Document:

Exhibit 4.1

 

SCL VENTURES, LTD.

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS
AGREEMENT (this “Agreement”) is made as of June 1, 2004 by and between SCL
Ventures, Ltd., a company organized under the laws of the British Virgin
Islands (the “Company”), the Tier I Shareholders (as defined below) listed on
Schedule I hereto, the Tier II Shareholders (as defined below) listed on
Schedule II hereto and the Tier III Shareholders (as defined below) listed
on Schedule III hereto.  The Tier I
Shareholders, the Tier II Shareholders and the Tier III Shareholders are
collectively referred to as the “Shareholders.”

 

WHEREAS, from time to
time on or prior to the date hereof, the Company issued to the Shareholders
shares of Company common stock, US$0.01 par value per share (“Common Stock”),
and/or warrants to purchase shares of Common Stock (“Warrants”);

 

WHEREAS, the Company
agreed to issue and sell to investors up to an aggregate of six million
(6,000,000) shares of Common Stock of the Company (the “Offering”), upon the
terms set forth in the Company’s Confidential Private Placement Memorandum,
dated May 2004; and

 

WHEREAS, to induce
investors to purchase the Common Stock, the Company agreed to undertake to
register the Common Stock if, as and when required hereunder, under the terms
set forth herein.

 

NOW, THEREFORE, the
parties hereto hereby covenant and agree as follows:

 

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.

 

“Exchange Act” shall mean
the Securities Exchange Act of 1934, 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.

 

“Laser” shall mean Laser
Recording Systems, Inc., a New Jersey corporation whose common stock is
currently listed for trading on the Nasdaq OTC Bulletin Board.

 

“Person” shall mean any
individual, corporation, partnership, limited liability company, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other entity, and
shall include any successor (by merger or otherwise) of such entity.

 

“Public Sale” shall mean
any sale of securities to the public pursuant to (i) an offering registered
under the Securities Act or (ii) the provisions of Rule 144 (or any similar
rule or rules then in effect) under the Securities Act.

 

 

“Register,” “registered”
and “registration” shall mean a registration effected by preparing and filing a
registration statement or statements or similar documents in compliance with
the Securities Act and the declaration or ordering of effectiveness of such
registration statement or document by the Commission.

 

“Registrable Securities”
shall mean (i) all shares of Common Stock held by the Shareholders, (ii) all
shares of Common Stock issued as a dividend or other distribution with respect
to, or in exchange for or in replacement of, any shares of Common Stock held by
the Shareholders, as the case may be, and (iii) all Warrants to purchase Common
Stock held by the Shareholders.  As to any
particular Registrable Securities, such securities shall cease to be
Registrable Securities when they (i) have been distributed to the public
pursuant to an offering registered under the Securities Act, (ii) have been
sold to the public through a broker, dealer, or market maker in compliance with
Rule 144 under the Securities Act (or any similar rule then in force), (iii)
have been sold by a Person in a private transaction in which his rights under
this Agreement are not assigned or (iv) may be sold by thee holder to the
public without registration through a broker, dealer, or market maker in a
single three-month period in compliance with Rule 144 under the Securities Act
(or any similar rule then in force).

 

“Requisite Period” shall
mean, with respect to a firm commitment underwritten public offering, the
period commencing on the effective date of the registration statement and
ending on the date each underwriter has completed the distribution of all
securities purchased by it, and, with respect to any other registration, the
period commencing on the effective date of the registration statement and
ending on the earlier of the date on which the sale of all Registrable
Securities covered thereby is completed or 180 days after such effective date.

 

“Securities Act” shall
mean the Securities Act of 1933, as amended, or any similar federal statue, and
the rules and regulations of the Commission thereunder, all as the same shall
be in effect at the applicable time.

 

“Share Exchange” shall
mean that certain share exchange transaction in which each holder of
outstanding shares of capital stock of the Company shall exchange such shares
for an equal number of shares of common stock of Laser.

 

“Tier I Shareholders”
shall mean holders of the Company’s Common Stock and/or Warrants to purchase
shares of the Company’s Common Stock who paid cash to the Company in exchange
for such securities, including the investors in the Offering, and who are not,
at the time they propose to exercise the rights granted pursuant to this
Agreement, directors, officers or employees of the Company.

 

“Tier II Shareholders”
shall mean holders of the Company’s Common Stock and/or Warrants to purchase
shares of the Company’s Common Stock who performed services for the Company or
contributed property to the Company in exchange for such securities, and who
are not, at the time they propose to exercise the rights granted pursuant to
this Agreement, directors, officers or employees of the Company.

 

“Tier III Shareholders”
shall mean holders of the Company’s Common Stock and/or Warrants to purchase
shares of the Company’s Common Stock who (a) acquired such securities in
connection with their employment with the Company or (b) who are, at the time

 

 

they propose to exercise
the rights granted pursuant to this Agreement, directors, officers or employees
of the Company.

