REGISTRATION RIGHTS AGREEMENT
Exhibit
10.2
This
Registration Rights Agreement (the “Agreement”) is made and entered
into as of this 10th day of September, 2018 by and among ImageWare
Systems, Inc., a Delaware corporation (the “Company”), and the
“Purchasers”
named in that certain Securities Purchase Agreement by and among
the Company and the Purchasers (the “Purchase Agreement”). Capitalized
terms used herein have the respective meanings ascribed thereto in
the Purchase Agreement unless otherwise defined
herein.
The
parties hereby agree as follows:
1.
Certain
Definitions.
As used
in this Agreement, the following terms shall have the following
meanings:
“Affiliate”
means, with respect to any Person, any other Person that (either
directly or indirectly) controls, is controlled by, or is under
common control with the specified Person, and shall also include
any Related Fund of such Person. The term “control” includes the
possession, directly or indirectly, of the power to direct the
management or policies of a Person, whether through the ownership
of securities, by contract or otherwise.
“Common
Stock” means the Company’s common stock, par
value $0.01 per share, and any securities into which such Common
Stock may hereinafter be reclassified.
“Conversion
Shares” means the shares of Common Stock issuable upon
conversion of the Preferred Stock issued pursuant to the Purchase
Agreement.
“Person”
means an individual, partnership, corporation, unincorporated
organization, joint stock company, limited liability company,
association, trust, joint venture or any other entity, or a
governmental authority.
“Prospectus”
means (i) the prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and by all other
amendments and supplements to the prospectus, including
post-effective amendments and all material incorporated by
reference in such prospectus, and (ii) any “free writing prospectus” as
defined in Rule 405 under the 1933 Act.
“Purchasers”
means the Purchasers identified in the Purchase Agreement and any
Affiliate or permitted transferee of any Purchaser who is a
subsequent holder of any Registrable Securities.
“Register,”
“registered”
and “registration”
refer to a registration made by preparing and filing a Registration
Statement or similar document in compliance with the 1933 Act (as
defined below), and the declaration or ordering of effectiveness of
such Registration Statement or document.
“Registrable
Securities” means the (i) Conversion Shares and any
other securities issued or issuable with respect to or in exchange
for Registrable Securities, whether by merger, charter amendment or
otherwise, and (ii) shares of Common Stock issuable as dividends
payable with respect to the Preferred Stock; provided, that, a security shall cease
to be a Registrable Security upon sale pursuant to a Registration
Statement or Rule 144 under the 1933 Act.
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“Registration
Statement” means any registration statement of the
Company filed under the 1933 Act that covers the resale of any of
the Registrable Securities pursuant to the provisions of this
Agreement, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration
Statement.
“Related
Fund” means, with respect to any Person, any fund,
account or investment vehicle that is controlled or managed by (i)
such Person, (ii) an Affiliate of such Person or (iii) the same
investment manager, advisor or subadvisor as such Person or an
Affiliate of such investment manager, advisor or
subadvisor.
“Required
Purchasers” means, as of any date of determination,
the Purchasers holding a majority of the Registrable Securities as
of such date.
“SEC”
means the U.S. Securities and Exchange Commission.
“1933
Act” means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
“1934
Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated
thereunder.
2.
Registration.
(a) Registration
Statements.
(i) No
later than 30 days from the date of this Agreement (the
“Filing
Deadline”), the Company
shall prepare and file with the SEC one Registration Statement (the
“Initial Registration
Statement”) covering the
resale of all of the Registrable Securities on a continuous basis
pursuant to Rule 415 of the Securities Act. The Initial
Registration Statement filed hereunder shall be on Form S-3;
provided, that if Form S-3 is not available for the
registration of the resale of Registrable Securities hereunder, the
Company shall (x) register the resale of the Registrable Securities
on another appropriate form and (y) undertake to register the
resale of Registrable Securities on Form S-3 as soon as such form
is available, provided, that the Company shall maintain the
effectiveness of the Registration Statement then in effect until
such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the staff of
the SEC. No Purchaser shall be named as an
“underwriter” in the Initial Registration Statement
without such Purchaser’s prior written consent. Such Initial
Registration Statement also shall cover, to the extent allowable
under the 1933 Act and the rules promulgated thereunder (including
Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar
transactions with respect to the Registrable Securities. Such
Initial Registration Statement shall not include any shares of
Common Stock or other securities for the account of any other
Person (including the Company) without the prior written consent of
the Required Purchasers. The Initial Registration Statement (and
each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided in
accordance with Section 3(c) to the Purchasers and their counsel
prior to its filing or other submission. If (i) the Initial
Registration Statement covering the Registrable Securities is not
filed with the SEC on or prior to the Filing Deadline, or (ii)
prior to the effective date of the Initial Registration Statement,
the Company shall fail to file any pre-effective amendment to the
Initial Registration Statement required to be filed by the SEC or
otherwise respond to comments from the SEC within 15 days from the
date of receipt of such comments (a “Response
Failure”), the Company
will make payments to each Purchaser, as liquidated damages and not
as a penalty, in an amount equal to 1.0% of the aggregate Purchase
Price paid by such Purchaser for its Preferred Stock on the Closing
Date pursuant to the Purchase Agreement (such amount, with respect
to each Purchaser, the “Investment
Amount”) for the first
30-day period or pro rata for any portion thereof following the
Filing Deadline for which no Initial Registration Statement is
filed with respect to the Registrable Securities, or following a
Response Failure, as the case may be, and 1.5% of such
Purchaser’s Investment Amount for each 30-day period
thereafter or pro rata for any portion thereof for which no Initial
Registration Statement is filed with respect to the Registrable
Securities, or following a Response Failure, as the case may
be; provided, that the maximum payments to any Purchaser
pursuant to this Section 2(a)(i) shall not exceed 12.0% of such
Purchaser’s Investment Amount. Such payments shall constitute
the Purchasers’ exclusive monetary remedy for such events,
but shall not affect the right of the Purchasers to seek injunctive
relief.
