EX-4.2






EXHIBIT 4.2



REGISTRATION RIGHTS AGREEMENT, dated as of June 29, 2008 (the “Agreement”), between L-1
IDENTITY SOLUTIONS, INC., a Delaware corporation (the “Company”), and Iridian Asset
Management LLC, a Delaware limited liability company (the “Purchaser”).




     WHEREAS, pursuant to the Securities Purchase Agreement, dated as of the date hereof, between
the Company and the Purchaser (as such agreement may be amended from time to time, the
“Purchase Agreement”), the Purchaser will be issued, as of the Closing Date (as defined in
the Purchase Agreement), the shares of common stock, par value $0.001, of the Company (the
“Common Stock”) set forth opposite the Purchaser’s name on Schedule I thereto (the
“Purchased Shares”);



     WHEREAS, simultaneously with the issuance and sale of the Purchased Shares, the Purchaser may
obtain the right pursuant to the Purchase Agreement, to receive additional shares of Common Stock
on the third Business Day following the first anniversary of the issuance date of the Purchased
Shares (the “Price Protection Share Issuance Date"), subject to the terms and conditions
set forth in the Purchase Agreement (the “Price Protection Shares”);



     WHEREAS, the Company has agreed to grant the Purchaser the right to purchase additional shares
of Common Stock upon certain events of termination, by the Company or the Purchaser, of the
Purchase Agreement pursuant to Section 10(b) thereof and subject to the terms and conditions set
forth therein (the “Option Shares”);



     NOW, THEREFORE, in consideration of the premises and mutual covenants and obligations
hereinafter set forth, the Company and the Purchaser hereby agree as follows:



     Section 1. Certain Definitions. For purposes of this Agreement, the following terms
shall have the following respective meanings:



     “Affiliate” of a person shall mean any person that, directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under common control with, such
other person. For purposes of this definition, the term “control” (including the terms
“controlling,” “controlled by” and “under common control with”) means the possession, direct or
indirect, of the power to cause the direction of the management and policies of a person, whether
through the ownership of voting securities, by contract or otherwise.



     “Agreement” shall have the meaning assigned thereto in the Preamble.



     “Business Day” shall mean a day except a Saturday, a Sunday or other day on which the
Commission or banks in the City of New York are authorized or required by law to be closed.



 









 





     “Commission” shall mean the United States Securities and Exchange Commission, or any
other federal agency at the time administering the Exchange Act or the Securities Act, whichever is
the relevant statute for the particular purpose.



     “Common Stock” shall have the meaning assigned thereto in the Recitals to this
Agreement.



     “Company” shall have the meaning assigned thereto in the Preamble.



     “Company Indemnified Person” shall have the meaning assigned thereto in Section 6(b).



     “EDGAR” shall have the meaning assigned thereto in Section 3(a)(ix) of this Agreement.



     “Effective Time” shall mean, with respect to any Shelf Registration Statement, the
time and date as of which the Commission declares such Shelf Registration Statement effective or as
of which such Shelf Registration Statement otherwise becomes effective.



     “Electing Holder” shall mean each of the Purchaser, any Eligible Person that, in any
case, has returned a completed and signed Notice and Questionnaire to the Company at least five (5)
Business Days prior to the Closing Date, in the case of the Purchased Shares, on or prior to Price
Protection Share Issuance Date, in the case of the Price Protection Shares, on or prior to the
Option Share Issuance Date, in the case of the Option Shares or in accordance with Section 3(a)(ii)
hereof and the instructions set forth on the Notice and Questionnaire.



     “Eligible Persons” shall have the meaning assigned thereto in the Purchase Agreement.



     “Exchange Act” shall mean the Securities Exchange Act of 1934, or any successor
thereto, as the same shall be amended from time to time.



     The term “holder” shall mean each of the Purchasers and other Eligible Persons who
acquire Registrable Securities from time to time, in each case for so long as such person owns any
Registrable Securities.



     “Holder Indemnified Person” shall have the meaning assigned thereto in Section 6(a).



     “Indemnified Person” shall mean a Company Indemnified Person or a Holder Indemnified
Person, as applicable.



     “Indemnifying Person” shall mean the Company with respect to its obligations to
indemnify the Holder Indemnified Persons pursuant to Section 6(a), and each



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Electing Holder with respect to its obligations to indemnify the Company Indemnified Persons
pursuant to Section 6(b).



     “Losses” shall have the meaning assigned thereto in Section 6(a).



     “Material Disclosure Event” shall mean, as of any date of determination, any pending
or imminent event relating to the Company, which, in the good faith determination of the Company
after consultation with counsel to the Company (i) requires disclosure of material, non-public
information relating to such event in any Shelf Registration Statement or related prospectus
(including documents incorporated by reference therein) so that such Shelf Registration Statement
would not be materially misleading, (ii) is otherwise not required to be publicly disclosed at that
time (e.g., on Forms 10-K, 8-K, or 10-Q) under applicable federal or state securities laws but for
the filing of such Shelf Registration Statement, and (iii) if publicly disclosed at the time of
such event, would reasonably be expected to have a material adverse effect on the business,
financial condition or prospects of the Company or would materially adversely affect a pending or
proposed acquisition, merger, recapitalization, consolidation, reorganization, financing or similar
transaction, or negotiations with respect thereto.



