<PAGE>   1
EXHIBIT 10.1


                             DISTRIBUTION AGREEMENT


         This Distribution Agreement (hereinafter "Agreement") is effective as
of the 1st day of January, 2001, by and between Wireless Technology, Inc., a
Nevada corporation, located at 2064 Eastman Avenue, Suite 113, Ventura,
California 93003 (hereinafter "WTI"), and Image Sensing Systems, Inc., a
Minnesota corporation, located at 1600 University Avenue, West St. Paul,
Minnesota 55104 (hereinafter "ISS").

                                    RECITALS

         A. WTI is engaged in the business of designing and manufacturing video
camera systems and wireless video, audio, and data communications equipment,
with experience in the deployment of video systems for enforcement,
surveillance, and security.

         B. ISS is engaged, among other things, in the business of designing,
developing and selling certain video detection and control devices utilizing
machine vision technology, known as the Autoscope Video Detection System, under
exclusive license from the University of Minnesota. ISS has sublicensed the
exclusive right to manufacture and market the Autoscope system in North America
and the Caribbean to Econolite Control Products, Inc. ("Econolite"). Econolite
also manufactures the Autoscope system on a non-exclusive basis for direct sales
by ISS outside North America and the Caribbean. ISS and Econolite have a
marketing and production agreement that grants Econolite exclusive rights to
sell and produce ISS licensed technology within North America and the Caribbean.

         C. WTI desires to utilize ISS's domestic and international marketing
expertise and distribution channels to sell certain present and future products
designed and manufactured/assembled by WTI as designated herein.


         NOW, THEREFORE, for and in consideration of the mutual covenants,
promises and conditions contained herein, the parties agree as follows:

ARTICLE 1:    DEFINITIONS

         For purposes of this Agreement, the following terms shall have the
following meanings:

         1.1 Affiliate. "Affiliate" shall mean, with respect to a party to this
Agreement, any person or entity that, directly or indirectly, is in control of,
is controlled by or is under common control with such party. As used in the
previous sentence, "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies
<PAGE>   2
of a person or entity, whether through the ownership of voting securities, by
contract or otherwise.

         1.2 Confidential Information. "Confidential Information" shall mean all
information that is disclosed by one party to the other and that is designated
in writing as confidential, regardless of the form in which it is disclosed,
including but not limited to information embodied in the WTI Products or which
relates to markets, customers, products, patents, inventions, procedures,
methods, designs, strategies, plans, assets, liabilities, prices, costs,
revenues, profits, organization, employees, agents, distributors,
sub-distributors or business in general.

         1.3 Market. "Market" shall mean transportation, retail, banking,
military, security and law enforcement, in the Territory.

         1.4 Territory. "Territory" shall mean worldwide, without limitation.

         1.5 WTI Products. "WTI Products" shall mean all present and future
systems and equipment designed and manufactured by WTI.


ARTICLE 2:   APPOINTMENT; SUBDISTRIBUTORS; TRADEMARKS; NO PROPRIETARY RIGHTS
CONFERRED

         2.1 Scope. WTI hereby appoints ISS, and ISS hereby accepts such
appointment, as WTI's exclusive distributor of the WTI Products in the
transportation, retail and banking Markets, and as WTI's non-exclusive
distributor of the WTI Products in the security, military, and law enforcement
Markets, in the Territory during the term of this Agreement, subject to all the
terms and conditions of this Agreement. In consideration of such appointment,
ISS shall not represent, distribute or sell any products that compete with the
WTI Products. ISS expressly acknowledges that the distribution right granted
under this Agreement is limited to the Market and the Territory. With the prior
written consent of ISS, WTI may sell the WTI Products directly to end-users.

         2.2 Subdistributors. ISS shall have the right to appoint
sub-distributors of the WTI Products with the prior written consent of WTI,
which shall not be unreasonably withheld.

         2.3 Use of Trademarks. WTI hereby grants ISS the nontransferable,
nonexclusive right to use the WTI trademarks and trade names listed on Exhibit
A, and any other trademarks owned by WTI which it may designate in writing for
use by ISS (the "Trademarks"), in marketing and distributing the WTI Products in
the Market in the Territory for the duration of this Agreement. ISS shall not
alter any WTI Trademarks or any package or label used in connection with any WTI
Products, except as specifically authorized by WTI in writing.

