Exhibit 10.5
THE SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT
BE SOLD, TRANSFERRED, OR ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF SUCH SECURITIES REASONABLY SATISFACTORY TO
THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
No.:
2003-2
WARRANT
TO PURCHASE COMMON STOCK
OF
IMAGEWARE SYSTEMS, INC.
(void after June 13, 2009)
1.
ISSUANCE OF WARRANT.
FOR VALUE RECEIVED, ON
AND AFTER THE DATE OF ISSUANCE OF THIS WARRANT, AND SUBJECT TO THE TERMS AND
CONDITIONS HEREIN SET FORTH, THE HOLDER (AS DEFINED BELOW) IS ENTITLED TO
PURCHASE FROM IMAGEWARE SYSTEMS, INC., A CALIFORNIA CORPORATION (THE "COMPANY"),
AT ANY TIME BEFORE 5:00 P.M. NEW YORK TIME ON JUNE 13, 2009 (THE "TERMINATION
DATE"), AT A PRICE PER SHARE EQUAL TO THE WARRANT PRICE (AS DEFINED BELOW AND
SUBJECT TO ADJUSTMENT AS DESCRIBED BELOW), THE WARRANT STOCK (AS DEFINED BELOW
AND SUBJECT TO ADJUSTMENT AS DESCRIBED BELOW) UPON EXERCISE OF THIS WARRANT
(THIS "WARRANT") PURSUANT TO SECTION 6 HEREOF.
2.
DEFINITIONS.
AS USED IN THIS WARRANT, THE FOLLOWING TERMS HAVE
THE DEFINITIONS ASCRIBED TO THEM BELOW:
(A)
"BUSINESS DAY" MEANS ANY DAY OTHER THAN A
SATURDAY, SUNDAY OR OTHER DAY ON WHICH THE NATIONAL OR STATE BANKS LOCATED IN
THE STATE OF NEW YORK OR THE STATE OF CALIFORNIA OR THE DISTRICT OF COLUMBIA ARE
AUTHORIZED TO BE CLOSED.
(B)
"COMMON STOCK" MEANS THE COMMON STOCK, PAR
VALUE $0.01 PER SHARE, OF THE COMPANY.
(C)
"HOLDER" MEANS L.F. GLOBAL HOLDINGS, LLC,
OR ITS ASSIGNS.
(D)
"PURCHASE AGREEMENT" MEANS THE NOTE AND
WARRANT PURCHASE AGREEMENT DATED AS OF MAY 22, 2002 BY AND BETWEEN THE COMPANY
AND PERSEUS 2000,L.L.C., AS AMENDED.
(E)
"COMPANY NOTES" MEANS ALL NOTES ISSUED TO
L.F. GLOBAL HOLDINGS, LLC ("LF"), AND LAURUS MASTER FUND, LTD. ("LAURUS"),
PURSUANT TO THE CONSENT TO ASSIGNMENT AND
Amendment Agreement by and among LF, Laurus and the Company dated June 13, 2003
(the "Consent Agreement").
(F)
"WARRANT PRICE" MEANS $2.11 PER SHARE,
SUBJECT TO ADJUSTMENT AS DESCRIBED IN SECTION 3 BELOW.
(G)
"WARRANT STOCK" MEANS THE SHARES OF COMMON
STOCK (OR OTHER SECURITIES) PURCHASABLE UPON EXERCISE OF THIS WARRANT OR
ISSUABLE UPON CONVERSION OF THIS WARRANT.
THE TOTAL NUMBER OF SHARES TO BE
ISSUED UPON THE EXERCISE OF THIS WARRANT SHALL BE 1,021,687, SUBJECT TO
ADJUSTMENT AS DESCRIBED IN SECTION 3 BELOW.
3.
ADJUSTMENTS AND NOTICES.
THE WARRANT PRICE
AND THE NUMBER OF SHARES OF WARRANT STOCK SHALL BE SUBJECT TO ADJUSTMENT FROM
TIME TO TIME IN ACCORDANCE WITH THIS SECTION 3.
(A)
SUBDIVISION, STOCK DIVIDENDS OR
COMBINATIONS.
IN CASE THE COMPANY SHALL AT ANY TIME SUBDIVIDE THE OUTSTANDING
SHARES OF COMMON STOCK OR SHALL ISSUE A STOCK DIVIDEND WITH RESPECT