SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 4, 1997
LASERGATE SYSTEMS, INC.
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(Exact Name of Registrant as Specified in Charter)
Florida 0-15873 59-2543206
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
28050 U.S. 19 North, Suite 502, Clearwater, Florida 34621
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (813) 725-0882
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 9. Sales of Equity Securities Pursuant to Regulation S.
On November 4, 1997, the Company sold 7,500 shares of Series G
Preferred Stock to RBB Bank, AG ("RBB") for $7,500,000 pursuant to an exemption
from the registration requirements of the Securities Act of 1933, as amended,
under Regulation S promulgated thereunder. Pursuant to the transaction, the
Company redeemed 7,945 shares of the Company's Series F Preferred Stock owned by
RBB for $6 million, leaving the Company with $1,447,500 of net proceeds after
giving effect to expenses of the offering. No sales commissions were paid. Each
share of Series G Preferred Stock is convertible into 4,354 shares of Common
Stock.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits:
Exhibit Number Description
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3.1 Articles of Amendment of Articles of Incorporation of
Lasergate Systems, Inc.
4.1 Regulation S Securities Subscription Agreement dated
October 31, 1997 between RBB Bank, AG and the Company.
4.2 Registration Rights Agreement dated October 31, 1997
between the Company and RBB Bank, AG.
4.3 Letter agreement dated October 30, 1997 from the
Company to RBB Bank, AG granting the Company the right
to redeem its Series F Convertible Preferred Stock.
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SIGNATURES
Pursuant to the requirement of the securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: November 19, 1997 LASERGATE SYSTEMS, INC.
By: /s/ Jacqueline E. Soechtig
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Jacqueline E. Soechtig
President and Chief
Executive Officer
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Commission File No. 0-15873
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
to
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
LASERGATE SYSTEMS, INC.
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Exhibit
Number Document Page Number
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3.1 Articles of Amendment of Articles of
Incorporation of Lasergate Systems, Inc.
4.1 Regulation S Securities Subscription
Agreement dated October 31, 1997 between
RBB Bank, AG and the Company.
4.2 Registration Rights Agreement dated
October 31, 1997 between the Company and
RBB Bank, AG
4.3 Letter agreement dated October 30, 1997
from the Company to RBB Bank, AG
granting the Company the right to redeem its
Series F Convertible Preferred Stock.
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ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
LASERGATE SYSTEMS, INC.
-----------------
Pursuant to Provisions of Section 607.0602
Of the Florida Business Corporation Act
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Lasergate Systems, Inc. (the "Corporation"), a corporation organized
and existing under the Florida Business Corporation Act, does hereby certify
that, pursuant to Section 607.0821 of the Florida Business Corporation Act, the
Board of Directors of the Corporation adopted the following resolution at a
meeting duly held on October 30, 1997, which resolution is in full force and in
effect as of the date hereof.
WHEREAS, the Board of Directors of the Corporation is authorized,
within the limitation stated in the Articles of Incorporation, to fix by
resolutions the designation of each series of preferred stock, par value $.03
("Preferred Stock"), and powers, preferences and relative, participating,
optional, or other special rights and qualifications, limitations or
restrictions thereof, including, without limiting the generality of the
foregoing, such provisions as may be desired concerning voting, redemption,
dividends, dissolution or the distribution of assets, conversion or exchange,
and such other subjects or matters as may be fixed by resolution or resolutions
of the Board of Directors under the Florida Business Corporation Act;
WHEREAS, it is the desire of the Board of Directors of the
Corporation, pursuant to its authority as aforesaid, to authorize and fix the
terms of a series of Preferred Stock and the number of shares constituting such
series:
NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized such
number and series of Preferred Stock on the terms and with the provisions herein
set forth.
A. Designation of the Series. There shall be a series of Preferred
Stock designated as "Series G Preferred Stock." Each share of such series shall
be referred to herein as a "Series G Share." The authorized number of such
Series G Shares is eight thousand (8,000).
B. Dividends. The holders of record of the Series G Preferred Stock
shall be entitled to receive, when and if declared by the Board of Directors of
the Corporation, out of funds legally available therefor, dividends paid in
cash, stock or otherwise. When dividends become so payable, the Board of
Directors of the Corporation shall declare such dividends and cause them to be
paid, to the full extent of any funds legally available therefor. In the event
that the Corporation shall pay on the Corporation's Common Stock, $.03 par value
per share, any dividend whether in cash, property or otherwise, the Corporation
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shall pay a dividend on the Series G Shares in an amount per share which is
equal to that which holders of the Series G Shares would have been entitled had
they converted such shares into Common Stock immediately prior to the payment of
such dividend.
C. Liquidation Preference.
(i) In the event of any liquidation, dissolution or winding-up of
the Corporation, either voluntary or involuntary (a "Liquidation"), the holders
of shares of the Series G Preferred Stock then issued and outstanding shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its shareholders, whether from capital, surplus or earnings,
before any payment shall be made to the holders of shares of the Common Stock or
upon any other series of Preferred Stock of the Corporation with a liquidation
preference subordinate to the liquidation preference of the Series G Preferred
Stock, an amount equal to one thousand dollars ($1,000) per share. If, upon any
Liquidation of the Corporation, the assets of the Corporation available for
distribution to its shareholders shall be insufficient to pay the holders of
shares of the Series G Preferred Stock and the holders of any other series of
Preferred Stock with a liquidation preference equal to the liquidation
preference of the Series G Preferred Stock the full amounts to which they shall
respectively be entitled, the holders of shares of the Series G Preferred Stock
and the holders of any other series of Preferred Stock with liquidation
preference equal to the liquidation preference of the Series G Preferred Stock
shall receive all of the assets of the Corporation available for distribution
and each such holder of shares of the Series G Preferred Stock and the holders
of any other series of Preferred Stock with a liquidation preference equal to
the liquidation preference of the Series G Preferred Stock shall share ratably
in any distribution in accordance with the amounts due such shareholders. After
payment shall have been made to the holders of shares of the Series G Preferred
Stock of the full amount to which they shall be entitled, as aforesaid, the
holders of shares of the Series G Preferred Stock shall be entitled to no
further distributions thereon and the holders of shares of the Common Stock and
of shares of any other series of stock of the Corporation shall be entitled to
share, according to their respective rights and preferences, in all remaining
assets of the Corporation available for distribution to its shareholders.