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(b) Expenses.
The Company will pay all expenses associated with each Registration
Statement (whether or not such Registration Statement becomes
effective), including filing and printing fees, the Company’s
counsel and accounting fees and expenses, costs associated with
clearing the Registrable Securities for sale under applicable state
securities laws, listing fees, and the reasonable fees and expenses
of counsel to, (i) with respect to the Initial Registration
Statement, the Required Purchasers, (ii) with respect to a Demand
Registration, the Requesting Holders and (iii) with respect to any
Piggyback Registration, Purchasers that at the relevant time hold
at least a majority of the Registrable Securities held by all
Purchasers to be included in such Piggyback
Registration.
(c) Effectiveness
of Registration Statements.
(i) The
Company shall use its best efforts to have the Initial Registration
Statement declared effective as soon as practicable, but in no
event later than ninety (90) days after the date of this Agreement.
The Company shall notify the Purchasers by facsimile or e-mail as
promptly as practicable, and in any event, within twenty-four (24)
hours, after any Registration Statement is declared effective and
shall simultaneously provide the Purchasers with copies of any
related Prospectus to be used in connection with the sale or other
disposition of the securities covered thereby. If (A) the Initial
Registration Statement covering the Registrable Securities is not
declared effective by the SEC prior to the earlier of (i) five (5)
Business Days after the SEC shall have informed the Company that no
review of the Initial Registration Statement will be made or that
the SEC has no further comments on the Registration Statement and
(ii) the 90th
day after the date hereof; (B) after
the Initial Registration Statement has been declared effective by
the SEC, sales cannot be made pursuant to such Initial Registration
Statement for any reason (including without limitation by reason of
a stop order, the Company’s failure to update the Initial
Registration Statement or on account of any event described in
Section 3(h)) or the inability of any Purchaser to sell the
Registrable Securities covered thereby due to market conditions; or
(C) the Initial Registration Statement ceases to remain
continuously effective as to all Registrable Securities included
thereunder, then the Company will make payments to each Purchaser,
as liquidated damages and not as a penalty, in an amount equal to
1.0% of such Purchaser’s Investment Amount for the first
30-day period or pro rata for any portion thereof following the
date by which such Initial Registration Statement should have been
effective and 1.5% of such Purchaser’s Investment Amount for
each 30-day period thereafter or pro rata for any portion thereof
for which such Initial Registration Statement should have been
effective (the “Blackout
Period”);
provided, that the maximum payments to any Purchaser
pursuant to this Section 2(c) shall not exceed 16.0% of such
Purchaser’s Investment Amount. Such payments shall constitute
the Purchasers’ exclusive monetary remedy for such events,
but shall not affect the right of the Purchasers to seek injunctive
relief.
