**Exhibit10.2**

 

**IMAGEWARE SYSTEMS, INC.**

** **

**REGISTRATION RIGHTS AGREEMENT**

 

**This Registration Rights Agreement**(the“Agreement”) is entered into as of the 13th day of March, 2003, by and among **ImageWare Systems, Inc**., a California corporation (the “Company”) and the individuals andentities listed on the signature pages hereto, referred to hereinafter as the“Investors” and each individually as an “Investor.”

 

**Recitals**

 

**Whereas,**the Investors areholders of those certain Convertible Subordinated Promissory Notes (the“Notes”) issued by the Company in March 2003; and

 

**Whereas,** in connection with theissuance of the Notes, the parties desire to enter into this Agreement in orderto grant registration rights to the Investors as set forth below.

 

**Now, Therefore,**in considerationof the premises and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties agree hereto asfollows:

 

**SECTION 1.****                            GENERAL.**

 

**1.1          Definitions. **As used in this Agreement the following termsshall have the following respective meanings:

 

**(a)          **“ExchangeAct”******means the SecuritiesExchange Act of 1934, as amended.

 

**(b)          **“FormS-3”******means such formunder the Securities Act as in effect on the date hereof or any successorregistration form under the Securities Act subsequently adopted by the SECwhich permits inclusion or incorporation of substantial information byreference to other documents filed by the Company with the SEC.

 

**(c)          **“Holder”******means any personowning of record Registrable Securities that have not been sold to the public.

 

**(d)          **“Register,”“registered,” and “registration”******refer to a registration effected by preparing andfiling a registration statement in compliance with the Securities Act, and thedeclaration or ordering of effectiveness of such registration statement ordocument.

 

**(e)          **“RegistrableSecurities”******means(a) Common Stock of the Company issuable or issued upon conversion of theNotes and (b) any Common Stock of the Company issued as (or issuable uponthe conversion or exercise of any warrant, right or other security which isissued as) a dividend or other distribution with respect to, or in exchange foror in

 

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replacement of, suchabove-described securities. Notwithstanding the foregoing, RegistrableSecurities shall not include any securities (i) sold by a person to the publiceither pursuant to a registration statement or Rule 144, or (ii) held by aHolder if all shares of Common Stock of the Company issuable or issued uponconversion of the Notes held by such Holder may be sold pursuant to Rule 144during any ninety (90) day period.

 

**(f)           **“RegistrableSecurities then outstanding”******shall be the number of shares of the Company’s CommonStock that are Registrable Securities and either (a) are then issued andoutstanding or (b) are issuable pursuant to then convertible Notes.

 

**(g)          **“RegistrationExpenses”******shallmean all expenses incurred by the Company in complying with Section 2.1and Section 2.2 hereof, including, without limitation, all registration andfiling fees, printing expenses, fees and disbursements of counsel for theCompany, blue sky fees and expenses and the expense of any special auditsincident to or required by any such registration (but excluding thecompensation of regular employees of the Company which shall be paid in anyevent by the Company).

 

**(h)          **“SEC”or “Commission”******meansthe Securities and Exchange Commission.

 

**(i)           **“SecuritiesAct”******shall mean theSecurities Act of 1933, as amended.

 

**(j)           **“SellingExpenses”******shallmean all underwriting discounts and selling commissions applicable to the sale.

 

**(k)          **“SpecialRegistration Statement” shall mean (i) a registration statement relating to anyemployee benefit plan or (ii) with respect to any corporate reorganization ortransaction under Rule 145 of the Securities Act, including anyregistration statements related to the issuance or resale of securities issuedin such a transaction.

