**Exhibit 10.1**

**AMENDMENTNO. 1 TO OFFICE LEASE**

This AMENDMENT NO.1 TO OFFICE LEASE (“Amendment No. 1”) is entered into as of June 12, 2006 (“EffectiveDate”), by and between THORNMINT I, A CALIFORNIA LIMITED PARTNERSHIP (“Landlord”),and IMAGEWARE SYSTEMS, INC., (“Tenant”) with reference to the facts set forthin the Recitals below.

RECITALS

A.             Landlord and Tenantare parties to an Office Lease Agreement and Addendum dated September 26, 2003(“Lease”), by and between Thornmint I, a California limited partnership (“Landlord”)and ImageWare Systems Inc., (“Tenant”) for certain Leased Premises consistingof 16,020 square feet of rentable area of the Building located at 10883Thornmint Road, San Diego, CA 92127, as more specifically described in theLease.  The term of this Lease isscheduled to expire on September 30, 2006.

B.               Landlord and Tenanthave agreed to extend the term of this Lease for a new twenty-four (24) monthterm (“Extension Term”) under all of the same terms and conditions of the Leaseand Addendum, except as specifically provided below in this Amendment No.1.  Landlord and Tenant have furtheragreed to make certain modifications to the Lease, including, among otherthings, (i) modifying the Base Rental payable under the Lease.

AMENDMENT

NOW, THEREFORE, inconsideration of the Recitals above, the mutual covenants and conditions below,and other good and valuable consideration, the receipt and sufficiency of whichare hereby acknowledged, the parties agree as follows:

1.                 Extension ofthe Term.  Landlord and Tenant herebyagree that the term of the Lease shall be extended for the Extension Term,commending on October 1, 2006, on all of the same terms and conditions of theLease and Addendum, except as specifically modified by this Amendment No. 1.  All references o the Lease Agreement to the “ExpirationDate” shall mean September 30, 2008.

2.                 Base Rental.  Base Rental Payment during the Extension Termshall be payable pursuant to the following schedule:

 
| Months | ** ** | **Monthly Base Rental** |
|--------|------------|-------------------------|
| 01-12  |       | $                       | 18,423.33 |
| 13-24  |       | $                       | 19,224.00 |

 

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3.                 TenantImprovements.  Landlord, at Landlord’sexpense, shall complete the following Tenant Improvements utilizing buildingstandard materials within sixty (60) days from full executive of this LeaseAmendment 1:

%                 Installa new building standard garbage disposal.

%                 Re-paintreception entrance handrails and the handrails in the stairwell on the westside of the Building.

%                 Repairroof leaks.

%                 Replacedamaged ceiling tiles.

%                 Men’srestrooms:

•      1st Floor:Replace damaged flooring tile.

•      2nd Floor:Repair leaking urinal.Repair/replace one (1) fan.Install new plastic light covers for the restroom lights above the sinks (1st& 2nd Floors).

%                 Women’srestrooms:

•      1st Floor:Repair/replace two (2) fans.

•      2nd Floor:Repair/replace one (1) fan.Install new plastic light covers for the restroom lights above the sinks (1st& 2nd Floors).

%                 Capone (1) existing floor plug on the first floor that is exposed.

%                Remove wallpaperin the reception entrance up to the top of the stairwell and repaint thereception area with a mutually agreed upon color.

%                 Repair/replacetwo (2) recessed lights in the reception area.

%                 Investigatethe possibility of fixing the fraying carpet in Wayne Wetherall’s office.

All Tenant Improvement work shall be completed duringnormal business hours and Tenant shall be responsible for the removal of theirFurniture, Fixtures and Equipment as necessary in order for Landlord tocomplete the above mentioned Tenant Improvement work.

4.                 Brokers.  Tenant represents and warrants to Landlordthat it has dealt directly with (and only with) CB Richard Ellis (“Landlord’sBroker”) as broker in connection with this Amendment No. 1.

5.                 NoConstruction Against Party Drafting Amendment.  Landlord and Tenant acknowledge and agreethat each of them, and their respective professional advisors, have reviewedthis Amendment and that the provisions of this Amendment shall not be construedagainst either party.  The rule ofconstruction ambiguities are to be construed against the party drafting theagreement shall not imply to the interpretation of this Amendment No. 1 and iswaived.

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6.                 ContinuedEffect.  Except as specificallymodified by this Amendment No. 1, all of the terms, conditions and provisionsof the Lease shall remain in full force and effect.  Unless otherwise specifically defined in thisAmendment No. 1, terms with initial capital letter in this Amendment No. 1shall have the same meaning as such terms have in the Lease.

IN WITNESSWHEREOF, the parties have executed this Amendment No. 1 to Office lease as ofthe Effective Date.
| “LANDLORD” | Thornmint 1, a California Limited Partnership |
|----------------------|-----------------------------------------------|
|                 |                                          |   |
|                 |                                          |   |
|                 | By:                                           | s/David C. Price |   |
|                 |                                          |   |
|                 | Name:                                         | David C. Price |   |
|                 |                                          |   |
|                 | Title:                                        | General Partner |   |
|                 |                                          |   |
|                 | Date:                                         | July 3, 2006 |   |
|                 |                                          |   |
|                 |                                          |   |
| ‘TENANT”   | ImageWare Systems, Inc.                       |
|                 |                                          |   |
|                 | By:                                           | s/S. James Miller, Jr. |   |
|                 |                                          |   |
|                 | Name:                                         | S. James Miller, Jr. |   |
|                 |                                          |   |
|                 | Title:                                        | Chairman & CEO |   |
|                 |                                          |   |
|                 | Date:                                         | June 23, 2006 |   |
|                      |                                               |  |  |  |  |  |  |  |  |

 

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