Exhibit 10.5**SECURITIES EXCHANGE AGREEMENT**     This Securities Exchange Agreement (“Agreement”) is made and entered into as of March 28, 2006between JMAR Technologies, Inc., a Delaware corporation (the “Company”), and Laurus Master Fund,Ltd., a Cayman Islands company (“Laurus”).**RECITALS**     A. Whereas, Laurus currently owns shares of the Company’s Series F, G and H CumulativeConvertible Preferred Stock (“Preferred Stock”);     B. Whereas, the Company desires to issue shares from a new Series I Cumulative ConvertiblePreferred Stock to Laurus in exchange for all of its shares of Series F and Series H PreferredStock and in exchange for $506,480 Stated Value of its Series G Preferred Stock, and Laurus desiresto exchange such shares of Series F, G and H Preferred Stock for Series I Preferred Stock, on theterms and conditions set forth in this Agreement; and     C. Whereas, the parties also desire to make certain amendments to the terms of the remainingshares of Series G Preferred Stock and to certain Warrants held by Laurus.     Now, therefore, the parties agree as follows:**AGREEMENT**     **1. ****EXCHANGE OF PREFERRED STOCK AND CERTAIN AMENDMENTS****.**          1.1**Authorization****.**As of the Closing (as defined below) the Company will haveauthorized the issuance, pursuant to the terms and conditions of this Agreement, of 639,398 sharesof the Company’s Series I Cumulative Convertible Preferred Stock (the “Series I Preferred Stock”)with a Stated Value of $10 per share and having the rights, preferences, privileges andrestrictions set forth in the “Certificate to Set Forth Designations, Voting Powers, Preferences,Limitations, Restrictions, and Relative Rights of Series I Cumulative Convertible Preferred Stock,$.01 Par Value Per Share,” of the Company attached to this Agreement as Exhibit A (the“Certificate of Designations”).          1.2**Agreement to Exchange Shares****.**At the Closing, the Company agrees to issue toLaurus 639,398 shares of Series I Preferred Stock in exchange for and in cancellation of i) 196,250shares of Series F Preferred Stock, with a stated value of $1,962,500, ii) 50,648 shares of SeriesG Preferred Stock, with a stated value of $506,480, and iii) 392,500 shares of Series H PreferredStock, with a stated value of $3,925,000. Following this exchange, Laurus shall retain a total of145,602 shares of Series G Preferred Stock, with a stated value of $1,456,020.
 

 
          1.3 **Amendments to Series G Preferred Stock**. At the Closing, the terms of theremaining 145,602 shares of Series G Preferred Stock held by Laurus shall be amended as follows:                       1.3.1 The last paragraph of Section 5 of theCertificate of Designations for the Series GPreferred Stock is hereby amended by deleting said section in its entirety and inserting thefollowing in lieu thereof:“In the event of any conversions of shares of Series G Preferred Stock in part pursuant tothis Section 5, such conversions shall be deemed to constitute conversions of outstandingredemption amount applying to Monthly Amounts (as defined in Section 10 below) for theRepayment Dates (as defined in Section 10 below) in chronological order. By way of example,if the original stated amount of the Series G Preferred Stock is $1,456,020, the MonthlyAmount is $27,822 and the Holder converted $50,000 of such original stated amount prior tothe first Repayment Date, then (1) the principal amount of the Monthly Amount due on thefirst Repayment Dates would equal $0, (2) the principal amount of the Monthly Amount due onthe second Repayment Date would equal $5,644 and (3) the principal amount of the MonthlyAmount due on each of the remaining Repayment Dates would be $27,822.”                       1.3.2 Section 8 of the Certificate ofDesignations for the Series G Preferred Stock is herebyamended by deleting said section in its entirety and inserting the following in lieu thereof:     “8. Mandatory Redemption. In the event any shares of Series G Preferred Stockare outstanding on August 5, 2008, any remaining Stated Value of such shares shall beredeemed and such shares shall be cancelled, and any unpaid accrued dividends shall bepaid.”                       1.3.3 Section 10 of the Certificate ofDesignations for the Series G Preferred Stock is herebyamended by deleting said section in its entirety and inserting the following in lieu thereof:     “10. Amortization.          (a) Monthly Payments. Subject to the terms of this Section 10, the Corporationshall repay **$27,822**of the original Stated Value of the Series G Preferred Stock (to theextent such amount has not been converted pursuant to Section 5 above), together with thedividend accrued to date on such portion of the original Stated Value then due and payable(collectively the “**Monthly Amount**”), in accordance with Section 10(b) below, on the firstbusiness day of each consecutive calendar month (each, a “**Repayment Date**”), beginning onFebruary 1, 2007.          (b) Cash or Common Stock. Subject to the terms hereof, the Corporation has thesole option to determine whether to satisfy payment of the Monthly Amount in full on eachRepayment Date either in cash or in registered shares of Common Stock, or a combination ofboth. The Corporation shall deliver to the Holder a written
