EXHIBIT B
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LASERGATE SYSTEMS, INC.
Registration Rights Agreement
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into
as of 31 October, 1997, by and among Lasergate Systems, Inc., a Florida
corporation (the "Company"), and the persons and entities listed on Exhibit A
attached hereto (the "Investors").
Recitals
WHEREAS, pursuant to Subscription Agreements (the "Agreements"), by
and among the Company and the Investors, the Company has agreed to sell and the
Investors have agreed to purchase an aggregate of up to 7,500 shares of Series G
Preferred Stock of the Company (the "Preferred Shares") convertible into shares
of the Company's Common Stock, $.03 par value per share (the "Shares,,); and
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investors' agreement to enter into the Agreements, the Company has agreed to
provide the Investors with certain registration rights with respect to the
Shares;
NOW THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the
Agreements and this Registration Rights Agreement, the Company and the Investors
agree as follows:
Agreement:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
any other Federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Company's Common Stock, par value $.03
per share.
"Initiating Holders" shall mean holders of the Company's Preferred
Shares having an aggregate initial purchase price from the Company of $500,000
or more.
"Other Registrable Securities" shall mean those shares of Common
Stock heretofore or hereafter issued pursuant to one or more agreements granting
the purchasers of such securities the right to have the Company register such
securities or include such securities in any other registration of the Company's
equity securities.
"Registrable Shares" shall means (i) the Shares, and (ii) any Common
Stock of the Company issued or issuable in respect of the Shares or upon any
stock split, stock dividend, recapitalization or similar event; provided,
however, that Registrable Shares or other securities shall no longer be treated
as Registrable Shares if (A) they have been sold to or through a broker or
dealer or underwriter in a public distribution or a public securities
transaction, (B) they have been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so that
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all transfer restrictions and restrictive legends with respect thereto are
removed upon consummation of such sale or (C) the Shares are available for sale
under the Securities Act (including Rule 144), in the opinion of counsel to the
Company, without compliance with the registration and prospectus delivery
requirements of the Securities Act so that all transfer restrictions and
restrictive legends with respect thereto may be removed upon the consummation of
such sale.
The terms "register", "registered" and "registration" shall refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expense incurred by the
Company in compliance with Section 2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, reasonable fees and
disbursements (not to exceed $20,000) of one counsel for all the selling holders
of Registrable Shares for a limited "due diligence" examination of the Company,
and the reasonable expenses of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company, and excluding all
underwriting discounts and selling commissions applicable to the sale of the
Registrable Shares and all other payments to underwriters engaged by the
Investors, but not with respect to underwriters engaged by the Company).
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Shares and all fees and
disbursements. of one counsel for the selling holders of Registrable Shares
(other than the fees disbursements of such counsel included in Registration
Expenses).
2. Requested Registration.
The following registration rights will apply if, and only if, at any
time prior to the termination of this Agreement, Regulation S promulgated under
the Securities Act is rescinded or modified so as to preclude Initiating Holders
from reselling in United States public securities markets Shares received from
the Company pursuant to the Agreements following expiration of the Restricted
Period (as defined in the Agreements), or if, for any other reason, the Company
refuses to issue Shares at the times required by the Agreements bearing no
restrictive legend to Initiating Holders after expiration of the Restricted
Period; provided, however, that no Investor shall be entitled to request
registration pursuant to this Agreement (and such Investor shall not be
considered an Initiating Holder pursuant to this Agreement, and the securities
held by such Investor shall not he considered Registrable Shares pursuant to
this Agreement) if a representation or warranty of such Investor in the
Agreements between the Investor and the Company is inaccurate or was inaccurate
when made, or the Investor has tailed to comply with the covenants and
agreements of the Investor set forth in the Agreements between the Investor and
the Company:
(a) Request for Registration. If the Company shall receive from
Initiating Holders, at any time after two (2) and prior to thirty-six (36)
months following the final closing of the sale of Preferred Shares pursuant to
the Agreements, a written request that the Company effect a registration with
respect to all, but not less than all, of the Registrable Shares held by such
Initiating Holders (which notice shall specify the intended method of
disposition), the Company shall;
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(i) promptly give written notice of the proposed registration
to all other holders of Registrable Shares; and
(ii) as soon as practicable use its best efforts to effect
such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Shares as are specified in such request,
together with all or such portion of the Registrable Shares of any holder or
holders of Registrable Shares joining in such request as are specified in a
written request given within fifteen (15) days after receipt of such written
notice from the Company; provided that the Company shall not be obligated to
effect, or to take any action to effect, any such registration pursuant to this
Section 2:
(A) after the Company has effected one such
registration pursuant to this Section 2(a) and such registration has been
declared or ordered effective by the Commission and the sale of such Registrable
Shares shall have closed; or
(B) within the period starting with the date thirty
(30) days prior to the Company's good faith estimated date of filing of, and
ending ninety (90) days following the effective date of, any registered offering
of the Company's securities to the general public.