(d) Rule
415; Cutback If at any time the
SEC takes the position that the offering of some or all of the
Registrable Securities in any Registration Statement filed pursuant
to the terms and conditions of this Agreement is not eligible to be
made on a delayed or continuous basis under the provisions of Rule
415 under the 1933 Act or requires any Purchaser to be named as an
“underwriter”, the Company shall use its best efforts
to persuade the SEC that the offering contemplated by such
Registration Statement is a valid secondary offering and not an
offering “by or on behalf of the issuer” as defined in
Rule 415 and that none of the Purchasers is an
“underwriter”. The Purchasers shall have the right to
participate or have their counsel participate in any meetings or
discussions with the SEC regarding the SEC’s position and to
comment or have their counsel comment on any written submission
made to the SEC with respect thereto. No such written submission
shall be made to the SEC to which the Required Purchasers’,
or, with respect to a Demand Registration, the Requesting
Purchasers’ (as such term is defined in Section 2(f)(i)
below), counsel reasonably objects. In the event that, despite the
Company’s best efforts and compliance with the terms of this
Section 2(d), the SEC refuses to alter its position, the Company
shall (i) remove from such Registration Statement such portion of
the Registrable Securities that the SEC requires to be removed from
such Registration Statement, while still including the maximum
number of Registrable Securities permitted to be registered by the
SEC under such Registration Statement at such time (such removed
Registrable Securities, the “Cut Back
Shares”), and/or (ii)
agree to such restrictions and limitations on the registration and
resale of the Registrable Securities as the SEC may require to
assure the Company’s compliance with the requirements of Rule
415 (collectively, the “SEC
Restrictions”);
provided,
however, that the Company shall
not agree to name any Purchaser as an “underwriter” in
any Registration Statement without the prior written consent of
such Purchaser. Any cut-back imposed on the Purchasers pursuant to
this Section 2(d) shall be allocated, first, among all securities
that are not Registrable Securities (to the extent previously
permitted by the Required Purchasers, or, in the case of a Demand
Registration, by the Requesting Purchasers), and second, among the
Purchasers on a pro rata basis, unless the SEC Restrictions
otherwise require or provide or the Purchasers otherwise agree. In
the event of any cut-back imposed on the Purchasers pursuant to
this Section 2(d), the Company will use its best efforts to file
with the SEC, as promptly as allowed by the SEC, one or more
Registration Statements on Form S-1 covering the resale of the Cut
Back Shares or such other form available to register for resale the
Cut Back Shares. No liquidated damages shall accrue as to any Cut
Back Shares until such date as the Company is permitted to effect
the registration of such Cut Back Shares using Form S-3 in
accordance with any SEC Restrictions (such date, the
“Restriction Termination
Date” of such Cut Back
Shares). From and after the Restriction Termination Date applicable
to any Cut Back Shares, all of the provisions of this Section 2
(including the liquidated damages provisions) shall again be
applicable to any Cut Back Shares that are not included in a
Registration Statement prior to the Restriction Termination
Date; provided,
however, that (i) the Filing
Deadline for any Registration Statement including any Cut Back
Shares that have not otherwise been included in a Registration
Statement that has been declared effective shall be ten (10)
Business Days after such Restriction Termination Date, and (ii) the
date by which the Company is required to obtain effectiveness with
respect to such Cut Back Shares under Section 2(c) shall be the
120th
day immediately after the Restriction
Termination Date.
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(e) Right
to Piggyback Registration.
(i) If
at any time following the date of this Agreement that any
Registrable Securities remain outstanding the Company proposes for
any reason to register any shares of Common Stock under the 1933
Act (other than pursuant to a registration statement on Form S-4 or
Form S-8 (or a similar or successor form)) with respect to an
offering of Common Stock by the Company for its own account or for
the account of any of its stockholders, it shall, unless a holder
of Registrable Securities has provided written notice to the
Company that it does not want to receive such information, at each
such time promptly give written notice to the holders of the
Registrable Securities of its intention to do so (but in no event
less than thirty (30) days before the anticipated filing date) and,
to the extent permitted under the provisions of Rule 415 under the
1933 Act, include in such registration all Registrable Securities
with respect to which the Company has received written requests for
inclusion therein within fifteen (15) days after receipt of the
Company’s notice (a “Piggyback
Registration”). Such
notice shall offer the holders of the Registrable Securities the
opportunity to register such number of shares of Registrable
Securities as each such holder may request and shall indicate the
intended method of distribution of such Registrable
Securities.
(ii) Notwithstanding
the foregoing, (A) if such registration involves an underwritten
public offering, the Purchasers must sell their Registrable
Securities to, if applicable, the underwriter(s) at the same price
and subject to the same underwriting discounts and commissions that
apply to the other securities sold in such offering (it being
acknowledged that the Company shall be responsible for other
expenses as set forth in Section 2(b)) and subject to the
Purchasers entering into customary underwriting documentation for
selling stockholders in an underwritten public offering, and (B)
if, at any time after giving written notice of its intention to
register any Registrable Securities pursuant to Section 2(e)(i) and
prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for
any reason not to cause such registration statement to become
effective under the 1933 Act, the Company shall deliver written
notice to the Purchasers and, thereupon, shall be relieved of its
obligation to register any Registrable Securities in connection
with such registration; provided,
however, that nothing contained
in this Section 2(e) shall limit the Company’s liabilities
and/or obligations under this Agreement, including, without
limitation, the obligation to pay liquidated damages under this
Section 2. Any Purchaser may elect to withdraw such
Purchaser’s request for inclusion of Registrable Securities
in any Piggyback Registration by giving written notice to the
Company of such request to withdraw prior to the effectiveness of
the Registration Statement or the pricing of an underwritten
offering, as applicable.
(f) Demand
Registration.