 

**SECTION 2.****                            REGISTRATION.**

 

**2.1          FormS-3 Registration. **TheCompany shall use commercially reasonable efforts to prepare promptly and filewith the SEC as soon as practicable, but in no event later than May 12, 2003[60 days following issuance of the last Note] a Registration Statement on FormS-3 covering the resale of all of the Registrable Securities; *provided,however*, that the Company shall not be obligated to effect any suchregistration, qualification or compliance pursuant to this Section 2.1:

 

**(a)          **ifForm S-3 is not available for such offering by the Holders; or

 

**(b)          **ifthe Company shall furnish to the Holders a certificate signed by the Chairmanof the Board of Directors of the Company stating that in the good faithjudgment of the Board of Directors of the Company, it would be seriouslydetrimental to the Company and its shareholders for such Form S-3registration to be effected at such time, in which event the Company shall havethe right to defer the filing of the Form S-3 registration statement for aperiod of not more than one hundred twenty (120) days after the date of suchnotice; or

 

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**(c)          **ifthe Company shall have included, pursuant to Section 2.2, all RegistrableSecurities under a previously filed registration statement; or

 

**(d)          **inany particular jurisdiction in which the Company would be required to qualifyto do business or to execute a general consent to service of process ineffecting such registration, qualification or compliance.

 

**2.2          PiggybackRegistrations. **To the extent the Company shall nothave previously registered Registrable Securities under a registrationstatement filed pursuant to Section 2.1, the Holders shall have the rights setforth in this Section 2.2.  The Companyshall notify all Holders of Registrable Securities in writing at least fifteen(15) days prior to the filing of any registration statement under theSecurities Act for purposes of a public offering of securities of the Company(including, but not limited to, registration statements relating to secondaryofferings of securities of the Company, but excluding Special RegistrationStatements) and will afford each such Holder an opportunity, subject to therights of other holders of registration rights granted by the Company alsoparticipating in such offering, to include in such registration statement allor part of such Registrable Securities held by such Holder.  Each Holder desiring to include in any suchregistration statement all or any part of the Registrable Securities held by itshall, within fifteen (15) days after the above-described notice from theCompany, so notify the Company in writing. Such notice shall state the intended method of disposition of theRegistrable Securities by such Holder. If a Holder decides not to include all of its Registrable Securities inany registration statement thereafter filed by the Company, such Holder shallnevertheless continue to have the right to include any Registrable Securitiesin any subsequent registration statement or registration statements as may befiled by the Company with respect to offerings of its securities, all upon theterms and conditions set forth herein.

 

**(a)           Underwriting. **If the registrationstatement under which the Company gives notice under this Section 2.2 isfor an underwritten offering, the Company shall so advise the Holders ofRegistrable Securities.  In such event,the right of any such Holder to be included in a registration pursuant to thisSection 2.2 shall be conditioned upon such Holder’s participation in suchunderwriting and the inclusion of such Holder’s Registrable Securities in theunderwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities throughsuch underwriting shall enter into an underwriting agreement in customary formwith the underwriter or underwriters selected for such underwriting by theCompany.  Notwithstanding any otherprovision of this Agreement, if the underwriter determines in good faith thatmarketing factors require a limitation of the number of shares to be underwritten,the number of shares that may be included by Holders in the underwriting may bereduced to zero.  If any Holderdisapproves of the terms of any such underwriting, such Holder may elect towithdraw therefrom by written notice to the Company and the underwriter,delivered at least ten (10) business days prior to the effective date of theregistration statement.  Any RegistrableSecurities excluded or withdrawn from such underwriting shall be excluded andwithdrawn from the registration.

 

**(b)           Rightto Terminate Registration. **TheCompany shall have the right to terminate or withdraw any registrationinitiated by it under this Section 2.2 prior to the effectiveness of suchregistration whether or not any Holder has elected to include securities insuch registration.

 

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**2.3          Expensesof Registration. **Exceptas specifically provided herein, all Registration Expenses incurred inconnection with the registration, qualification or compliance pursuant toSection 2.1 or any registration under Section 2.2 shall be borne by theCompany.  All Selling Expenses incurredin connection with any registrations hereunder, shall be borne by the holdersof the securities so registered *pro rata* on the basis of the number ofshares so registered.