 

2.                                       Demand Registration.

 

(a)                                  Commencing one hundred and eighty (180)
days after the Company completes the Share Exchange, the holders of Registrable
Securities constituting at least twenty-five percent (25%) of the total Registrable
Securities then outstanding may, by written notice (collectively, a “Demand
Notice”), require that the Company register, or cause Laser to register, under
the Securities Act all or any portion of their Registrable Securities in the
manner specified in the Demand Notice, so long as such registration covers
sales having an anticipated offering price, net of underwriting discounts and
commissions, equal to or more than $10,000,000.

 

(b)                                 Within 10 days of receipt of any Demand
Notice under Section 2(a) above, the Company shall give written notice (a
“Company Notice”) to all holders of Registrable Securities from whom a Demand
Notice has not been received. 
Thereafter, the Company shall use its best efforts to register under the
Securities Act, in accordance with the method of disposition specified in the
Demand Notice, the number of Registrable Securities specified in the Demand
Notice (and in all notices received by the Company from other holders within
twenty (20) days after the giving of such Company Notice).  The Company shall be obligated to register
Registrable Securities pursuant to Section 2(a) on two occasions only and
no more than one such demand registration in any one hundred eighty (180) day
period; provided that such obligation shall be deemed satisfied only when a
registration statement covering all Registrable Securities specified in notices
received as aforesaid, for sale in accordance with the method of disposition
specified in the Demand Notice, shall have become effective and, if such method
of disposition is a firm commitment underwritten public offering, all such
Registrable Securities shall have been sold pursuant thereto.  In addition, the Company shall have the
right to delay the filing of a registration statement pursuant to this Section 2
for one period not to exceed 120 days in any twelve (12) month period if the
Board of Directors of the Company shall have determined in good faith, that to
so file the registration statement would be reasonably detrimental to the
Company, and an executive officer of the Company has delivered to the holder(s)
a certificate to such effect.

 

(c)                                  If a demand registration is an
underwritten public offering and the managing underwriters shall advise the
Company in writing that in their opinion the number of Registrable Securities
requested to be included in such offering exceeds the number of shares which
can be sold in an orderly manner in such offering within a price range
acceptable to the requiring holders without adversely affecting the
marketability of the offering, then the number of shares of Registrable
Securities to be included in such registration shall be subject to cutback, and
the Company will include in such demand registration (i) first, the Registrable
Securities of the Tier I Shareholders pro rata among them, (ii) second, the
Registrable Securities of the Tier II Shareholders pro rata among them, (iii)
third, the Registrable Securities of the Tier III Shareholders pro rata among
them, and (iv) fourth, other securities requested to be included in such
registration, pro rata from among the other shareholders of the Company who
have registration rights, in each case according to the number of such
securities requested by them to be so included.

 

(d)                                 If a demand registration is not an
underwritten public offering and the Board of Directors of the Company shall
have determined in good faith that to file a registration

 

 

statement covering the
number of shares of Registrable Securities requested to be included in such
registration would be reasonably detrimental to the Company, then the number of
shares of Registrable Securities to be included in such registration shall be
subject to cutback by the Company, provided that the number of shares of
Registrable Securities included in such demand registration shall not in any
case be reduced to less than ten percent (10%) of the total number of shares of
capital stock of the Company outstanding at such time, and the Company will
include in such demand registration (i) first, the Registrable Securities of the
Tier I Shareholders pro rata among them, (ii) second, the Registrable
Securities of the Tier II Shareholders pro rata among them, (iii) third, the
Registrable Securities of the Tier III Shareholders pro rata among them, and
(iv) fourth, other securities requested to be included in such registration,
pro rata from among the other shareholders of the Company who have registration
rights, in each case according to the number of such securities requested by
them to be so included.

 

3.                                       Piggyback Registration.

 

(a)                                  Commencing ninety (90) days after the
Company completes the Share Exchange, if the Company proposes to register any
of its securities under the Securities Act for sale to the public (other than
pursuant to Section 2 hereof), whether for its own account or for the
account of other security holders or both (except with respect to registration
statements on Forms S-4, F-4, and S-8 and any similar successor forms) (a
“Piggyback Registration”), each such time it will give prompt written notice to
such effect to all holders of outstanding Registrable Securities at least
thirty (30) days prior to such filing. 
Upon the written request of any such holder, received by the Company
within twenty (20) days after the giving of any such notice by the Company, to
register any of its Registrable Securities, the Company will, subject to
Section 3(b) below, cause all Registrable Securities as to which
registration shall have been so requested to be included in the securities to
be covered by the registration statement proposed to be filed by the Company,
all to the extent requisite to permit the sale or other disposition by the
holder of such Registrable Securities so registered.  Notwithstanding the foregoing provisions, the Company may
withdraw any registration statement referred to in this Section 3 without
thereby incurring any liability to the Shareholders.