         2.4 No Proprietary Rights. The relationship created by this Agreement
is one of manufacturer (WTI) and distributor (ISS) ONLY. This Agreement shall
not create in ISS or any of


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its affiliates any proprietary rights in the WTI products that are now, or may
in the future, be sold under this Agreement.


ARTICLE 3:   GENERAL OBLIGATIONS OF ISS

         3.1 Marketing. ISS shall have the following obligations with respect to
the marketing and distribution of the WTI Products:

         (a)      To use its best efforts to further the promotion, marketing,
                  and distribution of the WTI Products in the applicable Market,
                  in the Territory;

         (b)      To commit reasonable financial, intellectual and human
                  resources necessary to grow the Market in the Territory for
                  the WTI Products;

         (c)      To provide adequate and appropriate training to its sales
                  force and independent sales representatives concerning the WTI
                  Products at ISS's expense;

         (d)      To provide WTI with a reasonably detailed business plan
                  (including definitive marketing and strategic plans) for the
                  marketing and distribution of the WTI Products within ninety
                  (90) days of the Effective Date (including pricing strategies,
                  channels to market, service and warranty plans and promotional
                  activities) and to update such business plan thereafter once
                  per year fifteen days prior to the start of WTI's fiscal year;
                  and

         (e)      To conduct its business in a professional manner which will
                  reflect positively upon WTI and WTI Products.


         3.2 Promotional Materials. ISS shall submit samples of any proposed
brochures, literature, promotional materials and instructions which are created
or intended for use by ISS in the advertising, promotion, marketing or sale of
the WTI Products in the Market in the Territory ("Promotional Materials") to WTI
for written approval at least ten (10) days prior to proposed initial use. WTI
shall approve such Promotional Materials or identify any changes necessary for
approval of the Promotional Materials within five (5) days of receipt from ISS.
ISS shall use, and shall allow its employees or independent sales
representatives to use, only such Promotional Materials as have been approved in
writing by WTI. ISS shall make no claim, representation or warranty about the
WTI Products, and shall allow its employees or independent sales representatives
to make no claim, representation or warranty about the WTI Products, whether in
writing, orally or by electronic or other means, except as is contained in
Promotional Materials approved by WTI in accordance with this Section 3.2. ISS
shall promptly update or modify already approved Promotional Materials at WTI's
request.


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         3.3 Compliance with Law. ISS shall distribute the WTI Products in the
Market in the Territory in compliance with all applicable legal and regulatory
requirements. ISS shall not directly or indirectly misrepresent the use of the
WTI Products and will not alter the WTI Products.

         3.4 Customer Reports. ISS shall promptly forward to WTI any customer
complaints or inquiries relating to the performance or manufacture of the WTI
Products in accordance with WTI's customer service policies. ISS shall promptly
respond to all other inquiries and complaints from users of the WTI Products and
shall provide WTI with a monthly report on all such inquiries or complaints and
such other information as WTI may request from time to time.


ARTICLE 4:   ORDERS, PRICES AND PAYMENTS

         4.1 Forecasts. ISS shall provide WTI with an annual (one year) forecast
of orders for the WTI Products, which forecasts shall be updated monthly on a
90-day rolling basis. The forecasts shall be non-binding.

         4.2 Orders. ISS shall use its best efforts to submit purchase orders
for the WTI Products in quantities consistent with the applicable forecast. All
orders shall be in writing at least fifteen (15) days prior to the requested
delivery date. Orders shall include the quantity of WTI Products, requested
delivery dates and shipping instructions. All purchase orders are subject to
acceptance in writing by WTI.

         4.3 Modification of Orders. No accepted purchase order may be modified
or canceled except upon the written agreement of both WTI and ISS. ISS's
purchase orders shall be subject to all provisions of this Agreement, whether or
not the purchase order or change order so states.