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irrevocable notice in the formof Exhibit B attached hereto electing to pay such Monthly Amount in full on such RepaymentDate in either cash or registered Common Stock, or a combination of both (“**RepaymentElection Notice**”). Such Repayment Election Notice shall be delivered to the Holder at leastten (10) days prior to the applicable Repayment Date (the date of such notice beinghereinafter referred to as the “**Notice Date**”). If such Repayment Election Notice is notdelivered within the prescribed period set forth in the preceding sentence, then therepayment shall be made in either cash or shares of Common Stock on the same terms hereunderat the Holder’s sole option. If the Corporation elects or is required to repay all or aportion of the Monthly Amount in cash on a Repayment Date, then on such Repayment Date theCorporation shall pay to the Holder an amount equal to 102% of the Monthly Amount insatisfaction of such obligation. If the Corporation repays all or a portion of the MonthlyAmount in shares of Common Stock, the number of such shares to be issued for such RepaymentDate shall be the number determined by dividing (x) the portion of the Monthly Amount to bepaid in shares of Common Stock, by (y) the Conversion Price (as defined herein) as of suchdate.          (c) No Effective Registration. Notwithstanding anything to the contraryherein, the Corporation shall be prohibited from exercising its right to repay the MonthlyAmount in shares of Common Stock (and must deliver cash in respect thereof) on theapplicable Repayment Date if at any time from the Notice Date until the time at which theHolder receive such shares (i) there fails to exist an effective registration statement orthe holder cannot sell the shares pursuant to Rule 144(k), or (ii) an Event of Defaulthereunder exists or occurs, unless otherwise waived in writing by the Holder in whole or inpart at the Holder’s option.          (d) Share Price/Issuance Limitations. Notwithstanding anything to the contraryherein, if the closing price of the Common Stock as reported by Bloomberg, L.P. on thePrincipal Market for any of the 11 trading days preceding a Repayment Date was less than118% of the Conversion Price, and the Corporation has elected to pay all or a portion of theMonthly Amount in shares of Common Stock, then, in lieu of the Corporation delivering therequired number of shares of Common Stock on the Repayment Date, Corporation shall pay theMonthly Amount, or the unconverted part thereof, in cash.          (e) Deemed Conversions. Any repayment of the Monthly Amount in shares ofCommon Stock pursuant to the terms hereof shall constitute and be deemed a conversion ofsuch portion of the applicable Stated Value of the Series G Preferred Stock for all purposesunder this Certificate and the Purchase Agreement (as defined herein) (except as otherwiseprovided herein).          (f) Deemed Ownership. In the case of the exercise of the conversion rights orpayment of the Monthly Amount set forth herein the conversion privilege shall be deemed tohave been exercised and the shares of Common Stock issuable upon such conversion orRepayment shall be deemed to have been issued upon the date of receipt by the Corporation ofthe Notice of Conversion or on the Repayment Date if the Monthly Amount is paid in shares ofCommon Stock, as the case may be. The person or
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entity entitled to receive Common Stockissuable upon such conversion shall, on the date such conversion privilege is deemed to havebeen exercised and thereafter, be treated for all purposes as the record holder of suchCommon Stock.”          1.4**Amendments to Warrants**. Laurus is the owner of the following Warrants: i) Warrantto purchase 50,000 shares, dated February 5, 2004, with an original exercise price of $3.42, ii)Warrant to purchase 50,000 shares, dated February 5, 2004, with an original exercise price of$3.61, and iii) Warrant to purchase 100,000 shares, dated February 5, 2004, with an originalexercise price of $3.82 (collectively, the “February 2004 Warrants”). Effective on the ClosingDate, the February 2004 Warrants shall be amended as follows:               1.4.1 The Exercise Price (as defined therein) of each of the February 2004 Warrants shall bereduced to **$1.16**;               1.4.2 Section 2.2(b) of each of the February 2004 Warrants shall be amended to delete thefirst paragraph thereof and insert the following in lieu thereof:     ”(b) Notwithstanding any provisions herein to the contrary, if the Warrant isexercisable and a Registration Statement (as defined in the Registration RightsAgreement) covering the Warrant Shares that are the subject of the Exercise Noticeis not available for the resale of such Warrant Shares, the Holder may elect toreceive shares of Common Stock which are freely tradable under Rule 144(k) equal tothe value (as determined below) of this Warrant (or the portion thereof beingexercised) by surrender of this Warrant at the principal office of the Companytogether with the properly endorsed Exercise Notice in which event the Company shallissue to the Holder a number of shares of Common Stock computed using the followingformula:”               1.4.3 Each of the February 2004 Warrants shall not be exercisable during the period commencingon the Closing Date and continuing until six months after the Closing Date.     **2. ****CLOSING.**     Subject to the terms and conditions herein, the closing of the transactions contemplatedhereby (the “**Closing**”) shall take place on the date hereof or at such other time or place as theCompany and Laurus may mutually agree (such date is hereinafter referred to as the “**Closing Date**”).     **3. ****REPRESENTATIONS AND WARRANTIES OF THE COMPANY.**     The Company hereby represents and warrants to Laurus as follows:          3.1 **Organization, Good Standing and Qualification****.**The Company has been dulyincorporated and organized, and is validly existing in good standing, under the laws of