 

(b)                                 In the event that any Piggyback
Registration shall be, in whole or in part, an underwritten public offering of
Common Stock and the managing underwriters advise the Company in writing that
in their opinion the number of Registrable Securities and/or other securities
requested to be included in such offering exceeds the number of shares which
can be sold in an orderly manner in such offering within a price range
acceptable to the Company without adversely affecting the marketability of the
offering, then the number of shares of Registrable Securities to be included in
such registration shall be subject to cutback, and the Company will include in
such registration (i) first, the securities the Company proposes to sell, (ii)
second, the Registrable Securities of the Tier I Shareholders pro rata among
them, (iii) third, the Registrable Securities of the Tier II Shareholders pro
rata among them, and (iv) fourth, the Registrable Securities of the Tier III
Shareholders pro rata among them, in each case according to the number of such
securities requested by them to be so included.

 

(c)                                  If any Piggyback Registration shall not
be, in whole or in part, an underwritten public offering and the Board of
Directors of the Company shall have determined in good faith that to file a
registration statement covering the number of shares of Registrable Securities
requested to be included in such registration would be reasonably detrimental
to the Company, then the number of shares of Registrable Securities to be
included in such registration

 

 

shall be subject to cutback by
the Company, provided that the number of shares of Registrable Securities
included in such demand registration shall not in any case be reduced to less
than ten percent (10%) of the total number of shares of capital stock of the
Company outstanding at such time, and the Company will include in such demand
registration (i) first, the Registrable Securities of the Tier I Shareholders
pro rata among them, (ii) second, the Registrable Securities of the Tier II
Shareholders pro rata among them, (iii) third, the Registrable Securities of
the Tier III Shareholders pro rata among them, and (iv) fourth, other
securities requested to be included in such registration, pro rata from among
the other shareholders of the Company who have registration rights, in each
case according to the number of such securities requested by them to be so
included.

 

4.                                       Limitations on Registration; Holdback
Agreement; Power of Attorney.

 

(a)                                  Notwithstanding anything to the contrary
contained in this Agreement, the Company shall not be required to file a
registration statement pursuant to Section 2 hereof (i) which would become
effective within 120 days following the effective date of a registration
statement (other than a registration statement filed on Forms S-4, F-4 or S-8)
filed by the Company with the Commission pertaining to any subsequent public
offering for the account of the Company or another holder of securities of the
Company if the holder(s) of Registrable Securities were afforded the
opportunity, even if subject to and/or eliminated by the underwriter’s
cut-back, to include all of its Registrable Securities in such subsequent
registration pursuant to Section 3 or (ii) if the Company delivers notice
to the holders of Registrable Securities with thirty (30) days of any
registration request stating its intent to file a registration statement within
ninety (90) days.

 

(b)                                 The holders of Registrable Securities
agree, if so requested by the Company or by the underwriter or underwriters in
connection with an underwritten public offering of the Company’s securities,
not to effect any Public Sale or distribution (including any sale pursuant to
Rule 144 under the Securities Act) of any Registrable Securities, and not to
effect any such Public Sale or distribution of any other equity security of the
Company or of any security convertible into or exchangeable or exercisable for
any equity security of the Company (in each case, other than as part of such
underwritten public offering) during the 180 days following the effective date
of the registration statement (other than a registration statement on Forms
S-4, F-4 or S-8) with respect to such other underwritten public offering;
provided that all directors, officers, and all holders of 5% or more of the
Company’s then outstanding equity securities are subject to the same
restriction.

 

5.                                       Registration Procedures.  If and whenever the Company is required by the
provisions hereof to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act, the Company will, as
expeditiously as possible:

 

(a)                                  subject to Section 4(a), prepare and
file with the Commission a registration statement with respect to such
securities within 60 days after delivery of a Demand Notice under
Section 2(b) hereof, and use its best efforts to cause such registration
statement to become effective not later than 60 days from the date of its filing
and to remain effective for the Requisite Period;

 

(b)                                 prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be

 

 

necessary to keep such
registration statement effective for the Requisite Period and comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement in accordance
with the intended method of disposition set forth in such registration
statement for the Requisite Period;

 

(c)                                  furnish to each seller of Registrable
Securities and to each underwriter such number of copies of the registration
statement and the prospectus included therein (including each preliminary prospectus)
as such persons reasonably may request in order to facilitate the intended
disposition of the Registrable Securities covered by such registration
statement;

 

(d)                                 use its best efforts (i) to register or
qualify the Registrable Securities covered by such registration statement under
the securities or “blue sky” laws of such jurisdictions as the sellers of
Registrable Securities or, in the case of an underwritten public offering, the
managing underwriter reasonably shall request, (ii) to prepare and file in
those jurisdictions such amendments (including post effective amendments) and
supplements, and take such other actions, as may be necessary to maintain such
registration and qualification in effect at all times for the period of
distribution contemplated thereby and (iii) to take such further action as may
be necessary or advisable to enable the disposition of the Registrable
Securities in such jurisdictions; provided that the Company shall not for any
such purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;

 

(e)                                  use its best efforts to list the
Registrable Securities covered by such registration statement with any
securities exchange on which shares of Common Stock of the Company are then
listed, or, if shares of Common Stock are not then listed on a national
securities exchange, use its best efforts to list and facilitate the reporting
of the Common Stock on The New York Stock Exchange, The American Stock
Exchange, or The Nasdaq National Market or SmallCap Market;