     “Notice and Questionnaire” shall mean a Notice of Registration Statement and Selling
Securityholder Questionnaire substantially in the form of Exhibit A hereto.



     The term “person” shall mean a corporation, association, partnership, organization,
limited liability company, limited partnership, limited liability partnership, or other similar
entity, individual, government or political subdivision thereof or governmental agency.



     “Option Shares” shall have the meaning assigned thereto in the Recitals to this
Agreement.



     “Option Share Filing Date” shall have the meaning assigned thereto in Section 2(a).



     “Option Share Issuance Date” shall mean the date of issuance of the Option Shares by
the Company to the Purchaser, pursuant to the terms of the Purchase Agreement.



     “Permitted Assignee” means any Affiliate of any holder or any Eligible Person who
acquires Registrable Securities from such holder.



     “Price Protection Share Filing Date” shall have the meaning assigned thereto in
Section 2(a).



     “Price Protection Share Issuance Date” shall have the meaning assigned thereto in the
Recitals to this Agreement.



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     “Price Protection Shares” shall have the meaning assigned thereto in the Recitals to
this Agreement.



     “Purchase Agreement” shall have the meaning assigned thereto in the Recitals to this
Agreement.



     “Purchased Shares” shall have the meaning assigned thereto in the Recitals to this
Agreement.



     “Purchaser” shall have the meaning assigned thereto in the Preamble.



     “Registrable Securities” shall mean the Securities; provided, however, that a Security
shall cease to be a Registrable Security upon the earliest to occur of the following: (i) a Shelf
Registration Statement registering such Security under the Securities Act has been declared or
becomes effective and such Security has been sold or otherwise transferred by the holder thereof
pursuant to and in a manner contemplated by such effective Shelf Registration Statement; (ii) such
Security is sold pursuant to Rule 144 under circumstances in which any legend borne by such
Security relating to restrictions on transferability thereof, under the Securities Act or
otherwise, is removed by the Company; or (iii) such Security shall cease to be outstanding.



     “Rule 144,” “Rule 405” and “Rule 415” shall mean, in each case, such
rule promulgated under the Securities Act (or any successor provision), as the same shall be
amended from time to time.



     “Securities” means collectively, (i) the Purchased Shares, (ii) the Price Protection
Shares, if issued, (iii) the Option Shares, if issued and (iv) any Common Stock which may be issued
or distributed in respect thereof, by way of stock dividend or stock split or other distribution,
or in connection with a combination of shares, merger, consolidation, recapitalization,
reclassification or otherwise.



     “Securities Act” shall mean the Securities Act of 1933, or any successor thereto, as
the same shall be amended from time to time.



     “Shelf Registration” shall have the meaning assigned thereto in Section 2(a) hereof.



     “Shelf Registration Statement” shall have the meaning assigned thereto in Section 2(a)
hereof.



     “Suspension Notice” shall have the meaning assigned thereto in Section 3(d).



     “Suspension Period” shall have the meaning assigned thereto in Section 3(d).



     Unless the context otherwise requires, any reference herein to a “Section” or “clause” refers
to a Section or clause, as the case may be, of this Agreement, and the



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words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement
as a whole and not to any particular Section or other subdivision.



     Section 2. Registration Under the Securities Act.



          (a) The Company shall file under the Securities Act, a “shelf” registration statement
providing for the registration of, and the resale on a continuous or delayed basis by, each
Electing Holder of all of the Registrable Securities then held by such Electing Holder, pursuant to
Rule 415 or any similar rule that may be adopted by the Commission (each such filing, the
“Shelf Registration” and each such registration statement, the “Shelf Registration
Statement”), as follows: (x) with respect to the Purchased Shares, the Company shall file a
Shelf Registration Statement no later than the Closing Date (as defined in the Purchase Agreement),
(y) with respect to the Price Protection Shares, if applicable, the Company shall file a Shelf
Registration Statement no later than five (5) Business Days after the date of issuance of the Price
Protection Shares (such filing date, the “Price Protection Share Filing Date”) and (z) with
respect to the Option Shares, if applicable, the Company shall file a Shelf Registration Statement
no later than five (5) Business Days after the date of issuance of the Option Shares (such filing
date, the “Option Share Filing Date”). The Company agrees to use its reasonable best
efforts to cause each Shelf Registration Statement to become or be declared effective within sixty
(60) days of the applicable Shelf Registration Statement filing deadline described above and,
subject to Section 3(d), to keep each Shelf Registration Statement continuously effective for 180
days following the Closing Date, the Price Protection Share Filing Date, or the Option Share Filing
Date, as applicable; provided, that in the event that the Registrable Securities shall not be
freely distributable pursuant to Rule 144 at any time between the applicable 180-day anniversary
and the date that is 365 days following the Closing Date, the Price Protection Share Filing Date,
or the Option Share Filing Date, as applicable, the Company shall keep the applicable Shelf
Registration Statement continuously effective until the earlier of (i) such time as all Registrable
Securities become freely distributable pursuant to Rule 144 and (ii) the date that is 365 days
following the Closing Date, the Price Protection Share Filing Date, or the Option Share Filing
Date, as applicable. After the Effective Time of any Shelf Registration Statement, promptly upon
the request of an Eligible Person holding Registrable Securities that is not then an Electing
Holder, the Company shall use its best efforts to take any action reasonably necessary to enable
such holder to use the prospectus forming a part thereof for resales of Registrable Securities,
including, without limitation, any action necessary to identify such holder as a selling
securityholder in the Shelf Registration Statement; provided, however, that such Eligible Person
must return a completed and signed Notice and Questionnaire to the Company in accordance with this
Agreement. The Company further agrees to promptly supplement or make amendments to the Shelf
Registration Statement, including, without limitation, any post-effective amendments, as and when
required by the rules, regulations or instructions applicable to the registration form used by the
Company for any such Shelf Registration Statement or by the Securities Act or rules and regulations
thereunder for shelf registration.