         4.4 Prices. The parties agree that the prices to ISS for WTI Products
shall be 50% of WTI's list price as set forth on that Price List dated January
1, 2001 attached hereto as Exhibit B, subject to those price increases allowed
under Section 4.5 below. As to any future products developed by WTI, WTI shall
notify ISS of the price at which that new Product will be listed and ISS may
purchase that Product at 50% of list price subject to the same price adjustments
allowed under Section 4.5 below.

         4.5 Price Increases. WTI may, at any time beginning three (3) months
after the Effective Date of this Agreement, adjust its list prices for the WTI
Products by providing ISS with at least forty five (45) days prior written
notice of any such price list adjustment; provided however, that no list price
increase on a WTI Product shall be allowed if the list price increase for that
Product, when taken together with all other list price increases in WTI Products
over the preceding twelve months, will represent an increase in the aggregate
list price of all WTI Products during that same twelve month period, of more
than ten per cent 10% OR the percentage increase in the Consumer Price Index -
Urban Markets, whichever percentage figure is greater.


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The foregoing limitation shall NOT apply to any price increases that are due to
increase in WTI's component purchase costs. Any increased prices shall not apply
to any purchase orders accepted by WTI prior to the effective date of any price
increase.

         4.6 Payment Terms. Payments due under this Agreement shall be due net
forty-five (45) days from the date of WTI's invoice. An invoice shall be dated
on or after the date of shipment. In the event of any dispute arising over any
part of an invoice or the total amount due under an invoice, all undisputed
amounts shall be promptly paid by ISS in accordance with this Section 4.6.

         4.7 Resale Prices. ISS may offer the WTI Products for resale in the
Market in the Territory at such prices as ISS and WTI agree to in writing.

         4.8 Taxes and Duties. Except as provided in Section 4.9 below, ISS
shall be solely responsible for all taxes, duties or other similar government
charges in connection with its purchase of WTI Products from WTI, exclusive of
income taxes owed by WTI.

         4.9 Income Tax Withholding. If and only to the extent that ISS is
required by income tax laws in any country in the Territory to withhold income
taxes owed by WTI, ISS may so withhold such taxes from payments otherwise due to
WTI and shall promptly pay such taxes to the appropriate tax authorities on
behalf of WTI. ISS shall then provide WTI with written documentation of such tax
payment in a form reasonably acceptable to the U.S. Internal Revenue Service for
purposes of foreign tax credits.

ARTICLE 5:   WARRANTIES AND INDEMNIFICATION

         5.1 Warranties to ISS. WTI hereby warrants to ISS:

         (a)      WTI owns or has the lawful right from others to grant the
                  rights to market and distribute the WTI Products in the Market
                  in the Territory as set forth in this Agreement;

         (b)      WTI has no knowledge of any infringement by the WTI Products
                  of any third party United States or foreign intellectual
                  property rights, such as patents, copyrights, trade secrets or
                  trademarks; and

         (c)      The WTI Products shall be manufactured in conformity with
                  applicable good manufacturing procedures and shall be free
                  from defects in materials and workmanship.

         5.2 Limited Warranty. The warranties set forth in Section 5.1 above
apply only to ISS and are in lieu of all other warranties, express or implied,
including without limitation any warranty of merchantability or fitness for a
particular purpose or use.


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         5.3 No Warranty Pass-Through. No warranty, representation or agreement
herein shall be deemed to be made for the benefit of any third parties. ISS
shall not pass through to any third parties the warranties made by WTI under
this Article 5 and shall make no claims, representations or warranties
concerning the WTI Products other than as expressly approved by WTI pursuant to
Section 3.2 hereof.

         5.4 Indemnification by WTI. WTI hereby agrees to indemnify, defend and
hold ISS harmless from any claims, demands, liabilities, damages, cost and
expenses (including, without limitation, reasonable costs and legal fees
incurred by ISS) arising out of any third party suit, claim or other legal
action, including any action brought by any governmental agency ("Legal
Action"), that alleges (a) WTI Products infringe any United States or foreign
patent, copyright, or trade secret, or (b) personal injury, death or property
damage resulting from the use of WTI Products that are alleged to be defective
by manufacturing or design; provided however, that ISS shall reimburse WTI for
all indemnification expense paid to or on behalf of ISS under the foregoing
provisions if it is determined that ISS or any of its affiliates were also the
proximate cause of such personal injury, death or property damage. ISS shall
give written notice to WTI of any such Legal Action within thirty (30) days of
ISS's first knowledge thereof. If a WTI Product is found to infringe any third
party intellectual property right which falls within WTI's indemnification
obligation, at WTI's sole discretion and expense, WTI may (a) obtain a license
from such third party for the benefit of ISS; or (b) replace or modify the WTI
Products so that they are no longer infringing.

