any time
     with 60 day written notice to Visionics.


11.3 Upon expiration of the term of this Agreement, all rights granted to VAR
     hereunder shall immediately and without further action by Visionics
     revert to Visionics. VAR shall not thereafter manufacture, advertise,
     distribute or sell VFPs; provided, however, that the VAR may sell off
     existing inventories of the VFPs for a period of six months, subject to
     all the other terms and conditions hereof. After expiration or other
     termination of this Agreement, VAR shall continue to pay all royalties
     that become due and payable hereunder.

11.4 Visionics and VAR agree that upon expiration or termination of this
     Agreement, neither party shall be liable to the other for any damages or
     expenditures, loss of profits of any kind or nature sustained or arising
     out of, or alleged to have been sustained or to have arisen out of such
     termination. The expiration or termination of this Agreement shall not,
     however, relieve or release either party from making payments which may
     be owing to the other party under the terms of this Agreement.

11.5 Upon expiration or termination of this Agreement, VAR shall immediately
     cease all use of Visionics' Trademarks, and will not use any trademark
     which is confusingly similar to any of Visionics' Trademarks.

                                  SECTION 12

12.1 Each party represents and warrants to the other that this Agreement has
     been duly authorized, executed and delivered by it; it has the full
     power and authority and is free to enter into this Agreement and to
     perform its obligations hereunder; this Agreement constitutes its valid
     and binding obligation, enforceable in accordance with its terms; and the
     making of this Agreement does not violate any agreement, right or
     obligation existing between it and any other person, firm or
     corporation, on the other hand.

12.2 VAR represents and warrants that any materials created or added to the
     VFP or OSP or the VCP Product Set by VAR or its agents, does not and
     will not infringe the proprietary rights of any third party including,
     without limitation, patents, copyrights, trade secrets, rights of
     privacy and other intellectual property rights. VAR further represents
     and warrants that the VCP Product Set will be manufactured in accordance
     with industry standards for similar products, to the best of its
     knowledge will be free of defects, and will not be harmful to the
     property or person of third parties. VAR will handle in a professional
     manner any end user or distributor inquiries or complaints regarding the

12.3 Each party shall indemnify, defend and hold harmless the other (and the
     other's officers, directors, and affiliated companies) from any cost or
     expense (including reasonable attorney's fees), whether awarded by a
     court of panel or arbiters or paid in settlement, payable by the
     indemnified party to a third party as a result of a breach by the other
     party to this Agreement of a representation or warranty contained in
     this section. The party who would be entitled to indemnification shall
     promptly notify the other party of any such claim or proceeding and
     shall not settle any such claim or proceeding without the indemnifying
     party's prior written consent. The indemnified party shall have the
     right at its expense to participate in the defense thereof with counsel
     of its choice, provided that the indemnifying party shall have the right
     at all times to retain or resume control of the conduct of such defense.
     This indemnification obligation shall survive for two years after
     termination or expiration of this Agreement.


12.4 Visionics represents and warrants to VAR that the sale of the VFP and
     use of the Engine, OSP, and SDK to produce and sell the VCP by VAR will
     not infringe any copyright, patent, trade secret, or other intellectual
     property rights of any third party and that Visionics has the right to
     grant the licenses hereunder to VAR. For purposes of this section, VFP,
     Engine, OSP, and SDK are collectively referred to as "Licensed Products".
     Visionics shall indemnify, defend, and hold VAR harmless against any
     claim that the use of the Licensed Products in accordance with this
     Agreement, infringes any third-party intellectual property rights.
     Visionics shall have the right and responsibility to control the defense
     and all related settlement negotiations. Visionics shall bear all the
     expenses for any such defense and negotiations. If any infringement
     claim has occurred or is reasonably likely to occur, then Visionics
     shall be obligated, at VAR's option, either (i) to procure the right for
     VAR to continue the use of the Licensed Products; (ii) replace or modify
     the Licensed Products so they are noninfringing; or (iii) if neither of
     the foregoing options are available, to return to VAR the fees paid by
     VAR under this Agreement. Visionics shall reimburse VAR on a monthly
     basis for any and all damages and expenses incurred by VAR as a direct
     or indirect result of a third-party infringement claim. Visionics
     further represents and warrants to VAR that the Licensed Products shall
     be of the quality for which they were contracted, and fit for the
     purpose for which they were intended by VAR.