 

**2.4          Obligationsof the Company. **Wheneverrequired to effect the registration of Registrable Securities, the Companyshall, as expeditiously as reasonably possible:

 

**(a)          **Prepareand file with the SEC a registration statement with respect to such RegistrableSecurities and use all reasonable efforts to cause such registration statementto become effective and, in the case of a registration effected pursuant toSection 2.1, keep such registration statement effective until such date as isthe earlier of (i) the date on which all of the Registrable Securities coveredthereby have been sold, (i) the date on which all of the Registrable Securitiescovered thereby may be immediately sold to the public without registration orrestriction pursuant to Rule 144(k) under the Securities Act or any successorprovision, or (iii) the date that is two (2) years after the date on which suchregistration statement is declared effective by the SEC; provided, however,that at any time, upon written notice to the Holders and for a period not toexceed sixty (60) daysthereafter (a “Suspension Period”), the Company may delay the filing oreffectiveness of the registration statement or suspend the use or effectivenessof the registration statement (and the Holders hereby agree not to offer orsell any Registrable Securities pursuant to such registration statement duringthe Suspension Period) if the Company reasonably believes that the Company may,in the absence of such delay or suspension hereunder, be required under stateor federal securities laws to disclose any corporate development the disclosureof which could reasonably be expected to have an adverse effect upon theCompany, its shareholders, a potentially significant transaction or eventinvolving the Company, or any negotiations, discussions, or proposals directlyrelating thereto.  In the event that theCompany shall exercise its right to delay or suspend the filing oreffectiveness of the registration hereunder, the applicable time period duringwhich the registration statement is to remain effective shall be extended by aperiod of time equal to the duration of the Suspension Period.  The Company may extend the Suspension Periodfor an additional consecutive sixty(60)****days with the consent of the holders of a majority****of the RegistrableSecurities registered under the registration statement, which consent shall notbe unreasonably withheld. If so directed by the Company, all Holdersregistering shares under such registration statement shall use their bestefforts to deliver to the Company (at the Company’s expense) all copies, otherthan permanent file copies then in such Holders’ possession, of the prospectusrelating to such Registrable Securities current at the time of receipt of suchnotice.

 

**(b)          **Prepareand file with the SEC such amendments and supplements to such registrationstatement and the prospectus used in connection with such registrationstatement as may be necessary to comply with the provisions of the SecuritiesAct with respect to the disposition of all securities covered by suchregistration statement for the period set forth in subsection (a) above.

 

**(c)          **Furnishto the Holders such number of copies of a prospectus, including a preliminaryprospectus, in conformity with the requirements of the Securities Act, and suchother

 

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documents as they may reasonably request in order to facilitate thedisposition of Registrable Securities owned by them.

 

**(d)          **Useits reasonable efforts to register and qualify the securities covered by suchregistration statement under such other securities or Blue Sky laws of suchjurisdictions as shall be reasonably requested by the Holders; *provided*thatthe Company shall not be required in connection therewith or as a conditionthereto to qualify to do business or to file a general consent to service ofprocess in any such states or jurisdictions.

 

**(e)          **Notifyeach Holder of Registrable Securities covered by such registration statement atany time when a prospectus relating thereto is required to be delivered underthe Securities Act of the happening of any event as a result of which theprospectus included in such registration statement, as then in effect, includesan untrue statement of a material fact or omits to state a material factrequired to be stated therein or necessary to make the statements therein notmisleading in the light of the circumstances then existing. The Company willuse reasonable efforts to amend or supplement such prospectus in order to causesuch prospectus not to include any untrue statement of a material fact or omitto state a material fact required to be stated therein or necessary to make thestatements therein not misleading in the light of the circumstances thenexisting.

 

**(f)           **Useits reasonable efforts to furnish, on the date that such Registrable Securitiesare delivered to the underwriters for sale, if such securities are being soldthrough underwriters, (i) an opinion, dated as of such date, of thecounsel representing the Company for the purposes of such registration, in formand substance as is customarily given to underwriters in an underwritten publicoffering, addressed to the underwriters, if any, and (ii) a letter, datedas of such date, from the independent certified public accountants of theCompany, in form and substance as is customarily given by independent certifiedpublic accountants to underwriters in an underwritten public offering addressedto the underwriters.

