EXHIBIT 4.5


 


THIS WARRANT HAS NOT BEEN REGISTERED


UNDER THE SECURITIES ACT OF 1933


AND IS NOT TRANSFERABLE


EXCEPT AS PROVIDED HEREIN


 


ICOP Digital, Inc.


 


PURCHASE WARRANT


 


Issued to:


 


PAULSON INVESTMENT COMPANY, INC.


 


Exercisable to Purchase


 


             UNITS


 


of


 


ICOP DIGITAL, INC.


 


 


Void after              ,
2010


 





















 


This is to certify that, for value received
and subject to the terms and conditions set forth below, the Warrantholder
(hereinafter defined) is entitled to purchase, and the Company promises and
agrees to sell and issue to the Warrantholder, at any time on or after               , 2005
and on or before             ,
2010, up to           Units
(hereinafter defined) at the Exercise Price (hereinafter defined).


 


This Warrant Certificate is issued subject to
the following terms and conditions:


 


1.             DEFINITIONS OF CERTAIN TERMS. Except as may be otherwise
clearly required by the context, the following terms have the following
meanings:


 


(a)           “Act” means the Securities Act of
1933, as amended.


 


(b)           “Cashless Exercise” means an exercise
of Warrants in which, in lieu of payment of the Exercise Price, the Holder
elects to receive a lesser number of Securities such that the value of the
Securities that such Holder would otherwise have been entitled to receive but
has agreed not to receive, as determined by the closing price of such
Securities on the date of exercise or, if such date is not a trading day, on
the next prior trading day, is equal to the Exercise Price with respect to such
exercise. A Holder may only elect a Cashless Exercise if Securities issuable by
the Company on such exercise are publicly traded securities.


 


(c)           “Closing Date” means the date on
which the Offering is closed.


 


(d)           “Commission” means the Securities and
Exchange Commission.


 


(e)           “Common Stock” means the common
stock, no par value, of the Company.


 


(f)            “Company” means ICOP Digital, Inc.,
a Colorado corporation.


 


(g)           “Company’s Expenses” means any and
all expenses payable by the Company or the Warrantholder in connection with an
offering described in Section 6 hereof, except Warrantholder’s Expenses.


 


(h)           “Effective Date” means the date on
which the Registration Statement is declared effective by the Commission.


 


(i)            “Exercise Price” means the price at
which the Warrantholder may purchase one Unit upon exercise of Warrants as
determined from time to time pursuant to the provisions hereof. The initial
Exercise Price is $         per Unit.


 


(j)            “Offering” means the public offering
of Units made pursuant to the Registration Statement.


 


(k)           “Participating Underwriter” means any
underwriter participating in the sale of the Securities pursuant to a
registration under Section 6 of this Warrant Certificate.


 





















 


(l)            “Registration Statement” means the
Company’s registration statement (File No. 333-            )
as amended on the Closing Date.


 


(m)          “Rules and Regulations” means the
rules and regulations of the Commission adopted under the Act.


 


(n)           “Securities” means the securities
obtained or obtainable upon exercise of the Warrant or securities obtained or
obtainable upon exercise, exchange, or conversion of such securities.


 


(o)           “Unit” means one share of Common
Stock and one redeemable Warrant.


 


(p)           “Unit Warrants” means the Warrants
that are a component of the Unit.


 


(q)           “Warrant Agreement” means that
certain Warrant Agreement, dated as of             ,
2005, by and between the Company and ComputerShare Investor Services relating
to the issuance of Unit Warrants.


 


(r)            “Warrant Certificate” means a
certificate evidencing the Warrant.


 


(s)           “Warrantholder” means a record holder
of the Warrant or Securities. The initial Warrantholder is Paulson Investment
Company, Inc.


 


(t)            “Warrantholder’s Expenses” means the
sum of (i) the aggregate amount of cash payments made to an underwriter,
underwriting syndicate, or agent in connection with an offering described in Section 6
hereof multiplied by a fraction the numerator of which is the aggregate sales
price of the Securities sold by such underwriter, underwriting syndicate, or
agent in such offering and the denominator of which is the aggregate sales
price of all of the securities sold by such underwriter, underwriting
syndicate, or agent in such offering and (ii) all out-of-pocket expenses
of the Warrantholder, except for the fees and disbursements of one firm
retained as legal counsel for the Warrantholder that will be paid by the
Company.


 


(u)           “Warrant” means the warrant evidenced
by this certificate, any similar certificate issued in connection with the
Offering, or any certificate obtained upon transfer or partial exercise of the
Warrant evidenced by any such certificate.


