Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION
RIGHTS AGREEMENT (this “ Agreement ”), dated as of
December 19, 2007, is entered into by and among ImageWare
Systems, a Delaware corporation (the “ Company ”), Sol Logic, Inc.,
a California corporation (“ Holder ”), and Wink Jones, in his
capacity as the representative of Seller (the “Seller Representative” ).
All capitalized terms used but not defined herein shall have the
meanings ascribed thereto in that certain Asset Purchase Agreement
dated as of even date herewith, by and among the Company, Holder
and the Seller Representative (the “ Purchase Agreement ”).
NOW, THEREFORE,
each of the Company, Holder and the Seller Representative hereby
agrees as follows:
1.
In addition to those terms defined elsewhere in this Agreement, the
following terms shall have the following meanings wherever used in
this Agreement:
(a)
“ Business Day
” means a day Monday through Friday on which banks are
generally open for business in New York.
(b)
The terms “ register,
” “ registered
” and “ registration ” refer to the
registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration
statement.
(c)
“ Registrable
Securities ” means an aggregate of 306,185 Shares
issued to Holder pursuant to the Purchase Agreement, in any case
only for so long as all Shares (A) have not been disposed of
pursuant to a registration statement declared effective by the SEC,
(B) have not been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities
Act so that all transfer restrictions and restrictive legends with
respect thereto are removed upon the consummation of such sale,
(C) are not eligible to be sold under Rule 144 during any
90-day period without any limitations as to volume or holding
period.
(d)
“ Registration
Expenses ” means the expenses incurred by the Company
in preparing the Registration Statement, including, without
limitation, fees and expenses of counsel for the Company, blue sky
fees and expenses, the registration fee for the Registration
Statement, printing and delivery expenses of the Registration
Statement and the final prospectus related thereto filed pursuant
to Rule 424(b) of the Securities Act (the “Final Prospectus” ),
including any supplement or amendment thereto, and the expense of
any special audits incident to or required by any such registration
(but excluding all Selling Expenses).
(e)
“ Selling Expenses
” means all underwriting discounts and selling commissions
applicable to the sale of Registrable Securities and all fees and
expenses of legal counsel for Holder.
2.
As soon as practicable, but no later than thirty (30) days from the
date hereof, the Company will file a registration statement
covering the resale of the Registrable Securities on a
Form S-1 or Form S-3 Registration Statement (the “
Registration Statement
”) with the SEC (the “ Filing Date ”). The Company will
further use its commercially reasonable efforts to have the
Registration Statement declared effective by the SEC within a
reasonable time after the Filing Date. The Company shall not be
obligated to enter into any underwriting agreement for the sale of
any of the Registrable Securities. The Company shall be entitled to
include in the Registration Statement shares of the capital stock
of the Company to be sold by the Company for its own account or for
the account of any other security holders of the Company.
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3.
All Registration Expenses shall be borne by the Company. All
Selling Expenses shall be borne the Seller.
4.
The Company further agrees to:
(a)
subject to Section 7 hereof, use its commercially reasonable
efforts to keep such registration, and any qualification, exemption
or compliance under state securities laws that the Company
determines to obtain, continuously effective until the earlier to
occur of: (i) such time as all of the Registrable Securities
are sold, transferred or otherwise disposed of by Holder; or
(ii) one (1) year following the Closing Date; provided
that Holder and the Seller Representative each hereby
acknowledge that the Company does not and cannot provide any
assurance to Holder, the Seller Representative or otherwise that
the Registration Statement will be declared effective by the SEC.
The period of time during which the Company is required hereunder
to keep the Registration Statement continuously effective is
referred to herein as the “ Registration Period .
”
(b)
advise Holder within 15 Business Days:
(i)
of the filing of the Registration Statement or any amendment
thereto, and of the effectiveness of the Registration Statement or
any amendment thereto;
(ii)
of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of
any proceedings for such purpose;
(iii)
of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Registrable Securities
included therein for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(iv)
of the occurrence of any event that requires the making of any
changes in the Registration Statement or the Final Prospectus so
that, as of such date, the statements therein are not misleading
and do not omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of
the Final Prospectus and any amendment or supplement thereto, in
the light of the circumstances under which they were made) not
misleading;
(c)
use its commercially reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of the Registration
Statement;
(d)
furnish to Holder at least one copy of such Registration Statement,
including post-effective amendment thereto, and the Final
Prospectus, including any amendment or supplement thereto;
(e)
during the Registration Period, deliver to Holder as many copies of
the Final Prospectus, including any amendment or supplement
thereto, as Holder may reasonably request; and the Company
consents to the use, consistent with the provisions hereof and
thereof, of the Final Prospectus, including any amendment or
supplement thereto, in connection with the offering and sale by
Holder of the Registrable Securities covered thereby;
(f)
take such actions as may be necessary to register or qualify
the Registrable Securities or obtain an exemption for offer and
sale under the securities or blue sky laws of such jurisdictions as
Holder reasonably requests in writing, provided that the Company
shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction
where it is not so qualified as of the date hereof, to consent to
general service of process in any such jurisdiction or to become
subject to taxation in any jurisdiction in which it is not subject
to taxation as of the date hereof;
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(g)
upon the occurrence of any event contemplated by
Section 4(b)(iv) above, use its commercially reasonable
efforts to prepare a post-effective amendment to the Registration
Statement or an amendment or supplement to the Final Prospectus, or
file any other required document so that the Final Prospectus will
not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading;
(h)
otherwise use its commercially reasonable efforts to comply with
all applicable rules and regulations of the SEC which affect
the sale of the Registrable Securities by Holder in accordance with
the terms hereof; and
(i)
use its commercially reasonable efforts to cause all Registrable
Securities to be listed on a national securities exchange or
market, if any, on which the Company’s common stock is
then-listed or quoted.
5.
(a)
Holder shall indemnify the Company, each of its directors and
officers and each Person who controls the Company within the
meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of
any litigation, commenced or threatened (subject to
Section 5(b) below), arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact
contained in the Registration Statement, Final Prospectus, or any
amendment or supplement of either of the foregoing, 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 the case of the Final Prospectus and any amendment or
supplement thereto, in the light of the circumstances in which they
were made) not misleading, and will reimburse the Company, such
directors and officers and each Person controlling the Company for
reasonable legal and any other expenses reasonably incurred in
connection with investigating or defending any such
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