Private and Confidential

The Directors
Laserlock Technologies Inc.
837 Lindy Lane
Bala Cynwyd
PA 19004
 

For the Attention of: Mr. Norman Gardner
2 November 2006

 
Dear Sirs,

Proposed Admission through an Introduction of Laserlock Technologies Inc.
to trading on the London Stock Exchange plc’s AIM
 

1.
ENGAGEMENT

 

1.1.
Further to our recent discussions, we write to confirm and agree the terms on
which Athanor Capital Partners Limited (“Athanor”) will act as corporate adviser
(the “Corporate Adviser”) and Broker to Laserlock Technologies Inc. (the
“Company”) whereby Athanor will provide corporate finance advice and capital
raising assistance to the Company in connection with an introduction to trading
on AIM (the “Engagement”). Certain additional terms of the Engagement are
contained in the Appendices and incorporated by reference into this letter
(which shall be referred to as the “Engagement Letter” herein).

 

1.2.
In carrying out the Engagement Athanor will:

 

1.2.1.  
co-ordinate due diligence into the business and affairs of the Company;

 

1.2.2.  
advise and assist the Company with the preparation of a presentation to be given
to potential Nominated Advisers who are required to work with the Company and
Athanor on the admission to AIM (the “Admission”) under the rules of the London
Stock Exchange for admissions to AIM (the “AIM Rules”);

 

1.2.3.  
prepare the admission document (the “Admission Document”) and other supporting
documentation relating to the fundraising and Admission to AIM in accordance
with the AIM Rules (as amended from time to time), the EU Directive 2003/71/EC
(the Prospectus Directive) and to the standard required by the appropriate
regulatory authorities, City Practice and Athanors’ own professional standards,
and liasing with the regulatory authorities if and as appropriate;

 

1.2.4.  
assist the Company with the preparation of an information package to be provided
to potential investors (the “Investor Presentation”), including co-ordinating
all the Company’s advisers in relation to the preparation of the same;

 

1.2.5.  
co-ordinate on the Company’s behalf other engaged professional advisers as
deemed necessary by Athanor and agreed by the Company as follows:

 

(a)
Nominated Adviser in relation to:-

-
preparation of the Admission Document and ancillary documentation;

-
the Nominated Adviser Agreement; and

-
the application for admission of the Company’s ordinary shares, in accordance
with the AIM Rules, to trading on AIM.

(b)
Legal advisers in relation to:-

-
the placing agreement;

-
legal due diligence;

-
the verification of the Admission Document and Investor Presentation; and

-
any other incidental matter.

(c)
Reporting Accountants in relation to:-

-
audited financial results of the Company, including the Long and Short Form
Reports;

-
the Company’s financial projections;

-
the working capital memorandum;

-
tax advice: and

-
any other incidental matter.

 

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(d)
Other appropriate and relevant advisers, including registrars, receiving agents,
financial public relations and printers;

1.2.6.  
arrange such investor presentations as Athanor shall consider to be appropriate
in connection with the fundraising to be carried out under the Engagement;

 

1.2.7.  
Manage the fundraising process, including overall co-ordination of the Company’s
other advisers working on the fundraising; and

 

1.2.8.  
subject to due diligence into the business and affairs of the Company being
completed (in a form and substance satisfactory to Athanor in its absolute
discretion acting reasonably), suitable market conditions, senior management
approval and the performance by the Company of its obligations under this
Engagement Letter, use all reasonable endeavours to identify potential investors
for the fundraising to be carried out under the Engagement.

 

1.3
It is proposed that, with respect to the Engagement, the Company, its directors
and Athanor shall enter into a conditional placing agreement (the “Placing
Agreement”) under which, inter alia, Athanor shall use its reasonable endeavours
to procure investors for the Company with respect to the Engagement and the
Company and its directors shall give to Athanor certain warranties, undertakings
and indemnities (in each case the terms of which are yet to be agreed between
the parties including any caps and other limitations on liabilities agreed to by
such persons). Athanor and the Company hereby agree that they shall use all
reasonable endeavours to agree the terms of the Placing Agreement as soon as
possible after the date of this letter.