(i) At
any time and from time to time after the Initial Registration
Statement has been declared effective, any Purchaser or group of
Purchasers (acting together) that own or control Registrable
Securities representing at least fifty percent (50%) of the
then-issued and outstanding Registrable Securities (collectively,
the “Requesting
Purchasers”), may deliver
to the Company a written notice (a “Demand Registration
Notice”) informing the
Company that such Requesting Purchasers require the Company to
register for resale some or all of such Requesting
Purchasers’ Registrable Securities not otherwise then
registered for resale by the Initial Registration Statement (a
“Demand
Registration”);
provided,
however, that the Company will
not be required to effect more than two (2) Demand Registrations in
accordance with this Agreement. Upon receipt of the Demand
Registration Notice, the Company will use best efforts to file with
the SEC as promptly as practicable after receiving the Demand
Registration Notice, but in no event more than sixty (60) days
following receipt of the Demand Registration Notice, a Registration
Statement covering all requested Registrable Securities (the
“Demand Registration
Statement”), and agrees
to use best efforts to cause the Demand Registration Statement to
be declared effective by the SEC as soon as practicable following
the filing thereof, but in no event later than ninety (90) days
after the filing of such Demand Registration Statement. The Company
agrees to use best efforts to keep any Demand Registration
Statement continuously effective (including the preparation and
filing of any amendments and supplements necessary for that
purpose) until such time as all of the Registrable Securities
covered thereby have been sold (“Minimum Effective
Period”).
(ii) Notice
to Purchasers. The Company
shall give written notice of the proposed filing of any Demand
Registration Statement to all Purchasers (other than the Requesting
Purchasers) as soon as practicable, and each such Purchaser who
wishes to participate in such Demand Registration Statement shall
notify the Company in writing within five (5) Business Days after
the receipt by such Purchaser of the notice from the Company, and
shall specify in such notice the number of Registrable Securities
held by such Purchaser to be included in the Demand Registration
Statement. Upon the written request of any Purchaser, delivered to
the Company no later than five (5) Business Days after the
Company’s notice is delivered to such Purchaser (each such
Purchaser, a “Joining
Purchaser”), to register,
on the same terms and conditions as the Registrable Securities
otherwise being sold pursuant to such Demand Registration, any of
its Registrable Securities, the Company will use its best efforts
to cause such Registrable Securities to be included in the Demand
Registration Statement proposed to be filed by the Company on the
same terms and conditions as any Registrable Securities included
therein.
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3.
Company
Obligations. The Company will
use best efforts to effect the registration of the Registrable
Securities in accordance with the terms hereof, and pursuant
thereto the Company will, as expeditiously as
possible:
(a) use
best efforts to cause the Initial Registration Statement to become
effective and to remain continuously effective for a period that
will terminate upon the earlier of (i) the date on which all
Registrable Securities covered by such Initial Registration
Statement as amended from time to time, have been sold, and (ii)
the date on which all Registrable Securities covered by such
Initial Registration Statement may be sold without restriction and
without the need for current public information pursuant to Rule
144 (the “Effectiveness
Period”) and advise the
Purchasers in writing when the Effectiveness Period has
expired;
(b) prepare
and file with the SEC such amendments and post-effective amendments
to any Registration Statement and Prospectus as may be necessary to
keep such Registration Statement effective for, with respect to the
Initial Registration Statement, the Effectiveness Period and with
respect to any Demand Registration Statement, the Minimum Effective
Period, and in any case to comply with the provisions of the 1933
Act and the 1934 Act with respect to the distribution of all of the
Registrable Securities covered in any Registration
Statement;
(c) provide
copies to and permit counsel designated by the Purchasers to review
each Registration Statement and all amendments and supplements
thereto no fewer than seven (7) days prior to their filing with the
SEC and not file any Registration Statement or other document to
which such counsel reasonably objects;
(d) furnish
to the Purchasers and their legal counsel (i) promptly after the
same is prepared and publicly distributed, filed with the SEC, or
received by the Company (but not later than two (2) Business Days
after the filing date, receipt date or sending date, as the case
may be) one (1) copy of any Registration Statement and any
amendment thereto, each preliminary prospectus and Prospectus and
each amendment or supplement thereto, and each letter written by or
on behalf of the Company to the SEC or the staff of the SEC, and
each item of correspondence from the SEC or the staff of the SEC,
in each case relating to such Registration Statement (other than
any portion of any thereof which contains information for which the
Company has sought confidential treatment), and (ii) such number of
copies of a Prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as each
Purchaser may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Purchaser
that are covered by the related Registration
Statement;
(e) use
best efforts to (i) prevent the issuance of any stop order or other
suspension of effectiveness and, (ii) if such order is issued,
obtain the withdrawal of any such order at the earliest possible
moment;
(f) prior to any public offering of Registrable
Securities, use best efforts to register or qualify or cooperate
with the Purchasers and their counsel in connection with the
registration or qualification of such Registrable Securities for
offer and sale under the securities or blue sky laws of such