         5.5 Indemnification by ISS. ISS hereby agrees to indemnify, defend and
hold WTI harmless from any claims, demands, liabilities, damages, costs and
expenses (including, without limitation, reasonable costs and legal fees
incurred by WTI) arising out of any Legal Action that arises from or results out
of the marketing or distribution of the WTI Products by ISS including, without
limitation: (a) any act or omission by ISS or any of its employees or agents;
(b) any claims, warranties or representations made by ISS or any of its
employees or agents with respect to the WTI Products or in connection with such
activities of ISS or any of its employees or agents except as specifically
approved by WTI in Promotional Materials, in accordance with Section 3.2; or (c)
any unfair business practice of ISS or any of its employees or agents. WTI shall
give written notice of any such Legal Action to ISS within thirty (30) days of
WTI's first knowledge thereof.

         5.6 Insurance. Each of the parties shall procure and maintain in
effect, liability insurance in an amount not less than Two Million Dollars
($2,000,000.00), which will insure against claims and liabilities arising out of
or related to the WTI Products or covered by such party's indemnification
obligation hereunder. Each party's policy shall identify the other party as an
additional insured, and shall provide that there shall be no cancellation or
reduction of coverage except upon written notice to the other party of at least
thirty (30) days. Upon request, each party shall furnish appropriate
certificates of insurance to the other party.


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ARTICLE 6:  LIMITATION OF LIABILITY.

WTI AGREES THAT ISS SHALL NOT BE LIABLE FOR ANY LOSS OR DAMAGE CAUSED BY WTI'S
DELAY IN FURNISHING THE WTI PRODUCTS. IN NO EVENT WILL ISS OR ITS AFFILIATES BE
LIABLE TO WTI FOR CONSEQUENTIAL, EXEMPLARY, INCIDENTAL OR INDIRECT OR PUNITIVE
DAMAGES OR COSTS (INCLUDING LEGAL FEES AND EXPENSES) OR LOSS OF GOODWILL OR
PROFIT IN CONNECTION WITH THE DISTRIBUTION AND SALE OF THE WTI PRODUCTS, OR IN
CONNECTION WITH ANY CLAIM ARISING FROM THIS AGREEMENT, EVEN IF ISS AND ITS
AFFILIATES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR COSTS. WTI
AGREES THAT ISS'S TOTAL AGGREGATE LIABILITY UNDER THIS AGREEMENT SHALL NOT
EXCEED TWO MILLION DOLLARS ($2,000,000).

ISS AGREES THAT WTI SHALL NOT BE LIABLE FOR ANY LOSS OR DAMAGE CAUSED BY ISS'S
OWN DELAY IN DELIVERING THE WTI PRODUCTS TO THE END USER OR PURCHASER. IN NO
EVENT WILL WTI OR ITS AFFILIATES BE LIABLE TO ISS FOR CONSEQUENTIAL, EXEMPLARY,
INCIDENTAL OR INDIRECT OR PUNITIVE DAMAGES OR COSTS (INCLUDING LEGAL FEES AND
EXPENSES) OR LOSS OF GOODWILL OR PROFIT IN CONNECTION WITH THE DISTRIBUTION AND
SALE OF THE WTI PRODUCTS, OR IN CONNECTION WITH ANY CLAIM ARISING FROM THIS
AGREEMENT, EVEN IF WTI AND ITS AFFILIATES HAVE BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES OR COSTS. ISS AGREES THAT WTI'S TOTAL AGGREGATE LIABILITY UNDER
THIS AGREEMENT SHALL NOT EXCEED TWO MILLION DOLLARS ($2,000,000).

