OFFICE LEASE

EXHIBIT 10.54

Modified Form of OFFICE BUILDING LEASE Developed by PORTLAND METROPOLITAN ASSOCIATION OF BUILDING OWNERS AND MANAGERS

OFFICE LEASE

This lease, made and entered into at Clackamas, Oregon. This 2nd day of October 2009 by and between

LANDLORD: XXXXX X. XXXXXXXX, SUCCESSOR TRUSTEE OF THE XXXXXXXX X. XXXX TRUST DATED SEPTEMBER 3, 1975, AS AMENDED AND XXXXX X. XXXX TRUSTEE OF THE XXXXX X. XXXX TRUST

And

TENANT: IMAGEWARE SYSTEMS, INC.

Landlord hereby leases to Tenant the Following: Suite 230	(the Premises),
in Xxx Xxxx Xxxxxx, 00000 XX Xxxxxxxxx Xxxx	(the Building),

at Clackamas, Oregon, containing approximately 6,024 rentable square feet as shown on the attached floor plan,

calculated using a load factor of fifteen percent. Tenant's Proportion Share for purposes of Section 29 shall be 16.52%.

This lease is for a term commencing November 1, 2009 (Lease Commencement Date) and continuing through October 31, 2012 at a Monthly Base Rental as follows:

11/01/2009 to 10/31/2010 = $11,044.00

11/01/2010 to 10/31/2011 = $11,375.32

11/01/2011 to 10/31/2012 = $11,716.58

Rent is payable in advance on the 1ST day of each month commencing November 1, 2009.

Landlord and Tenant covenant and agree as follows:

1.1 Delivery of Possession.

Should Landlord be unable to deliver possession of the Premises on the date fixed for the commencement of the term, commencement will be deferred and Tenant shall owe no rent until notice from Landlord tendering possession to Tenant If possession is not so tendered within 90 days following commencement of the term, then Tenant may elect to cancel this lease by notice to Landlord within 10 days following expiration of the 90-day period. Landlord shall have no liability to Tenant far delay in delivering possession, nor shall such delay extend the term of this lease in any manner unless the parties execute a written extension agreement

2.1 Rent Payment.

Tenant shall pay the Monthly Base Rent for the Premises and any additional rent provided herein without deduction or offset. Rent for any partial month during the lease term shall be prorated to reflect the number of days during the month that Tenant occupies the Premises. Additional rent means amounts determined under Section 19 of this Lease and any other sums payable by Tenant to Landlord under this Lease. Rent not paid when due shall bear interest at the rate of one-and-one-half percent per month until paid. Landlord may at its option impose a late charge of $.05 for each $1 of rent for rent payments made more than 10 days late in lieu of interest for the first month of delinquency, without waiving any other remedies available for default. Failure to impose a late charge shall not be a waiver of Landlord's rights hereunder.

Page 1 of 15

3.1 Lease Consideration.

Upon execution of the lease Tenant has paid the Base Rent for the first full month of the lease term for which rent is payable, and in addition has paid the sum of 511,716.58 as lease consideration. Landlord may apply the lease consideration to pay the cost of performing any obligation which Tenant fails to perform within the time required by this lease, but such application by Landlord shall not be the exclusive remedy for Tenant's default. If the lease consideration is applied by Landlord, Tenant shall on demand pay the sum necessary to replenish the lease consideration to its original amount. To the extent cot applied by Landlord to cure defaults by Tenant, the lease consideration shall be applied against the rent payable for the last month of the term. The lease consideration shall not be refundable.

4.1 Use.

Tenant shall use the Premises as an identity management software and technology company and for no other purpose without Landlord's written consent. In connection with its use, Tenant shall at its expense promptly comply and cause the Premises to comply with all applicable laws, ordinances, rules and regulations of any public authority and shall not annoy, obstruct, or interfere with the rights of other tenants of the Building. Tenant shall create no nuisance nor allow any objectionable fumes, noise, or vibrations to be emitted from the Premises. Tenant shall not conduct any activities that will increase Landlord's insurance rates for any portion of the Building or that will in any manner degrade or damage the reputation of the Building.

4.2 Equipment.

Tenant shall install in the Premises only such office equipment as is customer/ for general office use and shall not overload the floors or electrical circuits of the Premises or Building or alter the plumbing or wiring of the Premises or Building Landlord must approve in advance the location of and manner of installing any wiring or electrical, heat generating or communication equipment or exceptionally heavy articles. All telecommunications equipment, conduit, cab k s and wiring, additional dedicated circuits and any additional air conditioning required because of heat generating equipment or special lighting installed by Tenant shall be installed and operated Tenant’s expense. Landlord shall have no obligation to permit the installation of equipment by any telecommunications provider whose equipment is not then servicing the Building.

4.3 Signs.

No signs, awnings, antennas, or other apparatus shall be painted on or attached tote B eliding or anything placed on any glass or woodwork of the Premises or positioned so as to be visible from outside the Premises without Landlord's written approval as to design, size, location, and color. All signs installed by Tenant shall comply with Landlords standards for signs and all applicable codes and all signs and sign hardware shall be removed upon termination of this lease with the sign Location restored to its former state unless Landlord elects to retain all or any portion thereof.