jurisdictions requested by the Purchasers and do any and all other
acts or things necessary or advisable to enable the distribution in
such jurisdictions of the Registrable Securities covered by any
Registration Statement; provided,
however, that the Company shall
not be required in connection therewith or as a condition thereto
to (i) qualify to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3(f),
(ii) subject itself to general taxation in any jurisdiction where
it would not otherwise be so subject but for this Section 3(f), or
(iii) file a general consent to service of process in any such
jurisdiction;
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(g) use
best efforts to cause all Registrable Securities covered by a
Registration Statement to be listed on each securities exchange,
interdealer quotation system or other market on which similar
securities issued by the Company are then listed or
quoted;
(h) immediately
notify the Purchasers, at any time prior to the end of the
Effectiveness Period or the Minimum Effective Period, as
applicable, upon discovery that, or upon the happening of any event
as a result of which, any Prospectus includes an untrue statement
of a material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and
promptly prepare, file with the SEC and furnish to such holder a
supplement to or an amendment of such Prospectus as may be
necessary so that such Prospectus shall not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then
existing;
(i) otherwise
use best efforts to comply with all applicable rules and
regulations of the SEC under the 1933 Act and the 1934 Act,
including, without limitation, Rule 172 under the 1933 Act, file
any final Prospectus, including any supplement or amendment
thereof, with the SEC pursuant to Rule 424 under the 1933 Act,
promptly inform the Purchasers in writing if, at any time during
the Effectiveness Period or Minimum Effective Period, as
applicable, the Company does not satisfy the conditions specified
in Rule 172 and, as a result thereof, the Purchasers are required
to deliver a Prospectus in connection with any disposition of
Registrable Securities and take such other actions as may be
reasonably necessary to facilitate the registration of the
Registrable Securities hereunder; and make available to its
security holders, as soon as reasonably practicable, but not later
than the Availability Date (as defined below), an earnings
statement covering a period of at least twelve (12) months,
beginning after the effective date of each Registration Statement,
which earnings statement shall satisfy the provisions of Section
11(a) of the 1933 Act, including Rule 158 promulgated thereunder
(for the purpose of this subsection 3(i),
“Availability
Date” means the 45th day
following the end of the fourth fiscal quarter that includes the
effective date of such Registration Statement, except that, if such
fourth fiscal quarter is the last quarter of the Company’s
fiscal year, “Availability
Date” means the 90th day
after the end of such fourth fiscal quarter);
(j) if
during the Effectiveness Period, the number of Registrable
Securities at any time exceeds 100% of the number of shares of
Common Stock then registered in the Initial Registration Statement,
the Company shall file as soon as reasonably practicable an
additional Registration Statement covering the resale by the
Purchasers of not less than the number of such Registrable
Securities; and
(k) with
a view to making available to the Purchasers the benefits of Rule
144 (or its successor rule) and any other rule or regulation of the
SEC that may at any time permit the Purchasers to sell shares of
Common Stock to the public without registration, the Company
covenants and agrees to: (i) make and keep public information
available, as those terms are understood and defined in Rule 144,
until the earlier of (A) six months after such date as all of the
Registrable Securities may be sold without restriction (including
without volume or manner-of-sale restrictions) and without the need
for current public information by the holders thereof pursuant to
Rule 144 or any other rule of similar effect and (B) such date as
all of the Registrable Securities shall have been resold; (ii) file
with the SEC in a timely manner all reports and other documents
required of the Company under the 1934 Act; and (iii) furnish to
each Purchaser upon request, as long as such Purchaser owns any
Registrable Securities, (A) a written statement by the Company that
it has complied with the reporting requirements of the 1934 Act,
(B) a copy of the Company’s most recent Annual Report on Form
10-K or Quarterly Report on Form 10-Q, and (C) such other
information as may be reasonably requested in order to avail such
Purchaser of any rule or regulation of the SEC that permits the
selling of any such Registrable Securities without registration.
The parties agree that nothing contained herein shall limit the
Company’s obligations under the Purchase
Agreement.
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4.
Due Diligence Review;
Information. The Company shall
make available, upon reasonable advance written notice, during
normal business hours, for inspection and review by the Purchasers,
advisors to and representatives of the Purchasers (who may or may
not be affiliated with the Purchasers and who are reasonably
acceptable to the Company), all financial and other records, all
SEC Documents (as defined in the Purchase Agreement) and other
filings with the SEC, and all other corporate documents and
properties of the Company as may be reasonably necessary for the
purpose of such review, and cause the Company’s officers,
directors and employees, within a reasonable time period, to supply
all such information reasonably requested by the Purchasers or any
such representative, advisor or underwriter in connection with such
Registration Statement (including, without limitation, in response
to all questions and other inquiries reasonably made or submitted
by any of them), prior to and from time to time after the filing
and effectiveness of the Registration Statement for the sole
purpose of enabling the Purchasers and such representatives,
advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect
to the accuracy of such Registration Statement.