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          (b) The Company shall use its best efforts to take all actions necessary or advisable to be
taken by it to ensure that the transactions contemplated herein are effected as contemplated in
Section 2(a) hereof, and, to the extent the Shelf Registration Statement is not effective upon
filing with the Commission, to submit to the Commission, within two (2) Business Days after the
Company learns that no review of the Shelf Registration Statement will be made by the staff of the
Commission or that the staff has no further comments on the Shelf Registration Statement, as the
case may be, a request for acceleration of effectiveness (or post-effective amendment, if
applicable) of the Shelf Registration Statement to a time and date not later than 48 hours after
the submission of such request.




          (c) Any reference herein to a registration statement or prospectus as of any time shall be
deemed to include any document incorporated, or deemed to be incorporated, therein by reference as
of such time and any reference herein to any post-effective amendment to a registration statement
as of any time shall be deemed to include any document incorporated, or deemed to be incorporated,
therein by reference as of such time. Any reference herein to a prospectus as of any time shall
include any supplement thereto, preliminary prospectus, or any free writing prospectus in respect
thereof.




     Section 3. Registration Procedures.


The following provisions shall apply to the filing of any Shelf Registration Statement:




          (a) The Company shall:




               (i) prepare and file with the Commission, within the time periods specified in Section 2(a),
Shelf Registration Statements on Form S-3 or, if the Company or the offering of the Registrable
Securities does not satisfy the requirements for use of such form, such other form as may be
appropriate (provided, however, that if the Shelf Registration Statements are not filed on Form
S-3, the Company shall, promptly upon meeting the requirements for use of such form, file an
appropriate amendment to the Shelf Registration Statements to convert it to Form S-3) and which
shall register all of the applicable Registrable Securities for resale by the Electing Holders
thereof in accordance with such method or methods of disposition as may be specified by such of the
holders as, from time to time, may be Electing Holders and use its best efforts to cause each such
Shelf Registration Statement to become effective as soon as practicable but in any case within the
time periods specified in Section 2(a);



               (ii) after the Effective Time of the applicable Shelf Registration Statement, upon the request
of any Eligible Person that is not then an Electing Holder, promptly send a Notice and
Questionnaire to such holder; provided, that the Company shall not be required to take any action
to name such holder as a selling securityholder in the Shelf Registration Statement or to enable
such holder to use the prospectus forming a part thereof for resales of Registrable Securities
until such holder has returned a completed and signed Notice and Questionnaire to the Company;



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               (iii) provide the Electing Holders and their counsel with a reasonable opportunity to review,
and comment on, any Shelf Registration Statement to be prepared and filed pursuant to this
Agreement prior to the filing thereof with the Commission, and make all changes thereto as any
Electing Holder may request in writing to the extent such changes are required, in the reasonable
judgment of the Company’s counsel, by the Securities Act or for the Company to comply with its
obligations hereunder;



               (iv) as soon as practicable prepare and file with the Commission such amendments and
supplements to any such Shelf Registration Statement (including any required post effective
amendments) and the prospectus included therein as may be necessary to effect and maintain the
continuous effectiveness, subject to Section 3(d), of such Shelf Registration Statement for the
period specified in Section 2(a) hereof and as may be required by the applicable rules and
regulations of the Commission and the instructions applicable to the form of such Shelf
Registration Statement, including to include any Electing Holder to be named as a selling security
holder therein;



               (v) for a reasonable period prior to the filing of each such Shelf Registration Statement, and
throughout the periods specified in Section 2(a), make available at reasonable times at the
Company’s principal place of business or such other reasonable place for inspection by the
representative and/or counsel for the Electing Holder such financial and other information and
books and records of the Company, and cause the officers, employees, counsel and independent
certified public accountants of the Company to be available to respond to such inquiries, as shall
be reasonably necessary, in the judgment of such counsel, to conduct a reasonable investigation
within the meaning of Section 11 of the Securities Act; provided, however, that each such party
shall be required to maintain in confidence and not to disclose to any other person any information
or records reasonably designated by the Company as being confidential, until such time as (A) such
information becomes a matter of public record (whether by virtue of its inclusion in such
registration statement or otherwise), or (B) such person shall be required so to disclose such
information pursuant to a subpoena or order of any court or other governmental agency or body
having jurisdiction over the matter (provided such person agrees that it will give notice to the
Company and allow the Company, at its expense, to promptly undertake appropriate action and to
prevent disclosure of such information deemed confidential);