                                  SECTION 13
                           LIMITATION OF LIABILITY

13.1 Under no circumstances will either Party or related persons, be liable
     for any consequential, indirect, special, punitive or incidental
     damages or lost profits, whether foreseeable or unforeseeable, based on
     claims of either Party, their dealers or Customers (including, but not
     limited to, claims for loss or data, goodwill, use of money or use of
     the Engine/VFP, interruption in use or availability of data, stoppage of
     other work or impairment or other assets), arising out of breach or
     failure of express or implied warranty or condition, breach of contract,
     misrepresentation, negligence, strict liability in tort or otherwise. In
     no event will the aggregate liability which either Party or related
     persons may incur in any action or proceeding exceed the total amount
     actually paid to by either Party for the specific item that directly
     caused the damage. Visionics disclaims any and all liability for
     recommendations that Visionics may make to VAR, its dealers or Customers,
     with respect to third party products that Visionics may recommend. This
     section will not apply only when and to the extent that applicable law
     specifically requires liability, despite the forgoing exclusion and

13.2 VAR agrees to include an appropriate end-user license in its VCP Product
     Set that will hold the VAR and Visionics harmless against claims by
     third party. This end-user license should include explicit language to
     the effect that the product is sold as "AS IS". Alternatively VAR may
     elect to purchase product liability insurance to cover potential claims
     and agrees to indemnify Visionics against all third Party claims in
     relation to the VFPs or VCPs.

                                  SECTION 14
                           MISCELLANEOUS PROVISIONS


14.1 NO ASSIGNMENT. VAR shall not have the right to assign any of its
     rights of obligations hereunder.

14.2 NOTICES. All notices, statements and payments to be sent to the
     parties hereunder shall be addressed to the parties at the addresses
     set forth on the first page hereof or at such other address as the
     parties shall designate in writing from time to time. All notices
     shall be in writing and shall either be served by personal delivery
     (to an officer of each company), mail, or facsimile (if confirmed by
     mail or personal delivery of the hard copy), all charges prepaid.
     Except as otherwise provided herein, such notices shall be deemed
     given when received. Copies of all notices to Visionics should be
     sent to Visionics at its address set forth above attention: Dr.
     Joseph Atick, President.

14.3 SCOPE OF AGREEMENT AND AMENDMENT. The entire understandings between
     the parties hereto relating to the subject manner hereof are
     contained herein. There are no representations, warranties, terms,
     conditions, undertakings or collateral agreements, express, implied
     or statutory, between the parties other than as expressly set forth
     in this Agreement. This Agreement cannot be changed, modified,
     amended or terminated except by an instrument in writing executed by
     both VAR and Visionics. All Schedules, which may be attached hereto,
     constitute a part of this Agreement and are incorporated herein by
     this reference.

14.4 NO WAIVER. No waiver, modification or cancellation of any term or
     condition of this Agreement shall be effective unless executed in
     writing by the party charged therewith. No written waiver shall
     excuse the performance of any act other than those specifically
     referred to therein and shall not be deemed or construed to be a
     waiver of such terms or conditions for the future or any subsequent
     breach thereof.

14.5 RELATIONSHIP OF PARTIES. This Agreement does not constitute a
     partnership or joint venture between Visionics and VAR. Neither VAR
     or Visionics shall have any right, power or authority to obligate or
     bind the other in any manner whatsoever, except as provided for in
     this Agreement, and nothing herein contained shall give or is
     intended to give any rights of any kind to any third persons.

14.6 APPLICABLE LAWS. This Agreement shall be governed by the laws of New
     Jersey applicable to contracts made and to be wholly performed
     therein (without regard to choice of law).

14.7 ARBITRATION. In the event of any dispute or controversy hereunder
     (including, without limitation, any dispute involving the existence,
     validity or breach of this Agreement), the parties shall submit same
     to arbitration privately and confidentially in New York, New York by
     one arbitrator mutually agreed (or, if none, appointed pursuant to
     the Commercial Arbitration Rules of the American Arbitration
     Association), subject to the arbitrator executing an appropriate
     confidentiality  agreement. The result of any such arbitration shall
     be binding but shall not be made public unless necessary to confirm
     same after non-compliance by a party.

14.8 SEVERABILITY. If any provision of this Agreement is or becomes or is
     deemed invalid, illegal or unenforceable under the applicable laws
     or regulations of any jurisdiction, then either such provision will
     be deemed amended to conform to such laws or regulations without
     materially altering the intention of the parties or it shall be
     stricken and the remainder of this Agreement shall remain in full
     force and effect.