The
Company shall not disclose material nonpublic information to the
Purchasers, or to advisors to or representatives of the Purchasers,
unless prior to disclosure of such information the Company
identifies such information as being material nonpublic information
and provides the Purchasers, such advisors and representatives with
the opportunity to accept or refuse to accept such material
nonpublic information for review and any Purchaser wishing to
obtain such information enters into an appropriate confidentiality
agreement with the Company with respect thereto.
5.
Obligations of the
Purchasers.
(a) Each
Purchaser shall furnish in writing to the Company such information
regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held
by it, as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably
request. At least ten (10) Business Days prior to the first
anticipated filing date of any Registration Statement, the Company
shall notify each Purchaser of the information the Company requires
from such Purchaser if such Purchaser elects to have any of the
Registrable Securities included in the Registration Statement. A
Purchaser shall provide such information to the Company at least
two (2) Business Days prior to the first anticipated filing date of
such Registration Statement if such Purchaser elects to have any of
the Registrable Securities included in the Registration
Statement.
(b) Each
Purchaser, by its acceptance of the Registrable Securities agrees
to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of a
Registration Statement hereunder, unless such Purchaser has
notified the Company in writing of its election to exclude all of
its Registrable Securities from such Registration
Statement.
(c) Each
Purchaser agrees that, upon receipt of any notice from the Company
of the happening of an event pursuant to Section 3(h) hereof, such
Purchaser will immediately discontinue disposition of Registrable
Securities pursuant to the applicable Registration Statement
covering such Registrable Securities, until the Purchaser is
advised by the Company that such dispositions may again be
made.
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6.
Indemnification.
(a) Indemnification
by the Company. The Company
will indemnify and hold harmless each Purchaser and its officers,
directors, members, employees and agents, successors and assigns,
and each other person, if any, who controls such Purchaser within
the meaning of the 1933 Act (collectively, the
“Purchaser
Indemnitees”), against
any losses, claims, damages or liabilities, joint or several, to
which such Purchaser Indemnitee may become subject under the 1933
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon: (i) any untrue statement or alleged untrue statement or
omission or alleged omission of any material fact contained in any
Registration Statement, any preliminary Prospectus or final
Prospectus, or any amendment or supplement thereof; (ii) any blue
sky application or other document executed by the Company
specifically for that purpose or based upon written information
furnished by the Company filed in any state or other jurisdiction
in order to qualify any or all of the Registrable Securities under
the securities laws thereof (any such application, document or
information herein called a “Blue Sky
Application”); (iii) the
omission or alleged omission to state in a Blue Sky Application a
material fact required to be stated therein or necessary to make
the statements therein not misleading; (iv) any violation by the
Company or its agents of any rule or regulation promulgated under
the 1933 Act or 1934 Act or any state securities laws in connection
with the performance of its obligations under this Agreement; or
(v) any failure to register or qualify the Registrable Securities
included in any such Registration Statement in any state where the
Company or its agents has affirmatively undertaken or agreed in
writing that the Company will undertake such registration or
qualification on an Purchaser’s behalf and will promptly
reimburse such Purchaser Indemnitee for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action as such
expenses are incurred; provided,
however, that the Company will
not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by such
Purchaser or any such controlling person in writing specifically
for use in such Registration Statement or Prospectus. The indemnity
provided in this Section 6(a) shall survive the transfer of the
Registrable Securities by any Purchaser to any other
Person.
(b) Indemnification
by the Purchasers. Each
Purchaser agrees, severally but not jointly, to indemnify and hold
harmless, to the fullest extent permitted by law, the Company, its
directors, officers, employees, stockholders and each person who
controls the Company (within the meaning of the 1933 Act)
(collectively, the “Company
Indemnitees”) against any
losses, claims, damages, liabilities and expense (including
reasonable attorney fees) resulting from any untrue statement of a
material fact or any omission of a material fact required to be
stated in the Registration Statement or Prospectus or preliminary
Prospectus or amendment or supplement thereto or necessary to make
the statements therein not misleading, to the extent, but only to
the extent that such untrue statement or omission is contained in
any information furnished in writing by such Purchaser to the
Company specifically for inclusion in such Registration Statement
or Prospectus or amendment or supplement thereto. In no event shall
the liability of a Purchaser be greater in amount than the dollar
amount of the proceeds (net of all underwriter’s discounts
and expenses paid by such Purchaser in connection with any claim
relating to this Section 6 and the amount of any damages such
Purchaser has otherwise been required to pay by reason of such
untrue statement or omission) received by such Purchaser upon the
sale of the Registrable Securities included in the Registration
Statement giving rise to such indemnification
obligation.