5.1 Utilities and Services.

Landlord will furnish water and electricity to the Building at all times and will furnish heat and air conditioning (if the Building is air conditioned) during the normal Building hours as established by Landlord. Janitorial service will be provided in accordance with the regular schedule of the Building, which schedule and service may change from time to time. Tenant shall comply with all government laws or regulations regarding the use or reduction of use of utilities on the Premises. Interruption of services or utilities shall not be deemed an eviction or disturbance of Tenant's use and possession of the Premises, render Landlord liable to Tenant for damages, or relieve Tenant from performance of Tenant's obligations under this lease. Landlord shall take all reasonable steps to correct any interruptions in service. Electrical service furnished will be 114 volts unless different service already exists in the Premises. Tenant shall provide its own surge protection for power furnished to the Premises.

5.2 Extra Usage.

If Tenant uses excessive amounts of utilities or services of any kind because of operation outside of normal Building hours, high demands from office machinery and equipment, nonstandard lighting, or any other cause. Landlord may impose a reasonable charge for supplying such extra utilities or services, which charge shall be payable monthly by Tenant in conjunction with rent payments. in cast of dispute over any extra charge under this paragraph, Landlord shall designate a qualified independent engineer whose decision shall be conclusive on both parties. Landlord and Tenant shall each pay one-half of the cost of such determination.

5.3 Security.

Landlord may but shall have no obligation to provide security service or to adopt security measures regarding the Premises, and Tenant shall cooperate with all reasonable security measures adopted by Landlord. Tenant may install a security system within the leased Premises with Landlord's written consent which will not be unreasonably withheld. Landlord will be provided with an access code to any security system and shall not have any liability for accidentally setting off Tenant's security system. Landlord may modify the type or amount of security measures or services provided to the Building or the Premises at any time.

Page 2 of 15

6.1 Maintenance and Repair.

Landlord shall have no liability for failure to perform required maintenance and repair unless written notice of such maintenance or repair is given by Tenant and Landlord fails to commence efforts to remedy the problem in a reasonable time and meaner. Landlord shall have the right to erect scaffolding and other apparatus necessary for the purpose of making repairs, and Landlord shall have no liability for interference with Tenant's use because of repairs and installations. Tenant shall have no claim against Landlord for any interruption or reduction of services or interference with Tenant's occupancy, and no such interruption or reduction shall be construed as a constructive or other eviction of Tenant. Repair of damage caused by negligent or intentional acts or breach of this lease by Tenant, its employees or invitees shall be at Tenant's expense.

6.2 Alterations.

Tenant shall not make any alterations, additions, or improvements to the Premises, change the color of the interior, or install any wall or floor covering without Landlord's prior written consent which may be withheld in Landlord's sole discretion. Any such improvements, alterations, wiring, cables or conduit installed by Tenant shall at once become part of the Premises and belong to Landlord except for removable machinery and unattached movable trade fixtures. Landlord may at its option require that Tenant remove any improvements, alterations, wiring, cables or conduit installed by or for Tenant and restore the Premises to the original condition upon termination of this lease. Landlord shall have the right to approve the contractor used by Tenant for any work in the Premises, and to post notices of non responsibility in connection with work being performed by Tenant in the Premises. Work by Xxxxxxx shall comply with all laws then applicable to the Premises.

7.1 Indemnity.

Tenant shall not allow any liens to attach to the Building or Tenant's interest in the Premises as a result of its activities. Tenant shall indemnify and defend Landlord and its managing agents from any claim, liability, damage, or loss occurring on the Premises, arising out o f any activity by Tenant, its agents, or invitees or resulting from Tenant's failure to comply with any term of this lease. Neither Landlord nor its managing agent shall have any liability to Tenant because of loss or damage to Tenant's property or for death or bodily injury caused by the acts or omissions of other Tenants of the Building, or by third parties (including criminal acts).

7.2 Insurance.

Tenant shall carry liability insurance with limits of not less than Two Million Dollars ($2,000,000) combined Single limit bodily injury and property damage which insurance shall have an endorsement naming Landlord and Landlord's managing agent, if any, as an additional insured, cover the liability insured under paragraph 7.1 of this lease and be in form and with companies reasonably acceptable to Landlord. Prior to occupancy, Tenant shall furnish a certificate evidencing such insurance which shall state that the coverage shall not be cancelled or materially changed without 10 days advance notice to Landlord and Landlord's managing agent, if any. A renewed certificate shall be furnished at least 10 days prior to expiration of any policy.

8.1 Fire or Casualty.

"Major Damage" means damage by fire or other casualty to the Building or the Premises which causes the Premises or any substantial portion of the Building to be unusable, or which will cost more than 25 percent of the pre-damage value of the Budding to repair, or which is not covered by insurance. In case of Major Damage, Landlord may elect to terminate this lease by notice in writing to the Tenant within 30 days after such date. if this lease is not terminated following Major Damage, or if damage occurs which is not Major Damage, Landlord shall promptly restore the Premises to the condition existing just prior to the damage. Tenant shall promptly restore all damage to tenant improvements or alterations installed by Tenant or pay the cost of such restoration to Landlord if Landlord elects to do the restoration of such improvements, Rent shall be reduced from the date of damage until the date restoration work being performed by Landlord is substantially complete, with the reduction to be in proportion to the area of the Premises not useable by Tenant.