14.9 APPROVAL AND CONSENT. Wherever the approval or consent of a party is
     required hereunder, such approval or consent shall not be
     unreasonably withheld.

14.10 NO CONFLICT OF INTEREST. The parties represent and warrant that they
      have full power and authority to undertake the obligations set forth
      in this Agreement and that they have not entered into any other
      agreements that would render them incapable of satisfactorily
      performing their obligations thereunder.


14.11 COMPLIANCE WITH LAW. The parties agree that they shall comply with
      all applicable laws and regulations of governmental bodies or
      agencies in their performance under this Agreement.

14.12 COUNTERPARTS. This Agreement may be executed in counterparts, each
      of which shall be deemed an original Agreement for all purposes and
      which collectively shall constitute one and the same Agreement.

      IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the day and year first above written.

ImageWare Software.

By:  /s/ [ILLEGIBLE]


By:  /s/ [ILLEGIBLE]
Its: Marketing Manager


                                  EXHIBIT A











C.R.I.M.E.S. is an integrated suite of software products which aids law
enforcement in the criminal investigative and arrest process. The
C.R.I.M.E.S. modular suite consists of five programs which are able to work
independent of one another. Included in the suite are: Suspect ID-Registered
Trademark-, a full color, photo-realistic composite program. Crime
Lab-Registered Trademark-, a photo and video image enhancement program,
Vehicle ID-TM-, a vehicle identification program, Crime Capture System-TM-, a
digital booking system, and Face ID-TM-, a facial recognition program.

Face ID-TM-is the program that Visionics Engine, OSPs and VFPs will be
integrated with. The current published description of Face ID-TM- is the

Face ID is a facial recognition and retrieval program that helps officers
positively identify both unknown suspects and criminals with multiple
aliases. Quickly identify a suspect at the time of booking, or if caught on
video by searching local, county, regional or state digital photobases. Face
ID searches can be conducted with or without setting criteria filters.
Identify a suspect by searching a photo-realistic suspect composite against a
digital booking database. Rather than searching a large database one photo at
a time. a witness can average photographs and/or composites to rapidly
identify a suspect.



                              PRICING & ROYALTIES

Prices: For each Licensed Product that VAR delivers as part of VAR's Product
Set, VAR will pay Licensor the then-current list price of the Licensed
Product as detailed below, less the applicable discount. This payment will be
due and payable 30 days after the end of the following calendar quarter after
the Licensed Product is accepted by the Customer. The current List Prices are
specified below:

                             FACEIT DB PRICING SCHEDULE*


<S>                    <C>                <C>        <C>        <C>
1-30,000                       $ 13,988    $ 6,994    $ 4,196    $ 2,098
30,000-75,000                  $ 20,988    $10,494    $ 6,296    $ 3,148
75,000-250,000                 $ 37,488    $18,744    $11,246    $ 5,623
250,000-500,000                $ 66,988    $33,494    $20,096    $10,048
500,000-1,000,000              $120,988    $60,494    $36,296    $18,148

     Server includes a license for 1 client


<S>                  <C>
1-4                            $4,196
5-8                            $3,497
9-20                           $1,255
21-50                          $1,198

Each Additional 50             $  600

    *Prices for Multiple CPUs are based on multiple CPUs within one Server Unit

*The above pricing schedule is applicable solely for FaceIt DB (when
integrated with digital imaging systems and law enforcement investigative
tools. Other pricing schedules will apply when FaceIt DB (is integrated with
other systems, including but not limited to applicant processing systems.

**Prices for Multiple CPUs are based on multiple CPUs within one Server Unit.



July 12, 1999
                               Agreement Modifications

     1.   The royalty structure of our Agreement dated October 7th, 1998 is
          hereby amended to reflect a 30% discount from Visionics Published OEM
          Licensing Fees in accordance with the Pricing and Royalties Schedule.

     2.   In consideration of the terms listed above, Imageware agrees to a
          minimum royalty payment in the amount of $200,000 per year, effective
          March 1, 1999.  The minimum royalty payment shall be pro-rated to a
          quarterly payment of $50,000 and is due 30 days after the close of
          each quarter.  The accounting period shall coincide with the effect
          date of March 1, 1999.

          /s/ [ILLEGIBLE]

          /s/ [ILLEGIBLE]