(c) Conduct
of Indemnification Proceedings.
Any person entitled to indemnification under Section 6(a) or
Section 6(b) (an “Indemnitee”) shall (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying party to assume
the defense of such claim with counsel reasonably satisfactory to
the Indemnitee; provided that any Indemnitee shall have the right to employ
separate counsel and to participate in the defense of such claim,
but the fees and expenses of such counsel shall be at the expense
of such Indemnitee unless (a) the indemnifying party has agreed to
pay such fees or expenses, or (b) the indemnifying party shall have
failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such Indemnitee or (c) in the reasonable
judgment of any such Indemnitee, based upon written advice of its
counsel, a conflict of interest exists between such Indemnitee and
the indemnifying party with respect to such claims (in which case,
if such Indemnitee notifies the indemnifying party in writing that
such Indemnitee elects to employ separate counsel at the expense of
the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such claim on behalf of such
Indemnitee); and provided,
further, that the failure of
any Indemnitee to give notice as provided herein shall not relieve
the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely
affect the indemnifying party in the defense of any such claim or
litigation. It is understood that the indemnifying party shall not,
in connection with any proceeding in the same jurisdiction, be
liable for fees or expenses of more than one separate firm of
attorneys (together with appropriate local counsel) at any time for
all such Indemnitees. No indemnifying party will, except with the
consent of the Indemnitee, consent to entry of any judgment or
enter into any settlement that (i) does not include as an
unconditional term thereof the giving by the claimant or plaintiff
to such Indemnitee of a release from all liability in respect of
such claim or litigation or (ii) includes a statement as to, or an
admission of, fault, culpability or a failure to act, by or on
behalf of the Indemnitee.
(d) Contribution.
If for any reason the indemnification provided for in the preceding
paragraphs (a) and (b) is unavailable to an Indemnitee or
insufficient to hold it harmless, other than as expressly specified
therein, then the indemnifying party shall contribute to the amount
paid or payable by the Indemnitee as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect
the relative fault of the Indemnitee and the indemnifying party, as
well as any other relevant equitable considerations. No person
guilty of fraudulent misrepresentation within the meaning of
Section 11(f) of the 1933 Act shall be entitled to contribution
from any person not guilty of such fraudulent misrepresentation. In
no event shall the contribution obligation of a holder of
Registrable Securities be greater in amount than the dollar amount
of the proceeds (net of all expenses paid by such holder in
connection with any claim relating to this Section 6 and the amount
of any damages such holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission) received by it upon the sale of the Registrable
Securities giving rise to such contribution
obligation.
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7.
Miscellaneous.
(a) Amendments
and Waivers. This Agreement may
be amended only by a writing signed by the Company and the Required
Purchasers. The Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only
if the Company shall have obtained the written consent to such
amendment, action or omission to act, of the Required
Purchasers.
(b) Notices.
All notices and other communications provided for or permitted
hereunder shall be made as set forth in the Purchase
Agreement.
(c) Assignments
and Transfers by Purchasers.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the Purchasers and their respective successors and
assigns. A Purchaser may transfer or assign, in whole or from time
to time in part, to one or more persons its rights and obligations
hereunder in connection with the transfer of Registrable Securities
by such Purchaser to such person, provided that such Purchaser
complies with all laws applicable thereto and provides written
notice of assignment to the Company promptly after such assignment
is effected (such transferee, a "permitted
transferee").
(d) Assignments
and Transfers by the Company.
This Agreement may not be assigned by the Company (whether by
operation of law or otherwise) without the prior written consent of
the Required Purchasers, provided, however, that in the event that
the Company is a party to a merger, consolidation, share exchange
or similar business combination transaction in which the Common
Stock is converted into the equity securities of another Person,
from and after the effective time of such transaction, such Person
shall, by virtue of such transaction, be deemed to have assumed the
obligations of the Company hereunder (and shall have acknowledged
such assumption in writing), the term “Company” shall be deemed to refer to such Person
and the term “Registrable
Securities” shall be
deemed to include the securities received by the Purchasers in
connection with such transaction unless such securities are
otherwise freely tradable by the Purchasers after giving effect to
such transaction.
(e) Benefits
of the Agreement. Nothing in
this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors
and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in
this Agreement and except for any Indemnitee not a party hereto
(solely with respect to Section 6).
(f) Counterparts;
Faxes. This Agreement may be
executed in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the
same instrument. This Agreement may also be executed via facsimile
or other electronic means, which shall be deemed an
original.
(g) Titles
and Subtitles. The titles and
subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
(h) Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be
interpreted as if it were written so as to be enforceable to the
maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the
parties hereby waive any provision of law which renders any
provisions hereof prohibited or unenforceable in any
respect.