(ii) A merger or consolidation of the Corporation with or into
any other corporation, or a sale, lease, exchange, or transfer of all or any
part of the assets of the Corporation which shall not in fact result in the
liquidation (in whole or in part) of the Corporation and the distribution of its
assets to its shareholders shall not be deemed to be a voluntary or involuntary
liquidation (in whole or in part), dissolution, or winding-up of the
Corporation.
D. Conversion of Series G Preferred Stock.
The holders of Series G Preferred Stock shall have the following
conversion rights:
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(i) Right to Convert. Each share of Series G Preferred Stock
shall be convertible, on the Conversion Dates at the Conversion Prices set forth
below, into fully paid and nonassessable shares of Common Stock.
(ii) Mechanics of Conversion. Each holder of Series G Preferred
Stock who desires to convert the same into shares of Common Stock shall provide
written notice ("Conversion Notice", via telecopy hand delivery, or overnight
delivery service to the Corporation. The original Conversion Notice and the
certificate or certificates representing the Series G Preferred Stock for which
conversion is elected, shall be delivered to the Corporation by international
courier, duly endorsed. The date upon which a Conversion Notice is properly
received by the Corporation shall be a "Notice Date."
The Corporation shall use all reasonable efforts to issue and deliver
within three (3) business days after the Notice Date, to such holder of Series G
Preferred Stock at the address of the holder on the stock books of the
Corporation, a certificate or certificates for the number of shares of Common
Stock to which the holder shall be entitled as aforesaid; provided that the
original shares of Series G Preferred Stock to be converted are received by the
transfer agent or the Corporation within three (3) business days after the
Notice Date and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such date. If the
original shares of Series G Preferred Stock to be converted are not received by
the transfer agent or the Corporation within three (3) business days after the
Notice Date, the Conversion Notice shall become null and void.
(iii) Conversion Dates. The Series G Preferred Stock shall become
convertible into shares of Common Stock at any time commencing forty-five (45)
days after the last day on which there is an original issuance of the Series G
Preferred Stock; provided, however, that only such number of shares shall be
converted as will together with any shares of Series F Preferred Stock which are
converted after such date, result in the issuance of a maximum of 8,000,000
shares of Common Stock, until the date on which the Corporation's Articles of
Incorporation are amended so as to provide for the authorization of such number
of shares of Common Stock as shall be necessary (after giving effect to all
issued and reserved shares of Common Stock) in order to give effect to
conversion of all remaining outstanding shares of Series F and Series G
Preferred Stock, (the "Amendment"). This shall be the "Conversion Date".
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(iv) Conversion Price. Each share of Series G Preferred Stock
shall be convertible into the number of shares of Common Stock according to the
following formula:
N x 1,000
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.22967
N = the number of shares of the Series G Preferred
Stock for which conversion is being elected.
(v) Fractional Shares. No fractional share shall be issued upon
the conversion of any shares, share or fractional share of Series G Preferred
Stock. All shares of Common Stock (including fractions thereof) issuable upon
conversion of shares (or fractions thereof) of Series G Preferred Stock by a
holder thereof shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fraction of a share of Common Stock, the Corporation shall, in lieu of issuing
any fractional share, pay the holder otherwise entitled to such fraction a sum
in cash equal to the closing bid price of the Corporation's Common Stock on the
Notice Date multiplied by such fraction.
(vii) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times after the Amendment reserve and keep available
out of its authorized but unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the shares of the Series G Preferred
Stock, such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all then outstanding shares of the Series
G Preferred Stock; and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of all
then outstanding shares of the Series G Preferred Stock, the Corporation shall
use its best efforts to take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
(viii) Adjustment to Conversion Price.
(a) If, prior to the conversion of all shares of Series G
Preferred Stock, the number of outstanding shares of Common Stock is increased
by a stock split, stock dividend, or other similar event, the Conversion Price
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shall be proportionately reduced, or if the number of outstanding shares of
Common Stock is decreased by a combination or reclassification of shares, or
other similar event, the Conversion Price shall be proportionately increased.
(b) If, prior to the conversion of all shares of Series G
Preferred Stock, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result of which
shares of Common Stock of the Corporation shall be changed into the same or a
different number of shares of the same or another class or classes of stock or
securities of the Corporation or another entity, then the holders of Series G
Preferred Stock shall thereafter have the right to purchase and receive upon
conversion of shares of Series G Preferred Stock, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such shares of stock and/or
securities as may be issued or payable with respect to or in exchange for the
number of shares of Common Stock immediately theretofore purchasable and
receivable upon the conversion of shares of Series G Preferred Stock held by
such holders had such merger, consolidation, exchange of shares,
recapitalization or reorganization not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
the holders of the Series G Preferred Stock to the end that the provisions
hereof (including, without limitation, provisions for adjustment of the
Conversion Price and of the number of shares issuable upon conversion of the
Series G Preferred Stock) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or securities thereafter
deliverable upon the exercise hereof. The Corporation shall not effect any
transaction described in this subsection unless the resulting successor or
acquiring entity (if not the Corporation) assumes by written instrument and
obligation to deliver to the holders of the Series G Preferred Stock such shares
of stock and/or securities as, in accordance with the foregoing provisions, the
holders of the Series G Preferred Stock may be entitled to purchase.
(c) If any adjustment under this subsection would create a
fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon conversion be the next higher number of
shares.
E. Redemption of Series G Preferred Stock
(i) At any time on or after November 1, 2000, the Corporation may
redeem, at its option, from any source of funds legally available therefor, the
Series G Preferred Stock as a whole. The Corporation shall effect such
redemption by paying in cash in exchange for each outstanding share of Series G
Preferred Stock a sum equal to $1.00 per share of Preferred Stock (the
"Redemption Price").
(ii) At least 30 but no more than 40 days prior to the date fixed
for redemption pursuant hereto by the Corporation (the "Redemption Date"),
written notice of the redemption to be effected shall be transmitted by the
Corporation to each holder of record of outstanding Series G Shares (at the
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close of business on the business day next preceding the day on which notice is
given), at the address shown on the records of the Corporation for such holder
(the "Redemption Notice"). The Redemption Notice shall be mailed by the
Corporation to each holder via United Sates mail, first class postage or
international air mail postage, as applicable, prepaid, and the Corporation
shall transmit a copy of such notice to each holder via a recognized courier
service (such as Federal Express or DHL) that guarantees delivery of such notice
within a maximum of seven (7) days from deposit of such notice with such courier
service. The Redemption Notice shall specify the Redemption Date. On or after
the Redemption Date each holder of Series G Preferred Stock shall surrender to
the Corporation the certificate or certificates representing such shares at the
principal executive office of the Corporation and in the manner designated in
the Redemption Notice, and thereupon the Redemption Price of such share shall be
payable to the order of the person whose name appears on such certificate as the
owner thereof and each surrendered certificate shall be canceled.