Page 3 of 15

8.2 Waiver of Subrogation.

Tenant shall be responsible for insuring its personal property and trade (latrines located on the Premises and any alterations or tenant improvements it has made to the Premises. Neither Landlord, its managing agent nor Tenant shall be liable to the other for any loss or damage caused by water damage, sprinkler leakage, or any of the risks that are or could be covered by a special all risk property insurance policy, or for any business interruption, and there shall be no subrogated claim by one parry's insurance carrier against the other party arising out of any such loss. This waiver is binding only if it does not invalidate the insurance coverage of either party hereto.

9.1 Eminent Domain.

If a condemning authority takes title by eminent domain or by agreement in lieu thereof to the entire Building or a portion sufficient to render the Premises unsuitable for Tenant's use, then either party may elect to terminate this lease effective on the date that possession is taken by the condemning authority. Rent shall be reduced for the remainder of the term in an amount proportionate to the reduction in area of the Premises caused by the taking. All condemnation proceeds shall belong to Landlord, and Tenant shall have no claim against Landlord or the condemnation award because of the taking.

10.1 Assignment and Subletting.

This least shall bind and inure to the benefit of the parties, their respective heirs, successors, and assigns, provided that Tenant shall not assign its interest under this lease or sublet all or any portion of the Premises without fire: obtaining Landlord's consent in writing. This provision shall apply to all transfers by operation of law including but not limited to mergers and changes in control of Tenant. No assignment shall relieve Tenant of its obligation to pay rent or perform other obligations required by this lease, and no consent to one assignment or subletting shall be a consent to any further assignment or subletting. Landlord shall not unreasonably withhold its consent to any assignment or subletting provided the effective rental paid by the subtenant or assignee is not less than the current scheduled rental rate of the Building for comparable space and the proposed Tenant is compatible with Landlord's normal standards for the Building. If Tenant proposes a subletting or assignment to which Landlord is required to consent under this paragraph, Landlord shall have the option of terminating this lease and dealing directly with the proposed subtenant or assignee, or any third party. If an assignment or subletting is permitted, any cash profit, or the net value of any other consideration received by Tenant as a mush of such transaction shall be paid to Landlord promptly following its receipt by Tenant. Tenant shall pay any casts incurred b1 Landlord in connection with e request for assignment or subletting, including reasonable attorneys' fees.

11.1   Default.

Any of the following shall constitute a default by Tenant under this lease:

(a)   Tenant's failure to pay rent when due, or any other charge under this lease within 10 days after it is due, or failure to comply with any other term or condition within 20 days following written notice from Landlord specifying the noncompliance. If such noncompliance cannot be cured within the 20-day period, this provision shall be satisfied if Tenant commences correction within such period and thereafter proceeds in good4aith and with reasonable diligence to effect compliance as soon as possible. Time is of the essence of this lease.

(b)   Tenant's insolvency, business failure or assignment for the benefit of its creditors. Tenant's commencement of proceedings under any provision of any bankruptcy or insolvency law or failure to obtain dismissal of any petition filed against it under such laws within the time required to answer, or the appointment of a receiver for all or any portion of Tenant's properties or financial records.

(c)   Assignment or subletting by Tenant in violation of paragraph 10.1.

(d)   Vacation or abandonment of the Premises without the written consent of Landlord or failure to occupy the Premises within 20 days after notice from Landlord tendering possession.

11.2 Remedies for Default

In case of default as described in paragraph 11.1 Landlord shall have the right to the following remedies which are intended to be cumulative and in addition to any other remedies provided under applicable law:

(a)   Landlord may at its option terminate the lease by notice to Tenant. With or without termination, Landlord may retake possession of the Premises and may use or rein the Premises without accepting a surrender or waiving the right to damages. Following such retaking of possession, efforts by Landlord to reel the Premises shall be sufficient if Landlord follows its usual procedures for finding tenants for the space at rates not less than the current rates for other comparable space in the Building. If Landlord has other vacant space in the Building, prospective tenants may be placed in such other space without prejudice to Landlord's claim to damages or loss of rentals from Tenant.

(b)   Landlord may recover all damages caused by Tenant’s default which shall include an amount equal to rentals lost because of the default, lease commissions paid for this lease, and the unamortized cost of any -tenant improvements installed by Landlord to meet Tenant's special requirements. Landlord may xxx periodically to recover damages as they occur throughout the lease term, and no action for accrued damages shall bar a later action for damages subsequently accruing. Landlord may elect in any one action to recover accrued damages plus damages attributable to the remaining term of the lease. Such damages shall be measured by the difference between the rent under this lease and the reasonable rental value of the Premises for the remainder of the term, discounted to the time of judgment at the prevailing interest rate on judgments.

(c)   Landlord may make any payment or perform any obligation which Tenant has failed to perform, in which case Landlord shall be entitled to recover from Tenant upon demand all amounts so expended, plus interest from the date of the expenditure at the rate of one-and-one-half percent pc r month. Any such payment or performance by Landlord shall not waive Tenant's default.

