EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") is dated as of May 22,
2002 by and between ImageWare Systems, Inc., a California corporation (the
"Company"), and Perseus 2000, L.L.C., a Delaware limited liability company (the
"Investor").
R E C I T A L S
A. The Investor has made an investment in the Company by
acquiring senior secured convertible promissory notes of the Company (the
"Notes") convertible into shares of the Company's common stock (the "Common
Stock") and warrants to acquire shares of Common Stock (the "Warrants")
(collectively, the Notes and Warrants together, the "Securities").
B. In connection with such purchase of the Securities, and to
induce the Investor to consummate such purchase of the Securities, the Company
has agreed to enter into this Agreement and to grant to the Investor the rights
set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, the Investor and the Company
(collectively, the Parties") agree as follows:
1. Definitions. For purposes of this Statement:
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
"Holder" means (i) the Investor, (ii) the partners, members or
stockholders of the Investor collectively provided that such partners, members
or stockholders act through the Investor or its successor and (iii) any person
or entity to whom the Investor or any person or entity identified in clause (ii)
of this definition sells, transfers or assigns 25% or more of the Registrable
Securities issued pursuant to the Purchase Agreement, any Note or any Warrant,
other than in a sale pursuant to Rule 144 under the Securities Act or a
registration effected pursuant to this Agreement.
"Register," "registered," and "registration" refer to an
underwritten registration effected by preparing and filing with the Securities
and Exchange Commission (the "Commission") a registration statement or similar
document in compliance with the Securities Act, and the declaration or ordering
by the Commission of effectiveness of such registration statement or document.
"Registration Expenses" means all expenses in connection with
the Company's performance of or compliance with its obligations under this
Agreement, including, without limitation, all (i) registration, qualification
and filing fees; (ii) fees, costs and expenses of compliance with securities or
blue sky laws (including reasonable fees, expenses and disbursements of counsel
for the underwriters in connection with blue sky qualifications of the
Exhibit4.Registration Rights Agreement
Registrable Securities under the laws of such jurisdictions as the managing
underwriter or underwriters in a registration may designate, subject to the
limitation as set forth in subsection (h) of Section 5 hereof); (iii) printing
expenses; (iv) messenger, telephone and delivery expenses; (v) fees, expenses
and disbursements of counsel for the Company and of all independent certified
public accountants retained by the Company (including the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance); (vi) Securities Act liability insurance if the Company so desires;
(vii) fees, expenses and disbursements of any other individuals or entities
retained by the Company in connection with the registration of the Registrable
Securities; (viii) fees, costs and expenses incurred in connection with the
listing of the Registrable Securities on each national securities exchange or
automated quotation system on which the Company has made application for the
listing of its Common Stock; and (ix) internal expenses of the Company
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties and expenses of any annual
audit). Registration Expenses shall not include selling commissions, discounts
or other compensation paid to underwriters or other agents or brokers to effect
the sale of Registrable Securities, or counsel fees and any other expenses
incurred by Holders in connection with any registration that are not specified
in the immediately preceding sentence.
"Registrable Securities" means any shares of Common Stock of
the Company owned by any Holder or that may be acquired by any Holder upon the
conversion of any convertible security or the exercise of any warrant, option or
other right owned by any Holder, but only to the extent such shares constitute
"restricted securities" under Rule 144 under the Securities Act.
"Requestor" means the Holder or Holders requesting the
registration in question. Actions taken by the Requestor shall be taken by those
Holders making such request who hold a majority of the Registrable Securities
held by such Holders.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor statute.
2. Demand Registrations.
(a) Request for Registration. If at any time after the
date hereof one or more Holders who in the aggregate hold at least 25% of the
Registrable Securities submits a written request (a "Demand Notice") to the
Company that the Company register Registrable Securities under and in accordance
with the Securities Act (a "Demand Registration"), then the Company shall:
(i) within five days after receipt of such
Demand Notice, give written notice of the proposed registration to all other
Holders; and
(ii) as soon as practicable, use diligent efforts
to effect such registration as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any Holders joining in such request as are
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specified in written requests received by the Company within 20 days after the
date the Company mails the written notice referred to in clause (i) above.
Notwithstanding the foregoing, if the Company shall furnish to
the Holders a certificate signed by the president of the Company stating that in
the good faith judgment of the board of directors of the Company, it would be
seriously detrimental to the Company or its stockholders for a registration
statement to be filed on or before the date filing would be required in
connection with any Demand Registration and it is therefore essential to defer
the filing of such registration statement, the Company shall have the right to
defer such filing or delay its effectiveness for a reasonable period not to
exceed 90 days provided that such right shall not be exercised more than once
with respect to a request for registration hereunder during any period of twelve
consecutive months. The Company will pay all Registration Expenses in connection
with such withdrawn request for registration.
