EXHIBIT 10.3
EXECUTION COPY
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
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
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specified in such request, together with all or such portion of the Registrable
Securities of any Holders joining in such request as are 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]
-11-
[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: /s/ S. Xxxxx Xxxxxx, Jr.
---------------------------------------
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:
Cooley Godward LLP
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: X. Xxxxxxxxxx Xxxxxxxx, Jr..
Facsimile: (000) 000-0000
-12-
[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: /s/ Xxx X. Xxxxxx III
-----------------------------------------
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-