(iii) Any shares of Preferred Stock specified for redemption
shall continue to be convertible during the period from the date of the
Redemption Notice through the day before the Redemption Date in accordance with
the conversion provisions hereof.
F. Voting. Except as otherwise provided by the General Corporation
Law of the State of Florida, the holders of the Series G Preferred Stock shall
have no voting power whatsoever, and no holder of Series G Preferred Stock shall
vote or otherwise participate in any proceeding in which actions shall be taken
by the Corporation or the shareholders thereof nor be entitled to notification
as to any meeting of the Board of Directors or the shareholders.
G. Protective Provisions. So long as shares of Series G Preferred
Stock are outstanding, the Corporation shall not without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of at
least a majority of the then outstanding shares of Series G Preferred Stock:
(a) alter or change the rights, preferences or privileges of the
shares of Series G Preferred Stock so as to affect adversely the Series G
Preferred Stock;
(b) create any new class or series of stock having a preference
over the Series G Preferred Stock with respect to dividends, to payments upon
Liquidation (as provided for in Section B of this Designation) or to redemption;
or
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(c) do any act or thing not authorized or contemplated by this
Designation which would result in taxation of the holders of shares of the
Series G Preferred Stock under Section 305 of the International Revenue Code of
1986, as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
H. Status of Converted Stock. In the event any shares of Series G
Preferred Stock shall be converted as contemplated by this designation, the
shares so converted shall be canceled, shall return to the status of authorized
but unissued Preferred Stock of no designated class or series, and shall not be
issuable by the Corporation as Series G Preferred Stock.
I. Status of Series G Preferred Stock. Notwithstanding anything to
the contrary set forth herein, the Series G Preferred Stock shall be on a parity
with, but not senior, in right as to dividends, redemption and liquidation with
the Series F Preferred Stock of the Corporation.
FURTHER RESOLVED, that the statements contained in the foregoing
resolutions creating and designating the said Series G Preferred Stock and
fixing the number, powers, preferences and relative, optional, participating,
and other special rights and the qualifications, limitations, restrictions, and
other distinguishing characteristics thereof shall, upon the effective date of
said series, be deemed to be included in and be a part of the certificate of
incorporation of the Corporation pursuant to the provisions of Section 607.0602
of the General Corporation Law of the State of Florida.
Signed on October 30, 1997.
LASERGATE SYSTEMS, INC.
By: /s/ Philip P. Signore
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Its: Vice President, CFO, Secretary
Attest:
/s/ Andrea Mabry
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REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE SECURITIES
LAW. THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
REGULATION S ("REGULATION S") PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE UNITED STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN
REGULATION S) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO
AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR
A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY BY OR TO
ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OF SOLICITATION WOULD BE
UNLAWFUL. INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. IN
MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND THE RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED OR DETERMINED THE ACCURACY OR ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Regulation S Securities Subscription Agreement (the "Agreement"
or the "Subscription Agreement") is executed by the undersigned (the
"Subscriber") in connection with the offer and subscription by the Subscriber
for shares of Series G Preferred Stock (the "Preferred Stock") of Lasergate
Systems, Inc., a Florida corporation (the "Company"), and offered in units of
not less than 100 shares. The Company is offering an aggregate face amount of
$7,500,000.00 (U.S.) (7,500 shares with a face amount of $1,000 (U.S.) per
share) at an aggregate purchase price of $7,500,000.00 (U.S.). The rights and
preferences of the Preferred Stock, including the terms on which the Preferred
Stock may be converted into Common Stock of the Company ("Shares") are set forth
in the Certificate of Designation of Series G Preferred Stock attached hereto as
Exhibit A (the "Certificate of Designation"). The solicitation of this
Subscription and, if accepted by the Company, the offer and sale of Preferred
Stock, are being made in reliance upon the provisions of Regulation S
("Regulation S") promulgated under the United States Securities Act of 1933, as
amended (the "Act"). The Preferred Stock and the Shares issuable upon conversion
thereof are sometimes referred to herein as the "Securities." The Subscriber
wishes to subscribe for the number of shares of Preferred Stock set forth in
Section 14 in accordance with the terms and conditions of the Certificate of
Designation and this Agreement. It is agreed as follows:
1. Offer to Subscribe; Purchase Price
The Subscriber hereby offers to purchase and subscribe for the
number of shares of Preferred Stock, and at the price, set out in Section 14 of
this Agreement. The Closing shall be deemed to occur when this Agreement has
been executed by both the Subscriber and the Company (the "Closing") and payment
shall have been made by the Subscriber, by wire transfer, as directed in
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writing by the Company on the day so directed against the Company's delivery of
certificates representing the Preferred Stock subscribed for. The payment shall
be made by delivering same day funds in United States Dollars as designated
above.
2. Representations; Access to Information; independent Information;
Independent Investigation
The Subscriber represents and warrants to and covenants with the
Company, on its own behalf and on behalf of each person or entity for which the
Subscriber is acting as a fiduciary, as follows:
2.1 Offshore Transaction. The Subscriber represents and
warrants to the Company that (i) neither the Subscriber
nor any of the investors on whose behalf the Subscriber
may purchase and hold Preferred Stock or Shares (the
"Investors") is a "U.S. person" as that term is defined
in Rule 902(o) of Regulation S (a copy of which
definition is attached as Exhibit B), and neither the
Subscriber nor any Investor is an entity organized or
incorporated under the laws of any foreign jurisdiction
by any "U.S. person" principally for the purpose of
investing in securities not registered under the Act,
unless the Subscriber is or was organized or
incorporated by "U.S. persons" who are accredited
investors (as defined in Rule 501(a) under the Act) and
who are not natural persons, estates or trusts
("Institutional Investors"), and all owners of interests
in such entity who are "U.S. persons" are Institutional
Investors, and not natural persons, estates or trusts;
(ii) the Preferred Stock was not offered to the
Subscriber or to any Investor in the United States and
at the time of execution of this Subscription Agreement
and of any offer to the Subscriber or to the Investors
to purchase the Preferred Stock hereunder, the
Subscriber and each such Investor was physically outside
the United States; (iii) the Subscriber is purchasing
the Securities for its own account and not on behalf of
or for the benefit of any U.S. person and the sale and
resale of the Securities have not been prearranged with
any buyer in the United States; (iv) the Subscriber and
to the best knowledge of the Subscriber each
distributor, if any, participating in the offering of
the Securities, has agreed and the Subscriber hereby
agrees that all offers and sales of the Securities prior
to the expiration of a period commencing on the Closing
of all Preferred Stock offered and ending forty-five
(45) days thereafter (the "Restricted Period") shall not
be made to U.S. persons or for the account or benefit of
U.S. persons and shall otherwise be made in compliance
with the provisions of Regulation S. Subscriber has not
been engaged or acted as or on behalf of a distributor
or dealer (and is not an affiliate of a distributor or
dealer) with respect to this transaction.