Page 4 of 15

12.1 Surrender.

On expiration or early termination of this lease Tenant shall deliver all keys tot Landlord and surrender the Premises vacuumed, swept, and free of debris and in the same condition as at the commencement of the term subject only to reasonable we from ordinary use. Tenant shall remove all of its furnishings and trade fixtures that remain its property and repair all damage resulting from such removal. Failure to remove shall beam abandonment of the property, and Landlord may dispose of it in any manner without liability. If Tenant fails to vacate the Premises when required, including failure to remove all its personal property, Landlord may elect either (i) to treat Tenant as a tenant from month to month, subject to the provisions of this lease except that rent shall be one hundred fifty percent of the total rent being charged when the lease term expired, and any option or other rights regarding extension of the term or expansion of the Premises shall no longer apply; or (ii) to eject Tenant from the Premises and recover damages caused by wrongful holdover.

13.1 Regulations.

Landlord shall have the right but shall not be obligated to make, revise and enforce regulations or policies consistent with this lease for the purpose of promoting safety, health (including moving, use of common areas and prohibition of smoking), order, economy, cleanliness, and good service to all tenants of the Building. All such regulations and policies shall be complied with as if part of this lease.

14.1 Access.

During times other than normal Building hours Tenant's officers and employees or those having business with Tenant may be required to identify themselves or show passes in order to gain access to the Building. Landlord shall have no liability for permitting or refusing to permit access by anyone. Landlord may regulate access to any Building elevators outside of normal Building hours. Landlord shall have the right to enter upon the Premises at any time by passkey or otherwise to determine Tenant's compliance with this lease, to perform necessary services, maintenance and repairs or alterations to the Building or the Premises, or to show the Premises to any prospective tenant or purchasers. Except in case of emergency such entry shall be at such times and in such manner as to minimize interference with the reasonable business use of the Premises by Tenant.

14.2 Furniture and Bulky Articles.

Tenant shall move furniture and bulky articles in and out of the Building or make independent use of the elevators only at times approved by Landlord following at least 24 hours written notice to Landlord of the intended move. Landlord will not unreasonably withhold its consent under this paragraph.

15.1 Notices.

Notices between the parties relating to this lease shall be in writing, effective when delivered, or if mailed, effective on the second day following mailing, postage prepaid, to the address for the party stated in this lease or to such other address as either party may specify by notice to the other. Notice to Tenant may always be delivered to the Premises. Rent shall be payable to Landlord at the same address and in the same manner, but shall be considered paid only when received.

16.1 Subordination and Atonement.

This lease shall be subject to and subordinate to any mortgages, deeds of trust, or land sale contracts (here after collectively referred to as encumbrances) now existing against the Building. At Landlord's option this lease shall be subject and subordinate to any future encumbrance hereafter placed against the Building (including the underlying land) or any modifications of existing encumbrances, and Tenant shall execute such documents as may reasonably be requested by Landlord or the holder of the encumbrance to evidence this subordination. If any encumbrance is foreclosed, then if the purchaser at foreclosure sale gives to Tenant a written agreement to recognize Tenant's lease, Tenant shall attorn to such purchaser and this Lease shall continue.

Page 5 of 15

16.2 Transfer of Building.

If the Building is sold or otherwise transferred by Landlord or any successor, Tenant shall attorn to the purchaser or transferee and recognize it as the lessor under this lease, and, provided the purchaser or transferee assumes all obligations hereunder, the transferor shall have no further liability hereunder.

16.3 Estoppels.

Either party will within 10 days after notice from the other execute, acknowledge and deliver to the other party a certificate certifying whether or not this lease has been modified and is in full fierce and effect; whether there ere any modifications or alleged breaches by the other party; the dates to which rent has been paid in advance, and the amount of any security deposit or prepaid rent; and any other facts that may reasonably be requested Failure to deliver the certificate within the specified time shall be conclusive upon the party of whom the certificate was requested that the lease is in full force and effect and has not been modified except as may be represented by the party requesting the certificate. If requested by the holder of any encumbrance, or any ground lessor, Tenant will agree to give such holder or lessor notice of and an opportunity to cure any default by Landlord under this lease.

17.1 Attorneys' Fees.

In any litigation arising out of this lease, the prevailing party shall be entitled to recover attorneys' fees at trial and on any appeal. If Landlord incurs attorneys' fees bemuse of a default by Tenant, Tenant shall pay all such fees whether or not litigation is filed.

18.1 Quiet Enjoyment.

Landlord warrants that so long as Tenant complies with all terms of this lease it shall be entitled to peaceable and undisturbed possession of the Premises free from any eviction or disturbance by Landlord. Neither Landlord nor its managing agent shall have any liability to Tenant for loss or damages arising out of the acts, including criminal acts, of other tenants of the Building or third parties, nor any liability for any reason which exceeds the value of its interest in the Building.