Notwithstanding the foregoing, the Company shall not be
required to effect any registration (i) requested within less than 120 days
after the filing of another registration filed by the Company in which all of
the Registrable Securities requested to be included in such registration by
participating Holders were so included; or, (ii)(A) if Perseus has not exercised
the Perseus Option in full, after the Company has filed and effected one
registration pursuant to this Section 2 in which all of the Registrable
Securities requested to be included in such registration by participating
Holders were so included and such registration has been declared or ordered
effective; (B) if Perseus has exercised the Perseus Option in full, after the
Company has filed and effected two registrations pursuant to this Section 2 in
which all of the Registrable Securities requested to be included in each such
registration by participating Holders were so included and each such
registration has been declared or ordered effective; or (C) if Perseus has
exercised the Perseus Option in part but less than in full, after the Company
has filed and effected two registrations pursuant to this Section 2 in which all
of the Registrable Securities requested to be included in each such registration
by participating Holders were so included and each such registration has been
declared or ordered effective; provided, however, that in the case of the second
registration filed and effected pursuant to this subclause (C), the Company
shall be required to register only those Registrable Securities acquired
pursuant to such partial exercise of the Perseus Option.
(b) Underwriting. In connection with any registration under
this Section 2, if the Requestors intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to Section 2(a). In
such event, the right of any Holder to include its Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. The Holders proposing to distribute
their securities through such underwriting shall enter into an underwriting
agreement with one or more underwriters selected by the Requestors having terms
and conditions customary for such agreements (which underwriter or underwriters
shall be reasonably acceptable to the Company). Notwithstanding any other
provision of this Section 2, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the number of Registrable
Securities to be included in such registration. The Company shall so advise all
Holders distributing Registrable Securities through such underwriting, and the
number of Registrable
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Securities that may be included in the registration and underwriting shall be
allocated in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities required to be included (determined without regard to any
requirement of a request to be included in such registration) in such
registration held by all Holders at the time of filing the registration
statement. To facilitate the allocation of shares in accordance with the above
provisions, the Company may round the number of shares allocated to any Holder
to the nearest 100 shares.
(c) Shelf Registration. If at the time the Company registers
Registrable Securities under the Securities Act pursuant to this Section 2, the
sale or other disposition of such Registrable Securities by the Holders may be
made pursuant to a registration statement on Form S-3 (or any successor form
that permits the incorporation by reference of future filings by the Company
under the Exchange Act), and such registration statement, unless otherwise
directed by the Requestor, shall be filed as a "shelf" registration statement
pursuant to Rule 415 under the Securities Act (or any successor rule). Any such
shelf registration shall cover the disposition of all Registrable Securities in
one or more underwritten offerings, block transactions, broker transactions,
at-market transactions and in such other manner or manners as may be specified
by the Requestor. Except as provided in Section 5(b) hereof, the Company shall
use its reasonable best efforts to keep such "shelf" registration continuously
effective as long as the delivery of a prospectus is required under the
Securities Act in connection with the disposition of the Registrable Securities
registered thereby and in furtherance of such obligation, shall supplement or
amend such registration statement if, as and when required by the rules,
regulations and instructions applicable to the form used by the Company for such
registration or by the Securities Act or by any other rules and regulations
thereunder applicable to shelf registrations. Upon their receipt of a
certificate signed by the president of the Company in accordance with the
procedure set forth in the penultimate paragraph of Section 2(a) hereof, the
Holders will refrain from making any sales of Registrable Securities under the
shelf registration statement for a period of up to 90 days; provided that this
right to cause the Holders to refrain from making sales shall not be exercised
by the Company more than twice, or for an aggregate period of more than 90 days,
in any twelve-month period (counting as a permitted exercise any exercise by the
Company of its right to defer the filing or delay its effectiveness of a
registration statement under the penultimate paragraph of Section 2(a)).
3. Company Registration.
(a) Notice of Registration. If at any time or from time
to time, the Company shall determine to register any of its capital stock,
whether or not for its own account, other than a registration relating to
employee benefit plans or a registration effected on Form S-4, the Company
shall:
(i) provide to each Holder written notice
thereof at least ten days prior to the filing of the registration statement by
the Company in connection with such registration; and
(ii) include in such registration, and in any
underwriting involved therein, all those Registrable Securities specified in a
written request by each Holder received by the Company within five days after
the Company mails the written notice referred to above, subject to the
provisions of Section 3(b) below.