 

1.4
At the discretion of Athanor, it may appoint such of its affiliates or
associates, as it may consider appropriate to carry out its services under the
Engagement at its own expense.

 

1.5
Athanor will give due consideration to any reasonable request by the Company to
carry out services not listed in paragraph 1.2 above with respect to the
Engagement in general.

 

1.6
This Engagement Letter excludes the transactional work and relevant fees in
connection with the proposed formation of a new holding company (“Newco”) and
the subsequent acquisition of Laserlock Technologies Inc. which will be covered
under a separate engagement letter with the Company and the costs will be
confirmed by Morgan Lewis.

 

2
OBLIGATIONS OF THE COMPANY

 

2.1
The Company undertakes that it will:

 

2.1.1
subject to receipt of advice and assistance from Athanor, use all reasonable
endeavours to prepare the Admission Document and ancillary documentation, the
Investor Presentation and all other relevant documentation as required by the
AIM Rules and the Company’s other advisers;

 

2.1.2
give its full co-operation and assistance to the due diligence process;

 

2.1.3
use its reasonable endeavours to ensure that the Company’s existing shareholders
provide all necessary co-operation to ensure the successful completion of the
Engagement, including, without limitation, the execution and delivery of normal
and appropriate documentation, including lock-in agreements, for a fundraising
of the size and nature of the Engagement and having regard to the circumstances
of the Company, the giving of necessary consents and the passing of the relevant
shareholder resolutions; and

 

2.1.4
at all times keep Athanor fully informed of all strategies, developments and
discussions with any party material to the fundraising during the course of the
Engagement.

 

2.2
The issue and allocation of new ordinary shares in the Company pursuant to the
fundraising under the Engagement shall be at the sole discretion of the Company,
following consultation with Athanor.

 

3
EXCLUSIVITY

 
The Engagement shall be exclusive to Athanor and shall immediately become
effective upon the Company’s signing of this letter. Accordingly, for the
duration of the Engagement, the Company shall not retain any other AIM Corporate
Adviser or Broker, without the prior written consent of Athanor, in relation to
the matters falling within the scope of the Engagement during the period
commencing on the date hereof and ending on the termination of the Engagement.
 
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4
FEES AND EXPENSES

 

4.1
In consideration of the services performed and to be performed by Athanor
pursuant to the Engagement, the Company shall pay certain fees and expenses
(plus, in each case and where applicable, VAT thereon) to Athanor in accordance
with the terms of this paragraph and the Cost Estimates Summary Table in
Appendix III:

 

4.1.1
the Company shall, on signing of this Engagement Letter, pay a non-refundable
corporate finance fee of £12,000 (twelve thousand pounds sterling).

 

4.1.2
the Company shall, upon completion of the fundraising and Admission to AIM pay a
corporate finance fee of £122,000 (one hundred and eight thousand pounds
sterling) and a fee equal to 6% (six per cent ) of the gross proceeds (in
whatever currency) of any securities issued by the Company in connection with
the Engagement (together “the Success Fee”). For the sake of clarification,
“Completion” shall be defined as the receipt by Athanor (or such other receiving
agent as shall be agreed between Athanor and the Company) of cash for such
securities issued by the Company and/or Admission of the Company to trading on
AIM. For additional details see Appendix III.

 

4.1.3
Athanor shall pay such fees as agreed by Athanor and the Company to the
appointed Nominated Adviser for the purposes of this engagement, including all
out-of-pocket costs and expenses (plus, where applicable VAT thereon) reasonably
and properly incurred by the Nominated Adviser in connection with the
Engagement, however excluding, the fees and expenses of the Nominated Adviser’s
legal advisers and travel costs (including VAT, where applicable) which shall be
payable by the Company directly.

 

4.1.4
The Company hereby also grants Athanor warrants over 3% (three per cent.) of the
enlarged ordinary share capital of the Company on Admission.

