ex10-2





 






Exhibit 10.2



 


REGISTRATION
RIGHTS AGREEMENT


 


THIS REGISTRATION RIGHTS AGREEMENT (this
“Agreement”), dated as of
May 17, 2021, by and between IMAGEWARE SYSTEMS, INC., a Delaware corporation (the
“Company”), and
LINCOLN PARK CAPITAL FUND,
LLC, an Illinois limited
liability company (together with its permitted assigns, the
“Buyer”). Capitalized
terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Purchase Agreement by and
between the parties hereto, dated as of the date hereof (as
amended, restated, supplemented or otherwise modified from time to
time, the “Purchase
Agreement”).


 


WHEREAS:


 


The
Company has agreed, upon the terms and subject to the conditions of
the Purchase Agreement, to sell to the Buyer up to Fifteen Million
One Hundred Thousand Dollars ($15,100,000) of Purchase Shares and
to induce the Buyer to enter into the Purchase Agreement, the
Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations
thereunder (collectively, the “Securities Act”), and
applicable state securities laws.


 


NOW, THEREFORE, in consideration of the
promises and the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which
are hereby 
acknowledged, the Company and the Buyer hereby
agree as follows:


 


1.           DEFINITIONS.


 


As used
in this Agreement, the following terms shall have the following
meanings:


 


a.           “Investor”
means the Buyer, any transferee or assignee thereof to whom a Buyer
assigns its rights under this Agreement in accordance with
Section 9 and who
agrees to become bound by the provisions of this Agreement, and any
transferee or assignee thereof to whom a transferee or assignee
assigns its rights under this Agreement in accordance with
Section 9 and who
agrees to become bound by the provisions of this
Agreement.


 


b.           “Person”
means any individual or entity including but not limited to any
corporation, a limited liability company, an association, a
partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental
agency.


 


c.           “Register,”
“registered,” and
“registration” refer to a
registration effected by preparing and filing one or more
registration statements of the Company in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act or
any successor rule providing for offering securities on a
continuous basis (“Rule 415”), and the
declaration or ordering of effectiveness of such registration
statement(s) by the United States Securities and Exchange
Commission (the “SEC”).


 


d.           “Registrable
Securities” means all of the Initial Purchase Shares
and Commitment Shares, and the Purchase Shares that may, from time
to time, be issued or become issuable to the Investor under the
Purchase Agreement (without regard to any limitation or restriction
on purchases), and any and all shares of capital stock issued or
issuable with respect to the Purchase Shares or the Commitment
Shares or the Purchase Agreement as a result of any stock split,
stock dividend, recapitalization, exchange or similar event or
otherwise, without regard to any limitation on purchases under the
Purchase Agreement.


 


e.           “Registration
Statement” means one or more registration statements
of the Company covering only the sale of the Registrable
Securities.


 




 

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2.           REGISTRATION.


 


a.           Mandatory
Registration. The Company shall, on or before thirty (30)
days from the date of this Agreement,  file with the SEC an initial
Registration Statement covering the maximum number of Registrable
Securities as shall be permitted to be included thereon in
accordance with applicable SEC rules, regulations and
interpretations so as to permit the resale of such Registrable
Securities by the Investor under Rule 415 under the Securities Act
at then prevailing market prices (and not fixed prices), as
mutually determined by both the Company and the Investor in
consultation with their respective legal counsel (in any case
including all of the Initial Purchase Shares and Commitment
Shares), subject to the aggregate number of authorized shares of
the Company’s Common Stock then available for issuance in its
Certificate of Incorporation. The initial Registration Statement
shall register only the Registrable Securities. The Investor and
its counsel shall have a reasonable opportunity to review and
comment upon such Registration Statement and any amendment or
supplement to such Registration Statement and any related
prospectus prior to its filing with the SEC, and the Company shall
give due consideration to all such comments. The Investor shall
furnish all information reasonably requested by the Company for
inclusion therein. The Company shall use reasonable best efforts to
have the Registration Statement and any amendment declared
effective by the SEC as soon as practicable. The Company shall use
reasonable best efforts to keep the Registration Statement
effective pursuant to Rule 415 promulgated under the Securities Act
and available for the resale by the Investor of all of the
Registrable Securities covered thereby at all times until the date
on which the Investor shall have resold all the Registrable
Securities covered thereby and no Available Amount remains under
the Purchase Agreement (the “Registration Period”).
The Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any
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, in light of the circumstances in which they
were made, not misleading.