2.2 Independent Investigation. The Subscriber, in offering
to subscribe for the Securities hereunder, has relied
upon an independent investigation made by it and has,
prior to the date hereof, been given access to and the
opportunity to examine all books and records of the
Company, and all material contracts and documents of the
Company. The Subscriber will keep confidential all
non-public information regarding the Company that the
Subscriber receives from the Company. In making its
investment decision to purchase the Preferred Stock, the
Subscriber is not relying on any oral or written
representations or assurances from the Company or any
other person or any representation of the Company or any
other person other than as set forth in this Agreement,
public filings of the Company or in a document executed
by a duly authorized representative of the Company
making reference to this Agreement. The Subscriber has
such experience in business and financial matters that
it is capable of evaluating the risk of its investment
and determining the suitability of its investment.
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The Subscriber is a sophisticated investor, as defined
in Rule 506(b)(2)(ii) of Regulation D, and an accredited
investor as defined in Rule 501 of Regulation D, a copy
of which definition is attached hereto as Exhibit C.
2.3 Economic Risk. The Subscriber understands and
acknowledges that an investment in the Shares involves a
high degree of risk, including a possible total loss of
investment. The Subscriber represents that the
Subscriber is able to bear the economic risk of an
investment in the Preferred Shares. In making this
statement the Subscriber hereby represents and warrants
that the Subscriber has adequate means of providing for
the Subscriber's current needs and contingencies; the
Subscriber is able to afford to hold the Preferred
Shares for an indefinite period and the Subscriber
further represents that the Subscriber has such
knowledge and experience in financial and business
matters that the Subscriber is capable of evaluating the
merits and risks of the investment in the Preferred
Shares to be received by the Subscriber. Further, the
Subscriber represents that the Subscriber is able to
bear the economic risks of an investment in the
Preferred Shares; the Subscriber has no present need for
liquidity in such Preferred Shares; the Subscriber can
afford a complete loss of such investment in the
Preferred Shares; and the Subscriber is willing to
accept such investment risks.
2.4 No Government Recommendation or Approval. The Subscriber
understands that no United States federal or state
agency or similar agency of any other country has passed
upon or made any recommendation or endorsement of the
Company, this transaction or the subscription of the
Securities.
2.5 No Directed Selling Efforts in Regard to this
Transaction. The Subscriber has not, and to the best of
the Subscriber's knowledge, neither the Company nor any
distributor, if any, participating in the offering of
the Securities nor any person acting for the Company or
any such distributor has conducted any "directed selling
efforts" as that term is defined in Rule 902 of
Regulation S. Such activity includes, without
limitation, the mailing of printed material to investors
residing in the United States, the holding of
promotional seminars in the United States, the placement
of advertisements with radio or television stations
broadcasting in the United States or in publications
with a general circulation in the United States, which
discuss the offering of Shares.
2.6 Reliance on Representation. This Agreement is made by
the Company with the Subscriber in reliance upon such
Subscriber's representations and covenants made in this
Section 2, which by his execution of this Agreement the
Subscriber hereby confirms. If the Subscriber includes
or consists of more than one person or entity, the
obligations of the Subscriber shall be joint and several
and the representations and warranties herein contained
shall be deemed to be made by and be binding upon each
such person or entity and their respective heirs,
executors, administrators, successors and assigns.
2.7 No Registration. Subscriber understands that the
Preferred Stock and the Common Stock issuable upon
conversion of the Preferred Stock have not been
registered under the Act and are being offered and sold
pursuant to an exemption from registration contained in
the Act based in part upon the representations of
Subscriber contained herein. The Common Stock does,
however, carry certain registration rights as set forth
in the Registration Rights Agreement executed by the
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parties hereto (the "Registration Rights Agreement").
2.8 No Public Solicitation. Subscriber knows of no public
solicitation or advertisement of an offer in connection
with the proposed issuance and sale of the Preferred
Stock.
2.9 Investment Intent. Subscriber is acquiring the Preferred
Stock to be issued and sold hereunder (and the Shares
issuable upon conversion of the Preferred Stock) for the
Subscriber's own account (or for beneficiaries, accounts
over which the Subscriber has investment discretion but
no discretionary voting or dispositive authority).
Subscriber and each other party acquiring Preferred
Stock and the shares issuable upon conversion of the
Preferred Stock pursuant to this Agreement are acquiring
such securities for investment and not with a view to
the distribution thereof. Subscriber understands that
Subscriber must bear the economic risk of this
investment indefinitely unless the sale of such
Preferred Stock or such Shares is registered pursuant to
the Act, or an exemption from such registration is
available, and that except as set forth in the
Registration Rights Agreement, the Company has no
present intention of registering any such sale of the
Preferred Stock or such Shares. Subscriber represents
and warrants to the Company that it has no present plan
or intention of selling the Preferred Stock or the
Shares in the United States, has made no predetermined
arrangements to sell the Preferred Stock or the Shares
other than as provided in the Registration Rights
Agreement and that the offering by the Company of its
securities to the Subscriber, as contemplated in this
Subscription Agreement (the "Offering"), together with
any subsequent resale of the Preferred Stock or the
Shares, is not part of a plan or scheme to evade the
registration provisions of the Act. Subscriber currently
has no short position in the Shares, including any short
call position or any long put position or any contract
or arrangement that has the effect of eliminating or
substantially diminishing the risk of ownership of the
Preferred Stock or the Shares, nor has engaged in any
hedging transaction with respect to the Preferred Stock
or the Shares. Subscriber covenants that neither
Subscriber nor its affiliates nor any person acting on
its or their behalf has the intention of entering, or
will enter during the Restricted Period, into any put
option, short position or any hedging transaction or
other similar instrument or position with respect to the
Shares or securities of the same class as the Shares and
neither Subscriber nor any of its affiliates nor any
person acting on its or their behalf will use at any
time Shares acquired pursuant to this Agreement to
settle any put option, short position or other similar
instrument or position that may have been entered into
prior to the execution of this Agreement.