 

4.2
Whether or not the fundraising proceeds to Completion, the Company will pay all
out-of-pocket costs and expenses (plus, where applicable, VAT thereon)
reasonably and properly incurred by Athanor in connection with the Engagement
including the fees and expenses of its legal advisers and travel costs
(including VAT, where applicable) (the “Costs”). Notwithstanding the foregoing;
sums in excess of £250 per month will be subject to approval by the Company
prior to being incurred;

 

4.3
The Costs shall be payable by the Company in pounds sterling within 14 days
(fourteen days) of demand by Athanor;

 

4.4
An annual retainer fee of £40,000 (thirty thousand pounds sterling, plus
applicable VAT thereon), payable quarterly in advance, commencing on the date of
Admission as detailed in Athanor’s Annual Retainer Agreement; and

 

4.5
The Company shall pay directly for the fees and costs incurred by its own legal
advisers, reporting accountants, independent experts and all other costs related
to the Engagement including, inter alia, any costs related to the printing of
the Admission Document and Investor Presentations.

 

5
TERMINATION

 
In the event that the Engagement is terminated for any reason by the Company,
other than provided in paragraph 12 of Appendix I, the Company shall pay a
termination fee (the “Termination Fee”) calculated according to the amount of
work undertaken to date, but in any event, not exceeding £40,000 (forty thousand
pounds sterling, plus applicable VAT).
 
Please confirm your acceptance of the terms of this letter (including Appendices
attached) by signing and returning the enclosed duplicate along with a signed
copy of the Warning Notice at Appendix II.

Yours faithfully
We agree to the terms of engagement as set out in this letter and its appendices

 
/s/ Graham Brown
/s/ Norman Gardner
For and on behalf of
For and on behalf of
Athanor Capital Partners Limited
Laserlock Technologies Inc.

 
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APPENDIX I
 
 
ATHANOR CAPITAL PARTNERS LIMITED STANDARD TERMS & CONDITIONS
 

Terms defined in the engagement letter between Athanor Capital Partners Limited
and Laserlock Technologies Inc. to this appendix is appended (the “Engagement
Letter”) shall have the same meaning when used in this Appendix. References in
this Appendix to “the Engagement Letter” shall include the terms and conditions
set out in this Appendix as well as those set out in the Engagement Letter.
 

1.
GENERAL OBLIGATIONS OF THE COMPANY

 

1.1
The Company shall promptly provide such information, assistance and/or
documentation as may be reasonably required by Athanor in connection with the
Engagement and, in particular, make available such of its senior staff and for
such periods as Athanor deems reasonably necessary for the Engagement.

 

1.1
Athanor may rely on the Company and its advisers to ensure that any information
(including any expressions of opinion) or documentation provided by the Company
or on its behalf is true, fair and accurate and not misleading and that there
are no omissions which could be material. The Company acknowledges that Athanor
will have no obligation to independently verify any documentation sent to
investors and/or shareholders, any statement of fact or opinion contained in
such documentation or any information or documentation provided by the Company.
If during the course of the Engagement the Company subsequently discovers any
such information or documentation in whole or in part is, or is likely to be,
untrue, unfair, inaccurate or misleading, it shall notify Athanor forthwith.

 

1.2
Athanor shall not be liable for any losses, liabilities, damages or costs
suffered by the Company as a consequence of providing advice based on any
inaccurate or misleading information or documentation which has been supplied by
or on behalf of the Company or resulting from any omission from such information
or documentation.

 

2
DISCLOSURE OF MATERIAL INTERESTS

 

2.1
The Company’s attention is drawn to the fact that, when Athanor gives the
Company investment advice or provides other services, it or an affiliate or some
other person connected with it or another client may have an interest,
relationship or arrangement that is material in relation to the Engagement.
However, Athanor’s employees are instructed to disregard any such interests,
relationships or arrangements when providing services to the Company and keep
such interests, relationships or arrangements confidential. The Company
acknowledges that existing clients or future clients of Athanor may have
products or technology that compete or potentially compete with the Company’s
technology or products.

 

2.2
The Company acknowledges and accepts that conflicts may arise as a result of
Athanor providing advice and being an investor in the Engagement, in particular
during any negotiations with other investors regarding the terms of the
investment, including valuation.

 

3
PUBLICITY

 

3.1
The Company and Athanor shall not (except to the extent required by law, any
court of competent jurisdiction or any competent, judicial, governmental or
regulatory body) make any announcement concerning or otherwise publicise the
existence of the Engagement, whether formally or informally, without the prior
agreement of the other party which shall not be unreasonably withheld or
delayed.