Subject to the foregoing limitations in clauses (A) and (B) above,
the Company shall file a registration statement covering the Registrable Shares
so requested to be registered as soon as practicable after receipt of the
request or requests of the Initiating Holders, but no later than forty-five (45)
days following receipt of such request or requests, except in the event audited
financial statements not previously prepared are required to be prepared prior
to the filing of such registration statement, in which case such registration
statement must be filed as soon as practicable, but in any event within ninety
(90) days following receipt of such request or requests.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provision of Section 2(b) below, include
Other Registrable Securities, other securities of the Company which are held by
officers or directors of the Company or which are held by other holders of
registration rights, and may include securities of the Company being sold for
the account of the Company.
(b) Underwriting. If the Initiating Holders intend to distribute
the Registrable Shares covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 2 and the Company shall include such information in the written notice
referred to in Section 2(a)(i) above. The right of any holder of Registrable
Shares to registration pursuant to Section 2 shall be conditioned upon such
holder's participation in such underwriting and the inclusion of such holder's
Registrable Shares in such underwriting (unless otherwise mutually agreed by a
majority in interest of the Initiating Holders and such holder with respect to
such participation and inclusion) to the extent provided herein. A holder of
Registrable Shares may elect to include in such underwriting all or a part of
the Registrable Shares it holds.
(i) If the Company shall request inclusion in any registration
pursuant to Section 2 of securities being sold for its own account, or if
officers or directors of the Company holding other securities of the Company or
other holders of registration rights, shall request inclusion in any
registration pursuant to Section 2, the Initiating Holders shall, on behalf of
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all holders of Registrable Shares, offer to include other Registrable Securities
and the securities of the Company, such officers and directors and such other
holders of registration rights in the underwriting and may condition such offer
on their acceptance of the further applicable provisions of this Agreement. The
Company shall (together with all holders of Registrable Shares, officers and
directors, other holders of registration rights and holders of other Registrable
Securities proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
representative of the underwriters selected for such underwriting by the
Company, which underwriters) shall be reasonably acceptable to a majority in
interest of the Initiating Holders.
(ii) Notwithstanding any other provision of this Section 2, if
the representative of the underwriters advises the Company in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the Company shall so advise all holders of Registrable Shares and
other shareholders whose securities would otherwise be underwritten pursuant
hereto, and the number of Registrable Shares and other securities that may be
included in the registration and underwriting shall be allocated in the
following manner: the securities of the Company held by officers and directors
of the Company (other than Registrable Shares) shall be excluded from such
registration and underwriting to the extent required by such limitation, and, if
a limitation on the number of shares is still required, the other Registrable
Securities shall be excluded pro rata with Registrable Shares, unless another
method of determining such exclusion is specified in the agreements governing
the Other Registrable Securities, according to the relative number of Other
Registrable Securities requested to be included in such registration and
underwriting, from such registration and underwriting to the extent required by
such limitation, and, if a limitation on the number of shares is still required,
the number of Registrable Shares that may be included in the registration and
underwriting shall be allocated among all holders of Registrable Shares in
proportion, as nearly as practicable, to the respective amounts of Registrable
Shares which they had requested to be included in such registration at the time
of filing the registration statement. No Registrable Shares or any other
securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall also be included in such registration.
(iii) If the Company or any officer, director or holder of
Registrable Shares or Other Registrable Securities who has requested inclusion
in such registration and underwriting as provided above disapproves of the terms
of the underwriting, such person may elect to withdraw therefrom by written
notice to the Company, the underwriter and the Initiating Holders. The
securities so withdrawn shall also be withdrawn from registration.
3. Expenses of Registration. The Company shall bear all Registration
Expenses incurred in connection with any registration, qualification or
compliance of the Registrable Shares pursuant to this Agreement. All Selling
Expenses shall be borne by the holders of the securities so registered pro rata
on the basis of the number of their shares so registered.
4. Registration Procedures. Pursuant to this Agreement, the Company
will keep each holder of Registrable Shares advised in writing as to the
initiation of a registration under this Agreement and as to the completion
thereof. At its expense, the Company will:
(a) Use reasonable efforts to keep such registration effective
for a period of one hundred eighty (180) days or until the holder or holders of
Registrable Shares have completed the distribution described in the registration
statement relating thereto or until the securities registered cease to be
Registerable Shares, whichever first occurs;
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(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of securities
covered by such registration statement; and
(c) Furnish such number of prospectuses and other documents
incidental thereto, including any amendment of or supplement to the prospectus,
as a holder of Registrable Shares from time to time may reasonably request.