2.10 No Sale in Violation of the Act. Subscriber further
covenants that Subscriber will not make any sale,
transfer or other disposition of the Preferred Stock or
the Shares in violation of the Act (including Regulation
S), the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or the rules and regulations of the
Securities and Exchange Commission (the "Commission")
promulgated thereunder.
2.11 Incorporation and Authority. Subscriber has the full
power and authority to execute, deliver and perform this
Agreement and to perform its obligations hereunder. This
Agreement has been duly approved by all necessary action
of Subscriber, including any necessary shareholder
approval, has been executed by persons duly authorized
by Subscriber, and constitutes a valid and legally
binding obligation of Subscriber, enforceable in
accordance with its terms.
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<PAGE>
2.12 No Reliance on Tax Advice. Subscriber has reviewed with
his, her or its own tax advisors the foreign, federal,
state and local tax consequences of this investment,
where applicable, and the transactions contemplated by
this Agreement. Subscriber is relying solely an such
advisors and not on any statements or representations of
the Company or any of its agents and understands that
Subscriber (and not the Company) shall be responsible
for the Subscriber's own tax liability that may arise as
a result of this investment or the transactions
contemplated by this Agreement.
2.13 Independent Legal Advice. Subscriber acknowledges that
Subscriber has had the opportunity to review this
Agreement and the transactions contemplated by this
Agreement with his or her own legal counsel. Subscriber
is relying solely on such counsel and not on any
statements or representations of the Company or any of
its agents for legal advice with respect to this
investment or the transactions contemplated by this
Agreement, except for the representations, warranties
and covenants set forth herein and in the opinion
provided for in Section 7.S herein.
2.14 Compliance. If Subscriber becomes subject to Section
13(d) of the Exchange Act, Subscriber will duly file the
required Schedule thereunder.
2.15 Not an Affiliate. Neither Subscriber nor any investor
for which Subscriber is acting as nominee ("Investor")
is an officer, director or affiliate (as that term is
defined for purposes of Section 16 of the Exchange Act)
of the Company. For this purpose, it is hereby
represented (and such representation is hereby accepted
by the Company) that neither Subscriber nor any Investor
will beneficially own, at any time more than 4.9% of the
total issued and outstanding shares of Common Stock of
the Company upon conversion of all the Preferred Stock.
Subscriber does not have voting control or power of
disposition over securities owned by the Investors and
no Investor is an affiliate of any other Investor or
Subscriber.
2.16 No Pledges. Subscriber has not pledged the Securities,
and will not pledge the Securities during the Restricted
Period (as defined below), as collateral in a margin
account or otherwise with a U.S. person.
2.17 No inquiries. Subscriber has not been the subject of a
regulatory inquiry by the Commission.
2.18 Subscriber acknowledges that the Company does not
currently have a sufficient number of authorized shares
of Common Stock to give effect to the conversion of all
the outstanding shares of Series F Preferred Stock and
Series G Preferred Stock being subscribed for hereby.
The Company agrees to use its best efforts to effect an
amendment to its Articles of Incorporation whereby the
authorized number of shares of Common Stock is increased
so as to permit conversions of all shares of Series F
Preferred Stock and Series G Preferred Stock and the
Subscriber agrees not to request conversions of shares
of Series F or Series G Preferred Stock into more than
8,000,000 shares of Common Stock until such time as such
amendment is effected; provided, however, that the
Company acts in good faith to effect such amendment.
2.19 Warranties of Other Parties. If Subscriber is purchasing
the Preferred Stock for the accounts of parties other
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<PAGE>
than Subscriber (as contemplated by Section 2.9 above),
Subscriber has full power and authority to make the
representations, warranties and agreements made pursuant
to this Agreement on behalf of the owners of such
accounts, and agrees that each representation, warranty
and agreement made by Subscriber herein is also made by
and on behalf of each owner of each such account.
3. Resales
Subscriber acknowledges and agrees that the Securities may and will
only be resold (a) in compliance with Regulation S; (b) pursuant to a
Registration Statement under the Act; or (c) pursuant to an exemption from
registration under the Act.
4. Legends; Subsequent Transfer of Securities
4.1 Legends. The certificates) representing the Preferred
Stock shall bear the legend set forth below and any
other legend, if such legend or legends are reasonably
required by the Company to comply with state, federal or
foreign law. Assuming that there are no changes in the
material facts set forth in Section 2 of this Agreement
or applicable law from the date hereof until the date of
conversion, and subject to the Company's transfer
agent's receipt of a legal opinion from legal counsel to
the Company, the certificate representing the Shares
into which the Preferred Stock is converted after the
Restricted Period shall not bear a legend.
"The shares of preferred stock of Lasergate
Systems, Inc. (the "Issuer") represented by this
certificate have been issued pursuant to
Regulation S, promulgated under the Securities Act
of 1933, as amended (the "Act"), and have not been
registered under the Act or any applicable state
securities laws. These shares may not be offered
or sold within the United States or to or for the
account of a "U.S. Person" (as that term is
defined in Regulation S) during the period
commencing on the sale of these securities and
ending on the forty-fifth (45th) day following
completion of the Regulation S offering of the
Issuer pursuant to which these shares have been
issued (the "Restricted Period"). The Issuer will
notify the transfer agent of the date of
completion of such offering and of the expiration
of such Restricted Period. Following expiration of
the Restricted Period, these shares may not be
offered or sold unless such offer or sale is
registered or exempt from registration under the
Act."
5. Transfers
5.1 Transfers After Restricted Period. Subject to receipt of
a legal opinion from the Subscriber's counsel reasonably
acceptable in form and substance to the Company and its
transfer agent, the Company agrees, and shall instruct
its agents, that the Securities may be transferred to
any person or entity who is not an affiliate of the
Company if such transfer occurs after the Restricted
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<PAGE>
Period, without (a) any further restriction on transfer
(provided the transfer is made in compliance with the
Act) or (b) the entry of a "stop transfer" order against
such Securities, and the Securities delivered to the
transferee shall not bear a legend. The Company may
place a stop transfer order on any Common Stock issued
upon conversion of Preferred Stock during the Restricted
Period for the duration of the Restricted Period and
thereafter in the absence of the aforementioned legal
opinion. Upon election by the Subscriber to convert the
Preferred Stock into Shares, the Subscriber shall
deliver to the Company a duly completed Notice of
Conversion (a "Notice of Conversion") in the form
attached to this Agreement.