               (vi) promptly notify each of the Electing Holders, and if requested by any such Electing
Holder, confirm such advice in writing, (A) when such Shelf Registration Statement or the
prospectus included therein or any prospectus amendment or supplement or post-effective amendment
has been filed, and, with respect to such Shelf Registration Statement or any post-effective
amendment, when the same has become effective, (B) of any comments by the Commission and by the
blue sky or securities commissioner or regulator of any state with respect thereto or any request
by the Commission for amendments or supplements to such Shelf Registration Statement or prospectus
or for additional information, (C) of the issuance by the



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Commission of any stop order suspending the effectiveness of such Shelf Registration Statement
or the initiation or threatening of any proceedings for that purpose, (D) of the receipt by the
Company of any notification with respect to the suspension of the qualification of the applicable
Registrable Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, or (E) that such Shelf Registration Statement, prospectus, prospectus
amendment or supplement or post-effective amendment does not conform in all material respects to
the applicable requirements of the Securities Act and the rules and regulations of the Commission
thereunder or contains an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not misleading in light
of the circumstances then existing;



               (vii) use its best efforts to obtain the withdrawal of any order suspending the effectiveness
of such registration statement or any post-effective amendment thereto, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable date;



               (viii) if requested by any Electing Holder, promptly incorporate in a prospectus supplement or
post-effective amendment such information as is required by the applicable rules and regulations of
the Commission and as such Electing Holder specifies should be included therein relating to the
terms of the sale of such Registrable Securities, including information with respect to the amount
of Registrable Securities being sold by such Electing Holder, the name and description of such
Electing Holder, the offering price of such Registrable Securities and any compensation payable in
respect thereof, and make all required filings of such prospectus supplement or post-effective
amendment promptly after notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment;



               (ix) furnish to each Electing Holder, a conformed copy of such Shelf Registration Statement,
each such amendment and supplement thereto (in each case including all exhibits thereto (in the
case of an Electing Holder of Registrable Securities, upon request) and documents incorporated by
reference therein) and such number of copies of such Shelf Registration Statement (excluding
exhibits thereto and documents incorporated by reference therein unless specifically so requested
by such Electing Holder) and of the prospectus included in such Shelf Registration Statement, in
conformity in all material respects with the applicable requirements of the Securities Act and the
rules and regulations of the Commission thereunder, and such other documents, as such Electing
Holder may reasonably request in order to facilitate the offering and disposition of the
Registrable Securities owned by such Electing Holder and to permit such Electing Holder to satisfy
the prospectus delivery requirements of the Securities Act; provided, however, the Company shall
have no obligation to deliver to the Electing Holders copies of any amendment consisting
exclusively of an Exchange Act report of other Exchange Act filing otherwise publicly available on
the Electronic Data Gathering Analysis and Retrieval System (“EDGAR”). Subject to Section
3(b) below, the Company hereby consents to the use of such prospectus and any amendment



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or supplement thereto by each such Electing Holder, in each case in the form most recently
provided to such person by the Company, in connection with the offering and sale of the Registrable
Securities covered by the prospectus or any supplement or amendment thereto;



               (x) use its best efforts to (A) register or qualify the Registrable Securities to be included
in such Shelf Registration Statement under such securities laws or blue sky laws of such
jurisdictions as any Electing Holder thereof shall reasonably request, (B) keep such registrations
or qualifications in effect and comply with such laws so as to permit the continuance of offers,
sales and dealings therein in such jurisdictions during the period the Shelf Registration is
required to remain effective under Section 2(a) above and for so long as may be necessary to enable
any such Electing Holder to complete its distribution of Registrable Securities pursuant to such
Shelf Registration Statement and (C) take any and all other actions as may be reasonably necessary
to enable each such Electing Holder to consummate the disposition in such jurisdictions of such
Registrable Securities; provided, however, that the Company shall not be required for any such
purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise
be required to qualify but for the requirements of this Section 3(a)(x), (2) consent to general
service of process in any such jurisdiction or become subject to taxation in any such jurisdiction
or (3) make any changes to its certificate of incorporation or by-laws or other governing documents
or any agreement between it and its stockholders;



               (xi) use its best efforts to obtain all other approvals, consents, exemptions or
authorizations of each governmental agency or authority, whether federal, state or local, which may
be required to effect each Shelf Registration or the offering or sale in connection therewith or to
enable the selling holder or holders to offer, or to consummate the disposition of, their
applicable Registrable Securities; and



               (xii) make generally available to its securityholders as soon as practicable but in any event
not later than eighteen months after the effective date of such Shelf Registration Statement, an
earning statement of the Company and its subsidiaries covering a period of twelve (12) months
beginning within three (3) months after the effective date of the applicable Shelf Registration
Statement, which earnings statement shall comply with Section 11(a) of the Securities Act and Rule
158 thereunder.