5. Indemnification.
(a) The Company will indemnify each holder of Registrable Shares,
each of its officers, directors and partners, and each person controlling such
holder of Registrable Shares, with respect to which registration has been
effected pursuant to this Agreement, and each underwriter, if any and each
person who controls any underwriter, and their respective counsel against all
claims, losses, damages and liabilities (or actions, proceedings or settlements
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, or other
document incident to any such registration, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation thereunder applicable to
the Company in connection with any such registration and will reimburse each
such holder of Registrable Shares, each of its officers, directors and partners,
and each person controlling such holder of Registrable Shares, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses as they are reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
provided, however, that the indemnity contained in this Section 5(a) shall not
apply to amounts paid in settlement of any such claim, loss, damage, liability
or action if such Settlement is effected without the consent of the Company; and
provided further that the Company shall not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission based upon written information
furnished to the Company by such holder of Registrable Shares or underwriter and
stated to be specifically for use therein. The foregoing indemnity agreement is
further subject to the condition that insofar as it relates to any untrue
statement, alleged untrue statement, omission or alleged omission made in a
preliminary prospectus, such indemnity agreement shall not inure to the benefit
of the foregoing indemnified parties if copies of a final prospectus correcting
the misstatement, or alleged misstatement, omission or alleged omission upon
which such loss, liability, claim or damage is based is timely delivered to such
indemnified party and a copy thereof was not furnished to the person asserting
the loss, liability, claim or damage.
(b) Each holder of Registrable Shares will, if Registrable Shares
held by it are included in the securities as to which such registration is being
effected, indemnify the Company, each of its directors and officers and each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of the Securities Act and the rules and regulations thereunder, each
other such holder of Registrable Shares and each of its officers, directors and
partners, and each person controlling such holder of Registrable Shares, and
their respective counsel (collectively, the "Company, Underwriters and Counsel")
against all claims, losses, damages and liabilities (or actions, proceedings or
settlements in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact relating to such Holder
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
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material fact required to be stated therein relating to such holder or necessary
to make the statements therein relating to such holder not misleading or any
violation by such holder of any rule or regulation promulgated under the
Securities Act applicable to such holder and relating to action or inaction
required of such holder in connection with any such registration; and will
reimburse the Company, such holders of Registrable Shares, directors, officers,
partners, persons, underwriters or control persons for any legal or any other
expense reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) relating to such holder is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such holder of Registrable Shares and stated to be specifically for
use therein; provided, however, that such indemnification obligations shall not
apply if the Company modifies or changes to a material extent written
information furnished by such Holder. Each holder of Registrable Shares will, if
Registrable Shares held by it are included in the securities as to which such
registration is being effected, indemnify the Company, Underwriters and Counsel
against all claims, losses, damages and liabilities (or actions, proceedings or
settlements in respect thereof), arising out of or based on any sale of
Registrable Shares made by such holder following receipt by such holder of
written notice from the Company, underwriters or Counsel that the registration
statement filed with respect to such Registrable Shares contains an untrue
statement of material fact or omits to state a material fact necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading.
(c) Each party entitled to indemnification under this Section 5
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld or delayed), and the Indemnified Party may participate
in such defense at such Indemnified Party's expense. No Indemnifying Party, in
the defense of any such claim or litigation, shall except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.
6. Information by Holder of Registrable Shares. Each holder of
Registrable Shares shall furnish to the Company such information regarding such
holder of Registrable Shares and the distribution proposed by such holder of
Registrable Shares as the Company may reasonably request in writing and as shall
be reasonably required in connection with any registration referred to in this
Agreement.
7. Miscellaneous.
7.1 Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the State of Florida without giving
effect to conflict of laws.
7.2 Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
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7.3 Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.
7.4 Notices, etc. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by first-class
mail, postage prepaid, or delivered by hand or by messenger or courier delivery
service, addressed (a) if to an Investor, at such Investor's address set forth
on Exhibit A hereof, or at such other address as such Investor shall have
furnished to the Company in writing, or (b) if to the Company at 00000 X.X. 00
Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000, Attn: President, or at such other
address as the Company shall have furnished to each Investor and each such other
holder in writing.
7.5 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any holder of any Registrable Shares, upon
any breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereunder occurring, nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions of
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
7.6 Counterparts. This agreement may be executed in any number
of counterparts, each of which may be executed by less than all of the
Investors, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
7.7 Severability. In the case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
7.8 Amendments. The provisions of this Agreement may be amended
at any time and from time to time, and particular provisions of this Agreement
may be waived, with and only with an agreement or consent in writing signed by
the Company and by the Investors currently holding fifty percent (50%) of the
Registrable Shares as of the date of such amendment or waiver.
7.9 Termination of Registration Rights. This Agreement shall
terminate at such time as there ceases to be at least $500,000 in face amount of
outstanding Preferred Shares which constitute Registrable Shares as defined
herein.
The foregoing Registration Rights Agreement is hereby executed as of the date
first above written.
LASERGATE SYSTEMS, INC. INVESTOR
By: /s/ Xxxxxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxxxxx X. Xxxxxxxx Name: Xxxxxxx Xxxxxxx
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Title: Chairman, CEO and President Title: Head Trader
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