 

(f)                                    immediately notify each seller of
Registrable Securities and each underwriter under such registration statement,
at any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event of which the Company
has knowledge as a result of which the prospectus contained in such
registration statement, as then in effect, includes any untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing and promptly amend or supplement such registration
statement to correct any such untrue statement or omission;

 

(g)                                 notify each seller of Registrable
Securities of the issuance by the Commission of any stop order suspending the
effectiveness of the registration statement or the initiation of any
proceedings for that purpose and make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, obtain the lifting
thereof at the earliest possible time;

 

(h)                                 permit a single firm of counsel
designated as selling shareholders’ counsel by the holders of a majority in
interest of the Registrable Securities and all other securities being
registered to review the registration statement and all amendments and
supplements thereto for a

 

 

reasonable period of time
prior to their filing and the Company shall not file any document in a form to
which such counsel reasonably objects;

 

(i)                                     if the offering is an underwritten
offering, the Company will enter into a written agreement with the managing
underwriter selected in the manner herein provided in such form and containing
such provisions as are usual and customary in the securities business for such
an arrangement between such underwriter and companies of the Company’s size and
investment stature, including, without limitation, customary holdback,
indemnification and contribution provisions;

 

(j)                                     if the offering is an underwritten
offering, at the request of any seller of Registrable Securities, use its best
efforts to furnish to such seller on the date that Registrable Securities are
delivered to the underwriters for sale pursuant to such registration: (i) a
copy of an opinion dated such date of counsel representing the Company for the
purposes of such registration, addressed to the underwriters, stating that such
registration statement has become effective under the Securities Act and (A)
that, to the best knowledge of such counsel, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the Securities Act, (B)
that the registration statement, the related prospectus and each amendment or
supplement thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not express
any opinion as to financial statements or other financial or statistical
information contained therein) and (C) to such other effects as reasonably may
be requested by counsel for the underwriters and (ii) a copy of a letter dated
such date from the independent public accountants retained by the Company,
addressed to the underwriters, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion
of such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to
the period ending no more than five business days prior to the date of such
letter) with respect to such registration as such underwriters reasonably may
request;

 

(k)                                  make available for inspection by each
seller of Registrable Securities, any underwriter participating in any
distribution pursuant to such registration statement, and any attorney,
accountant or other agent retained by such seller or underwriter, all financial
and other records, pertinent corporate documents and properties of the Company,
and cause the Company’s officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;

 

(l)                                     provide a transfer agent and registrar,
which may be a single entity, for the Registrable Securities not later than the
effective date of the registration statement;

 

(m)                               take all actions reasonably necessary to
facilitate the timely preparation and delivery of certificates (not bearing any
legend restricting the sale or transfer of such securities) representing the
Registrable Securities to be sold pursuant to the registration statement; and

 

(n)                                 take all other reasonable actions necessary
to expedite and facilitate the registration of the Registrable Securities
pursuant to the registration statement.

 

 

In connection with each
registration hereunder, the sellers of Registrable Securities will furnish to
the Company in writing such information with respect to themselves and the
proposed distribution by them as reasonably shall be necessary in order to
assure compliance with federal and applicable state securities laws.

 

6.                                       Expenses.  All expenses incurred by the Company in complying with Sections
2, and 3, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees and expenses (including counsel fees)
incurred in connection with complying with state securities or “blue sky” laws,
fees of the National Association of Securities Dealers, Inc., fees of transfer
agents and registrars, costs of insurance and fees and disbursements of one
counsel for the sellers of Registrable Securities and all other securities
being registered, but excluding any Selling Expenses, are called “Registration
Expenses.” All underwriting discounts, selling commissions and stock transfer
taxes applicable to the sale of Registrable Securities are called “Selling
Expenses.”

 

The Company will pay all
Registration Expenses in connection with each registration statement filed
hereunder.  All Selling Expenses in
connection with each registration statement shall be borne by the participating
sellers in proportion to the number of Registrable Securities sold by each or
as they may otherwise agree.

 

7.                                       Indemnification and Contribution.  (a) 
In the event of a registration of any of the Registrable Securities
under the Securities Act pursuant to the terms of this Agreement, the Company
will indemnify and hold harmless and pay and reimburse each seller of such
Registrable Securities thereunder, each underwriter of Registrable Securities
thereunder and each other person, if any, who controls such seller or
underwriter within the meaning of the Securities Act, from and against, and pay
or reimburse them for, any losses, claims, expenses, damages or liabilities,
joint or several, to which such seller, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
Registrable Securities were registered under the Securities Act pursuant
hereto, any preliminary prospectus (unless superseded by a final prospectus) or
final prospectus contained therein, or any amendment or supplement thereof, or
(ii) the omission or alleged omission to state in any such registration
statement a material fact required to be stated therein or necessary to make
the statements therein not misleading or, with respect to any prospectus,
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or (iii) any violation or alleged
violation of the Securities Act or any state securities or blue sky laws
applicable to the Company and relating to action or inaction required by the
Company, and specifically will reimburse each such seller, each underwriter and
each such controlling person for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such loss,
claim, damage or liability (or action in respect thereof); provided that the
Company will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability (or action in respect thereof) arises out of
or is based upon the Company’s reliance on an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by any such seller, any such underwriter or any such
controlling person in writing specifically for use in such registration statement
or prospectus; and provided, further, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage or liability (or
action in respect thereof)