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(b) Underwriting. The right of any Holder to registration
pursuant to this Section 3 shall be conditioned upon the participation by such
Holder in the underwriting arrangements specified by the Company in connection
with such registration and the inclusion of the Registrable Securities of such
Holder in such underwriting to the extent provided herein. All Holders proposing
to distribute their Registrable Securities through such underwriting shall
(together with the Company) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the Company
and take all other actions, and deliver such opinions and certifications, as may
be reasonably requested by such managing underwriter. Notwithstanding any other
provision of this Section 3, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the number of Registrable
Securities to be included in such registration. The Company shall so advise all
Holders distributing Registrable Securities through such underwriting, and there
shall be excluded from such registration and underwriting, to the extent
necessary to satisfy such limitation, first shares held by the Holders and,
thereafter, to the extent necessary, shares which the Company wishes to register
for its own account. As among the Holders as a group, the number of Registrable
Securities that may be included in the registration and underwriting shall be
allocated in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities required to be included (determined without regard to any
requirement of a request to be included in such registration) in such
registration held by all Holders at the time of filing the registration
statement. To facilitate the allocation of shares in accordance with the above
provisions, the Company may round the number of shares allocated to any Holder
to the nearest 100 shares.
(c) Right to Terminate Registration. The Company shall
have the right to terminate or withdraw any registration initiated by it under
this Section 3 whether or not any Holder has elected to include Registrable
Securities in such registration.
4. Expense of Registration. All Registration Expenses incurred in
connection with the registration and other obligations of the Company pursuant
to Sections 2, 3 and 5 shall be borne by the Company, and all underwriting
discounts and selling commissions incurred in connection with any such
registrations shall be borne by the Holders of the securities so registered pro
rata on the basis of the number of shares so registered. The Company shall not,
however, be required to pay for expenses of any registration proceeding begun
pursuant to Sections 2, 3 or 5, the request of which has been subsequently
withdrawn by the Holders unless the withdrawal is based upon material adverse
information concerning the Company of which the Holders were not aware at the
time of such request.
5. Registration Procedures. If and whenever the Company is required by
the provisions of this Agreement to effect the registration of Registrable
Securities, the Company shall:
(a) promptly prepare and file with the Commission a
registration statement with respect to such Registrable Securities on any form
that may be utilized by the Company and that shall permit the disposition of the
Registrable Securities in accordance with the intended method or methods of
disposition thereof, and use its reasonable diligent efforts to cause such
registration statement to become effective as promptly as practicable and remain
effective thereafter as provided herein, provided that prior to filing a
registration statement or prospectus or any amendments or supplements thereto,
including documents incorporated by reference after
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the initial filing of any registration statement, the Company will furnish to
each of the Investor whose Registrable Securities are covered by such
registration statement, their counsel and the underwriters copies of all such
documents proposed to be filed sufficiently in advance of filing to provide them
with a reasonable opportunity to review such documents and comment thereon;
(b) prepare and file with the Commission such amendments
(including post-effective amendments) and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective and current and to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of all Registrable Securities covered by such registration statement, including
such amendments (including post-effective amendments) and supplements as may be
necessary to reflect the intended method of disposition by the prospective
seller or sellers of such Registrable Securities, provided that except in the
case of a shelf registration under Section 2(c) such registration statement need
not be kept effective and current for longer than 120 days subsequent to the
effective date of such registration statement;
(c) subject to receiving reasonable assurances of
confidentiality, for a reasonable period after the filing of such registration
statement, and throughout each period during which the Company is required to
keep a registration effective, make available for inspection by the selling
holders of Registrable Securities being offered, and any underwriters, and their
respective counsel, such financial and other information and books and records
of the Company, and cause the officers, directors, employees, counsel and
independent certified public accountants of the Company to respond to such
inquiries as shall be reasonably necessary, in the judgment of such counsel, to
conduct a reasonable investigation within the meaning of Section 11 of the
Securities Act;
(d) promptly notify the selling holders of Registrable
Securities and any underwriters and confirm such advice in writing, (i) when
such registration statement or the prospectus included therein or any prospectus
amendment or supplement or post-effective amendment has been filed, and, with
respect to such registration statement or any post-effective amendment, when the
same has become effective, (ii) of any comments by the Commission, by the
National Association of Securities Dealers Inc. ("NASD"), and by the blue sky or