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the State of Delaware. The Company has the corporate power and authority to enter into and perform thisAgreement, to own and operate its properties and assets, and to carry on its business as currentlyconducted and as presently proposed to be conducted.          3.2 **Due Authorization****.**All corporate action on the part of the Company necessary forthe authorization, execution, delivery of, and the performance of all obligations of the Companyunder this Agreement, the authorization, issuance, reservation for issuance and delivery of all ofthe shares of Preferred Stock being exchanged under this Agreement has been taken, and thisAgreement constitutes, valid and legally binding obligations of the Company, enforceable inaccordance with their respective terms, except as may be limited by (i) applicable bankruptcy,insolvency, reorganization or others laws of general application relating to or affecting theenforcement of creditors’ rights generally and (ii) the effect of rules of law governing theavailability of equitable remedies.               **Valid Issuance of Stock**. The Series I Preferred Stock, when issued and paid forasprovided in this Agreement will be duly authorized and validly issued, fully paid andnonassessable. The shares of Common Stock issuable upon conversion of the Series I Preferred Stockhave been duly and validly reserved for issuance upon conversion thereof and, when issued upon suchconversion in accordance with the Certificate of Designations will be duly authorized and validlyissued, fully paid and nonassessable.     **4. ****REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF LAURUS.**     Laurus hereby represents and warrants to, and agrees with, the Company as follows:          4.1 **Authorization****.**This Agreement constitutes Laurus’ valid and legally bindingobligation, enforceable in accordance with its terms except as may be limited by (i) applicablebankruptcy, insolvency, reorganization or other laws of general application relating to oraffecting the enforcement of creditors’ rights generally and (ii) the effect of rules of lawgoverning the availability of equitable remedies. Laurus represents that it has full power andauthority to enter into this Agreement.          4.2**Purchase for Own Account****.**The Series I Preferred Stock to be issued to Laurushereunder will be acquired for investment for Laurus’ own account, not as a nominee or agent, andnot with a view to the public resale or distribution thereof within the meaning of the 1933 Act(other sales than pursuant to an effective registration statement under the Securities Act of 1993,as amended or sales pursuant to Rule 144(k)).          4.3 **Disclosure of Information****.**Laurus has received or has had full access to all theinformation it considers necessary or appropriate to make an informed investment decision withrespect to the Preferred Stock to be received by Laurus under this Agreement. Laurus further hashad an opportunity to ask questions and receive answers from the Company regarding the terms andconditions of the issuance of the Preferred Stock and to obtain additional information (to theextent the Company possessed such information or could acquire it without unreasonable effort orexpense) necessary to verify any information furnished to Laurus or to
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which Laurus had access. The foregoing, however, does not in any way limit or modify the representations and warranties madeby the Company in Section 3.          4.4 **Accredited Investor Status****.**Laurus is an “accredited investor” within the meaningof Regulation D promulgated under the 1933 Act.     5. **CONDITIONS TO LAURUS’ OBLIGATIONS AT CLOSING.**     The obligations of Laurus under this Agreement are subject to the fulfillment or waiver, on orbefore the Closing, of each of the following conditions:          5.1 **Representations and Warranties True****.**The representations and warranties of theCompany contained in Section 3 shall be true and correct on the Closing with the same effect asthough such representations and warranties had been made on and as of the date of the Closing.          5.2 **Performance****.**The Company shall have performed and complied with all agreements,obligations and conditions contained in this Agreement that are required to be performed orcomplied with by it on or before the Closing and shall have obtained all approvals, consents andqualifications necessary to complete the purchase and sale described herein.     **6. ****CONDITIONS TO THE COMPANY’S OBLIGATIONS AT CLOSING.**     The obligations of the Company under this Agreement are subject to the fulfillment or waiver,on or before the Closing, of each of the following conditions:          6.1 **Representations and Warranties****.**The representations and warranties of Lauruscontained in Section 4 shall be true and correct on the date of the Closing with the same effect asthough such representations and warranties had been made on and as of the Closing.          6.2 **Performance****.**Laurus shall have performed and complied with all agreements,obligations and conditions contained in this Agreement that are required to be performed orcomplied with by it on or before the Closing and shall have obtained all approvals, consents andqualifications necessary to complete the purchase and sale described herein     **7. ****TRADING LIMITATIONS****.**Laurus agrees to limit its sale of those shares which areissuable upon conversion of the Series I Preferred Stock to no more than a number of shares pertrading day equal to 20% of the average daily trading volume of JMAR Common Stock during regulartrading hours as reported by Nasdaq for the calendar week preceding the date of sale. Laurusfurther agrees to limit its sale of those shares which are issuable upon exercise of the February2004 Warrants to no more than a number of shares per trading day equal to 10% of the average dailytrading volume of JMAR Common Stock during regular trading hours as reported by Nasdaq for thecalendar week preceding the date of sale.
