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                                     6/2/00

                                   SUBCONTRACT

                                     BETWEEN

                           INFORMATION SPECTRUM, INC.

                                       AND

                          LASERCARD SYSTEMS CORPORATION

                      FOR OPTICAL CARDS AND INSURED STORAGE

              FOR THE U.S. IMMIGRATION AND NATURALIZATION SERVICE'S
                        INTEGRATED CARD PRODUCTION SYSTEM



1.  Parties/Effective Date of Contract

This Subcontract is made and entered into effective May 26, 2000, by and between
LaserCard Systems Corporation, a Delaware Corporation (hereinafter
"Subcontractor" or "LSC" or "LaserCard") having its principal place of business
at 2644 Bayshore Parkway, Mountain View, CA 94043 and Information Spectrum, Inc.
(hereinafter the "Contractor" or "Prime Contractor" or "ISI"), a New Jersey
corporation having its principal place of business at 7611 Little River
Turnpike, Annandale, Virginia 22003, (collectively hereinafter the "Parties").

2.  Statement of Work/Delivery Requirements

2.1        LSC is to manufacture and deliver optical cards to ISI in accordance
           with:

           a.    the requirements, statement of work, and terms and conditions
                 of the prime contract entered into between ISI and the
                 Immigration and Naturalization Service (INS), Contract
                 COW-0-C-0040, as set forth in pages 13 through 30 and
                 Attachments 1 and 2 thereof which are hereby incorporated by
                 reference and attached hereto as Attachment A (hereinafter
                 referred to as the "prime contract"), with exceptions as are
                 explicitly specified in this Subcontract;

           b.    the requirements of purchase orders issued to LSC by ISI
                 pursuant to INS delivery orders issued under the prime
                 contract; and

           c.    the LaserCard quote of November 5, 1999, to ISI as amended by
                 LaserCard's letter to ISI of May 10, 2000 (attached hereto as
                 Attachments B and C, respectively).

2.2        LSC shall deliver optical cards F.O.B. Mountain View, California to
           an ISI-designated INS site.  In the event ISI does not designate an
           INS site for delivery, LSC shall securely store the optical cards in
           accordance


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           with Section 5 of the prime contract (See Attachment A) at no
           additional cost to ISI and shall insure those stored cards at no
           additional cost to ISI. LSC shall deliver the optical cards to an INS
           production site from secured storage upon receipt of an ISI, INS or
           INS agent's written request for delivery of the optical cards. The
           INS agents are identified in Section 17 of the prime contract.

3.  Inspection, Acceptance, Rejections and Returns

LSC shall comply with Section 13 and all other applicable provisions of the
prime contract that provide for the inspection, acceptance, rejections and
returns of optical cards. Pursuant to Section 13, and FAR 52.246-2, Inspection
of Supplies which is incorporated therein, LSC shall replace all cards found to
be noncompliant by the INS at no cost to ISI or the INS.

4.  Invoicing and Payment

4.1        Subcontractor shall present to ISI an original and three copies of an
           invoice as a condition for payment. To constitute a proper invoice,
           the invoice must include the following information: Subcontract
           identification, product description, price and quantity of products
           or services for which payment is requested, and required
           documentation, in addition to the requirements of Section 1 of
           Attachment 2 to the prime contract. The invoice should be submitted
           to the following ISI office:

                Information Spectrum, Inc.
                Accounts Payable
                7611 Little River Turnpike, Suite 300 East
                Annandale, Virginia 22003

On additional copy of the invoice shall be sent to the ISI technical
representative identified in Section 13 of this Subcontract.

4.2        ISI will pay LSC under this Subcontract as follows:

Fifty percent (50%) of the price for the forecasted quantity of cards to be
delivered in the ensuing quarter is due thirty (30) days in advance of each
quarter, with the balance of fifty percent (50%) due within thirty (30) days of
ISI's receipt of the Government's written acceptance of each partial shipment of
cards and ISI's receipt of LSC's invoice therefor. Quarters are defined as
January - March; April - June; July - September; and October - December.
Therefore, advance payments for the above quarters are due after ISI's receipt
of an appropriate invoice and on the first day of December, March, June, and
September. The first advance payment will be due on September 1, 2000.

ISI shall pay LSC the amounts specified in each delivery order for each card
that meets the requirements of this Subcontract.

5.  Reporting

LSC shall submit a monthly report to ISI, due by the last day of each month,
indicating the information required for all card stock (by format) in accordance
with Section 16.3 of the prime contract.

6.  Damages

The provisions relating to the payment of damages in the prime contract in
Sections 14, 21, and Attachment 2 Section 1 are applicable to this Subcontract.



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7.  Period of Performance/Option

The period of performance of this Subcontract is from May 26, 2000, through May
25, 2001. The parties agree to extend this Subcontract as necessary to coincide
with any and all options exercised by the INS pursuant to the prime contract.