ARTICLE 7:  CONFIDENTIALITY

         7.1 Confidential Information; Term. All Confidential Information shall
be deemed confidential and proprietary to the party disclosing such information
hereunder. Each party may use the Confidential Information of the other party
during the term of this Agreement only as permitted or required for the
receiving party's performance hereunder. The receiving party shall not disclose
or provide any Confidential Information to any third party and shall take
reasonable measures to prevent any unauthorized disclosure by its employees,
agents, contractors or consultants during the term hereof, including appropriate
individual nondisclosure agreements. The foregoing duty shall apply to any
Confidential Information during the term of this Agreement and for a period of
five (5) years from the date of termination of this Agreement.

         7.2 Exclusions. The following shall not be considered Confidential
Information for purposes of this Article 7:

         (a)      Information that is or comes into the public domain through no
                  fault or act of the receiving party;


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         (b)      Information that was independently developed by the receiving
                  party without the use of or reliance on the disclosing party's
                  Confidential Information;

         (c)      Information which was provided to the receiving party by a
                  third party under no duty of confidentiality to the disclosing
                  party; or

         (d)      Information which is required to be disclosed by law, provided
                  however, prompt prior notice thereof shall be given to the
                  party whose Confidential Information is involved.

ARTICLE 8:  ASSIGNMENT; SURVIVORSHIP

         8.1 Assignment. Neither party may assign its rights or obligations
under this Agreement, even to its affiliates, without the written consent of the
other party.

         8.2 Survivorship. If more than half of the equity of WTI is purchased
by a single person or entity that was not an WTI Affiliate before such purchase,
that person or entity shall take subject to this Agreement, which shall remain
in full force and effect.

ARTICLE 9:  IMPORT AND EXPORT OF WTI PRODUCTS

         9.1 Import Documentation. If applicable, ISS shall be responsible for
obtaining all licenses, permits and registrations required to import the WTI
Products into the Territory in accordance with applicable laws or regulations in
the Territory.

         9.2. Export Regulations. If applicable, ISS shall supply WTI on a
timely basis with all necessary information and documentation requested by WTI
for export of the WTI Products in accordance with United States export control
laws and regulations.

         9.3 Written Assurance. If applicable, ISS hereby assures WTI that ISS
shall not re-export, directly or indirectly, the WTI Products to any destination
forbidden under the then-applicable United States Export Administration
Regulations unless the United States Export Administration Regulations expressly
permit such re-export or the United States Commerce Department's Bureau of
Export Administration has granted such authorization in writing.

ARTICLE 10:  TERM AND TERMINATION

         10.1 Term. This Agreement shall take effect as of the Effective Date
and shall have an initial term of seven (7) years. Unless terminated as set
forth below, this Agreement shall automatically extend for consecutive one year
periods unless either party notifies the other no less than 60 days prior to the
date of expiration of the initial term or any extension term that the Agreement
will not be extended.


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         10.2 Termination. Notwithstanding the provisions of Section 10.1 above,
this Agreement may be terminated earlier:

         (a)      By either party immediately on written notice to the other
                  party if the other party files a petition of any type as to
                  its bankruptcy, is declared bankrupt, becomes insolvent, makes
                  an assignment for the benefit of creditors, goes into
                  liquidation or receivership, or otherwise loses legal control
                  of its business involuntarily;

         (b)      By either party if the other party is in material breach of
                  this Agreement and has failed to cure such breach within
                  thirty (30) days of receipt of written notice thereof from the
                  first party;

         (c)      By either party immediately on written notice to the other
                  party if an event of Force Majeure continues for more than six
                  (6) months, provided however both parties shall use all best
                  and reasonable efforts to find a solution to or a method of
                  avoiding the effects of such Force Majeure event and only in
                  the event such solutions or efforts fail then either party may
                  terminate this Agreement.

         (d)      By either party upon sixty (60) days prior written notice if
                  the sales from WTI to ISS and Econolite under this Agreement
                  do not meet the Minimum Sales Requirements set forth in
                  Exhibit C hereto.