 

 

arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission in such registration statement or prospectus, which untrue statement
or alleged untrue statement or omission or alleged omission is completely
corrected in an amendment or supplement to the registration statement or
prospectus and such seller or such controlling person thereafter fails to
deliver or cause to be delivered such registration statement or prospectus as
so amended or supplemented prior to or concurrently with the Registrable
Securities to the person asserting such loss, claim, damage or liability (or
action in respect thereof) or expense after the Company has furnished such
seller or such controlling person with the same.

 

(b)                                 In the event of a registration of any of
the Registrable Securities under the Securities Act pursuant hereto, each
seller of such Registrable Securities thereunder, severally and not jointly,
will indemnify and hold harmless the Company, each person, if any, who controls
the Company within the meaning of the Securities Act, each officer of the
Company who signs the registration statement, each director of the Company and
each underwriter and each person who controls any underwriter within the
meaning of the Securities Act from and against all losses, claims, expenses,
damages or liabilities, joint or several, to which the Company or such officer,
director, or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based on any untrue statement or
alleged untrue statement of any material fact contained in the registration
statement under which such Registrable Securities were registered under the
Securities Act pursuant hereto, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse the Company and each such officer, director,
underwriter and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage or liability (or action in respect thereof); provided that such
seller will be liable hereunder in any such case only if and to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with information pertaining to such
seller furnished in writing to the Company by such seller specifically for use
in such registration statement or prospectus; and provided, further, that the
liability of each seller hereunder shall be limited to the proportion of any
such loss, claim, damage, liability or expense which is equal to the proportion
that the public offering price of the Registrable Securities sold by such
seller under such registration statement bears to the total public offering
price of all securities sold thereunder, but not in any event to exceed the
proceeds received by such seller from the sale of Registrable Securities
covered by such registration statement. 
Notwithstanding the foregoing, the indemnity provided in this
Section 7(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or expense if such settlement is effected
without the consent of such indemnified party, which shall not be unreasonably
withheld.

 

(c)                                  Promptly after receipt by an indemnified
party hereunder of notice of the commencement of any action or claim, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party hereunder, notify the indemnifying party in writing
thereof, but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to such indemnified party other than
under this Section 7 and shall only relieve it from any liability which it
may have to such indemnified party under this Section 7 if and to the
extent the indemnifying party is materially prejudiced by such omission.  In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying

 

 

party of the commencement
thereof, the indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 7 for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected;
provided that if the defendants in any such action include both the indemnified
party and the indemnifying party and the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified party shall have the right to select a separate counsel
and to assume such legal defenses and otherwise to participate in the defense
of such action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred.

 

(d)                                 In order to provide for just and
equitable contribution to joint liability under the Securities Act in any case
in which either (i) any holder of Registrable Securities exercising rights
under this Agreement, or any controlling person of any such holder, makes a
claim for indemnification pursuant to this Section 7 but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 7 provides for indemnification
in such case, or (ii) contribution under the Securities Act may be required on
the part of any such selling holder or any such controlling person in
circumstances for which indemnification is provided under this Section 7,
then, and in each such case, the Company and such holder will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that such holder is
responsible for the portion represented by the percentage that the public
offering price of its Registrable Securities offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; provided that, in any such case, (A) no such holder will be required
to contribute any amount in excess of the public offering price of all such
Registrable Securities offered by it pursuant to such registration statement
and (B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 10(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.

 

8.                                       Changes in Capital Stock.  If, and as often as, there is any change in
the capital stock of the Company by way of a stock split, stock dividend,
combination or reclassification, or through a merger, consolidation, reorganization
or recapitalization, or by any other means, including the Share Exchange,
appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to the capital
stock as so changed.  Upon consummation
of the Share Exchange, the Company shall cause Laser to transfer the rights and
privileges granted hereby to the shares of Laser common stock issued to the
Shareholders in the Share Exchange and to assume the Company’s obligations
hereunder.

 

9.                                       Rule 144 Reporting.  With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Securities to the public without registration, at
all times after 90 days after any

 

 

registration statement
covering a public offering of securities of the Company under the Securities
Act shall have become effective, the Company agrees to:

 

(a)                                  make and keep public information
available, as those terms are understood and defined in Rule 144(c) under the
Securities Act;

 

(b)                                 file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and

 

(c)                                  furnish to each holder of Registrable Securities
forthwith upon request a written statement by the Company as to its compliance
with the reporting requirements of such Rule 144 and of the Securities Act and
the Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing such holder to sell any Registrable Securities without
registration.