19.1 Additional Rent-Tax Adjustment.

Whenever for any July 1 - June 30 tax year the real property taxes levied against the Building and its underlying land exceed those levied for the 2009-2010 tax year, then the monthly rental for the next succeeding calendar year shall be increased by one-twelfth of such tax increase times Tenant's Proportionate Share., `Real property taxes" as used herein means all taxes and assessments of any public authority against the Building and the land on which it is located, the cost of contesting any tax and any form of fee or charge imposed on Landlord as a direct consequence of owning or teasing the Premises, including but not limited to rent taxes, gross receipt taxes, leasing taxes, or any fee or charge wholly or partially in lieu of or in substitution for ad valorem real property taxes or assessments, whether now existing or hereafter enacted. If any portion of the Building is occupied by a tax-exempt tenant so that the Building has a partial lax exemption under ORS 307.112 or a similar statute, then real property taxes shall Mean taxes computed as .f such partial exemption did not exist. If a separate assessment or identifiable tax increase arises because of improvements to the Premises, then Tenant shall pay 100 percent of such increase.

19.2 Additional Rent-Cost-of-Living Adjustment.

Deleted.

19.3 Operating Expense Adjustment.

Tenant shall pay as additional rent Tenant's Proportionate Share of the amount by which operating expenses for the Building increase over those experienced by Landlord during the calendar year 2009 (base year), Effective January 1 of each year Landlord shall estimate the amount by which operating expenses are expected to increase, if any, over those incurred in the base year. Monthly rental for that year shall be increased by one-twelfth of Tenant's share of the estimated increase provided that Landlord may revise its estimate during any year with reasonable cause and the additional estimate shall be payable as equal additions to rent for the remainder of the calendar year. Following the end of each calendar year, Landlord shall compute the actual increase in operating expenses and xxxx Tenant for any deficiency or credit Tenant with any excess collected. Tenant shall pay any such deficiency within 30 days after Landlord's billing, whether or not this lease shall have expired or terminated at the time of such billing. As used herein "operating expenses" shall mean all costs of operating and maintaining and repairing the Building as determined by standard real estate accounting practice, including, but not limited to: all water and sewer charges; the cost of natural gas and electricity provided to the Building; janitorial and cleaning supplies and services; administration costs and management fees; superintendent fees; security services, if any; insurance premiums; licenses, permits for the operation and maintenance of the Building and all of its component elements and mechanical systems; ordinary and emergency repairs and maintenance, and a reserve equal to one-half percent (.05%) of gross rental income for the Property to be expended on roof replacement, exterior painting, asphalt resurfacing, and other miscellaneous matters not specified in the preceding and the annual amortized capital improvement cost (amortized over such a period as Landlord may select but not shorter than the life of the improvement and at current market interest rate) for any capital improvements to the Building required by any governmental authority or those which have a reasonable probability of improving the operating efficiency of the Building. "Operating Expenses" shall also include all assessments under recorded covenants or master plans and/or by owner's associations. If electricity or other energy costs increase between the date of this Lease and last day of the Base Year, (i) Tenant shall pay to Landlord on a monthly basis as additional rent, its Proportionate Share of such cost increase for the period from the date of such increase until the first estimated payment due under this paragraph, and (ii) Landlord may adjust the calculation of Base Year operating expenses by using the energy costs in effect on the date of this Lease.

Page 6 of 15

19.4 Disputes.

If Tenant disputes any computation of additional rent or rent adjustment under paragraphs 19.1 through 19.3 of this lease, it shall give notice to Landlord not later than thirty days after the notice from Landlord describing the computation in question, but in any event not later than 30 days after expiration or earlier termination of this lease. If Tenant fails to give such a notice, the computation by Landlord shall be binding and conclusive between the parties for the period in question. If Tenant gives a timely notice, the dispute shall be resolved by an independent certified public accountant selected by Landlord whose decision shall be conclusive between the parties. Each party shall pay one-half of the fee for making such determination except that if the adjustment in favor of Tenant does not exceed ten percent of the escalation amounts for the year in question, Tenant shall pay (i) the entire cost of any such third-party determination; and (ii) Landlord's out-of-pocket costs and reasonable expenses for personnel time in responding to the audit Nothing herein shall reduce Tenants obligations to make all payments as required by this lease.

20.1 Mold.

Tenant shall not allow or permit any conduct or omission at the Premises, or anywhere on Landlord's property, that will promote or allow the production or growth of mold, spores, fungus, or any other similar organism, and shall indemnify and hold Landlord harmless from any claim, demand, cost, and expense (including attorney fees) arising from or caused by Tenant's failure to strictly comply with its obligations under this provision.

21.1 Complete Agreement; No Implied Covenants.

This lease and the attached Exhibits and Schedules if any, constitute the entire agreement of the parties and supersede all prior written and oral agreements and representations and there are no implied covenants or other agreements between the parties except as expressly set forth in this Lease. Neither Landlord nor Tenant is relying on any representations other than those expressly set forth herein.

21.2 Space Leased AS IS.

Unless otherwise staled in this Lease, the Premises are leased AS IS in the condition now existing with no alterations or other work to be performed by Landlord except as stated in Exhibit C.

21.3 Captions.

The titles to the paragraphs of this lease are descriptive only and are not intended to change or influence the meaning of any paragraph or to be part of this lease.

21.4 Nonwaiver.

Page 7 of 15

Failure by Landlord to promptly enforce any regulation, remedy or right of any kind under this Lease shall not constitute a waiver of the same and such right or remedy may be asserted at any time after Landlord becomes entitled to the benefit thereof notwithstanding delay in enforcement.