 

**2.5          Delayof Registration; Furnishing Information.**

 

**(a)          **NoHolder shall have any right to obtain or seek an injunction restraining orotherwise delaying any such registration as the result of any controversy thatmight arise with respect to the interpretation or implementation of thisSection 2.

 

**(b)          **Itshall be a condition precedent to the obligations of the Company to take anyaction pursuant to Section 2.1 or Section 2.2 that the selling Holdersshall furnish to the Company such information regarding themselves, theRegistrable Securities held by them and the intended method of disposition of suchsecurities as shall be required to effect the registration of their RegistrableSecurities.

 

**2.6          Termination of Registration Rights.**  All registration rights granted under thisSection 2 shall terminate and be of no further force and effect as of the earlierof (i) April 16, 2005 or (ii) the date on which there are no RegistrableSecurities then outstanding.

 

**2.7          Indemnification. **In the event anyRegistrable Securities are included in a registration statement underSections 2.1 or 2.2:

 

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**(a)          **Tothe extent permitted by law, the Company will indemnify and hold harmless eachHolder, the partners, members, officers and directors of each Holder, anyunderwriter (as defined in the Securities Act) for such Holder and each person,if any, who controls such Holder or underwriter within the meaning of theSecurities Act or the Exchange Act, against any losses, claims, damages, orliabilities (joint or several) to which they may become subject under theSecurities Act, the Exchange Act or other federal or state law, insofar as suchlosses, claims, damages or liabilities (or actions in respect thereof) ariseout of or are based upon any of the following statements, omissions orviolations (collectively a “***Violation***”) by the Company: (i) any untruestatement or alleged untrue statement of a material fact contained in suchregistration statement or incorporated reference therein, including anypreliminary prospectus or final prospectus contained therein or any amendmentsor supplements thereto, (ii) the omission or alleged omission to statetherein a material fact required to be stated therein, or necessary to make thestatements therein not misleading, or (iii) any violation or allegedviolation by the Company of the Securities Act, the Exchange Act, any statesecurities law or any rule or regulation promulgated under the Securities Act,the Exchange Act or any state securities law in connection with the offeringcovered by such registration statement; and the Company will reimburse eachsuch Holder, partner, member, officer, director, underwriter or controllingperson for any legal or other expenses reasonably incurred by them inconnection with investigating or defending any such loss, claim, damage,liability or action; *provided however*, that the indemnityagreement contained in this Section 2.7(a) shall not apply to amounts paid insettlement of any such loss, claim, damage, liability or action if suchsettlement is effected without the consent of the Company, which consent shallnot be unreasonably withheld, nor shall the Company be liable in any such casefor any such loss, claim, damage, liability or action to the extent that itarises out of or is based upon a Violation which occurs in reliance upon and inconformity with written information furnished expressly for use in connectionwith such registration by such Holder, partner, member, officer, director,underwriter or controlling person of such Holder.

 

**(b)          **Tothe extent permitted by law, each Holder will, if Registrable Securities heldby such Holder are included in the securities as to which such registrationqualifications or compliance is being effected, indemnify and hold harmless theCompany, each of its directors, its officers and each person, if any, who controlsthe Company within the meaning of the Securities Act, any underwriter and anyother Holder selling securities under such registration statement or any ofsuch other Holder’s partners, directors or officers or any person who controlssuch Holder, against any losses, claims, damages or liabilities (joint orseveral) to which the Company or any such director, officer, controllingperson, underwriter or other such Holder, or partner, director, officer orcontrolling person of such other Holder may become subject under the SecuritiesAct, the Exchange Act or other federal or state law, insofar as such losses,claims, damages or liabilities (or actions in respect thereto) arise out of orare based upon any of the following statements: (i) any untrue statementor alleged untrue statement of a material fact contained in such registrationstatement or incorporated reference therein, including any preliminaryprospectus or final prospectus contained therein or any amendments orsupplements thereto, (ii) the omission or alleged omission to statetherein a material fact required to be stated therein, or necessary to make thestatements therein not misleading, or (iii) any violation or allegedviolation by the Company of the Securities Act (collectively, a “***Holder Violation***”), in each case to the extent (and onlyto the extent) that such Holder Violation occurs in reliance upon and inconformity with written information furnished by such Holder under aninstrument