         10.3 Rights and Obligations on Termination. In the event of termination
or expiration of this Agreement for any reason, the parties shall have the
following rights and obligations:

         (a)      ISS shall cease to distribute the WTI Products;

         (b)      Neither party shall be released from the obligation to make
                  payment of all amounts then or thereafter due and payable
                  under this Agreement;

         (c)      ISS's duty of compliance with applicable United States export
                  control laws under Section 9.3 hereof and duties of both
                  parties of confidentiality under Article 7 and concerning
                  dispute resolution under Article 10, shall survive termination
                  of this Agreement; and

         (d)      Each party shall return all copies of the other party's
                  Confidential Information and, if applicable, shall erase all
                  Confidential Information from its computer systems and shall
                  certify in writing to the other party that it has done so.


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         10.4 No Compensation. In the event of any termination of this Agreement
under Section 10.2, subject to Section 10.3(b), neither party shall owe any
compensation to the other party for lost profits, lost opportunities, good will,
or any other loss or damage as a result of or arising from such termination.

ARTICLE 11:  ARBITRATION

         11.1 Dispute Resolution. Except as provided in Section 11.2, WTI and
ISS shall each use best efforts to resolve any dispute between them promptly and
amicably and without resort to any legal process, if feasible, within thirty
(30) days of receipt of a written notice by one party to the other party of the
existence of such dispute. Except as provided in Section 11.2, no further action
may be taken under this Article 11 unless and until executive officers of WTI
and ISS have met in good faith to discuss and settle such dispute. The foregoing
requirement in this Section 11.1 shall be without prejudice to either party's
rights, if applicable, to terminate this Agreement under Section 10.2.

         11.2 Litigation Rights Reserved. If any dispute arises with regard to
the unauthorized use or disclosure of Confidential Information by the other
party, the party whose Confidential Information was so used or disclosed may
seek any available remedy at law or in equity from a court of competent
jurisdiction.

         11.3 Procedure for Arbitration. Except as provided in Section 11.2, any
dispute, claim or controversy arising out of or in connection with this
Agreement which has not been settled through negotiation within a period of
thirty (30) days after the date on which either party shall first have notified
the other party in writing of the existence of a dispute, shall be settled by
final and binding arbitration under the then applicable Commercial Arbitration
Rules of the American Arbitration Association ("AAA"). Any such arbitration
shall be conducted by three (3) arbitrators appointed by mutual agreement of the
parties or, failing such agreement, in accordance with AAA Rules. At least one
(1) arbitrator shall be an experienced industry professional and at least one
(1) arbitrator shall be an experienced business attorney with background in the
licensing and distribution of similar products. Any such arbitration shall be
conducted in Omaha, Nebraska, U.S.A. An arbitral award may be enforced in any
court of competent jurisdiction. Notwithstanding any contrary provision in the
AAA Rules, the following additional procedures and rules shall apply to any such
arbitration:

         (a)      Each party shall have the right to request from the
                  arbitrators, and the arbitrators shall order upon good cause
                  shown, reasonable and limited pre-hearing discovery, including
                  (a) exchange of witness lists, (b) depositions under oath of
                  named witnesses at a mutually convenient location, (c) written
                  interrogatories, and (d) document requests.

         (b)      Upon conclusion of the pre-hearing discovery, the arbitrators
                  shall promptly hold a hearing upon the evidence to be adduced
                  by the parties and shall promptly render a written opinion and
                  award.


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         (c)      The arbitrators may not award or assess punitive damages
                  against either party.

         (d)      Each party shall bear its own costs and expenses of the
                  arbitration and one-half (1/2) of the fees and costs of the
                  arbitrators, subject to the power of the arbitrators, in their
                  sole discretion, to award all such reasonable costs, expenses
                  and fees to the prevailing party.

ARTICLE 12:   MISCELLANEOUS

         12.1 Relationship. This Agreement does not make either party the
employee, agent or legal representative of the other for any purpose whatsoever.
Neither party is granted any right or authority to assume or to create any
obligation or responsibility, express or implied, on behalf of or in the name of
the other party. Each party is acting as an independent contractor and nothing
herein shall be construed to create a partnership, joint venture, franchise,
employment, or agency relationship between the parties.