21.3 Contingency

All terms and conditions of this Lease are subject to and are not binding until a fully executed original is delivered to the Tenant

21.6 Exhibits.

The following Exhibits are attached hereto and incorporated as a part of this lease:

Exhibit A - Floor Plan

Exhibit B - Additional Provisions

Exhibit C - Tenant Improvements

Exhibit D - Rules & Regulations

IN WITNESS WHEREOF, the duly authorized representatives of the parties have executed this lease as of the day and year first written above.

Landlord:	Xxxxx X. Xxxxxxxx, Successor Trustee	By: __________________________________________________
	of the Xxxxxxxx X. Xxxx Trust Dated
	September 3, 1975, as Amended and
	Xxxx X. Xxxx Trustee of the Xxxx X. Xxxx Trust	Title: _________________________________________________
Address for notices:
c/o Xxxx Xxxx & Associates, Inc.
0000 XX Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Tenant: ImageWare Systems, Inc.
		By: __________________________________________________
Address for notices:		Title: _________________________________________________
10135 X.X. Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000		By: __________________________________________________
		Title: _________________________________________________

Page 8 of 15

EXHIBIT A

Floor Plan

[Missing Graphic Reference]

Page 9 of 15

EXHIBIT B

Additional Provisions

21.1 Additional Provisions as to Delivery of Possession

The term of the lease shall commence when the Premises have been tendered to Tenant ready for occupancy. The Premises shall be deemed ready for occupancy when Landlord has substantially completed the work designated to be performed by the Landlord set forth in Exhibit C, the Tenant Improvements exhibit Substantially completed shall mean completion of those items which are Landlord's responsibility, except for those minor items which do not materially impair Tenant's usability of the Premises or the Building and except for completion of those items which are dependent upon work and installations to be performed by Tenant and which are not yet performed. Upon the date the Premises are ready for occupancy, Tenant shall be deemed to have accepted the Premises in their then condition unless on or before said date Tenant has delivered to Landlord a “punch list" (as that term is used in the construction industry) setting forth the deviations, variations or omissions from the Tenant Improvements exhibit. The delivery of a punch list shall not postpone the commencement of the term if the Premises are ready for occupancy as defined herein. Following the commencement of the term, Landlord shall complete any remaining items that are the responsibility of Landlord with reasonable diligence.

23.1 Parking

Parking at the Building is based upon a ratio of 3.5 parking spaces per 1,000 rentable square feet leased by Tenant, is unassigned and is on a first come, first served basis at no additional charge to Tenant. Therefore, Tenant is entitled to twenty-one (21) parking spaces. Parking in the parking areas shall be subject to the Rules and Regulations attached hereto as Exhibit D, including Landlord's right to amend and make other reasonable rules and regulations with respect to parking as set forth in paragraph 13.1 of this lease.

24.1 Hazardous Materials

During the terns of this lease, Tenant shall not cause or permit any hazardous Materials (as defined herein) to be placed, held, located or disposed of on, in or under the Premises or to otherwise affect the Premises in any manner that violates federal, state or local laws, ordinances, rules, regulations or policies in effect hereafter adopted governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials (collectively, the "Environmental Laws"). For purposes of this paragraph, "Hazardous Materials" shall mean any flammable substances, explosives, radioactive materials, medical wastes, hazardous materials, hazardous wastes, toxic substances, pollutants, pollution or related materials specified as such in, or regulated under, any of the Environmental Laws, At the expiration or earlier termination of this lease, Tenant shall cause any Hazardous Materials on or affecting the Premises in any manner that violate the Environmental Laws to be cleaned Up and removed from the Premises at Tenant's expense in such manner as to comply with the Environmental Laws. Tenant shall indemnify, defend and hold Landlord harmless from and against any and all losses, liabilities, claims and expenses (including reasonable attorney fees and fees of environmental engineers) arising out of or in any way relating to any default by Tenant pursuant to this paragraph. The foregoing indemnification includes, without limitation, costs incurred in connection with any investigation of site conditions or any clean up, remedial, removal or restoration work required under the Environmental Laws. The agreements and indemnity by Tenant in this paragraph that survive the expiration or earlier termination of this lease.

26.1 No Brokers

Tenant represents end warrants to Landlord that it has not engaged any broker, finder or other person who would be entitled to any commission or fees in respect of the negotiation, execution or delivery of this lease, and Tenant shall indemnify, defend and hold Landlord harmless against any loss, cost, liability or expense incurred by Landlord as a result of any claim asserted by any such broker, finder or other person on the basis of any arrangements or agreements made or alleged to have been made by or on behalf of Tenant. The provisions of this paragraph shall not apply to brokers with whom Landlord has an express written brokerage agreement.

Page 10 of 15

27.1 Signage

Landlord will provide its standard signage for Tenant on the Building lobby directory and on Tenant's entrance door.

2.8.1 Additional Provision as to Maintenance

Subject to the provisions of paragraph 6.1, Landlord shall maintain the Building, including public and common areas of the Building, in good condition and repair. Except for the janitorial service to be provided by Landlord as provided in paragraph 5.1, and subject to paragraph 8.1, the maintenance of the interior of the Premises shall be the responsibility of Tenant and Tenant shall maintain the Premises in good condition and repair during the term of this lease.