securities commissioner or regulator of any state with respect thereto or any
request by any such entity for amendments or supplements to such registration
statement or prospectus or for additional information, (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of such
registration statement or the initiation or threatening of any proceedings for
that purpose, (iv) if at any time the representations and warranties of the
Company cease to be true and correct in all material respects, (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, or (vi) at any
time when a prospectus is required to be delivered under the Securities Act,
that such registration statement, prospectus, prospectus amendment or supplement
or post-effective amendment, or any document incorporated by reference in any of
the foregoing, contains 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, in light of the circumstances under which they are made, not
misleading;
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(e) furnish to each selling holder of Registrable Securities
being offered, and any underwriters, prospectuses or amendments or supplements
thereto, in such quantities as they may reasonably request and as soon as
practicable, that update previous prospectuses or amendments or supplements
thereto;
(f) use reasonable diligent efforts to (i) register or qualify
the Registrable Securities to be included in a registration statement hereunder
under such other securities laws or blue sky laws of such jurisdictions within
the United States of America as any selling holder of such Registrable
Securities or any underwriter of the securities being sold shall reasonably
request, (ii) keep such registrations or qualifications in effect for so long as
the registration statement remains in effect and (iii) take any and all such
actions as may be reasonably necessary or advisable to enable such holder or
underwriter to consummate the disposition in such jurisdictions of such
Registrable Securities owned by such holder; provided, however, that the Company
shall not be required for any such purpose to (x) qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not
otherwise be required to qualify but for the requirements of this Section 5(f),
(y) subject itself to taxation in any such jurisdiction or (z) consent to
general service of process in any such jurisdiction;
(g) cause all such Registrable Securities to be listed or
accepted for quotation on each securities exchange or automated quotation system
on which the Company's Common Stock then trades; and
(h) otherwise use reasonable diligent efforts to comply with
all applicable provisions of the Securities Act, and rules and regulations of
the Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering a period of at least
twelve months which shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.
6. Indemnification. In the event any of the Registrable
Securities are included in a registration statement under this Agreement:
(a) to the extent permitted by law, the Company will indemnify
each Holder who participates in such registration, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement or prospectus, or any amendment or
supplement thereto, or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
with any such registration, qualification or compliance (each, a "Violation"),
and the Company will reimburse each such Holder, each of its officers and
directors and partners and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably
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incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any Violation which occurs in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder or underwriter and stated
to be specially for use therein, and provided further, that the indemnity
agreement described in this Section 6(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers and its legal counsel and independent accountants,
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act, and each other such
Holder, each of its officers and directors and each person controlling such
Holder within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, and will reimburse the Company, such Holders,
such directors, officers, persons, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein.
(c) Each party entitled to indemnification under this Section
6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought provided
that failure to give such prompt notice shall not relieve the Indemnifying Party
of its obligations hereunder unless it is materially prejudiced thereby, and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld). Such Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be that of such Indemnified Party unless
(i) the Indemnifying Party has agreed to pay such fees and expenses or (ii) the
Indemnifying Party shall have failed to assume the defense of such action or
proceeding and employ counsel reasonably satisfactory to such Indemnified Party
in any such action or proceeding or (iii) the named parties to any such action
or proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party and such Indemnified Party shall have been
advised by counsel that there may be one or more legal defenses available to
such Indemnified Party which are different from
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or additional to those available to the Indemnifying Party (in which case, if
such Indemnified Party notifies the Indemnifying Party in writing of an election
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 action
or proceeding on behalf of such Indemnified Party, it being understood, however,
that the Indemnifying Party then shall have the right to employ separate counsel
at its own expense and to participate in the defense thereof, and shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any time for
all Indemnified Parties, which firm shall be designated in writing by a majority
of the Indemnified Parties who are eligible to select such counsel). No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. No
Indemnified Party may consent to entry of any judgment or enter into any
settlement without the prior written consent of the Indemnifying Party.