8.  Incorporation by Reference

8.1        Except as provided for in Sections 8.2 and 8.3, below, the provisions
           of the prime contract are applicable to this Subcontract and are
           hereby incorporated by reference subject to the following
           modifications.

8.2        The following provisions in the prime contract are inapplicable and
           struck from this Subcontract:

           Section 7.3 Non-Optical Card and all other prime contract references
           to non-optical card requirements Section 15 Payments and Invoicing
           FAR 52.233-1 Disputes

8.3        Except as provided for in Section 8.4, whenever the following terms
           are used in the prime contract they shall have the meaning set forth
           below:

           a.    The term "Contract" shall mean "this Subcontract."
           b.    The term "Subcontract" shall mean "lower tier subcontract."
           c.    The term "Government," "Contracting Officer" and equivalent
                 terms shall mean "ISI."
           d.    The term "Contractor" shall mean "Subcontractor," and, in
                 addition, if required by the clause, "lower tier
                 subcontractors."

8.4        The definitions in Section 8.3 shall not be applicable to the
           following clauses or to the terms therein, to the extent specified
           this Section 8.4:

           a.    Whenever there is a reference to "Government Property,"
                 "Government Equipment" or equivalent terms which refers to
                 Government property, these terms shall remain unchanged.

           b.    Whenever there is a reference to the right to inspect, examine
                 or audit records, only the Government shall have that right.

           c.    Whenever there is a reference to patents or copyrights, or
                 infringement of intellectual property rights, the related
                 references in the text of the clause to the Government or
                 Contracting Officer shall remain unchanged.

           d.    Whenever there is a reference to the reimbursement of costs to
                 a Contractor or Subcontractor for liability, the related
                 references in the text of the clause to the Government or
                 Contracting Officer shall remain unchanged.

           e.    The definitions in Section 8.3 are inapplicable to Section 17
                 of the prime contract, "Government Agent."

9.  Security Requirements

As of the effective date of this Subcontract, the application of the security
requirements in Section 22 of the prime contract shall be the same, with the
same exceptions granted, as has been in effect under the subcontract between LSC
and ISI effective February 12, 1997 for the INS Integrated Card Production
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System and the follow-on subcontract for optical cards and insured storage
effective April 20, 1999. LSC agrees to conform to any subsequent changes in
security requirements mandated by the INS.

10.  Duty of Notice and Non-Infringement

The Subcontractor shall not, in the course of performing work under this
Subcontract, infringe or cause the Contractor to infringe any patent, copyright,
or trademark rights of others. In the event the Subcontractor possesses
information that may infringe any patent, copyright, trademark, or trade secret,
the Subcontractor shall, in a reasonable and timely manner, give notice of the
facts known by the Subcontractor to the Contractor.

If the Subcontractor receives notice of any legal actions or claim in which
Contractor may become involved, or of any Contractor right to invention,
discovery, copyright, or trade secret covered by the terms of this Subcontract,
Subcontractor shall promptly give notice of the facts known by Subcontractor to
Contractor.

11.  Claims and Disputes

11.1       Claims and Disputes Between the Parties Under this Subcontract

           Except with respect to claims or disputes under Section 11.2 below,
           any claim or dispute concerning questions of fact or law arising out
           of this Subcontract, or to an alleged breach thereof by a party,
           which is not disposed of by mutual agreement within thirty (30)
           calendar days after one party has provided written notice of the
           claim or dispute to the other, shall be settled by arbitration in,
           and in accordance with the laws of, the Commonwealth of Virginia.
           Such arbitration shall be by and in accordance with the Commercial
           Arbitration Rules and Procedures of the American Arbitration
           Association. The parties shall share equally in the cost of the
           arbitrator(s) and the cost of recording any arbitration proceeding.
           Judgment on the award rendered by the arbitrator(s) may be entered in
           any court having jurisdiction thereof. Neither party shall institute
           any action or proceeding against the other party in any court with
           respect to any claim or dispute that is governed by this Section
           11.1. The decision of the arbitrator(s) shall be conclusive and final
           and shall be binding on the parties unless fraudulent, arbitrary or
           capricious, so grossly erroneous as to necessarily imply bad faith,
           or contrary to law.