29.1 Additional Provision as to Assignment

If Tenant is a corporation or a partnership, the transfer, assignment or change in the ownership of any stock or partnership interest in the aggregate in excess of forty-nine percent (49%) shall be deemed an assignment within the meaning of paragraph 10.1.

30.1 Additional Provisions as to Taxes

Where tax increases as provided in paragraph 19.1 are applicable, the monthly rental for the applicable fiscal tax year, commencing with July 1 of the fiscal year, shall be increased by 1/12th of Tenant's share of the estimated increase Following the end of the fiscal year (June 30), Landlord shall compute the actual increase and xxxx Tenant for any deficiency or credit Tenant with any excess collected. When the amount of the increase is known., Landlord may adjust the monthly estimate. All real property taxes payable for a period, part of which shall be within the lease term and pan of which shall be after the term, shall be prorated between Landlord and Tenant at the expiration of the term or as soon thereafter as the amount is determined.

31.1 Force Majeure

Landlord shall not be deemed in default for the nonperformance or for any interruption or delay in performance of any of the terms, covenants and conditions of this lease if the same shall be due to any labor dispute, strike, lock-out, civil commotion or like operation, invasion, rebellion, hostilities, military or usurped power, sabotage, governmental regulations or controls, inability to obtain labor, services or materials, or through act of God or causes beyond the reasonable control of Landlord, provided such cause is not due to the willful act or neglect of Landlord.

33.1 Persons With Disabilities

Tenant shall take all necessary action, at Tenant's expense, to cause the Premises to be kept, maintained, used and occupied in compliance with the Americans with Disabilities Act of 1990 and with all other federal, state and local laws, ordinances, rules, regulations and requirements governing discrimination against persons with disabilities as defined by applicable laws. The indemnity provisions of paragraph 7.1 shall include, without limitation, Tenant's obligation to indemnify, defend and hold Landlord and its managing agents harmless from liability arising from Tenant's violation of any of the laws and requirements above set forth in this paragraph.

34.1 Contingency

All terms and conditions of this Lease are subject to and are not binding until a fully executed original is delivered to the Tenant.

Page 11 of 15

EXHIBIT C

TENANT IMPROVEMENTS

Landlord shall improve the premises in accordance with the attached floor plan. Landlord's work shall be restricted to construction documents, ceiling, lighting, HVAC including the installation of two (2) 2-ton units in the server room, electrical outlet, plumbing, wall construction, painting, carpet base and fire life/safety work. Specifically excluded from the Landlord's work and cost is all cabling for data, voice or telephone, or any other technology related upgrade or retrofit, furniture and workstations.

All other work shall be paid for by Tenant.

Page 12 of 15

EXHIBIT D

RULES AND REGULATIONS

1.   The sidewalks, halls, passages, exits, entrances, and parking areas shall not be obstructed by Tenant or used by Tenant for any purpose other than access to the Leased Premises, Tenant shall not go on the roof of the building.

2.   No awning, canopy, or other projection of any kind shall be installed over or around the windows and only such window coverings as are approved by Landlord shall be used in the Leased premises.

3.   The Leased Premises shall not be used for lodging or sleeping. Unless specifically authorized in Tenant's lease. no cooking shall be done or permitted by Tenant on the Leased Premises, except the preparation of coffee, tea, and similar items for Tenant and its employees, and use of a microwave.

4.   Landlord will furnish Tenant with two keys to the Leased Premises, free of charge. No additional locking devices shall be installed without the prior written consent of Landlord, and Tenant shall furnish Landlord with a key for any such additional locking device. Tenant, upon termination of its tenancy, shall deliver to Landlord all keys to doors in the Leased Premises.

5.   Tenant shall not use or keep in the Leased Premises or the building any kerosene, gasoline, or other flammable or combustible fluid or material or use any method of heating or air conditioning other than that supplied by Landlord provided, however, that Tenant shall be permitted to use or keep in the Leased premises any materials customarily used in its business.

6.   In case of invasion, mob, riot, public excitement, or other circumstances rendering such action advisable in Landlord's opinion, Landlord reserves the right to prevent access to the building by such action as Landlord may deem appropriate, including closing entrances to the building, provided, however, that Landlord shall not be permitted to prevent access to the building due to a labor disturbance. ")

7.   All perimeter doors to the building shall remain closed and securely lon4teci at all times after regular building hours. The doors of the Leased Premises shall remain closed and securely locked at such time as Tenant's employees leave the Leased Premises, after regular building hours.

8.   The toilet rooms, toilets, urinals, wash bowls, and other apparatus in the Leased Premises and the building shall not be used for any purpose other than that for which they are intended, no foreign substance of any kind shall be deposited therein, and any damage resulting from Tenant's misuse shall be paid for by Tenant.

9.   Except with the prior written consent of Landlord, the Leased Premises shall not be used for manufacturing of any kind, or for any business or other activity other than that specifically permitted under Tenants lease.

10.   Tenant shall not install any radio, television, or similar antenna or aerial, nor any loudspeaker or other device, on the roof, exterior walls, or grounds of the building without obtaining prior written consent from Landlord.

11.   Tenant shall not use in the Leased Premises or the building any hand-truck not equipped with rubber tires and side guards, nor any other material-handling equipment not approved in writing by Landlord. No other vehicles of any kind shall be brought by Tenant into the Leased Premises, including bicycles.