 

10.                                 Representations and Warranties of the
Company.  The Company represents and
warrants to the Shareholders as follows:

 

(a)                                  The execution, delivery and performance
of this Agreement by the Company have been duly authorized by all requisite
corporate action and will not violate any provision of law, any order of any
court or other agency of government, the organizational documents of the
Company or any provision of any indenture, agreement or other instrument to
which it or any or its properties or assets is bound, conflict with, result in
a breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company or its
subsidiaries.

 

(b)                                 This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms.

 

11.                                 Assignment of Registration Rights.  The rights to cause or have the Company
register Registrable Securities pursuant to this Agreement may be transferred
by the Shareholders in connection with a transfer of Registrable Securities to
(i) any partner, retired partner or affiliated partnership of any holder which
is a partnership, or any member of any holder which is a limited liability
company, (ii) any family member or trust for the benefit of any individual
holder, or (iii) a subsidiary or affiliate of any holder of Registrable
Securities; provided that the Company is, within a reasonable amount time after
such transfer, and in all events at least thirty (30) days prior to any
exercise of such rights by the transferee or assignee, furnished with written notice
of the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned.  The term “Shareholders” as used in this
Agreement shall include such transferees or permitted assignees.

 

12.                                 Termination; No Other Registration
Rights.

 

(a)                                  The registration rights granted pursuant
to this Agreement shall terminate five (5) years after the Company completes
the Share Exchange.

 

 

(b)                                 The Company shall not grant registration
rights to any other holders of its equity securities after the date of this
Agreement, unless such registration rights are pari passu or subordinate to the
registration rights granted to the holders of Registrable Securities hereunder.

 

(c)                                  This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein.  There are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein.  This Agreement supersedes all prior agreements and understandings
among the parties with respect to such subject matter, including such agreements
and understandings made in connection with the Offering.

 

13.                                 Miscellaneous.

 

(a)                                  Subject to Section 11, all covenants
and agreements contained in this Agreement by or on behalf of any of the
parties hereto shall bind and inure to the benefit of the respective successors
and assigns of the parties hereto (including without limitation transferees of
any Registrable Securities), whether so expressed or not.

 

(b)                                 All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in person,
mailed by certified or registered mail, return receipt requested, or sent by
telecopier or telex, addressed (i) if to the Company, to SCL Ventures, Ltd.,
515 East Las Olas Boulevard, Suite 1350, Fort Lauderdale, Florida 33301,
facsimile (954) 527-7751, Attention: Chief Executive Officer and (ii) if to
Shareholders, to the address of such party set forth beneath such party’s
signature to this Agreement; and (iii) if to any subsequent holder of
Registrable Securities, to it at such address as may have been furnished to the
Company in writing by such holder; or, in any case, at such other address or
addresses as shall have been furnished in writing to the Company (in the case
of a holder of Registrable Securities) or to the holders of Registrable
Securities (in the case of the Company) in accordance with the provisions of
this paragraph.

 

(c)                                  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts entered into and to be performed wholly within said State.

 

(d)                                 Any judicial proceeding brought against
any of the parties to this Agreement on any dispute arising out of this
Agreement or any matter related hereto shall be brought exclusively in the
state or federal courts of the State of New York, and, by execution and
delivery of this Agreement, each of the parties hereto accepts for itself and
himself the process in any such action or proceeding by the mailing of copies
of such process to it or him, at its or his address as set forth in
Section 13(b) and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. 
Each party hereto irrevocably waives to the fullest extent permitted by
law any objection that it or he may now or hereafter have to the laying of the
venue of any judicial proceeding brought in such courts and any claim that any
such judicial proceeding has been brought in an inconvenient forum.  The foregoing consent to jurisdiction shall
not constitute general consent to service of process in the State of New York
for any purpose except as provided about and shall not be deemed to confer
rights on any person other than the respective parties to this Agreement.

 

 

(e)                                  This Agreement may not be amended or
modified without the written consent of the Company, and the holders of at
least a majority of the Registrable Securities.

 

(f)                                    Failure of any party to exercise any
right or remedy under this Agreement or otherwise, or delay by a party in
exercising such right or remedy, shall not operate as a waiver thereof.  No waiver shall be effective unless and
until it is in writing and signed by the party granting the waiver.

 

(g)                                 This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

(h)                                 The Company shall not grant to any third
party any registration rights more favorable than or inconsistent with any of
those contained herein, so long as any of the registration rights under this
Agreement remains in effect.

 

(i)                                     If any provision of this Agreement shall
be held to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other provision
of this Agreement, and this Agreement shall be carried out as if any such
illegal, invalid or unenforceable provision were not contained herein.

 

IN WITNESS WHEREOF, the
undersigned have executed this Agreement as of the date first written above.