 


b.           Rule
424 Prospectus. The Company shall, as required by applicable
securities regulations, from time to time file with the SEC,
pursuant to Rule 424 promulgated under the Securities Act, the
prospectus and prospectus supplements, if any, to be used in
connection with sales of the Registrable Securities under the
Registration Statement. The Investor and its counsel shall have a
reasonable opportunity to review and comment upon such prospectus
prior to its filing with the SEC, and the Company shall give due
consideration to all such comments. The Investor shall use its
reasonable best efforts to comment upon such prospectus within one
(1) Business Day from the date the Investor receives the final
pre-filing version of such prospectus.


 


c.           Sufficient
Number of Shares Registered. In the event the number of
shares available under the Registration Statement is insufficient
to cover all of the Registrable Securities, the Company shall amend
the Registration Statement or file a new Registration Statement (a
“New Registration
Statement”), so as to cover all of such Registrable
Securities (subject to the limitations set forth in Section 2(a)) as soon as
practicable, but in any event not later than ten (10) Business Days
after the necessity therefor arises, subject to any limits that may
be imposed by the SEC pursuant to Rule 415 under the Securities
Act. The Company shall use its reasonable best efforts to cause
such amendment and/or New Registration Statement to become
effective as soon as practicable following the filing
thereof.


 


  d.
Offering. If the
staff of the SEC (the “Staff”) or the SEC seeks
to characterize any offering pursuant to a Registration Statement
filed pursuant to this Agreement as constituting an offering of
securities that does not permit such Registration Statement to
become effective and be used for resales by the Investor under Rule
415 at then-prevailing market prices (and not fixed prices), or if
after the filing of the initial Registration Statement with the SEC
pursuant to Section
2(a), the Company is otherwise required by the Staff or the
SEC to reduce the number of Registrable Securities included in such
initial Registration Statement, then the Company shall reduce the
number of Registrable Securities to be included in such initial
Registration Statement (with the prior consent, which shall not be
unreasonably withheld, of the Investor and its legal counsel as to
the specific Registrable Securities to be removed therefrom) until
such time as the Staff and the SEC shall so permit such
Registration Statement to become effective and be used as
aforesaid. In the event of any reduction in Registrable Securities
pursuant to this paragraph, the Company shall file one or more New
Registration Statements in accordance with Section 2(c) until such time as
all Registrable Securities have been included in Registration
Statements that have been declared effective and the prospectus
contained therein is available for use by the Investor.
Notwithstanding any provision herein or in the Purchase Agreement
to the contrary, the Company’s obligations to register
Registrable Securities (and any related conditions to the
Investor’s obligations) shall be qualified as necessary to
comport with any requirement of the SEC or the Staff as addressed
in this Section
2(d).


 




 

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3.           RELATED
OBLIGATIONS.


 


With
respect to the Registration Statement and whenever any Registrable
Securities are to be registered pursuant to Section 2, including on any New
Registration Statement, the Company shall use its reasonable best
efforts to effect the registration of the Registrable Securities in
accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following
obligations:


 


a.           The
Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to any
registration statement and the prospectus used in connection with
such registration statement, which prospectus is to be filed
pursuant to Rule 424 promulgated under the Securities Act, as may
be necessary to keep the Registration Statement or any New
Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of
all Registrable Securities of the Company covered by the
Registration Statement or any New Registration Statement until such
time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the
Investor as set forth in such registration statement.


 


b.           The
Company shall permit the Investor to review and comment upon the
Registration Statement or any New Registration Statement and all
amendments and supplements thereto at least two (2) Business Days
prior to their filing with the SEC, and not file any document in a
form to which Investor reasonably objects. The Investor shall use
its reasonable best efforts to comment upon the Registration
Statement or any New Registration Statement and any amendments or
supplements thereto within two (2) Business Days from the date the
Investor receives the final version thereof. The Company shall
furnish to the Investor, without charge any correspondence from the
SEC or the staff of the SEC to the Company or its representatives
relating to the Registration Statement or any New Registration
Statement.