          (b) In the event that the Company would be required, pursuant to Section 3(a)(vi)(E) above, to
notify the Electing Holders, the Company shall promptly prepare and furnish to each of the Electing
Holders a reasonable number of copies of a prospectus supplemented or amended so that, as
thereafter delivered to purchasers of Registrable Securities, such prospectus shall conform in all
material respects to the applicable requirements of the Securities Act and the rules and
regulations of the Commission thereunder and shall not contain an 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 not misleading in light of the circumstances then existing. Each




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Electing Holder agrees that upon receipt of any notice from the Company pursuant to Section
3(a)(vi)(E) hereof, such Electing Holder shall forthwith discontinue the disposition of Registrable
Securities pursuant to the Shelf Registration Statement applicable to such Registrable Securities
until such Electing Holder shall have received copies of such amended or supplemented prospectus,
and if so directed by the Company, such Electing Holder shall deliver to the Company (at the
Company’s expense) all copies, other than permanent file copies, then in such Electing Holder’s
possession of the prospectus covering such Registrable Securities at the time of receipt of such
notice.




          (c) In the event of a Shelf Registration, in addition to the information required to be
provided by each Electing Holder in its Notice and Questionnaire, the Company may require such
Electing Holder to furnish to the Company such additional information regarding such Electing
Holder and such Electing Holder’s intended method of distribution of Registrable Securities as may
be required in order to comply with the Securities Act. Each such Electing Holder agrees to notify
the Company as promptly as practicable of any inaccuracy or change in information previously
furnished by such Electing Holder to the Company or of the occurrence of any event in either case
as a result of which any prospectus relating to such Shelf Registration contains or would contain
an untrue statement of a material fact regarding such Electing Holder or such Electing Holder’s
intended method of disposition of such Registrable Securities or omits to state any material fact
regarding such Electing Holder or such Electing Holder’s intended method of disposition of such
Registrable Securities required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and promptly to furnish to the Company
any additional information required to correct and update any previously furnished information or
required so that such prospectus shall not contain, with respect to such Electing Holder or the
disposition of such Registrable Securities held by such Electing Holder, an 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 not misleading in light of the circumstances then existing.




          (d) Notwithstanding any other provision of this Agreement, in the event of a Material
Disclosure Event, the Company may notify holders of Registrable Securities in writing (such notice,
a “Suspension Notice”) that a Shelf Registration Statement is no longer effective or the
prospectus included therein is no longer usable for offers and sales of Securities for a period not
to exceed forty-five (45) consecutive days at any one time and sixty (60) in the aggregate during
any twelve-month period (any such period, a “Suspension Period”); provided, that the
Company promptly thereafter complies with the requirements of Section 2(b) hereof, if applicable;
and provided, further, that, if a post-effective amendment is required by applicable law to be
filed with the Commission to cause a holder to be named as a selling security holder in the Shelf
Registration Statement, the period of time between the filing and the effectiveness of any such
post-effective amendment shall be not deemed to be a Suspension Period hereunder. The first day of
any Suspension Period must be at least




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two trading days after the last day of any prior Suspension Period. Each holder agrees that
upon receipt of any notice from the Company pursuant to this Section 3(d), it will discontinue use
of the prospectus contained in the Shelf Registration Statement until the earlier of (i) the
expiration of the Suspension Period, (ii) receipt of copies of the supplemented or amended
prospectus relating thereto or (iii) such time as the holder is advised in writing by the Company
that the use of the prospectus contained in the Shelf Registration Statement may be resumed. In
the event of a Suspension Notice, the Company shall, promptly after such time as the related
Material Disclosure Event no longer exists, provide notice to all holders that the Suspension
Period has ended, and shall take any and all actions necessary or desirable to give effect to any
holder’s rights under this Agreement that may have been affected by such notice.




     Section 4. Registration Expenses.


The Company agrees to bear and to pay or cause to be paid promptly all expenses incident to the
Company’s performance of or compliance with this Agreement, whether or not the Shelf Registration
Statement becomes effective, including (a) all Commission and any NASD registration, filing and
review fees and expenses, (b) all fees and expenses in connection with the qualification of the
Securities for offering and sale under the State securities and blue sky laws referred to in
Section 3(a)(x) hereof and determination of their eligibility for investment under the laws of such
jurisdictions as the Electing Holders may designate, (c) all expenses relating to the preparation,
printing, production, distribution and reproduction of each registration statement required to be
filed hereunder, each prospectus included therein or prepared for distribution pursuant hereto,
each amendment or supplement to the foregoing, the expenses of preparing the Securities for
delivery and the expenses of printing or producing blue sky memoranda and all other documents in
connection with the offering, sale or delivery of Securities to be disposed of (including
certificates representing the Securities), (d) messenger, telephone and delivery expenses relating
to the offering, sale or delivery of Securities and the preparation of documents referred in clause
(c) above, (e) internal expenses (including all salaries and expenses of the Company’s officers and
employees performing legal or accounting duties), (f) fees, disbursements and expenses of counsel
and independent certified public accountants of the Company, (g) fees, expenses and disbursements
of any other persons, including special experts, retained by the Company in connection with such
registration and (h) any out-of-pocket expenses of the Electing Holder, including any fees,
disbursements and expenses of counsel to such Electing Holder, subject to the limitations contained
in Section 11(i) of the Purchase Agreement, with such expenses being aggregated with expenses
reimbursed pursuant to Section 11(i) of the Purchase Agreement. The holders of the Registrable
Securities being registered shall pay all agency fees and commissions and underwriting discounts
and commissions attributable to the sale of such Registrable Securities and the fees and
disbursements of any counsel or other advisors or experts retained by such holders (severally or
jointly).