 

 

	
   

  	
   

  	
  SCL VENTURES, LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SHAREHOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
							

 

 

SCHEDULE I

 

Tier I Shareholders

 

 

SCHEDULE II

 

Tier II Shareholders

 

 

SCHEDULE III

 

Tier III ShareholdersExhibit 10.3

 

SECOND AMENDMENT TO SHARE EXCHANGE AGREEMENT

 

SECOND AMENDMENT TO SHARE EXCHANGE AGREEMENT (this “Amendment”),
dated  as of March 31, 2004, by and
among SCL VENTURES, LTD., a British Virgin Islands company having an address at
515 East Olas Boulevard, Suite 1350, Fort Lauderdale, FL 33301 (“SCL”), LASER
RECORDING SYSTEMS, INC., a New Jersey corporation having an address at 1395 New
York Avenue, Huntington Station, NY 11746 (“Laser” or the “Company”), certain
shareholders of SCL signatory hereto (“SCL Signatory Shareholders”), and
certain shareholders of Laser signatory hereto (the “Laser Signatory
Shareholders”).

 

WHEREAS, SCL, Laser, the SCL Signatory Shareholders and the Laser
Signatory Shareholders entered into that certain Share Exchange Agreement,
dated as of May 20, 2003, and that certain Amendment to Share Exchange
Agreement, dated November 30, 2003 (together, the “Exchange Agreement”);

 

WHEREAS, as consideration for agreeing to certain restrictions on
transfer of their shares pursuant to Section 10.9 of the Exchange
Agreement, the Laser Signatory Shareholders were to be granted limited
preemptive rights which were unintentionally omitted from the Exchange
Agreement; and

 

WHEREAS, SCL, Laser, the SCL Signatory Shareholders and the Laser
Signatory Shareholders wish to amend the Exchange Agreement to provide for the
previously agreed upon limited preemptive rights for the Laser Signatory
Shareholders and to amend certain other provisions of the Exchange Agreement as
provided herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties, intending to be legally
bound, agree as follows:

 

1.                                       Limited Preemptive Rights. 
The Exchange Agreement shall be amended by adding the following
Section 10.10:

 

“10.10.  The Laser Signatory Shareholders are hereby
granted limited preemptive rights as follows:

 

(a)                                  Preemptive
Rights.  Each Laser Signatory
Shareholder shall have the right, on the terms set forth below, to purchase
such Laser Signatory Shareholder’s Pro Rata Share of New Securities which Laser
may, after the Closing, from time to time, propose to sell and issue for cash
or other consideration to officers, directors and others holding 5% or more of
post-exchange shares of Laser (“Insiders”) in the event such sale
and issuance is at a price per share that is below the average closing sales
price of Laser common stock for the thirty (30) days prior to such sale and
issuance (the “Preemptive
Rights”).

 

(b)                                 Notice.  In the event Laser proposes to undertake an
issuance of New Securities, it shall give the Laser Signatory Shareholders
written notice of its intention, describing the type of New Securities, the
consideration and the general terms upon which Laser proposes to issue the
same.  Each such Laser Signatory
Shareholder shall have 7 days from the date of receipt of any such notice to
agree to purchase its Pro Rata Share as of such date of such New Securities for
the cash or cash equivalent consideration and upon

 

 

the general terms specified in the notice by giving written notice to
Laser and stating therein the quantity of New Securities to be purchased.

 

(c)                                  Limitations.  Notwithstanding the provisions of
Section 10.10(a) above, the Preemptive Rights hereby granted to the Laser
Signatory Shareholders are subject to the following restrictions:

 

(i)                                     The Preemptive
Rights shall not be effective as long as the Laser Signatory Shareholders or
their designees comprise  a majority of
Laser’s board of directors; and

 

(ii)                                  the Preemptive Rights
of any Laser Signatory Shareholder shall terminate upon expiration or
termination as to such Laser  Signatory
Shareholder of the lock-up provisions contained in Section 10.9 of this
Agreement.

 

For purposes of this Section 10.10, the term “New Securities” shall mean any authorized
but unissued equity securities of Laser and all rights, options or warrants to
purchase securities of Laser of any type whatsoever that are, or may become,
convertible into equity securities of Laser; provided, however, that the term “New Securities” does not include:

 

(i)                                     equity securities
issued pursuant to stock dividends, stock splits or similar transactions;

 

(ii)                                  equity securities
issued pursuant to the acquisition of another corporation or entity (not owned
or controlled by Insiders) by Laser or any of its subsidiaries by merger,
acquisition of equity interest, purchase of all or substantially all of the
assets, reorganization or other transactions whereby Laser or any of its
subsidiaries shall become the owner of or have the right to vote more than
fifty percent (50%) of the voting power of such corporation or entity;

 

(iii)                               grants of compensatory
options, warrants or restricted securities, or equity securities issued
pursuant to compensatory grants of options, warrants or restricted securities
to Insiders at a purchase price greater than or equal to 80% of the average
closing sales price of Laser common stock for the thirty (30) days prior to
such issuance;

 

(iv)                              equity securities issued
to financial institutions as consideration for or in connection with any
commercial credit arrangements, equipment financings or similar transactions
obtained by Laser;

 

(v)                                 equity securities
issuable upon exercise of options or warrants issued by Laser or SCL and  outstanding as of the date hereof; or

 

(vi)                              equity securities issued
to SCL, to shareholders of SCL, or to consultants and finders pursuant to or as
contemplated by this Agreement, or to the Fund as contemplated by
Section 4.4 of this Agreement, but only to the extent that such issuances,
when aggregated with prior issuances pursuant to or as

 

 

contemplated by this Agreement, do not exceed 80,833,333 shares of
Laser Common.