 


c.           Upon
request of the Investor, the Company shall furnish to the Investor,
(i) promptly after the same is prepared and filed with the SEC, at
least one copy of such registration statement and any amendment(s)
thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits, (ii)
upon the effectiveness of any registration statement, a copy of the
prospectus included in such registration statement and all
amendments and supplements thereto (or such other number of copies
as the Investor may reasonably request) and (iii) such other
documents, including copies of any preliminary or final prospectus,
as the Investor may reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities owned
by the Investor. For the avoidance of doubt, any filing available
to the Investor via the SEC’s live EDGAR system shall be
deemed “furnished to the Investor”
hereunder.


 


d.           The
Company shall use reasonable best efforts to (i) register and
qualify the Registrable Securities covered by a registration
statement under such other securities or “blue sky”
laws of such jurisdictions in the United States as the Investor
reasonably requests, (ii) prepare and file in those jurisdictions,
such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the
Registration Period, (iii) take such other actions as may be
necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take
all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business
in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), (y) subject
itself to general taxation in any such jurisdiction, or (z) file a
general consent to service of process in any such jurisdiction. The
Company shall promptly notify the Investor who holds Registrable
Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of
any of the Registrable Securities for sale under the securities or
“blue sky” laws of any jurisdiction in the United
States or its receipt of actual notice of the initiation or
threatening of any proceeding for such purpose.


 




 

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e.           As
promptly as practicable after becoming aware of such event or
facts, the Company shall notify the Investor of the happening of
any event or existence of such facts as a result of which the
prospectus included in any registration statement, as then in
effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading (provided that in no event
shall such notice contain any material, non-public information
regarding the Company), and promptly prepare a supplement or
amendment to such registration statement to correct such untrue
statement or omission, and deliver a copy of such supplement or
amendment to the Investor (or such other number of copies as the
Investor may reasonably request). The Company shall also promptly
notify the Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed,
and when a registration statement or any post-effective amendment
has become effective (notification of such effectiveness shall be
delivered to the Investor by email or facsimile on the same day of
such effectiveness and by overnight mail), (ii) of any request by
the SEC for amendments or supplements to any registration statement
or related prospectus or related information, and (iii) of the
Company’s reasonable determination that a post-effective
amendment to a registration statement would be
appropriate.


 


f.           The
Company shall use its reasonable best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of
any registration statement, or the suspension of the qualification
of any Registrable Securities for sale in any jurisdiction and, if
such an order or suspension is issued, to obtain the withdrawal of
such order or suspension at the earliest possible moment and to
notify the Investor of the issuance of such order and the
resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such
purpose.


 


g.           The
Company shall (i) cause all the Registrable Securities to be listed
on each securities exchange on which securities of the same class
or series issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the
rules of such exchange, or (ii) secure designation and quotation of
all the Registrable Securities on the Principal Market. The Company
shall pay all fees and expenses in connection with satisfying its
obligation under this Section 3.


 


h.           The
Company shall cooperate with the Investor to facilitate the timely
preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be
offered pursuant to any registration statement and enable such
certificates to be in such denominations or amounts as the Investor
may reasonably request and registered in such names as the Investor
may request.


 


i.           The
Company shall at all times provide a transfer agent and registrar
with respect to its Common Stock.


 


j.           If
reasonably requested by the Investor, the Company shall (i) as soon
as practicable after receipt of written notice from the Investor,
incorporate in a prospectus supplement or post-effective amendment
such information as the Investor believes should be included
therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect
to the number of Registrable Securities being sold, the purchase
price being paid therefor and any other terms of the offering of
the Registrable Securities; (ii) make all required filings of such
prospectus supplement or post-effective amendment as soon as
practicable upon notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment; and (iii)
supplement or make amendments to any registration
statement.


 


k.           The
Company shall use its reasonable best efforts to cause the
Registrable Securities covered by any registration statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to consummate the disposition of
such Registrable Securities.


 




 

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l.           Within
one (1) Business Day after any registration statement which
includes the Registrable Securities is ordered effective by the
SEC, the Company shall deliver, and shall cause legal counsel for
the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Investor) confirmation that such
registration statement has been declared effective by the SEC in a
form acceptable to the transfer agent. Thereafter, if requested by
the Buyer at any time, the Company shall require its counsel to
deliver to the Buyer a written confirmation whether or not the
effectiveness of such registration statement has lapsed at any time
for any reason (including, without limitation, the issuance of a
stop order) and whether or not the registration statement is
current and available to the Buyer for sale of all of the
Registrable Securities.