6. Representations, Warranties and Covenants of Company
The Company represents and warrants to and covenants with the
Subscriber as follows:
6.1 Organization, Good Standing, and Qualification. The
Company is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Florida and has all requisite corporate power
and authority to carry on its business as now conducted
and as proposed to be conducted. The Company is duly
qualified to transact business and is in good standing
in each jurisdiction in which the failure to so qualify
would have a material adverse effect on the business or
properties of the Company and its subsidiaries taken as
a whole. The Company to its knowledge is not the subject
of any pending or threatened investigation or
administrative or legal proceeding by the Internal
Revenue Service, the taxing authorities of any state or
local jurisdiction, or the Securities and Exchange
Commission which have not been disclosed in the reports
referred to in Section 6.5 below.
6.2 Corporate Condition. None of the Company's filings
made pursuant to the Exchange Act, including, but not
limited to, those reports referenced in Section 6.5
below, contains any untrue statement of a material fact
or omits to state a material fact necessary in order to
make the statements made, in light of the circumstances
under which they were made, not misleading. There have
been no material adverse changes in the Company's
financial condition or business since the date of those
reports which have not been disclosed to Subscriber in
writing.
6.3 Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders
necessary for the authorization, execution and delivery
of this Agreement, the performance of all obligations of
the Company hereunder and the authorization, issuance
(or reservation for issuance) and delivery of the
Preferred Stock being sold hereunder and the Common
Stock issuable upon conversion of the Preferred Stock
have been taken subject to the provisions of Section
2.18 hereof and the filing of the amendment contemplated
thereby, and this Agreement constitutes a valid and
legally binding obligation of the Company, enforceable
in accordance with its terms.
6.4 Valid Issuance of Preferred Stock and Common Stock. The
Preferred Stock, when issued, sold and delivered in
accordance with the terms hereof for the consideration
expressed herein, will be validly issued, fully paid and
nonassessable and, based in part upon the
representations of the Subscriber in this Agreement,
will be issued in compliance with all applicable U.S.
federal and state securities laws. The Common Stock
issuable upon conversion of the Preferred Stock when
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<PAGE>
issued in accordance with the terms of the Certificate
of Designation, shall be duly and validly issued and
outstanding, fully paid and nonassessable, and based in
part on the representations and warranties of Subscriber
and any transferee of the Preferred Stock, will be
issued in compliance with all applicable U.S. federal
and state securities laws.
6.5 Current Public Information. The Company represents and
warrants to the Subscriber that the Company is a
"reporting issuer" as defined in Rule 902(l) of
Regulation S and it has a class of securities registered
under Section 12(g) of the Exchange Act and has filed
all the materials required to be filed as reports
pursuant to the Exchange Act for a period of at least
twelve months preceding the date hereof (or for such
shorter period as the Company was required by law to
file such material). The Subscriber has obtained copies
of the Company's Form 10-KSB Annual Report for the year
ended December 31, 1996 and Form 10-QSB for the fiscal
quarters ended March 31, 1997 and June 30, 1997. The
Company undertakes to furnish the Subscriber with copies
of such other information as may be reasonably requested
by the Subscriber prior to consummation of this
Offering.
6.6 No Directed Selling Efforts in Regard to this
Transaction. The Company has not, and to the best of the
Company's knowledge neither the Subscriber nor any
distributor, if any, participating in the offering of
the Securities nor any person acting for the Company or
any such distributor has conducted any "directed selling
efforts" as that term is defined in Rule 902 of
Regulation S. Such activity includes, without
limitation, the mailing of printed material to investors
residing in the United States, the holding of
promotional seminars in the United States, the placement
of advertisements with radio or television stations
broadcasting in the United States or in publications
with a general circulation in the United States, which
discuss the offering of Shares. The Company represents
and warrants that the Offering is not part of a plan or
scheme to evade the registration provisions of the Act.
6.7 No Conflicts. The execution and delivery of this
Agreement and the consummation of the issuance of the
Securities and the transactions contemplated by this
Agreement do not and will not conflict with or result in
a breach by the Company of any of the terms or
provisions of, or constitute a default under, the
Certificate of Incorporation or bylaws of the Company,
or any indenture, mortgage, deed of trust or other
material payment or instrument to which the Company is a
party or by which it or any of its properties or assets
are bound, or any existing applicable decree, judgment
or order of any court, Federal or State regulatory body,
administrative agency or other governmental body having
jurisdiction over the Company or any of its properties
or assets.
6.8 Issuance of Securities. The Company will issue one or
more certificates representing the Preferred Shares in
the name of Subscriber in such denominations to be
specified by the Company prior to closing. Upon
conversion of the Preferred Shares in accordance with
their terms, the Company will issue one or more
certificates representing Shares in the name of
Subscriber and in such denominations to be specified by
Subscriber prior to conversion. Subject to the Company's
transfer agent's receipt of a legal opinion from legal
counsel to the Subscriber reasonably acceptable in form
and substance to the Company and its transfer agent, the
Shares to be issued upon conversion of the Preferred
Shares shall not bear any restrictive legends. The
Company further warrants that no instructions other than
these instructions, and instructions for a "stop
transfer" until the end of the Restricted Period, have
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<PAGE>
been given to the transfer agent and also warrants that
the Shares shall otherwise be freely transferable by
Subscriber on the books and records of the Company
subject to compliance with Federal and State securities
laws, the receipt of a legal opinion from legal counsel
to the Subscriber reasonably acceptable in form and
substance to the Company and its transfer agent and the
terms of the Preferred Shares. The Company will notify
the transfer agent of the date of completion of the
offering and of the date of expiration of the Restricted
Period. Nothing in this section shall affect in any way
Subscriber's obligations and agreement to comply with
all applicable securities laws upon resale of the
Securities.
6.9 No Action. The Company has not taken and will not take
any action that will affect in any way the running of
the Restricted Period or the ability of Subscriber to
resell freely the Securities in accordance with
applicable securities laws and the Agreement.
6.10 Compliance with Laws. As of the date hereof, the conduct
of the business of the Company complies in all material
material respects with all material statutes, laws,
regulations, ordinances, rules, judgments, orders or
decrees applicable thereto. The Company has not received
notice of any alleged violation of any statute, law,
regulations, ordinance, rule, judgement, order or decree
from any governmental authority. The Company shall
comply with all applicable securities laws with respect
to the sale of the Securities, including but not limited
to the filing of all reports required to be filed in
connection therewith with the Securities and Exchange
Commission or any stock exchange or the NASDAQ Stock
Market or any other regulatory authority.