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     Section 5. Representations and Warranties.


The Company represents and warrants to, and agrees with, each Purchaser and each of the holders
from time to time of Registrable Securities that:




          (a) Each registration statement covering Registrable Securities and each prospectus (including
any preliminary or summary prospectus) contained therein or furnished pursuant to Section 3(c) or
Section 3(d) hereof and any further amendments or supplements to any such registration statement or
prospectus, when it becomes effective or is filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the Securities Act and the rules and
regulations of the Commission thereunder and will not contain an 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 not misleading; and at all times subsequent to the Effective Time when a
prospectus would be required to be delivered under the Securities Act, other than from (i) such
time as a notice has been given to holders of Registrable Securities pursuant to Section
3(a)(vi)(E) hereof until (ii) such time as the Company furnishes an amended or supplemented
prospectus pursuant to Section 3(b) hereof, each such registration statement, and each prospectus
contained therein or furnished pursuant to Section 3(a) hereof, as then amended or supplemented,
will conform in all material respects to the requirements of the Securities Act and the rules and
regulations of the Commission thereunder and will not contain an 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 not misleading in the light of the circumstances then existing; provided,
however, that this representation and warranty shall not apply to any statements or omissions made
in reliance upon and in full conformity with information furnished in writing to the Company by a
holder of Registrable Securities solely with respect to such holder expressly for use therein.




          (b) Any documents incorporated by reference in any prospectus referred to in Section 5(a)
hereof, when they become or became effective or are or were filed with the Commission, as the case
may be, will conform or conformed in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable, and none of such documents will contain or contained an
untrue statement of a material fact or will omit or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements or omissions made in reliance
upon and in full conformity with information furnished in writing to the Company by a holder of
Registrable Securities solely with respect to such holder expressly for use therein.




     Section 6. Indemnification.



          (a) Indemnification by the Company. The Company will indemnify and hold harmless to the full
extent permitted by law each of the Electing Holders of Registrable Securities included in a Shelf
Registration Statement, each of their




12









 




Affiliates, and their respective directors, officers, managers, members, stockholders,
partners, employees, advisors, agents, representatives of the foregoing, and each of their
respective successors and assigns, and each person who “controls” any of the foregoing within the
meaning of the Securities Act and the Exchange Act (each such person listed above being sometimes
referred to as a “Holder Indemnified Person”), against any losses, claims, damages,
liabilities and expenses (including reasonable costs of investigations and legal expenses), joint
or several (each a “Loss” and collectively “Losses”), to which such Holder
Indemnified Person may become subject; and the Company agrees to reimburse such Holder Indemnified
Person for any for any legal or other expenses reasonably incurred by it, as such expenses are
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 Commission, whether pending or threatened,
whether or not such Holder Indemnified Person is or may be a party thereto, to which such Holder
Indemnified Person may become subject under the Securities Act, the Exchange Act or 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 a Shelf Registration
Statement, insofar as such Losses arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Shelf Registration Statement under which such
Registrable Securities were registered under the Securities Act, or any preliminary, final or free
writing prospectus contained therein or furnished by the Company to any such Electing Holder 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 shall not be liable to any such Holder
Indemnified Person in any such case to the extent that any such Loss (x) arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged omission made in such
registration statement, or preliminary, final or free writing prospectus, or amendment or
supplement thereto, in reliance upon and in full conformity with written information furnished to
the Company by the Electing Holder expressly for use therein, or (y) arises from such Holder
Indemnified Person’s use of the Shelf Registration Statement or prospectus or any amendments or
supplements thereto during a Suspension Period. The indemnity provided in this Section 6(a) shall
remain in full force and effect regardless of any investigation made by or on behalf of such Holder
Indemnified Person and shall survive the transfer or disposal of the Registrable Securities by the
holder or any such other persons.




          (b) Indemnification by the Holders. Each Electing Holder agrees, severally and not jointly,
to: (i) indemnify and hold harmless the Company (for purposes of the Section 6, the “Company
Indemnified Person”), against any Losses to which the Company may become subject, under the
Securities Act or otherwise, insofar as such Losses arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in such registration statement,
or any preliminary, final or free writing prospectus contained therein or furnished by the Company
to any




13









 




such Electing Holder, 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, in each case to the extent, but
only to the extent, that (A) such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in full conformity with written information
furnished to the Company by such Electing Holder expressly for use therein and (B) such Electing
Holder had a reasonable opportunity to review the relevant registration statement or preliminary,
final or free writing prospectus contained therein or amendment or supplement thereto prior to its
filing and failed to correct such statement or omission; and (ii) reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred; provided, however, that no such
Electing Holder shall be required to undertake liability to any person under this Section 6(b) for
any amounts in excess of the dollar amount of the net proceeds actually received by such Electing
Holder from the sale of such Electing Holder’s Registrable Securities pursuant to such
registration.