 

For purposes of this Section 10.10, the term “Pro Rata
Share” as of any date shall mean, with respect to the outstanding equity
securities of Laser, the ratio of (i) the percentage interest of Laser common
stock owned by a Laser Signatory Shareholder on such date (including any
warrants or options then held by such holder) to (ii) the total percentage
ownership of Laser Common Stock then outstanding held by all holders of Laser
common stock on such date (assuming exercise of any warrants and options then
outstanding).”

 

2.                                       Standstill.  
Section 10.4 of the Exchange Agreement shall be amended adding the
following sentence:

 

“Nothing contained in this Section 10.4 shall prohibit SCL
from offering or issuing additional shares of its equity securities prior to
the Closing.”

 

3.                                       Restriction on Sale of Laser Stock. 
Section 10.9.1 of the Exchange Agreement shall be amended by
changing the lock up period set forth in such Section 10.9.1 from two (2)
years to one (1) year from the date of the Closing.

 

4.                                       Amended Closing Date. 
Section 5.1 of the Exchange Agreement relating to the definition of
the term “Closing Date” is hereby amended to read in its entirety as follows:

 

“5.1   The Closing of the
Exchange shall take place upon five days’ written notice from SCL to Laser, but
no later than July 31, 2004 (the “Closing Date”).”

 

5.                                       Exchange Ratio. 
Section 3.1 of the Exchange Agreement shall be amended by adding
the following sentence:

 

“To the extent that the number of SCL Exchange Shares outstanding
as of the Closing Date is less than 76 million shares and therefore results in
SCL Shareholders holding less than 95% of the Laser Common outstanding
immediately following the Closing, the difference between the number of shares
of Laser Common issued at Closing and 76 million shall be reserved for future
issuance within the following 180 days to SCL Shareholders, finders or consultants
to SCL, or to others, including the Fund in accordance with Section 4.4,
in such amounts and for such consideration as determined by the SCL Signatory
Shareholders.”

 

6.                                       Payment of Fees and Expenses. 
Section 5.2.2 of the Exchange Agreement shall be amended by
deleting the second sentence of such Section 5.2.2 and replacing it with
the following:

 

“SCL agrees to pay all fees, costs and expenses incurred in
connection with the Exchange, including the preparation, assembly and mailing
of the proxy statement and the special meeting of shareholders relating to the
Exchange.”

 

7.                                       Board of Directors. 
Section 8.5.1 of the Exchange Agreement shall be amended by
changing the number of directors in the first sentence of such
Section 8.5.1 from five (5) to three (3) directors.

 

8.                                       Directors and Officers Insurance. 
The Exchange Agreement shall be amended by adding the following
Section 10.11:

 

 

“10.11.  Directors and
Officers Insurance.  “The parties hereby
agree to use reasonable efforts to obtain a policy of directors and officers
liability insurance in an amount and on terms reasonably satisfactory to each
of the parties.”

 

9.                                       Exchange Agreement. 
All other terms and conditions of the Exchange Agreement shall remain in
full force and effect, as amended hereby.

 

10.                                 Consents. 
SCL and the SCL Signatory Shareholders represent and warrant that the
execution, delivery and performance by SCL of this Amendment has been duly
authorized by action of the Board of Directors of SCL.  Laser and the Laser Signatory Shareholders
represent and warrant that the execution, delivery and performance by Laser of
this Amendment has been duly authorized by action of the Board of Directors of
Laser.

 

11.                                 Capitalized Terms. 
All capitalized terms used but not defined herein shall have the same
meanings as ascribed thereto in the Exchange Agreement.

 

12.                                 Counterparts. 
This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

 

IN WITNESS WHEREOF, the parties have duly executed this Amendment
as of the date first above written, by signing on the appropriate signature
page hereto.

 

 

	
  SCL VENTURES, LTD.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Mitchell Sepaniak

  	
   

  	
   

  
	
    Mitchell
  Sepaniak

  	
   

  	
   

  
	
    President

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SCL SIGNATORY SHAREHOLDERS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Mitchell Sepaniak

  	
   

  	
   

  	
  /s/ Jack Chen

  	
   

  
	
   Mitchell
  Sepaniak

  	
   

  	
   Jack Chen

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Norman Rothstein

  	
   

  	
   

  	
   

  
	
   Norman
  Rothstein

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LASER RECORDING SYSTEMS, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Carl Lanzisera

  	
   

  	
   

  
	
    Carl
  Lanzisera

  	
   

  	
   

  
	
    Chief
  Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LASER SIGNATORY SHAREHOLDERS:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Carl Lanzisera

  	
   

  	
   

  	
  /s/ Carrie Niemiera

  	
   

  
	
   Carl
  Lanzisera

  	
   

  	
   Carrie
  Niemiera

  
	
   

  	
   

  	
   

  
	
  /s/ Harvey Kash

  	
   

  	
   

  	
   

  
	
   Harvey
  Kash

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