6.11 Litigation. Except as disclosed in the Company's Annual
Report on Form 10- KSB and the Company's most recently
filed Form 10-QSB, there is no action, suit or
proceeding before or by any court or governmental agency
or body, domestic or foreign, now pending or, to the
knowledge of the Company, threatened, against or
affecting the Company, or any of its properties, which
could reasonably be expected to result in any material
adverse change in the business, financial condition or
results of operations of the Company, or which could
reasonably be expected to materially and adversely
affect the properties or assets of the Company.
6.12 No U.S. Offering. The Company represents that it has not
offered the Securities to the Subscriber or any Investor
in the U.S. or to any person in the United States or any
U.S. person.
6.13 Disclosures. There is no fact known to the Company
(other than general economic conditions known to the
public generally) that has not been disclosed in writing
to the Subscriber that (a) could reasonably be expected
to have a material adverse effect on the business,
financial condition or results of operations of the
Company, or which could reasonably be expected to
materially and adversely affect the properties or assets
of the Company, other than the Company's low cash
position which has been disclosed to the Subscriber or
(b) could reasonably be expected to materially and
adversely affect the ability of the Company to perform
its obligations pursuant to this Subscription Agreement
and the issuance of the Preferred Stock hereunder.
6.14 Capitalization. The Company, as of the date of the
Closing, will have outstanding the number of shares of
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<PAGE>
Common Stock, Preferred Stock and Warrants as set forth
on Exhibit D.
7. Additional Covenants of Company
7.1 Accountants. The Company shall, until at least the
second anniversary of the date of the Closing (the
"Closing Date"), maintain as its independent auditors an
accounting firm that is authorized to practice before
the SEC.
7.2 Corporate Existence and Taxes. The Company shall, until
at least the second anniversary of the Closing Date,
maintain its corporate existence in good standing, and
shall pay all its taxes when due except for taxes which
the Company disputes.
7.3 Reserved Shares and Listings. For so long as any shares
of Preferred Stock held by the Subscriber remain
outstanding subject to the provisions of Section 2.18
hereof and adoption of the amendment to the Company's
Articles of Incorporation contemplated thereby, the
Company will reserve from its authorized but unissued
shares of Common Stock ("Common Stock") a sufficient
number of Shares to permit the conversion in full of the
outstanding shares of Series G Preferred Stock; and
7.4 Liquidated Damages for Failure to Authorize Conversion
Shares. Subject to the terms and provisions hereof, the
Company shall use its best efforts to issue and deliver,
within three (3) business days after the Subscriber has
fulfilled all conditions and submitted all necessary
documents duly executed and in proper form required for
conversion (the "Deadline"), to the Subscriber or any
party receiving Preferred Stock by transfer from the
Subscriber (together with the Subscriber, a "Holder"),
at the address of the Holder on the books of the
company, a certificate or certificates for the number of
Shares of Common Stock to which the Holder shall be
entitled. The Company understands that a delay in the
issuance of the Shares of Common Stock beyond the
Deadline could result in economic loss to the Holder
and, accordingly, that it is important that the Company
act swiftly to obtain the authorization of its
stockholders to amend its Articles of Incorporation and
that such an amendment be effected so that enough shares
of Common Stock are authorized to permit conversion of
all shares of Preferred Stock (the "Amendment"). As
compensation to the Holder for the Company's failure to
affect the Amendment, the Company agrees to pay
liquidated damages to the Holder in accordance with the
following schedule (where "No. Days Late" is defined as
the number of days following the date hereof until the
Amendment is effected).
No. Days Late Liquidated Damages
120-240 $375,000
240-360 $750,000
An additional $750,000 for
each 120 days thereafter.
The Company shall pay the Holder any liquidated damages
incurred under this Section, by check within 10 days
after the date such liquidated damages are incurred;
provided, however, that if in the good faith
determination of the Company's Board of Directors the
Company does not have sufficient cash balances to pay
such penalty in cash and continue its operations as then
being conducted, it may pay such penalty with a
promissory note which will accrue interest at the rate
of 20% per annum until paid in full. Nothing herein
shall limit the Subscriber's right to pursue actual
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<PAGE>
damages for the Company's failure to issue and deliver
shares of Common Stock to the Subscriber in accordance
with the terms of the Certificate of Designation.
7.5 Conversion Notice. The Company agrees that, in addition
to any other remedies which may be available to the
Subscriber, including, but not limited to, remedies
available under Section 7.4 of this Agreement, in the
event the Company fails for any reason to effect
delivery to the Subscriber of certificates representing
Shares within three business days following receipt by
the Company of a Notice of Conversion, the Investor will
be entitled to revoke the Notice of Conversion by
delivering a notice to such effect to the Company
whereupon the Company and the Subscriber shall each be
restored to their respective positions immediately prior
to delivery of such Notice of Conversion.
7.6 Opinion of Counsel. Subscriber shall, upon purchase of
the shares of Preferred Stock, receive an opinion letter
from Parker, Chapin, Flattau & Klimpl, LLP, counsel to
the Company, to the effect that (i) the Company is duly
incorporated and validly existing; (ii) this Agreement
has been duly approved by all required corporate action;
and (iii) this Agreement and the Registration Rights
Agreement are valid and binding obligations of the
Company, enforceable in accordance with their terms,
except as enforceability of any indemnification
provisions may be limited by principles of public
policy, and subject to laws of general application
relating to bankruptcy, insolvency and the relief of
debtors and rules of laws governing specific performance
and other equitable remedies.
7.7 Consultation with Legal Counsel. The Company shall
consult with its legal counsel regarding its Exchange
Act filing requirements including, but not limited to,
the possible obligation of the Company to file Forms
10-C and Form S-K in connection with the offering, and
will timely make any and all such filings deemed
necessary by such counsel.
7.8 Registration Rights. The Company will grant the
Subscriber the registration rights covering the Shares
issuable on conversion of the Preferred Stock on
substantially the terms of the Registration Rights
Agreement attached hereto as Exhibit B on the Closing
Date.
8. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida, U.S.A., applicable to agreements made in and
wholly to be performed in that jurisdiction, except for matters arising under
the Act or the Exchange Act which matters shall be construed and interpreted in
accordance with such laws. Any action brought to enforce, or otherwise arising
out of, this Agreement shall be heard and determined in either a federal or
state court sitting in the State of Florida, U.S.A.