         12.2 Assignment. Neither party shall have the right to assign or
otherwise transfer its rights and obligations under this Agreement without the
prior written consent of the other party. Any prohibited assignment shall be
null and void.

         12.3 Notices. Notices permitted or required to be given hereunder shall
be deemed sufficient if given by registered or certified mail, postage prepaid,
return receipt requested, by private courier service, or by facsimile addressed
to the respective addresses of the parties as first above written or at such
other addresses as the respective parties may designate by like notice from time
to time. Notices so given shall be effective upon (a) receipt by the party to
which notice is given or (b) on the fifth (5th) day following domestic mailing
or the tenth (10th) day following international mailing, as the case may be,
whichever occurs first.

         12.4 Entire Agreement. This Agreement, including the Exhibits hereto
which are incorporated herein by reference, constitutes the entire agreement of
the parties with respect to the subject matter hereof and supersedes and
replaces all proposals, oral or written, and all negotiations, conversations,
discussions and previous agreements heretofore between the parties. WTI hereby
acknowledges that it has not been induced to enter into this Agreement by any
representations or statements, oral or written, not expressly contained herein.
If any provision hereof is declared invalid by a court of competent
jurisdiction, such provision shall be ineffective only to the extent of such
invalidity, so that the remainder of that provision and all remaining provisions
of this Agreement will continue in full force and effect.

         12.5 Amendment. This Agreement may not be modified, amended, rescinded,
canceled or waived, in whole or in part, except by written amendment signed by
both parties hereto.


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         12.6 Publicity. Subject to Section 12.12 hereof, this Agreement is
confidential, and no party shall issue press releases or engage in other types
of publicity of any nature dealing with the commercial or legal details of this
Agreement without the other party's prior written approval, which approval shall
not be unreasonably withheld; provided however, approval of such disclosure
shall be deemed to be given to the extent such disclosure is required to comply
with governmental rules, regulations or other governmental requirements. In such
event, the publishing party shall furnish a copy of such disclosure to the other
party.

         12.7 Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Minnesota, excluding its choice of law rules. The
parties agree that the United Nations Convention on Contracts for the
International Sale of Goods shall not apply in any respect to this Agreement or
the parties hereto.

         12.8 Severability. If any provision of this Agreement is found
unenforceable under any laws or regulations applicable thereto, such provision
shall be deemed stricken from this Agreement, but such invalidity or
unenforceability shall not invalidate any of the other provisions of this
Agreement.

         12.9 Counterparts. This Agreement may be executed in two or more
counterparts and each such counterpart shall be deemed an original hereof.

         12.10 Waiver. No failure by either party to take any action or assert
any right hereunder shall be deemed to be a waiver of such right in the event of
the continuation or repetition of the circumstances giving rise to such right.

         12.11 Force Majeure. Upon written notice to the other party, a party
affected by an event of Force Majeure shall be suspended without any liability
on its part from the performance of its obligations under this Agreement, except
for the obligation to pay any amounts due and owing hereunder. As used in this
Agreement, the term "Force Majeure" shall mean any event or condition beyond the
reasonable control of either party which prevents, in whole or in material part,
the performance by one of the parties of its obligations hereunder or which
renders the performance of such obligations so difficult or costly as to make
such performance commercially unreasonable, including acts of State or
governmental action, riots, disturbance, war, strikes, lockouts, slowdowns,
prolonged shortage of energy or other supplies, epidemics, fire, flood,
hurricane, typhoon, earthquake, lightning and explosion, or any refusal or
failure of any governmental authority to grant any approval or export license
legally required.

         12.12 Announcements. ISS shall have the right to announce to its
shareholders and to the public significant events and achievements by ISS and
WTI under this Agreement with the prior written consent of WTI.


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         IN WITNESS WHEREOF, the parties have caused this Distributorship
Agreement to be executed by their duly authorized representatives below.


                                             "ISS"
                                             IMAGE SENSING SYSTEMS, INC.


Date: April 27, 2001                         By: /s/ William L. Russell

                                             Title: CEO



                                             "WTI"
                                             WIRELESS TECHNOLOGY, INC.