11.2       Claims or Disputes with the Government under the Prime Contract

           a.    All Subcontractor claims or disputes arising out of the
                 Government's action or failure to act under the Prime Contract
                 shall be governed by this Section 11.2.

           b.    The Contractor shall notify the Subcontractor in writing of a
                 Government action or failure to act and any final decision that
                 has an adverse impact on the Subcontractor. Any final decision
                 of the Contracting Officer under the prime contract shall be
                 conclusive and binding upon Subcontractor unless appealed
                 pursuant to this Section 11.2.

           c.    In the event a final decision of the Government's Contracting
                 Officer has an adverse impact on the Subcontractor, the
                 Contractor and Subcontractor shall seek to agree on (1) whether
                 a claim or appeal should be filed and the forum in which the
                 claim or appeal should be filed; (2) whether the Subcontractor
                 should be sponsored by the Contractor in filing the claim or
                 appeal; (3) whether there is
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                 sufficient evidence that the claim is made in good faith, all
                 statements in the required certification are accurate and
                 complete and the amount requested accurately reflects the
                 contract adjustment claimed; (4) the responsibility for the
                 prosecution of the claim and/or appeal, the support to be
                 provided by each party and the responsibility for the costs and
                 liabilities that may be incurred; and (5) other relevant
                 matters.

11.3       Pending the final disposition of a claim or dispute pursuant to
           Sections 11.1 or 11.2 above, the Subcontractor shall proceed
           diligently with the performance of this Subcontract in accordance
           with the Contractor's written direction.

11.4       Any decision upon such claim or appeal pursuant to Section 11.2
           above, by Government Board of Contract appeals, by a United States
           Court, or other forum having jurisdiction, shall be conclusive and
           final and shall be binding on the parties unless appealed to a court
           having jurisdiction. A final judgment in any such appeal shall be
           conclusive and final and shall be binding on the parties.

12.  Modifications

No modification of any part of this Subcontract shall be binding upon the
parties hereto, or either of them, unless such is in writing and duly signed by
those authorized to sign for the respective parties.

13.  Contracting and Technical Representatives

13.1       The ISI Contracting Representative is:

                Ms. Terri Ann Rogers
                7611 Little River Turnpike, Suite 300 East
                Annandale, Virginia 22003
                Telephone: (703) 813-8544
                Telefax: (703) 813-8499

13.2       The LSC Contracting Representative is:

                Mr. Steven G. Larson
                LaserCard Systems Corporation
                2644 Bayshore Parkway
                Mountain View, CA 94043
                Telephone: (650) 969-4428
                Telefax: (650) 969-0487

13.3       The ISI Technical Representative is:

                Mr. George Cayey
                7611 Little River Turnpike, Suite 100 East
                Annandale, Virginia 22003
                Telephone: (703) 813-8330
                Telefax: (703) 813-8332

           The ISI Technical Representative will coordinate the technical
           aspects of this Subcontract and inspect products and services
           furnished hereunder; however he is not authorized to modify or add
           any terms or conditions of this Subcontract, including price. The
           authority to accept products and services furnished by the
           Subcontractor is expressly reserved to the ISI Contracting
           Representative.
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13.4       The LSC Technical Representative is:

                Mr. Richard Haddock
                LaserCard Systems Corporation
                2644 Bayshore Parkway
                Mountain View, CA 94043
                Telephone: (650) 969-4428
                Telefax: (650) 967-6524

All notices required pursuant to this Subcontract shall be in writing, shall
bear the addresses of the parties to this Agreement and shall be dispatched by
certified or registered mail, return receipt requested, or by commercial
delivery service requiring signed receipts, to the attention of the above
contractual or technical representatives, as appropriate. A notice sent by
facsimile shall be effective when received, provided that it is promptly
confirmed by certified or registered mail, return receipt requested, or by
commercial delivery service requiring signed receipts.

14.  Proprietary Information

14.1       "Proprietary Information" is defined as information which the
           disclosing party at the time of disclosure identifies in writing as
           Proprietary Information by means of a proprietary legend, marking,
           stamp, or other positive written notice identifying the information
           to be proprietary. In order for information disclosed orally or
           visually by a party to this Subcontract to be Proprietary Information
           protected hereunder, the disclosing party shall identify the
           information as proprietary at the time of the disclosure and, within
           thirty (30) days after such oral or visual disclosure, reduce the
           subject matter of the disclosure to writing, properly stamped with a
           proprietary legend, marking, stamp, or other positive written notice
           and submit it to the receiving party.

14.2       It is agreed that for a period of five (5) years following the
           receipt of Proprietary Information, each party will use such
           information only as necessary for the performance of their
           obligations under the prime contract or this Subcontract. Each party
           shall take reasonable efforts to preserve the confidentiality of such
           Proprietary Information, and prevent disclosure thereof to third
           parties. Each party agrees that it will use the same reasonable
           efforts to protect the other's Proprietary Information as are used to
           protect its own, but, in any event, not less than reasonable care.