12.   Tenant shall store its trash and garbage within the Leased Premises until daily removal as may be designated from time to time by Landlord. No material shall be placed in the building trash boxes or receptacles if such material may not be disposed of in the ordinary and customary manner in the Portland, Oregon metropolitan area without being in violation of any law or ordinance governing such disposal.

13.   All loading and unloading of merchandise, supplies, materials, garbage and refuse and delivery or removal of the same to or from the Leased Premises shall be made only through such entryways and at such time as Landlord may designate from time to time. Tenant shall not obstruct or permit the obstruction of any loading areas used by other tenants in the building, and at o time shall Tenants park vehicles in a loading area except for loading or unloading.

Page 13 of 15

14.   Canvassing, soliciting, peddling, and distributing of handbills or other written material in the building is prohibited and Tenant shall cooperate to prevent same.

15.   Tenant shall not permit the use or the operation of any operated machines on the Leased Premises, including without limitation vending machines, video games, pinball machines, or pay telephones, without the prior written consent of Landlord. However, Tenant shall be permitted to install inside its Leased Premises snack vending machines for the use of Tenant's employees and invitees.

16.   Landlord may direct the use of pest extermination and scavenger contractors at such intervals as Landlord may determine.

17.   Tenant shall, immediately upon request from Landlord (which request need not be in writing), reduce its lighting in the Leased Premises for temporary periods designated by Landlord, when required in Landlord's judgment to prevent overloads of the mechanical or el electrical systems of the building; provided, however, that Tenant shall not be required to reduce its lighting if such reduction would interfere with Tenant's use of the Leased Premises for its business.

18.   Tenant shall not refer to the building by any name(s) other than the name(s) selected by Landlord (as same may be changed from time to time) or the postal address (es) as designated by the United States Post Office. Tenant shall not use the name(s) of the building other than as the address of its operation. However, Tenant may, at its option, use the name of the building, or a variant thereof, in the name of its business in the building. Tenant shall not be required to change the name of its business if Landlord changes the name of the building.

19.   Employees of Landlord shall not perform any work for or on behalf of Tenant or do anything outside of their regular duties unless under special instructions from Landlord.

20.   Tenant shall not park any vehicles in the business park overnight or permit any of its vehicles to remain at the business park after Tenant’s business hours; provided that any vehicle which is temporarily disabled or which cannot be moved due to inclement weather may be left at the business park for up to, but not more than, 24 hours.

21.   Tenant’s employees shall park only in those areas of the building designated by Landlord from time to time for such purpose. Any vehicle improperly parked by an employee of Tenant may be towed or otherwise removed by Landlord.

22.   Smoking is prohibited in all areas of the building.

23.   Tenant must provide, at its own expense, protection to the carpets from chair wheels or other abnormal wear, tear, or staining. Tenant shall be responsible for replacing carpet where damage has occurred due to lack of said protection, Tenant shall be responsible for heavy stain removal and periodic shampooing of carpet. It is recommended that carpets be shampooed at least annually.

24.   If Tenant elects to install a monitored security system within its Leased Premises, neither the Landlord nor its contractors shall be held responsible for setting off the alarm mistakenly, or for any fines which may be levied.

25.   The normal building hours are from 8:00 AM to 6:00 PM Monday through Friday except holidays.

26.   All Tenant's Alterations shall be performed in accordance with Landlord's Conditions for Renovation.

27.   Landlord may waive any one or more of these Rules and Regulations in favor of a particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of these Rules and Regulations in favor of any other tenant, nor prevent Landlord from thereafter enforcing any such Rules and Regulations against any or all tenants of the building.

Page 14 of 15

28.   The word "Tenant" as used in these Rules and Regulations shall mesa and include Tenant's assigns, agents, clerks, employees, licensees, invitees, and visitors. The word "Landlord" as used in these Rules and Regulations shall mean and include “Landlord's assigns, agents, clerks, employees, licensees, invitees, and visitors."

29.   These Rules and Regulations are in addition to, and shall not be construed in any way to modify, alter, or amend, the conditions of Tenant's Lease. In the event of a conflict between these Rules and Regulations and Tenant's Lease, the Lease shall govern.

30.   Landlord reserves the right to amend these Rules and Regulations and to make such other reasonable rules and regulations that in its judgment may from time to time be needed for Ole safety, cart, and cleanliness of the building and for the preservation of good order therein.

31.   Parking Rules & Regulations:

a.	Parking is allowed only in designated (stripped) parking stalls.
b.	No over-night parking is allowed.
c.	Vehicle owner and/or operator shall be responsible for damages or injuries caused by faulty operation or any other defect of vehicle or by failure of operator to set the vehicle's brake.
d.	Vehicle operator/xxxxxx assumes the risk of any loss or damage to the -vehicle or personal property left therein, including but not limited to damage caused by fire, theft, acts of God, acts of any third party or any other causes.
e.	Except for emergency repair by a licensed service, no vehicle repairer maintenance work is allowed in the parking lot without prior permission of the Landlord.
f.	All parking is unreserved on a first come first served basis.
g.	Landlord has the right to modify these rules and regulations as needed.­­

Page 15 of 15