 


2.             EXERCISE OF WARRANT. All or any part of the Warrant
represented by this Warrant Certificate may be exercised commencing 180 days
after the Effective Date and ending at 5:00 p.m. Pacific Time on the fifth
anniversary of the Effective Date by surrendering this Warrant Certificate,
together with appropriate instructions, duly executed by the Warrantholder or
by its duly authorized attorney, at the office of the Company at ICOP Digital, Inc.,
11011 King Street, Suite 260, Overland Park, Kansas 66210, Attention: President;
or at such other office or agency as the Company may designate. The date on
which such instructions are received by the Company shall be the date of
exercise. If the Holder has elected a Cashless Exercise, such instructions
shall so state. Upon receipt of notice of exercise, the Company shall
immediately instruct its transfer agent to prepare certificates for the
Securities to be received by the Warrantholder upon completion of the Warrant
exercise. When such certificates are prepared, the Company shall notify the
Warrantholder and deliver such certificates to the Warrantholder or


 


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as per the Warrantholder’s instructions immediately
upon payment in full by the Warrantholder, in lawful money of the United
States, of the Exercise Price payable with respect to the Securities being
purchased, if any. If the Warrantholder shall represent and warrant that all
applicable registration and prospectus delivery requirements for their sale
have been complied with upon sale of the Securities received upon exercise of
the Warrant, such certificates shall not bear a legend with respect to the
Securities Act of 1933, as amended.


 


If fewer than all the Securities purchasable
under the Warrant are purchased, the Company will, upon such partial exercise,
execute and deliver to the Warrantholder a new Warrant Certificate (dated the
date hereof), in form and tenor similar to this Warrant Certificate, evidencing
that portion of the Warrant not exercised. The Securities to be obtained on
exercise of the Warrant will be deemed to have been issued, and any person
exercising the Warrants will be deemed to have become a holder of record of
those Securities, as of the date of the payment of the Exercise Price.


 


3.             ADJUSTMENTS IN CERTAIN EVENTS. The number, class, and
price of Securities for which this Warrant Certificate may be exercised are
subject to adjustment from time to time upon the happening of certain events as
follows:


 


(a)           If the outstanding shares of the
Company’s Common Stock are divided into a greater number of shares or a
dividend in stock is paid on the Common Stock, the number of shares of Common
Stock for which the Warrant is then exercisable will be proportionately
increased and the Exercise Price will be proportionately reduced; and,
conversely, if the outstanding shares of Common Stock are combined into a
smaller number of shares of Common Stock, the number of shares of Common Stock
for which the Warrant is then exercisable will be proportionately reduced and
the Exercise Price will be proportionately increased. The increases and
reductions provided for in this Section 3(a) will be made with the
intent and, as nearly as practicable, the effect that neither the percentage of
the total equity of the Company obtainable on exercise of the Warrants nor the
price payable for such percentage upon such exercise will be affected by any
event described in this Section 3(a).


 


(b)           In case of any change in the Common
Stock through merger, consolidation, reclassification, reorganization, partial
or complete liquidation, purchase of substantially all the assets of the
Company, or other change in the capital structure of the Company, other than
changes in par value, then, as a condition of such change, lawful and adequate
provision will be made so that the holder of this Warrant Certificate will have
the right thereafter to receive upon the exercise of the Warrant the kind and
amount of shares of stock or other securities or property to which he would
have been entitled if, immediately prior to such event, he had held the number
of shares of Common Stock obtainable upon the exercise of the Warrant. In any
such case, appropriate adjustment will be made in the application of the
provisions set forth herein with respect to the rights and interest thereafter
of the Warrantholder, to the end that the provisions set forth herein will
thereafter be applicable, as nearly as reasonably may be, in relation to any shares
of stock or other property thereafter deliverable upon the exercise of the
Warrant. The Company will not permit any change in its capital structure to
occur unless the issuer of the shares of stock or other securities to be
received by the holder of this Warrant Certificate, if not the Company, agrees
to be bound by and comply with the provisions of this Warrant Certificate.


 


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(c)           When any adjustment is required to be
made in the number of shares of Common Stock, other securities, or the property
purchasable upon exercise of the Warrant, the Company will promptly determine
the new number of such shares or other securities or property purchasable upon
exercise of the Warrant and (i) prepare and retain on file a statement
describing in reasonable detail the method used in arriving at the new number
of such shares or other securities or property purchasable upon exercise of the
Warrant and (ii) cause a copy of such statement to be mailed to the
Warrantholder within 30 days after the date of the event giving rise to the
adjustment.


 


(d)           No fractional shares of Common Stock
or other securities will be issued in connection with the exercise of the
Warrant, but the Company will pay, in lieu of fractional shares, a cash payment
therefor on the basis of the mean between the bid and asked prices of the
Common Stock in the over-the-counter market or the last sale price of the
Common Stock on the principal exchange or other trading facility on which the
Common Stock is traded on the day immediately prior to exercise.