14.3       The obligation to protect Proprietary Information, and the liability
           for unauthorized disclosure or use of Proprietary Information, shall
           not apply with respect to such information which is now available or
           becomes available to the public without breach of this Agreement;
           information lawfully received without restrictions from other
           sources, including the U.S. Government; information published or
           disclosed by the disclosing party to others, including the U.S.
           Government, without restriction; information developed by the
           receiving party independent of and without use of the information
           disclosed by the disclosing party; or, is required to be disclosed
           pursuant to any law or judicial or governmental demand, requirement
           or order, provided that the receiving party shall give reasonable
           notice to the disclosing party of such order to enable the disclosing
           party to seek legal protection of the Proprietary Information.

14.4       The parties agree that disclosures of Proprietary Information shall
           be restricted to those individuals directly participating in the
           performance of the prime contract or this Subcontract who have a need
           to know such information and who have been made aware of and consent
           to abide by the


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           restrictions contained herein concerning the disclosure and use of
           such information.

14.5       Upon termination or expiration of this Subcontract, or upon the
           written request of either party at any time, each party will, within
           a reasonable period of time thereafter, not to exceed sixty (60)
           days, return all Proprietary Information received from the other
           party and copies made thereof by the receiving party under this
           Agreement, or certify by written memorandum that all such Proprietary
           Information has been destroyed. Neither termination of this
           Subcontract nor return of all proprietary information shall affect
           the rights and obligations contained herein with respect to
           Proprietary Information disclosed hereunder prior to termination or
           return of said information.

14.6       Except as expressly provided herein, neither the execution and
           delivery of this Subcontract nor the furnishing of any Proprietary
           Information shall be construed as granting either expressly or by
           implication, estoppel or otherwise, any license under any copyright,
           invention, improvement, discovery or patent, or trademark now or
           hereafter owned or controlled by a party disclosing Proprietary
           Information hereunder.

14.7       Each party warrants that it has the right to disclose the Proprietary
           Information disclosed to the other party hereunder for the purposes
           set forth in Section 14.2 above.

15.  Applicable Law

This Subcontract shall be governed by the laws of the Commonwealth of Virginia.

16.  Assignment

No right under this Subcontract is assignable by Subcontractor except the right
to payments may be assigned to a United States financial institution provided
written notice is made to Contractor and such assignment is acknowledged by
Contractor. Acknowledgment will not be withheld or unreasonably delayed by
Contractor.

17.  Relationship of the Parties

This Subcontract is not intended to constitute, create, give effect to, or
otherwise recognize a joint venture, partnership or any other form of business
organization, and the rights and obligations of the parties shall be only those
expressly set forth herein. At all times, each of the parties shall remain an
independent contractor, responsible for its own employees.

18.  Additional INS Procurements

The parties agree that for a period of five years after the effective date of
this Subcontract, or two years after the termination or expiration of this
Subcontract, whichever period is longer, if the INS or the Department of State
(DoS) (or another U.S. Government agency, contractor or another person or entity
acting on behalf of, or as successor to, the INS or DoS) should request one or
more proposals, quotes or bids for the provision of custom format optical cards,
or the provision of associated Reader/Writers, to the INS and/or DoS or any
successor agency:

           a.    ISI shall provide, in its response to each request for
                 proposal, quote or bid, exclusively LaserCard custom format
                 optical cards and associated Reader/Writers and no other
                 competitors' optical cards or Reader/Writers; and



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           b.    LaserCard shall offer to provide custom format optical cards
                 and associated Reader/Writers exclusively to ISI, to be
                 included in ISI's response to each request for proposal, quote
                 or bid, and to no other person or entity.

This provision shall survive the termination of this Subcontract for any reason
other than the default of either party, in which event the requirements of this
provision shall no longer apply.

19.  Severability

In the event that any one or more of the provisions of this Subcontract is found
to be unenforceable, the enforceability of the remaining provisions shall be
unimpaired.

20.  Entire Agreement

This Subcontract, including Attachments A, B, and C, constitutes the complete
agreement of the parties and supersedes all previous understandings, agreements
or representations, written or oral, between the parties on this subject matter.

21.  Order of Precedence

Any inconsistency in this Subcontract shall be resolved by giving precedence in
the following order:

           a.    Sections 1 through 20 of this Subcontract
           b.    Attachment A
           c.    Attachments B and C


IN WITNESS WHEREOF, the parties have executed this Subcontract.

ATTEST:

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<S>                                                                    <C>
For:        LaserCard Systems Corporation                              For:       Information Spectrum, Inc.

/s/:        STEVEN G. LARSON                                           /s/:       TERRI ANN ROGERS
            ----------------------------                                          ---------------------------

Name:       STEVEN G. LARSON                                           Name:      TERRI ANN ROGERS
            ----------------------------                                          ---------------------------

Title: VICE PRESIDENT, FINANCE                                         Title:     VICE PRESIDENT, CONTRACTS
       ----------------------------                                               ---------------------------

Date:       JUNE 2, 2000                                               Date:      JUNE 6, 2000
            ----------------------------                                          ---------------------------
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