          (c) Notices of Claims, Etc. Promptly after receipt by an Indemnified Person under subsection
(a) or (b) above of written notice of the commencement of any action, such Indemnified Person
shall, if a claim in respect thereof is to be made against an Indemnifying Person pursuant to the
indemnification provisions of or contemplated by this Section 6, notify such Indemnifying Person in
writing of the commencement of such action; but the omission so to notify the Indemnifying Person
shall not relieve it from any liability which it may have to any Indemnified Person otherwise than
under the indemnification provisions of or contemplated by Section 6(a) or 6(b) hereof to the
extent the Indemnifying Person is not materially prejudiced by such omission. In case any such
action shall be brought against any Indemnified Person and it shall notify an Indemnifying Person
of the commencement thereof, such Indemnifying Person shall be entitled to participate therein and,
to the extent that it shall wish, jointly with any other Indemnifying Person similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Person (who
shall not, except with the consent of the Indemnified Person, be counsel to the Indemnifying
Person), and, after notice from the Indemnifying Person to such Indemnified Person of its election
so to assume the defense thereof, such Indemnifying Person shall not be liable to such Indemnified
Person for any legal expenses of other counsel or any other expenses, in each case subsequently
incurred by such Indemnified Person, in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that such Indemnified Person shall have the right to
retain its own counsel with the fees and expenses of not more than one counsel for such Indemnified
Person to be paid by the Company, if, in the reasonable opinion of such Indemnified Person the
representation by such counsel of such Indemnified Person and the Company would be inappropriate
due to actual or potential differing interests between such Indemnified Person and any other party
represented by such counsel in such proceeding, and provided, further, that the Indemnifying Person
shall not be required to pay for more than one such separate counsel for all similarly situated
Indemnified Persons in connection with any




14









 




indemnification claim. No Indemnifying Person shall, without the written consent of the
Indemnified Person, effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the Indemnified Person is an actual or
potential party to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the Indemnified Person from all liability arising out of such
action or claim and (ii) does not include a statement as to or an admission of fault, culpability
or a failure to act by or on behalf of any Indemnified Person.




          (d) Contribution. If for any reason the indemnification provisions contemplated by Section
6(a) or Section 6(b) are unavailable to or insufficient to hold harmless an Indemnified Person in
respect of any Losses referred to therein, then each Indemnifying Person shall contribute to the
amount paid or payable by such Indemnified Person as a result of such Losses in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Person and the Indemnified Person
in connection with the statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Person and Indemnified
Person shall be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a material fact
relates to information supplied by such Indemnifying Person or by such Indemnified Person, and the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 6(d) were determined by pro rata allocation (even if the
holders were treated as one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to in this Section 6(d). The amount
paid or payable by an Indemnified Person as a result of the Losses referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), no holder shall be required to contribute any amount in excess of
the amount by which the dollar amount of the proceeds received by such holder from the sale of any
Registrable Securities (after deducting any fees, discounts and commissions applicable thereto)
exceeds the amount of any damages which such holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
The holders’ obligations in this Section 6(d) to contribute shall be several in proportion to the
principal amount of Registrable Securities registered by them and not joint.




          (e) The remedies provided in this Section 6 are not exclusive and shall not limit any rights
or remedies that may otherwise be available to an Indemnified Person at law or in equity.




15









 





     Section 7. Miscellaneous.



          (a) No Inconsistent Agreements. The Company represents, warrants, covenants and agrees that
(i) it has not granted, and shall not grant, registration rights with respect to Registrable
Securities or any other securities which would be inconsistent with the terms contained in this
Agreement and (ii) neither this Agreement nor the exercise of any of the rights of the holders
contained herein, shall trigger (whether immediately or through the passage of time) any rights of
any holder of securities that are currently subject to registration rights agreements with the
Company.




          (b) Specific Performance. The parties hereto acknowledge that there would be no adequate
remedy at law if the Company fails to perform any of its obligations hereunder and that the
Purchaser and the holders from time to time of the Registrable Securities may be irreparably harmed
by any such failure, and accordingly agree that the Purchaser and such holders, in addition to any
other remedy to which they may be entitled at law or in equity, shall be entitled to compel
specific performance of the obligations of the Company under this Agreement in accordance with the
terms and conditions of this Agreement, in any court of the United States or any State thereof
having jurisdiction.




          (c) Remedies Cumulative. In the event that the Company fails to observe or perform any
covenant or agreement to be observed or performed under this Agreement, each holder may proceed to
protect and enforce its rights by suit in equity or action at law, whether for specific performance
of any term contained in this Agreement or for an injunction against the breach of any such term or
in aid of the exercise of any power granted in this Agreement or to enforce any other legal or
equitable right, or to take any one or more of such actions, without being required to post a bond.




          (d) Notices. All notices, requests, claims, demands, waivers and other communications
hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand,
if delivered personally, by facsimile or by courier, or three days after being deposited in the
mail (registered or certified mail, postage prepaid, return receipt requested) as follows: If to
the Company, to it at L-1 Identity Solutions, Inc., 177 Broad Street, Stamford, CT 06901,
Attention: Mark Molina, Facsimile: (203) 504-1104, with a copy to Weil, Gotshal & Manges LLP, 767
Fifth Avenue, New York , New York 10153, Attention: Marita A. Makinen, Esq., and if to a holder, to
the address of such holder set forth in the security register or other records of the Company, or
to such other address as the Company or any such holder may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be effective only upon
receipt.