(d) If the indemnification provided for in this Section 6 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying the Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
with respect to such loss, liability, claim, damage or expenses in the
proportion that is appropriate to reflect the relative fault of the Indemnifying
Party and the Indemnified Party in connection with the statements or omissions
that resulted in such loss, liability, claim, damage, or expense, as well as any
other relevant equitable considerations. The relative fault of the Indemnifying
Party and the Indemnified Party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
7. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, after such time as a public market exists for the Common Stock,
the Company shall use reasonably diligent efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, beginning 90
days after the Company registers a class of securities under Section 12 of the
Exchange Act or completes a registered offering under the Securities Act;
(b) File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and
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(c) Furnish to any Holder promptly upon request a written
statement as to its compliance with the reporting requirements of Rule 144 (at
any time after 90 days after the Company completes a registered offering under
the Securities Act), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), and a copy of the
most recent annual or quarterly report of the Company.
8. Termination of Registration Rights. No Holder shall be
entitled to exercise any right provided for in this Agreement after the earlier
of (a) five years after the date hereof and (b) the date all Registrable
Securities held by such Holder may be sold in a single three-month period under
Rule 144 under the Securities Act.
9. Information To Be Provided by the Holders. Each Holder whose
Registrable Securities are included in any registration pursuant to this
Agreement shall furnish the Company such information regarding such Holder and
the distribution proposed by such Holder as may be reasonably requested in
writing by the Company and as shall be required in connection with such
registration or the registration or qualification of such securities under any
applicable state securities law.
10. "Stand-Off" Agreement. Each Holder, if requested by the
managing underwriter of a registered public offering of securities by the
Company, shall agree not to sell or otherwise transfer or dispose of any
Registrable Securities or other securities of the Company then held by such
Holder for a specified period of time that is customary under the circumstances
(not to exceed 180 days) following the effective date of the registration
statement for such offering, provided that (a) no such agreement shall be
required unless the other principal stockholders of the Company enter into a
similar agreement covering the same period of time and (b) such agreement shall
contain terms customary for such agreements. The Company may impose stop
transfer instructions to enforce any required agreement of the Holders under
this Section 10.
11. Miscellaneous.
(a) Notices. All notices, requests and other communications
hereunder shall be in writing and shall be deemed to have been duly given at the
time of receipt if delivered by hand or by facsimile transmission or three days
after being mailed, registered or certified mail, return receipt requested, with
postage prepaid, to the address or facsimile number (as the case may be) listed
below the signature of each Party on such Party's signature page hereto if any
Party shall have designated a different address or facsimile number by notice to
the other Parties given as provided above, then to the last address or facsimile
number so designated.
(b) Severability. In the event one or more of the provisions
of this Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed and interpreted in such manner as to be effective and valid
under applicable law.
(c) Waiver or Modification. Any amendment or modification of
this Agreement shall be effective only if evidenced by a written instrument
executed by the Company and by Investor that hold a majority of the total
Registrable Securities.
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(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the principles of conflicts of laws thereof.
(e) Attorneys' Fees. In the event of any dispute involving the
terms hereof, the prevailing parties shall be entitled to collect legal fees and
expenses from the other party to the dispute.
(f) Further Assurances. Each Party agrees to act in accordance
herewith and not to take any action that is designed to avoid the intention
hereof.
(g) Successors and Assigns. This Agreement and the rights and
obligations of the Parties hereunder shall inure to the benefit of, and be
binding upon, their respective successors, assigns and legal representatives.
(h) Defined Terms. Certain defined terms used herein and not
otherwise defined herein shall have them meanings ascribed to such terms in the
Note and Warrant Purchase Agreement, dated as of May 22, 2002, by and between
the Company and the Investor (the "Purchase Agreement").
[Remainder of page intentionally left blank]
[signatures appear on following pages]
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[COMPANY SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned Party has executed this Agreement
as of the day and year first above written.
IMAGEWARE SYSTEMS, INC.
By:________________________________________
Name: S. Xxxxx Xxxxxx, Jr.
Title: Chairman, CEO and President
ADDRESS FOR NOTICE:
ImageWare Systems, Inc.
00000 Xxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: S. Xxxxx Xxxxxx, Jr.,
Chairman, CEO and President
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Godward LLP
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: X. Xxxxxxxxxx Xxxxxxxx, Jr..
Facsimile: (000) 000-0000
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[INVESTOR SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned Investor has executed this
Agreement as of the day and year first above written.
PERSEUS 2000, L.L.C.
By:________________________________________
Name: Xxx X. Xxxxxx III
Title: Managing Director
ADDRESS FOR NOTICE:
Perseus 2000, L.L.C.
0000 Xxxxxxxxxxxx Xxx., X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxx Xxxxxx, Managing Director
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx
0000 Xxxxxx Xxxxxxxxx; Xxxxx 000
XxXxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxx, Esq.
Facsimile: (000) 000-0000
- 13 -