Date: April 27, 2001                         By: /s/ Phillip D. Fancher
                                             Title: President/CEO


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                                    EXHIBIT A

                         WTI TRADEMARKS AND TRADE NAMES

WIRELESS TECHNOLOGY, INC. (WTI)

FS-930N VIDEO TRANSMISSION SYSTEMS

2400 VIDEO TRANSMISSION SYSTEMS

5.8 GHZ VIDEO TRANSMISSION SYSTEMS

PS-991 PORTABLE VIDEO SURVEILLANCE SYSTEM

FAST DEPLOYMENT POWER OPTIONS

CFS-2400P INTELLIGENT TRAFFIC SYSTEMS- WIRELESS VIDEO MONITORING

FS-2400 WIRELESS VIDEO FOR GRADE CROSSING SAFETY

TWO-WIRE TRANSMISSION SYSTEM

2400 MHZ VIDEO MULTI-CHANNEL ANTENNAS

2400 MHZ VIDEO ANTENNA FOR COVERT APPLICATIONS

RL450AXB CONTROL LINK OMNIDIRECTIONAL ANTENNA

900 MHZ LINEAR POLARIZED MICROSTRIP ANTENNA

CONTROL LINK 460 UHF YAGI ANTENNA

2400 MHZ LINEAR POLARIZED MICROSTRIP ANTENNA

900 MHZ LINEAR POLARIZED YAGI ANTENNA

PRS-24, PS-2401 PORTABLE VIDEO SURVEILLANCE SYSTEM

MOBILE BLOCKER, MOBILE ALERT, MOBILE INTERCEPTOR

AUTOSCOPE SOLO PRO, AUTOSCOPE IMAGE SENSOR (AIS)


                                      -14-
<PAGE>   15
                                    EXHIBIT B

                               WTI PRODUCTS PRICES

NOTE: TRANSFER PRICING FROM WTI TO ISS IS AT A 50% DISCOUNT OFF PUBLISHED LIST
PRICE, IN ACCORD WITH WTI PRICE LIST DATED 4 JULY 2000. THE PRODUCTS, AUTOSCOPE
SOLO PRO, AUTOSCOPE IMAGE SENSOR, MOBILE BLOCKER, MOBILE ALERT AND MOBILE
INTERCEPTOR ARE EXCLUSIVELY ISS PRODUCTS, FOR WHICH A UNIQUE TRANSFER PRICE HAS
BEEN AGREED, OR WILL BE JOINTLY AGREED UPON SUBMITTAL OF A FORMAL SYSTEM
REQUIREMENT SPECIFICATION.

FS-930N VIDEO TRANSMISSION SYSTEMS

2400 VIDEO TRANSMISSION SYSTEMS

5.8 GHZ VIDEO TRANSMISSION SYSTEMS

PS-991 PORTABLE VIDEO SURVEILLANCE SYSTEM

FAST DEPLOYMENT POWER OPTIONS

CFS-2400P INTELLIGENT TRAFFIC SYSTEMS- WIRELESS VIDEO MONITORING

FS-2400 WIRELESS VIDEO FOR GRADE CROSSING SAFETY

TWO-WIRE TRANSMISSION SYSTEM

2400 MHZ VIDEO MULTI-CHANNEL ANTENNAS

2400 MHZ VIDEO ANTENNA FOR COVERT APPLICATIONS

RL450AXB CONTROL LINK OMNIDIRECTIONAL ANTENNA

900 MHZ LINEAR POLARIZED MICROSTRIP ANTENNA

CONTROL LINK 460 UHF YAGI ANTENNA

2400 MHZ LINEAR POLARIZED MICROSTRIP ANTENNA

900 MHZ LINEAR POLARIZED YAGI ANTENNA

PRS-24, PS-2401 PORTABLE VIDEO SURVEILLANCE SYSTEM


                                      -15-
<PAGE>   16
                                    EXHIBIT C

                            MINIMUM SALES REQUIREMENTS


<TABLE>
<S>                                                        <C>
          For the calendar year 2001                       $1,500,000
          For the calendar year 2002                       $2,000,000
          For the calendar year 2003                       $2,500,000
          For the calendar year 2004                       $3,000,000
          For the calendar years 2005 through 2010         $3,500,000
</TABLE>


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