 


m.           The
Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investor of Registrable
Securities pursuant to any registration statement.


 


4.           OBLIGATIONS
OF THE INVESTOR.


 


a.           The
Company shall notify the Investor in writing of the information the
Company reasonably requires from the Investor in connection with
any registration statement hereunder. The Investor shall furnish 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.


 


b.           The
Investor agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and
filing of any registration statement hereunder.


 


c.           The
Investor agrees that, upon receipt of any notice from the Company
of the happening of any event or existence of facts of the kind
described in Section
3(f) or the first sentence of 3(e), the Investor will
immediately discontinue disposition of Registrable Securities
pursuant to any registration statement(s) covering such Registrable
Securities until the Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or the first
sentence of 3(e).
Notwithstanding anything to the contrary, the Company shall cause
its transfer agent to promptly deliver shares of Common Stock
without any restrictive legend in accordance with the terms of the
Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Investor has entered into a
contract for sale prior to the Company’s knowledge of and
subsequent issuance of a notice from the Company to the Investor of
the happening of any event of the kind described in Section 3(f) or the first
sentence of Section
3(e) and for which the Investor has not yet
settled.


 


5.           EXPENSES
OF REGISTRATION.


 


All
reasonable expenses, other than sales or brokerage commissions,
incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without
limitation, all registration, listing and qualifications fees,
printers and accounting fees, and fees and disbursements of counsel
for the Company, shall be paid by the Company.


 




 

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6.           INDEMNIFICATION.


 


a.           To
the fullest extent permitted by law, the Company will, and hereby
does, indemnify, hold harmless and defend the Investor, each
Person, if any, who controls the Investor, the members, the
directors, officers, partners, employees, agents, members, managers
representatives of the Investor and each Person, if any, who
controls the Investor within the meaning of the Securities Act or
the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”) (each, an “Indemnified Person”),
against any losses, claims, damages, liabilities, judgments, fines,
penalties, charges, costs, reasonable attorneys’ fees,
amounts paid in settlement or reasonable expenses, joint or
several, (collectively, “Claims”) incurred in
investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a
party thereto (“Indemnified Damages”), to
which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement
or alleged untrue statement of a material fact in the Registration
Statement, any New Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other
“blue sky” laws of any jurisdiction in which
Registrable Securities are offered (“Blue Sky Filing”), or the
omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement
of a material fact contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which
the statements therein were made, not misleading, (iii) any
violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable
Securities pursuant to the Registration Statement or any New
Registration Statement or (iv) any material violation by the
Company of this Agreement (the matters in the foregoing clauses (i)
through (iv) being, collectively, “Violations”). The Company
shall reimburse each Indemnified Person promptly as such expenses
are incurred and are due and payable, for any reasonable legal fees
or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything
to the contrary contained herein, the indemnification agreement
contained in this Section
6(a): (i) shall not apply to a Claim by an Indemnified
Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information about the Investor
furnished in writing to the Company by such Indemnified Person
expressly for use in connection with the preparation of the
Registration Statement, any New Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was
timely made available by the Company pursuant to Section 3(c) or Section 3(e); (ii) with respect
to any superseded prospectus, shall not inure to the benefit of any
such person from whom the person asserting any such Claim purchased
the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue
statement or omission of material fact contained in the superseded
prospectus was corrected in the revised prospectus, as then amended
or supplemented, if such revised prospectus was timely made
available by the Company pursuant to Section 3(c) or Section 3(e),
and the Indemnified Person was promptly advised in writing not to
use the incorrect prospectus prior to the use giving rise to a
violation and such Indemnified Person, notwithstanding such advice,
used it; (iii) shall not be available to the extent such Claim is
based on a failure of the Investor to deliver or to cause to be
delivered the prospectus made available by the Company, if such
prospectus was timely made available by the Company pursuant to
Section 3(c) or
Section 3(e); and
(iv) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and
shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 9.