9. Entire Agreement; Amendment
This Agreement, the Certificate of Designation, the Registration
Rights Agreement and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and thereof, and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants except
as specifically set forth herein or therein. Except as expressly provided
herein, neither this Agreement nor any term hereof may be amended, waived,
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<PAGE>
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought.
10. Notices, Etc.
Any notice, demand or request required or permitted to be given by
either the Company or the Subscriber pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally or by
facsimile, with a hard copy to follow by two day courier addressed to the
parties at the addresses of the parties set forth at the end of this Agreement
or such other address as a party may request by notifying the other in writing.
11. Counterparts
This Agreement may be executed in any number of counterparts, each
of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
12. Severability
In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
13. Title and Subtitles
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
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<PAGE>
14. Amount
The undersigned Subscriber hereby subscribes for 7,500 shares of
Preferred Stock with a face value of One Thousand Dollars ($1,000.00 (U.S.)) per
share and pays herewith funds in the amount of Seven Million Five Hundred
Thousand Dollars ($7,500,000 (U.S.)).
The undersigned Subscriber acknowledges that this subscription shall
not be effective unless accepted by the Company as indicated below.
Dated this 31st day of October, 1997.
RBB Bank Aktiengesellschaft (as agent for independent clients)
- --------------------------------------------------------------
(Name) (Please Print)
Herbert Strauss
- ---------------
(Signature)
Burgring 16, 8010 Graz, Austria
- -------------------------------
(Mailing Address)
Austria
- -------------------------------
(Place of Execution)
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 31st DAY OF
October, 1997.
LASERGATE SYSTEMS, INC.
By: /s/ Jacqueline E. Soechtig
------------------------------
Print Name: Jacqueline E. Soechtig
---------------------------
Title: Chairman, CEO & President
------------------------------
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NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the share(s) of Series G Preferred Stock)
The undersigned hereby irrevocably elects to convert shares of Series G
Preferred Stock ("Preferred Stock"), represented by stock certificate No(s).
_______ (the "Preferred Stock Certificate(s)") into shares of common stock
("Common Stock") of Lasergate Systems, Inc. (the "Company") according to the
conditions of the Certificate of Designation of Series G Preferred Stock, as of
the date written below. If shares are to be issued in the name of a person other
than undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates. No fee will be
charged to the undersigned for any conversion, except for transfer taxes, if
any.
The undersigned represents that it and each person or entity on whose behalf it
holds shares of Preferred Stock to be converted into Common Stock (each an
"Investor"): (i) is familiar with and understands the terms, conditions and
requirements contained in Regulation S ("Regulation S") and Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Act"); (ii) is not a "U.S.
Person" or "distributor" as defined in Regulation S; (iii) purchased the shares
,of Preferred Stock for which conversion is being elected, and is purchasing the
Common Stock referenced herein, for its own account and for the account of each
Investor and not for the account or benefit of any U.S. Person; (iv) will comply
with the transfer restrictions contained in Section 4(l) of the Act and Rule 144
promulgated thereunder to the extent they are applicable; (v) has not had a
"short" position in the Company's securities at any time since the Purchase of
the Preferred Stock (including any short call position or any long put position
or any contract or arrangement that had the effect of eliminating or
substantially diminishing the risk of ownership of the Preferred Stock) nor has
it engaged in any hedging transaction with respect to the Preferred Stock or the
Common Stock; (vi) has no prior understanding with respect to the sale of the
Common Stock to any third party; (vii) has not engaged in any "directed selling
efforts" (as such term is defined in Regulation S) with respect to the Preferred
Stock or the Common Stock issuable upon conversion of the Preferred Stock;
(viii) purchased the Preferred Stock with investment intent, is purchasing the
Common Stock with investment intent and presently has no intent to sell, dispose
of or otherwise transfer the Common Stock; (ix) will make any sale, transfer or
other disposition of the Common Stock in full compliance with the Act, the
Exchange Act, as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder; and (x) received the offer to
purchase the Preferred Stock outside the United States and, at the time the
Subscription Agreement pursuant to which the Preferred Stock was executed was,
and upon execution of this Notice of Conversion is, outside the United States.
The undersigned has obtained representations from each Investor with respect to
compliance with paragraphs (i) - (x) of this Notice.
Conversion Formula: ------------------------------
Date of Conversion
------------------------------
Applicable Conversion Price
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------------------------------
Signature
------------------------------
Name
Address:
------------------------------
------------------------------
* No shares of Common Stock will be issued until the original Preferred Stock
Certificate(s) to be converted and the Notice of Conversion are received by the
Company or its Transfer Agent. The original Preferred Stock Certificate(s) to be
converted and the Notice of Conversion must be received by the Company or its
Transfer Agent by the third business day following the Date of Conversion, or
such Notice of Conversion shall become null and void in the discretion of the
Company.
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EXHIBIT B
---------
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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<PAGE>
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 28050 U.S. 19
North, Suite 502, Clearwater, Florida 34621, 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/ Jacqueline E. Soechtig By: /s/ Herbert Strauss
---------------------------- --------------------------
Name: Jacqueline E. Soechtig Name: Herbert Strauss
---------------------------- ----------------------------
Title: Chairman, CEO and President Title: Head Trader
---------------------------- ----------------------------
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[LASERGATE SYSTEMS, INC. LETTERHEAD]
October 30, 1997
RBB Bank Aktiengesellschaft
Attn: Mr. Herbert Strauss
Burgring 16, 8010 Graz
Austria
Dear Herbert:
By signing in the space below, and returning a copy of this letter by fax, you
confirm your agreement that in consideration of Lasergate System Inc's (LSi)
acceptance of your subscription to purchase 7,500 shares of Series G Convertible
Preferred Stock at a total price of seven million five hundred thousand dollars
($7,500,000 U.S.) upon LSi's election in writing on or before midnight EST
November 6, 1997, you will cause the holders of seven thousand nine hundred
forty-five (7,945) shares of the issued and outstanding Series F Convertible
Preferred Stock, to sell such stock to LSi for a total price of six million
dollars ($6,000,000 U.S.) payable to RBB Bank Aktiengesellschaft against
delivery of the shares.
Sincerely,
/s/ Jacqueline E. Soechtig
- --------------------------
Jacqueline E. Soechtig
Chairman, CEO, President
Agreed:
RBB Bank Aktiengesellschaft
By: /s/ Herbert Strauss
----------------------- -----------------------
Herbert Strauss Date
Head Trader
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Title