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     **8. ****GENERAL PROVISIONS.**          8.1 **Survival of Warranties****.**The representations, warranties and covenants of theCompany and Laurus contained in or made pursuant to this Agreement shall survive the execution anddelivery of this Agreement and the Closings and shall in no way be affected by any investigation ofthe subject matter thereof made by or on behalf of Laurus or the Company, as the case may be.          8.2 **Successors and Assigns****.**The terms and conditions of this Agreement shall inure tothe benefit of and be binding upon the respective successors and assigns of the parties.          8.3 **Governing Law****.**This Agreement shall be governed by and construed under theinternal laws of the State of New York as applied to agreements among New York residents enteredinto and to be performed entirely within New York, without reference to principles of conflict oflaws or choice of laws.          8.4 **Counterparts****.**This Agreement may be executed in two or more counterparts, each ofwhich shall be deemed an original, but all of which together shall constitute one and the sameinstrument.          8.5 **Headings****.**The headings and captions used in this Agreement are used forconvenience only and are not to be considered in construing or interpreting this Agreement. Allreferences in this Agreement to sections, paragraphs, exhibits and schedules shall, unlessotherwise provided, refer to sections and paragraphs hereof and exhibits and schedules attachedhereto, all of which exhibits and schedules are incorporated herein by this reference.          8.6 **Notices****.**All notices required or permitted hereunder shall be in writing andshall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) whensent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not,then on the next business day, (c) five days after having been sent by registered or certifiedmail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationallyrecognized overnight courier, specifying next day delivery, with written verification of receipt.All communications shall be sent to the Company at the address as set forth on the signature pagehereof and to Laurus at the address set forth on the signature page hereto for, with a copy in thecase of Laurus to John E. Tucker Esq. 825 Third Avenue, New York, NY 10022, facsimile number (212)541-4434, or at such other address as the Company or Laurus may designate by ten days advancewritten notice to the other parties hereto.          8.7 **Amendments and Waivers****.**Any term of this Agreement may be amended and theobservance of any term of this Agreement may be waived (either generally or in a particularinstance and either retroactively or prospectively), only with the written consent of the Companyand Laurus.          8.8 **Severability****.**If one or more provisions of this Agreement are held to beunenforceable under applicable law, such provision(s) shall be excluded from this Agreement and thebalance of the Agreement shall be interpreted as if such provision(s) were so excluded and shall beenforceable in accordance with its terms.
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          8.9 **Entire Agreement****.**This Agreement constitutes the entire agreement andunderstanding of the parties with respect to the subject matter hereof and supersedes any and allprior negotiations, correspondence, agreements, understandings duties or obligations between theparties with respect to the subject matter hereof.          8.10 **Further Assurances****.**From and after the date of this Agreement, upon the requestof Laurus or the Company, the Company and Laurus shall execute and deliver such instruments,documents or other writings as may be reasonably necessary or desirable to confirm and carry outand to effectuate fully the intent and purposes of this Agreement.     **IN WITNESS WHEREOF,**the parties hereto have executed this Securities Exchange Agreement as ofthe date set forth in the first paragraph hereof.           **JMAR Technologies, Inc.** **Laurus Master Fund, Ltd.**             By: /s/ Dennis E. Valentine By: /s/ Eugene Grin           Name: Dennis E. Valentine Name: Eugene Grin  Title: Chief Financial Officer Address: LAURUS MASTER FUND, LTD.  Address: 10905 Technology Place     c/o Ironshore Corporate Services Ltd.  San Diego, California 92127     P.O. Box 1234 G.T., QueensgateHouse, South Church Street Grand Cayman, Cayman Islands  
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