 




 

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b.           In
connection with the Registration Statement or any New Registration
Statement, the Investor agrees to indemnify, hold harmless and
defend, to the same extent and in the same manner as is set forth
in Section 6(a),
the Company, each of its directors, each of its officers who signs
the Registration Statement or any New Registration Statement, each
Person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act (collectively and together with
an Indemnified Person, an “Indemnified Party”),
against any Claim or Indemnified Damages to which any of them may
become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim or Indemnified Damages arise out
of or are based upon any Violation, in each case to the extent, and
only to the extent, that such Violation occurs in reliance upon and
in conformity with written information about the Investor set forth
on Exhibit B
attached hereto and furnished to the Company by the Investor
expressly for use in connection with such registration statement;
and, subject to Section
6(d), the Investor will reimburse any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however, that
the indemnity agreement contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall not apply to
amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Investor, which
consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to the Investor as a result of the sale of Registrable
Securities pursuant to such registration statement. Such indemnity
shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and
shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 9.


 


c.           Promptly
after receipt by an Indemnified Person or Indemnified Party under
this Section 6 of
notice of the commencement of any action or proceeding (including
any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under
this Section 6,
deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party
so desires, jointly with any other indemnifying party similarly
noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel with the reasonable fees and
expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party,
the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of
any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably
available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep
the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding
effected without its written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or
condition its consent. No indemnifying party shall, without the
consent of the Indemnified Party or Indemnified Person, consent to
entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party
or Indemnified Person of a release from all liability in respect to
such claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights
of the Indemnified Party or Indemnified Person with respect to all
third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified
Party under this Section
6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.


 




 

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d.           The
indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or
Indemnified Damages are incurred.


 


e.           The
indemnity agreements contained herein shall be in addition to (i)
any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and
(ii) any liabilities the indemnifying party may be subject to
pursuant to applicable law.


 


7.           CONTRIBUTION.


 


To the
extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent
permitted by law; provided, however, that: (i) no seller of
Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any seller of Registrable
Securities who was not guilty of fraudulent misrepresentation; and
(ii) contribution by any seller of Registrable Securities shall be
limited in amount to the net amount of proceeds received by such
seller from the sale of such Registrable Securities.


 


8.           REPORTS
AND DISCLOSURE UNDER THE SECURITIES ACTS.


 


With a
view to making available to the Investor the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the Investor to
sell securities of the Company to the public without registration
(“Rule
144”), the Company agrees, at the Company’s sole
expense, to:


 


a.           make
and keep public information available, as those terms are
understood and defined in Rule 144;


 


b.           file
with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange
Act so long as the Company remains subject to such requirements and
the filing of such reports and other documents is required for the
applicable provisions of Rule 144;


 


c.           furnish
to the Investor so long as the Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting and or disclosure
provisions of Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably
requested to permit the Investor to sell such securities pursuant
to Rule 144 without registration; and


 

d.           
take such additional action as is reasonably requested by the
Investor to enable the Investor to sell the Registrable Securities
pursuant to Rule 144, including, without limitation, delivering all
such legal opinions, consents, certificates, resolutions and
instructions to the Company’s Transfer Agent as may be
reasonably requested from time to time by the Investor and
otherwise fully cooperate with Investor and Investor’s broker
to effect such sale of securities pursuant to Rule
144.


 


The
Company agrees that damages may be an inadequate remedy for any
breach of the terms and provisions of this Section 8 and that Investor
shall, whether or not it is pursuing any remedies at law, be
entitled to equitable relief in the form of a preliminary or
permanent injunction, without having to post any bond or other
security, upon any breach or threatened breach of any such terms or
provisions.


 




 

-8-








 






 


 




9.

ASSIGNMENT OF REGISTRATION
RIGHTS.






 


The
Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the
Investor. The Investor may not assign its rights under this
Agreement without the written consent of the Company, other than to
an affiliate of the Investor controlled by Jonathan Cope or Josh
Scheinfeld.


 


10.           AMENDMENT
OF REGISTRATION RIGHTS.


 


No
provision of this Agreement may be amended or waived by the parties
from and after the date that is one (1) Business Day immediately
preceding the initial filing of the Registration Statement with the
SEC. Subject to the immediately preceding sentence, no provision of
this Agreement may be (i) amended other than by a written
instrument signed by both parties hereto or (ii) waived other than
in a written instrument signed by the party against whom
enforcement of such waiver is sought. Failure of any party to
exercise any right or remedy under this Agreement or otherwise, or
delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.