 

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duly executed by such Holder and stated to be specifically for use inconnection with such registration; and each such Holder will reimburse anylegal or other expenses reasonably incurred by the Company or any suchdirector, officer, controlling person, underwriter or other Holder, or partner,officer, director or controlling person of such other Holder in connection withinvestigating or defending any such loss, claim, damage, liability or action ifit is judicially determined that there was such a Holder Violation; *provided,however,* that the indemnity agreement contained in this Section2.7(b) shall not apply to amounts paid in settlement of any such loss, claim,damage, liability or action if such settlement is effected without the consentof the Holder, which consent shall not be unreasonably withheld; *providedfurther*, that in no event shall any indemnity under this Section 2.7exceed the net****proceedsfrom the offering received by such Holder.

 

**(c)          **Promptlyafter receipt by an indemnified party under this Section 2.7 of notice of thecommencement of any action (including any governmental action), suchindemnified party will, if a claim in respect thereof is to be made against anyindemnifying party under this Section 2.7, deliver to the indemnifying party awritten notice of the commencement thereof and the indemnifying party shallhave the right to participate in, and, to the extent the indemnifying party sodesires, jointly with any other indemnifying party similarly noticed, to assumethe defense thereof with counsel mutually satisfactory to the parties; *provided,however,* that an indemnified party shall have the right to retainits own counsel, with the fees and expenses to be paid by the indemnifyingparty, if representation of such indemnified party by the counsel retained bythe indemnifying party would be inappropriate due to actual or potentialdiffering interests between such indemnified party and any other partyrepresented by such counsel in such proceeding.  The failure to deliver written notice to the indemnifying partywithin a reasonable time of the commencement of any such action, if materiallyprejudicial to its ability to defend such action, shall relieve suchindemnifying party of any liability to the indemnified party under this Section2.7, but the omission so to deliver written notice to the indemnifying partywill not relieve it of any liability that it may have to any indemnified partyotherwise than under this Section 2.7.

 

**(d)          **Ifthe indemnification provided for in this Section 2.7 is held by a court ofcompetent jurisdiction to be unavailable to an indemnified party with respectto any losses, claims, damages or liabilities referred to herein, theindemnifying party, in lieu of indemnifying such indemnified party thereunder,shall to the extent permitted by applicable law contribute to the amount paidor payable by such indemnified party as a result of such loss, claim, damage orliability in such proportion as is appropriate to reflect the relative fault ofthe indemnifying party on the one hand and of the indemnified party on theother in connection with the Violation(s) or Holder Violation(s) that resultedin such loss, claim, damage or liability, as well as any other relevantequitable considerations.  The relativefault of the indemnifying party and of the indemnified party shall bedetermined by a court of law by reference to, among other things, whether theuntrue or alleged untrue statement of a material fact or the omission to statea material fact relates to information supplied by the indemnifying party or bythe indemnified party and the parties’ relative intent, knowledge, access toinformation and opportunity to correct or prevent such statement or omission; *provided*,that in no event shall any contribution by a Holder hereunder exceed the netproceeds from the offering received by such Holder.

 

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**(e)          **Theobligations of the Company and Holders under this Section 2.7 shall survivecompletion of any offering of Registrable Securities in a registrationstatement and the termination of this Agreement.  No indemnifying party, in the defense of any such claim orlitigation, shall, except with the consent of each indemnified party, consentto entry of any judgment or enter into any settlement which does not include asan unconditional term thereof the giving by the claimant or plaintiff to suchindemnified party of a release from all liability in respect to such claim orlitigation.

 

**2.8          Amendmentof Registration Rights. **Anyprovision of this Section 2 may be amended and the observance thereof maybe waived (either generally or in a particular instance and eitherretroactively or prospectively), only with the written consent of the Companyand the Holders of at least****amajority of the Registrable Securities then outstanding.  Any amendment or waiver effected inaccordance with this Section 2.8 shall be binding upon each Holder and theCompany.  By acceptance of any benefitsunder this Section 2, Holders of Registrable Securities hereby agree to bebound by the provisions hereunder.