(i) Further
Assurances. The parties shall
execute and deliver all such further instruments and documents and
take all such other actions as may reasonably be required to carry
out the transactions contemplated hereby and to evidence the
fulfillment of the agreements herein contained.
-9-
(j) Entire
Agreement. This Agreement is
intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the
subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with
respect to such subject matter.
(k) Governing Law; Consent
to Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New
York without regard to the choice of law principles thereof. Each
of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern
District of New York for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Agreement
and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served
on each party hereto anywhere in the world by the same methods as
are specified for the giving of notices under this Agreement. Each
of the parties hereto irrevocably consents to the jurisdiction of
any such court in any such suit, action or proceeding and to the
laying of venue in such court. Each party hereto irrevocably waives
any objection to the laying of venue of any such suit, action or
proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO
WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH
RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.
(l) Injunctive
Relief. It is hereby agreed and
acknowledged that it will be impossible to measure in money the
damages that would be suffered if the parties to this Agreement
fail to comply with any of the obligations imposed on them by this
Agreement and that in the event of any such failure, a
non-breaching party hereto will be irreparably damaged and will not
have an adequate remedy at law. Any such Person shall, therefore,
be entitled to injunctive relief, specific performance or other
equitable remedies to enforce such obligations, this being in
addition to any other remedy to which such Person is entitled at
law or in equity. Each of the parties hereto hereby waives any
defense that a remedy at law is adequate and any requirement to
post bond or other security in connection with actions instituted
for injunctive relief, specific performance or other equitable
remedies. Each of the parties hereto hereby agrees not to assert
that specific performance, injunctive relief and other equitable
remedies are unenforceable, violate public policy, invalid,
contrary to law or inequitable for any reason. The right of
specific performance, injunctive relief and other equitable
remedies is an integral part of the transactions contemplated by
this Agreement.
(m) Recapitalizations,
Exchanges, Etc. The provisions
of this Agreement shall apply, to the full extent set forth herein
with respect to the Registrable Securities, to any and all shares
of capital stock of the Company or any successor or assign of the
Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in exchange for or in
substitution of, the Registrable Securities and shall be
appropriately adjusted for any stock dividends, splits, reverse
splits, combinations, recapitalizations and the like occurring
after the date hereof
-10-
(n) Independent
Nature of Purchasers’ Obligations and
Rights. The obligations of each
Purchaser hereunder are several and not joint with the obligations
of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of
any other Purchaser hereunder. Nothing contained herein or in any
other agreement or document delivered at any closing, and no action
taken by any Purchaser pursuant hereto or thereto, shall be deemed
to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of group or entity, or create a
presumption that the Purchasers are in any way acting in concert or
as a group or entity with respect to such obligations or the
transactions contemplated by this Agreement or any other matters,
and the Company acknowledges that the Purchasers are not acting in
concert or as a group, and the Company shall not assert any such
claim, with respect to such obligations or transactions. Without
limiting the foregoing, no Purchaser has agreed with any other
Purchaser, and no term, provision, obligation or agreement of any
Purchaser set forth herein shall be deemed to constitute an
agreement with any other Purchaser, to act together for the
purposes of acquiring, holding, voting or disposing of equity
securities of the Company. Each Purchaser shall be entitled to
protect and enforce its rights, including without limitation the
rights arising out of this Agreement, and it shall not be necessary
for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. The use of a single agreement with
respect to the obligations of the Company contained herein was
solely in the control of the Company, not the action or decision of
any Purchaser, and was done solely for the convenience of the
Company and not because it was required or requested to do so by
any Purchaser. It is expressly understood and agreed that each
provision contained in this Agreement is between the Company and an
Purchaser, solely, and not between the Company and the Purchasers
collectively and not between and among
Purchasers.
(o) No
Inconsistent Agreements.
Neither the Company nor any of its Subsidiaries has entered, as of
the date hereof, nor shall the Company or any of its Subsidiaries,
on or after the date of this Agreement, enter into any agreement
with respect to its securities, that would have the effect of
impairing the rights granted to the Purchasers in this Agreement or
otherwise conflicts with the provisions hereof. Neither the Company
nor any of its Subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of
its securities to any Person that have not been satisfied in
full.
(p) Prohibition on Filing
Other Registration Statements.
The Company shall not file any other registration statements until
all Registrable Securities are registered pursuant to the Initial
Registration Statement that is declared effective by the staff of
the Commission, provided that this Section 7(p) shall not prohibit the
Company from filing amendments to registration statements filed
prior to the date of this Agreement.
(Signature
Pages Follow)
-11-
IN
WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the
date first above written.
The
Company:
IMAGEWARE SYSTEMS,
INC.
By:_________________________
Name:
Xxx Xxxxxx
Title:
Chief Executive Officer
-00-
Xxx
Xxxxxxxxxx:
____________________________________
By:_______________________________
Name:
Title:
-13-