 


(e)           If securities of the Company or
securities of any subsidiary of the Company are distributed pro rata to holders
of Common Stock, such number of securities will be distributed to the
Warrantholder or its assignee upon exercise of its rights hereunder as such
Warrantholder or assignee would have been entitled to if this Warrant
Certificate had been exercised prior to the record date for such distribution. The
provisions with respect to adjustment of the Common Stock provided in this Section 3
will also apply to the securities to which the Warrantholder or its assignee is
entitled under this Section 3(e).


 


(f)            Notwithstanding anything herein to
the contrary, there will be no adjustment made hereunder on account of the sale
by the Company of the Common Stock or other Securities purchasable upon
exercise of the Warrant.


 


(g)           If, immediately prior to any exercise
of Warrants, there shall be outstanding no securities of a class or series
that, but for the provisions of this Section 3, would be issuable upon
such exercise (the “Formerly Issuable Securities”), then, upon such
exercise, and in lieu of the Formerly Issuable Securities, the Company shall
issue that number and kind of other securities or property for which the
Formerly Issuable Securities were most recently exercisable or into which the
Formerly Issuable Securities were most recently convertible, as the case may
be.


 


4.             RESERVATION OF SECURITIES. The Company agrees that the
number of shares of Common Stock or other Securities sufficient to provide for
the exercise of the Warrant upon the basis set forth above will at all times
during the term of the Warrant be reserved for exercise.


 


5.             VALIDITY OF SECURITIES. All Securities delivered upon
the exercise of the Warrant will be duly and validly issued in accordance with
their terms, and the Company will pay all documentary and transfer taxes, if
any, in respect of the original issuance thereof upon exercise of the Warrant.


 


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6.             REGISTRATION OF SECURITIES ISSUABLE ON EXERCISE OF
WARRANT CERTIFICATE.


 


(a)           The Company will register the
Securities on Form S-3 or any successor form (or such other
registration statement form for which the Company qualifies) with the
Commission pursuant to the Act so as to allow the unrestricted sale of the
Securities to the public from time to time commencing 180 days after the
Effective Date and ending at 5:00 p.m. Pacific Time on the fifth
anniversary of the Effective Date (the “Registration Period”). The
Company will also file such applications and other documents necessary to
permit the sale of the Securities to the public during the Registration Period
in those states in which the Warrantholders reside or such other states as to
which the Company and the Warrantholder agree. In order to comply with the
provisions of this Section 6(a), the Company is not required to file more
than one registration statement. No registration right of any kind, “piggyback”
or otherwise, will last longer than five years from the Effective Date.


 


(b)           The Company will pay all of the
Company’s Expenses and each Warrantholder will pay its pro rata share of the
Warrantholder’s Expenses relating to the registration, offer, and sale of the
Securities.


 


(c)           Except as specifically provided
herein, the manner and conduct of the registration, including the contents of
the registration statement, will be entirely in the control and at the
discretion of the Company. The Company will file such post-effective amendments
and supplements as may be necessary to maintain the currency of the
registration statement during the period of its use. In addition, if the
Warrantholder participating in the registration is advised by counsel that the
registration statement, in their opinion, is deficient in any material respect,
the Company will use its best efforts to cause the registration statement to be
amended to eliminate the concerns raised.


 


(d)           The Company will furnish to the
Warrantholder the number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Act, and such other
documents as it may reasonably request in order to facilitate the disposition
of Securities owned by it.


 


(e)           The Company will, at the request of
Warrantholders holding at least 50 percent of the then outstanding Warrants: (i) furnish
an opinion of the counsel representing the Company for the purposes of the
registration pursuant to this Section 6, addressed to the Warrantholders
and any Participating Underwriter; (ii) furnish an appropriate letter from
the independent public accountants of the Company, addressed to the
Warrantholders and any Participating Underwriter; and (iii) make such
representations and warranties to the Warrantholders and any Participating
Underwriter as are customarily given to underwriters of public offerings of
equity securities in connection with such offerings. A request pursuant to this
subsection (e) may be made on three occasions. The documents required
to be delivered pursuant to this subsection (e) will be dated within
ten days of the request and will be, in form and substance, equivalent to
similar documents furnished to the underwriters in connection with the
Offering, with such changes as may be appropriate in light of changed
circumstances.


 


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7.             INDEMNIFICATION IN CONNECTION WITH REGISTRATION.