 

**2.9          *“MarketStand-Off”* Agreement. **EachHolder hereby agrees that such Holder shall not sell, transfer, make any shortsale of, grant any option for the purchase of, or enter into any hedging orsimilar transaction with the same economic effect as a sale, any Common Stock(or other securities) of the Company held by such Holder (other than thoseincluded in the registration) for a period specified by the representative ofthe underwriters of Common Stock (or other securities) of the Company not toexceed one hundred eighty (180) days following the effective date of aregistration statement of the Company filed under the Securities Act; *provided*thatall officers and directors of the Company enter into similar agreements.

 

**2.10        Agreementto Furnish Information.** Each Holder agrees to execute and deliver such other agreements as maybe reasonably requested by the Company or the underwriter that are consistentwith the Holder’s obligations under Section 2.9 or that are necessary to givefurther effect thereto.  In addition, ifrequested by the Company or the representative of the underwriters of CommonStock (or other securities) of the Company, each Holder shall provide, withinten (10) days of such request, such information as may be required by theCompany or such representative in connection with the completion of any publicoffering of the Company’s securities pursuant to a registration statement filedunder the Securities Act.  Theobligations described in Section 2.9 shall not apply to a SpecialRegistration Statement.  The Company mayimpose stop-transfer instructions with respect to the shares of Common Stock(or other securities) subject to the foregoing restriction until the end ofsaid one hundred eighty (180) day period. Each Holder agrees that any transferee of any shares of RegistrableSecurities shall be bound by Sections 2.9 and 2.10.  The underwriters of the Company’s stock areintended third party beneficiaries of Sections 2.9 and 2.10 and shall have theright, power and authority to enforce the provisions hereof as though they werea party hereto.

 

**SECTION 3.****                            MISCELLANEOUS.**

 

**3.1          GoverningLaw. **This Agreementshall be governed by and construed under the laws of the State of California****in all respects as such lawsare applied to agreements among Californiaresidents entered into and to be performed entirely within California. The parties agree that anyaction brought by either party under or in relation to this Agreement,including without 

 

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limitation to interpret or enforce any provision of this Agreement,shall be brought in, and each party agrees to and does hereby submit to thejurisdiction and venue of, any state or federal court located in the County ofSan Diego, California.

 

**3.2          Successorsand Assigns. **Exceptas otherwise expressly provided herein, the provisions hereof shall inure tothe benefit of, and be binding upon, the parties hereto and their respectivesuccessors, assigns, heirs, executors, and administrators and shall inure tothe benefit of and be enforceable by each person who shall be a holder ofRegistrable Securities from time to time; *provided, however*, that prior to thereceipt by the Company of adequate written notice of the transfer of anyRegistrable Securities specifying the full name and address of the transferee,the Company may deem and treat the person listed as the holder of such sharesin its records as the absolute owner and holder of such shares for all purposes,including the payment of dividends or any redemption price.

 

**3.3          EntireAgreement. **ThisAgreement and the Notes constitute the full and entire understanding andagreement between the parties with regard to the subjects hereof, and supersedeany other agreements or promises between or made by the parties to each other,whether oral or written, including but not limited to that certain documententitled “JMR, Inc. Summary of Terms/Private Placement” dated January 29, 2003.  No party shall be liable or bound to anyother in any manner by any oral or written representations, warranties,covenants and agreements except as specifically set forth herein andtherein.  Each party expresslyrepresents and warrants that it is not relying on any oral or written representations,warranties, covenants or agreements outside of the Notes and this Agreement.

 

**3.4          Severability. **In the event one or moreof the provisions of this Agreement should, for any reason, be held to beinvalid, illegal or unenforceable in any respect, such invalidity, illegality,or unenforceability shall not affect any other provisions of this Agreement,and this Agreement shall be construed as if such invalid, illegal orunenforceable provision had never been contained herein.

 

**3.5          Amendmentand Waiver.**

 

**(a)          **Exceptas otherwise expressly provided, this Agreement may be amended or modified onlyupon the written consent of the Company and the holders of at least a majority of the then-outstandingRegistrable Securities.