          (e) Parties in Interest. This Agreement and the rights, duties and obligations of the Company
hereunder may not be assigned or delegated by the Company in whole or in part, except by operation
of law. This Agreement and the rights, duties and obligations of the holders hereunder may be
assigned by any holder to




16









 




a Permitted Assignee in whole or in part, without the consent of the Company, provided such
Permitted Assignee agrees to be bound by the terms of this Agreement, whereupon such Permitted
Assignee shall be deemed to be a holder for all purposes of this Agreement. Subject to the
preceding sentence, all the terms and provisions of this Agreement shall be binding upon, shall
inure to the benefit of and shall be enforceable by the parties hereto and the holders from time to
time of the Registrable Securities and the respective successors and assigns of the parties hereto
and such holders. In the event that any transferee of any holder of Registrable Securities shall
acquire Registrable Securities, in any manner, whether by gift, bequest, purchase, operation of law
or otherwise, such transferee shall, without any further writing or action of any kind, be deemed a
beneficiary hereof for all purposes and such Registrable Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Registrable Securities such transferee
shall be entitled to receive the benefits of, and be conclusively deemed to have agreed to be bound
by all of the applicable terms and provisions of, this Agreement. If the Company shall so request,
any such successor, assign or transferee shall agree in writing to acquire and hold the Registrable
Securities subject to all of the applicable terms hereof.




          (f) Survival. The respective indemnities, agreements, representations, warranties and each
other provision set forth in this Agreement or made pursuant hereto shall remain in full force and
effect regardless of any investigation (or statement as to the results thereof) made by or on
behalf of any holder of Registrable Securities, any director, officer or partner of such holder or
any director, officer or partner thereof, or any controlling person of any of the foregoing, and
shall survive delivery of and payment for the Registrable Securities pursuant to the Purchase
Agreement and the transfer and registration of Registrable Securities by such holder and the
consummation of the transactions contemplated herein.




          (g) Governing Law.




               (i) This Agreement shall be governed by, and construed in accordance with, the laws of the
State of Delaware, applicable to contracts executed in and to be performed entirely within that
State.



               (ii) All actions and proceedings arising out of or relating to this Agreement shall be heard
and determined in the Chancery Court of the State of Delaware or any federal court sitting in the
State of Delaware, and the parties hereto hereby irrevocably submit to the exclusive jurisdiction
of such courts (and, in the case of appeals, appropriate appellate courts therefrom) in any such
action or proceeding and irrevocably waive the defense of an inconvenient forum to the maintenance
of any such action or proceeding. The consents to jurisdiction set forth in this paragraph shall
not constitute general consents to service of process in the State of Delaware and shall have no
effect for any purpose except as provided in this paragraph and shall not be deemed to confer
rights on any person other than the parties hereto. The parties hereto agree that a final judgment
in any such action or proceeding shall be conclusive and may be



17









 







enforced in other jurisdictions by suit on the judgment or in any other manner provided by
applicable Law.



          (h) Headings. The descriptive headings of the several Sections and paragraphs of this
Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall
not affect in any way the meaning or interpretation of this Agreement.




          (i) Entire Agreement; Amendments. This Agreement and the other writings referred to herein or
delivered pursuant hereto which form a part hereof contain the entire understanding of the parties
with respect to its subject matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This Agreement may be
amended and the observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a written instrument duly
executed by the Company and the holders of at least a majority of the Registrable Securities at the
time outstanding. Each holder of any Registrable Securities at the time or thereafter outstanding
shall be bound by any amendment or waiver effected pursuant to this Section 7(i), whether or not
any notice, writing or marking indicating such amendment or waiver appears on such Registrable
Securities or is delivered to such holder.




          (j) Inspection. For so long as this Agreement shall be in effect, this Agreement and a
complete list of the names and addresses of all the holders of Registrable Securities shall be made
available for inspection and copying on any business day by any holder of Registrable Securities
for proper purposes only (which shall include any purpose related to the rights of the holders of
Registrable Securities under the Securities and this Agreement) at the offices of the Company at
the address thereof set forth in Section 7(c) above.




          (k) Counterparts. This Agreement may be executed by the parties in counterparts, each of which
shall be deemed to be an original, but all such respective counterparts shall together constitute
one and the same instrument. If the foregoing is in accordance with your understanding, please sign
and return to us counterparts hereof, and upon the acceptance hereof by you, on behalf of each of
the Purchasers, this letter and such acceptance hereof shall constitute a binding agreement among
the Purchasers and the Company.




          (l) Further Assurances. Each of the parties hereto shall execute such documents and perform
such further acts as may be reasonably required or desirable to carry out or to perform the
provisions of this Agreement.




[Remainder of page intentionally left blank.]




* * *




18









 





          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.



	 	 	 	 	 
	 	L-1 IDENTITY SOLUTIONS, INC.

 	 
	 	By:  	/s/ Robert V. LaPenta
 	 
	 	 	Name:  	Robert V. LaPenta 	 
	 	 	Title:  	Chairman, President & CEO 	 
	 





 









 





          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.



	 	 	 	 	 
	 	IRIDIAN ASSET MANAGEMENT LLC

 	 
	 	By:  	/s/ Lane Bucklan
 	 
	 	 	Name:  	Lane Bucklan	 
	 	 	Title:  	General Counsel	 
	 
	 	(as Agent for First Eagle Fund of America)