LETTERHEAD]

                               [LETTERHEAD]




                                                             January 20, 1997

Xx. Xxxx Xxxxxx
ImageWare Software, Inc.
00000 Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000

                   RE: NICB/IMAGEWARE RELATIONSHIP AGREEMENT

Dear Xx. Xxxxxx:

I have requested that our Law Department review your letter sent to me and
dated January 9, 1997. Consistent with their clarifications, I can agree to
the following listed points, in addition to the confidentiality agreement
executed by both parties.

1.   In good faith consultation with the National Insurance Crime Bureau
     (NICB), ImageWare Software (IWS) will design and develop software
     programs which support the reduction of vehicle theft and insurance
     related fraud. IWS understands that the NICB may only provide
     information for inclusion in such software programs for use exclusively
     by local, state and federal law enforcement entities. The NICB may allow
     its data for inclusion with other entities subject to approval on a
     case-by-case basis.

2.   IWS will give credit to the NICB by name as participating in the
     development of such programs. This credit will appear in each program
     and on all promotional materials.

3.   The NICB will work and cooperate with IWS on the development of these
     programs. Each party wil maintain the confidentiality of information
     regarding the design and development of these programs.

4.   The NICB will provide IWS with relevant data, in appropriate form, for
     inclusion in these program upon the execution of an appropriate
     licensing agreement. The parties will determine such relevant data at a
     later date.

5.   The NICB will assist IWS in the proliferation of the programs by
     providing liaison with the appropriate federal and state law enforcement
     agencies, and the insurance and automobile industries.



Xx. Xxxx Xxxxxx
January 20, 1997
Page 2


6.   IWS will retain all proprietary rights, title and interest, including
     trademarks, servicemarks and copyrights in the programs created. The
     NICB will retain any trademarks, service marks and copyrights associated
     with data and programs it provides to IWS for inclusion in these
     programs.

I am enclosing a copy of the executed Confidentiality Agreement which you
provided to me. I am also enclosing a Confidentiality Agreement which the
NICB requires IWS to execute. Please forward me a copy of the fully executed
Confidentiality Agreement at your earliest convenience.

                                      Sincerely,

                                      /s/ Xxxxxxx X. Xxxxx
                                      Xxxxxxx X. Xxxxx
                                      Vice President, Chief Information Officer

Enclosures


Accepted and agreed:

/s/ Xxxx Xxxxxx
---------------------------------
Xxxx Xxxxxx