 


(a)           If any of the Securities are
registered, the Company will indemnify and hold harmless each selling
Warrantholder, any person who controls any selling Warrantholder within the
meaning of the Act, and any Participating Underwriter against any losses,
claims, damages, or liabilities, joint or several, to which any Warrantholder,
controlling person, or Participating Underwriter may be subject under the Act
or otherwise; and it will reimburse each Warrantholder, each controlling
person, and each Participating Underwriter for any legal or other expenses
reasonably incurred by the Warrantholder, controlling person, or Participating
Underwriter in connection with investigating or defending any such loss, claim,
damage, liability, or action, insofar as such losses, claims, damages, or
liabilities, joint or several (or actions in respect thereof), arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained, on the effective date thereof, in any such registration
statement or any preliminary prospectus or final prospectus, or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that the Company will not be liable in any case to the extent that any loss, claim,
damage, or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in any
registration statement, preliminary prospectus, final prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with
written information furnished by a Warrantholder for use in the preparation
thereof. The indemnity agreement contained in this subparagraph (a) will
not apply to amounts paid to any claimant in settlement of any suit or claim
unless such payment is first approved by the Company, such approval not to be
unreasonably withheld.


 


(b)           Each selling Warrantholder, as a
condition of the Company’s registration obligation, will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed any registration statement or other filing or any amendment or
supplement thereto, and any person who controls the Company within the meaning
of the Act, against any losses, claims, damages, or liabilities to which the
Company or any such director, officer, or controlling person may become subject
under the Act or otherwise, and will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, or action, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue or alleged untrue statement of any material fact contained in said
registration statement, any preliminary or final prospectus, or other filing,
or any amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only to the extent that such untrue statement or alleged untrue statement
or omission or alleged omission was made in said registration statement,
preliminary or final prospectus, or other filing, or amendment or supplement,
in reliance upon and in conformity with written information furnished by such
Warrantholder for use in the preparation thereof; provided, however, that the
indemnity agreement contained in this subparagraph (b) will not apply to
amounts paid to any claimant in settlement of any suit or claim unless such
payment is first approved by the Warrantholder, such approval not to be
unreasonably withheld.


 


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(c)           Promptly after receipt by an
indemnified party under subparagraphs (a) or (b) above of notice of
the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, notify the indemnifying
party of the commencement thereof; but the omission to notify the indemnifying
party will not relieve it from any liability that it may have to any
indemnified party otherwise than under subparagraphs (a) and (b), except
to the extent it was prejudiced by such failure to notify.


 


(d)           If any such action is brought against
any indemnified party and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party; and after notice from the indemnifying party to such
indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation.


 


8.             RESTRICTIONS ON TRANSFER. This Warrant Certificate and
the Warrant may not be sold, transferred, assigned, pledged, or hypothecated,
or be the subject of any hedging, short sale, derivative, put or call
transaction that would result in the effective economic disposition of the
Warrant or the underlying securities by any person for a period of one hundred
eighty (180) days following the Effective Date or commencement of sales of the
public offering, except by operation of law or to an individual who is an officer
or partner of the underwriters of the Offering and members of the selling group
or commencement of sales of the public offering but only if all securities so
transferred remain subject to the lock-up restriction for the remainder of the
180 day time period. The Warrant may be divided or combined, upon request to
the Company by the Warrantholder, into a certificate or certificates evidencing
the same aggregate number of Warrants.


 


9.             NO RIGHTS AS A STOCKHOLDER. Except as otherwise provided
herein, the Warrantholder will not, by virtue of ownership of the Warrant, be
entitled to any rights of a shareholder of the Company but will, upon written
request to the Company, be entitled to receive such quarterly or annual reports
as the Company distributes to its stockholders.


 


10.           NOTICE. Any notices required or
permitted to be given hereunder will be in writing and may be served personally
or by mail; and if served will be addressed as follows:


 


If to the Company:


 


ICOP Digital, Inc.


11011 King
Street, Suite 260


Overland Park,
Kansas 66210


Attention: President


 


If to the Warrantholder:


 


AT THE ADDRESS FURNISHED


BY THE WARRANTHOLDER TO THE


 


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COMPANY FOR THE PURPOSE OF NOTICE.


 


Any notice so given by mail will be deemed effectively given 48 hours
after mailing when deposited in the United States mail, registered or certified
mail, return receipt requested, postage prepaid and addressed as specified
above. Any party may by written notice to the other specify a different address
for notice purposes.


 


11.           APPLICABLE LAW. This Warrant
Certificate will be governed by and construed in accordance with the laws of
the State of Oregon, without reference to conflict of laws principles
thereunder. All disputes relating to this Warrant Certificate shall be tried
before the courts of Oregon located in Multnomah County, Oregon to the
exclusion of all other courts that might have jurisdiction.


 


Dated as of             ,
2005


 


	
   

  	
  ICOP DIGITAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


Agreed and Accepted as of               ,
2005


 


	
   

  	
  PAULSON INVESTMENT COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


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