 

**(b)          **Exceptas otherwise expressly provided, the obligations of the Company and the rightsof the Holders under this Agreement may be waived only with the written consentof the holders of at least a majorityof the then-outstanding Registrable Securities.

 

**(c)          **Forthe purposes of determining the number of Holders or Investors entitled to voteor exercise any rights hereunder, the Company shall be entitled to rely solelyon the list of record holders of its stock as maintained by or on behalf of theCompany.

 

**3.6          Delaysor Omissions. **It isagreed that no delay or omission to exercise any right, power, or remedyaccruing to any party, upon any breach, default or noncompliance by anotherparty under this Agreement shall impair any such right, power, or remedy, norshall it be construed to be a waiver of any such breach, default ornoncompliance, or any acquiescence

 

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therein, or of any similar breach, default or noncompliance thereafteroccurring.  It is further agreed thatany waiver, permit, consent, or approval of any kind or character on anyparty’s part of any breach, default or noncompliance under the Agreement or anywaiver on such party’s part of any provisions or conditions of this Agreementmust be in writing and shall be effective only to the extent specifically setforth in such writing.  All remedies,either under this Agreement, by law, or otherwise afforded to any party, shallbe cumulative and not alternative.

 

**3.7          Notices. **All notices required orpermitted hereunder shall be in writing and shall be deemed effectively given:(a) upon personal delivery to the party to be notified, (b) when sentby confirmed electronic mail or facsimile if sent during normal business hoursof the recipient; if not, then on the next business day, (c) five (5) daysafter having been sent by registered or certified mail, return receiptrequested, postage prepaid, or (d) one (1) day after deposit with anationally recognized overnight courier, specifying next day delivery, withwritten verification of receipt.  Allcommunications shall be sent to the party to be notified at the address as setforth on the signature pages hereof or Exhibit A hereto or at such otheraddress or electronic mail address as such party may designate by ten (10) daysadvance written notice to the other parties hereto.

 

**3.8          Attorneys’Fees. **In the eventthat any suit or action is instituted under or in relation to this Agreement,including without limitation to enforce any provision in this Agreement, theprevailing party in such dispute shall be entitled to recover from the losingparty all fees, costs and expenses of enforcing any right of such prevailingparty under or with respect to this Agreement, including without limitation,such reasonable fees and expenses of attorneys and accountants, which shallinclude, without limitation, all fees, costs and expenses of appeals.

 

**3.9          Titlesand Subtitles. **Thetitles of the sections and subsections of this Agreement are for convenience ofreference only and are not to be considered in construing this Agreement.

 

**3.10        AdditionalInvestors.** Notwithstanding anything to the contrary contained herein, if theCompany shall issue additional Notes, any purchaser of such Notes shall becomea party to this Agreement by executing and delivering an additional counterpartsignature page to this Agreement and shall be deemed an “***Investor***,” a “***Holder***” and a party hereunder.

 

**3.11        Counterparts. **This Agreement may beexecuted in any number of counterparts, each of which shall be an original, butall of which together shall constitute one instrument.

 

**3.12        Aggregationof Stock. **All shares of Registrable Securities held oracquired by affiliated entities or persons or persons or entities under commonmanagement or control shall be aggregated together for the purpose ofdetermining the availability of any rights under this Agreement.

 

**3.13        Pronouns.**  All pronouns contained herein, and anyvariations thereof, shall be deemed to refer to the masculine, feminine orneutral, singular or plural, as to the identity of the parties hereto mayrequire.

 

[THIS SPACE INTENTIONALLYLEFT BLANK]

 

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**In Witness Whereof,**the partieshereto have executed this **Registration Rights Agreement**as of the date set forth in the first paragraph hereof.

 

 
| **COMPANY:**                | **INVESTORS:** |
|-----------------------------|----------------|
|                        |           |
| **ImageWare Systems, Inc.** |           |
|                        |           |
| By:                         |           |   | By: |   |
| Name:                       |           |   | Name: |   |
| Title:                      |           |   | Title: |   |
|                             |                |  |  |  |  |  |

 

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