 


11.           MISCELLANEOUS.


 


a.           A
Person is deemed to be a holder of Registrable Securities whenever
such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the
same Registrable Securities, the Company shall act upon the basis
of instructions, notice or election received from the registered
owner of such Registrable Securities.


 


b.           Any
notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile or email (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) Business Day after deposit with a
nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses
for such communications shall be:


 


If to
the Company:


 


ImageWare Systems,
Inc.


13500
Evening Creek Drive North


Suite
550


San
Diego, CA 92128


Telephone:                                858-573-8600


Attention:                      Kristen
A. Taylor



E-Mail:                       

ktaylor@iwsinc.com






 


With a
copy to (which shall not constitute notice or service of
process):


 


Disclosure Law
Group, a Professional Corporation


655
West Broadway, Suite 870


San
Diego, California 92101



Telephone:                                 

619.272.7063







Facsimile:                       

619.330.2101







E-mail:                                 


drumsey@disclosurelawgroup.com







Attention:                       

Daniel W. Rumsey,
Esq.






 




 

-9-








 






 


 


If to
the Investor:


 


Lincoln
Park Capital Fund, LLC


440
North Wells, Suite 410


Chicago, IL
60654



Telephone:                                 

312.822.9300







Facsimile:                       

312.822.9301







E-mail:                                 

jscheinfeld@lpcfunds.com
or jcope@lpcfunds.com







Attention:                       

Josh Scheinfeld or
Jonathan Cope






 


With a
copy to (which shall not constitute notice or service of
process):


 


K&L
Gates, LLP


200 S.
Biscayne Blvd., Ste. 3900


Miami,
Florida 33131


Telephone:                                305.539.3306


Facsimile:                      305.358.7095


E-mail:
clayton.parker@klgates.com



Attention:                       

Clayton E. Parker,
Esq.





 


or at
such other address, email address and/or facsimile number and/or to
the attention of such other person as the recipient party has
specified by written notice given to each other party three (3)
Business Days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine or
email account containing the time, date, recipient facsimile number
or email address, as applicable, or (C) provided by a nationally
recognized overnight delivery service, shall be rebuttable evidence
of personal service, receipt by facsimile, email or receipt from a
nationally recognized overnight delivery service in accordance with
clause (i), (ii) or (iii) above, respectively.


 


c.           The
corporate laws of the State of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed
by the internal laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdictions) that
would cause the application of the laws of any jurisdictions other
than the State of Illinois. Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts
sitting the State of Illinois, County of Cook, for the adjudication
of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. If
any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this
Agreement in that jurisdiction or the validity or enforceability of
any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.


 




 

-10-








 






 


 


d.           This
Agreement and the Purchase Agreement constitute the entire
agreement among the parties hereto with respect to the subject
matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred
to herein and therein. This Agreement and the Purchase Agreement
supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and
thereof.


 


e.           Subject
to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties hereto.


 


f.           The
headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning
hereof.


 


g.           This
Agreement may be executed in identical counterparts, each of which
shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile
transmission or by e-mail in a “.pdf” format data file
of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.


 


h.           Each
party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.


 


i.           The
language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent and no rules
of strict construction will be applied against any
party.


 


j.           This
Agreement is intended for the benefit of the parties hereto and
their respective successors and permitted assigns, and is not for
the benefit of, nor may any provision hereof be enforced by, any
other Person.


 


 


 


*
* * * * *


 




 

-11-








 






 


 


IN WITNESS WHEREOF, the parties have
caused this Registration Rights Agreement to be duly executed as of
day and year first above written.


 


 


 



THE COMPANY:


 



IMAGEWARE SYSTEMS, INC.


 


 


By:
/s/ Kristin
Taylor


Name:
Kristin Taylor


Title:
Chief Executive Officer


 


 



BUYER:


 


LINCOLN
PARK CAPITAL FUND, LLC


BY:
LINCOLN PARK CAPITAL, LLC


BY:
Rockledge Capital Corporation



 


 


By:
/s/ Joshua B.
Scheinfeld



Name:
Joshua
B. Scheinfeld


Title:
President


 


 






 




[Exhibits
and Schedules Intentionally Omitted]

  




 


 




 



-12-