 

3.2
Following completion of the Engagement Athanor may place advertisements in
financial and other newspapers and journals at the expense of the Company but
with the prior agreement of the Company for any expense over £250 (two hundred
and fifty pounds sterling).

 

4
REGULATORY COMPLIANCE

 
The Company is, and acknowledges that it is being treated by Athanor, with
respect to the services to be provided to the Company under the Engagement, as
an Intermediate Customer as Athanor believes that the Company has sufficient
experience and understanding to waive the protections provided for Private
Customers. As a consequence of being treated as an Intermediate Customer the
Company will lose the protections afforded by the regulatory systems (as defined
by the Rules of the Financial Services Authority (“FSA”)). These include the
following protections afforded under the FSA’s Conduct of Business Rules:
 
COB 3.9 (Direct offer financial promotions);
 
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COB 3.12.1 (Communication and approval of financial promotions of an overseas or
unauthorised person);
COB 5.4 (Customers’ understanding of risk); and
COB 5.6 (Disclosure of changes, remunerations and commission).

In addition, the Company will lose the right of access to the Financial
Ombudsman Service.

If the client exercises any right to be treated as a Private Customer, Athanor
may decide that it is unable to continue to act for the Company under the terms
of the Engagement. Enclosed with this letter at Appendix II is a “warning
notice”. In order for Athanor to be able to act for the Company under the
Engagement, the Company hereby undertakes to sign this warning notice and return
it to Athanor on entering into this letter of agreement.
 

5
LEGAL AND REGULATORY REQUIREMENT

 

5.1
The Company agrees that it shall:

 

5.1.1
comply with all applicable laws and regulatory requirements in connection with
the Engagement;

 

5.1.2
ensure that every announcement, public statement, or other material issued made
or published by the Company or on its behalf in connection with the Engagement
will comply with all applicable statutory legal and regulatory provisions; and

 

5.1.3
use its reasonable endeavours to ensure that all necessary authorisations,
approvals, consents and filings to enable the fundrraising under the Engagement
to proceed or otherwise in connection with the Engagement are promptly obtained
or made.

 

5.2
The Company has not, to the best of its knowledge, taken any actions prior to
its acceptance of the terms of the Engagement Letter and shall use all
reasonable commercial efforts not to take any actions during the term of the
Engagement which would, or might reasonably be expected to impair its ability to
complete the transactions contemplated by the Engagement Letter;

 

5.3
The Company agrees that it will comply and use all reasonable endeavours to
procure that all its officers, directors and employees, will comply with all
applicable laws and regulations in connection with the Engagement. In carrying
out its obligations to the Company pursuant to the Engagement, Athanor is also
subject to (as well as the range of applicable laws) a number of rules and
regulations and the requirements of a number of regulators. The Company agrees
that the duties of Athanor to it will not restrict the freedom of Athanor to
take all steps which Athanor considers to be necessary to comply with the laws,
rules and regulations applicable to Athanor;

 

5.4
Athanor confirms it will observe the standards of integrity and fair dealing to
which it is bound under the Rules and the Financial Services Authority (“FSA”)
Handbook and will use all due skill care and diligence in its work for the
client in relation to the Engagement;

 

5.5
In so far as applicable, Athanor will provide all services subject to the rules
for the time being in force of the Financial Services Authority and also subject
to all other applicable laws and regulations (including the Companies Act and
FSMA ) and the Rules of the United Kingdom Listing Authority and the London
Stock Exchange, as appropriate and may take all such steps (on its own behalf)
as may be necessary or desirable to comply with such rules, regulations,
requirements, practices, guidelines and laws; and

 

5.6
Where Athanor is treating the client as an “Intermediate Customer” in terms of
the Rules of the FSA, the Company will not be afforded any of the protections
contained therein for “Private Customers”. In addition, the Company accepts
certain protections contained in the FSA Rules may be limited or modified in
their application to Intermediate Customers, in particular those relating to COB
3 (Financial Promotion). Further that Athanor may have regard to his/her
expertise when complying with its obligations under the Rules of the FSA that
its communications with the Company must be fair and not misleading.

 

6
GOVERNING LAW AND JURISDICTION

 
This letter (and any dispute, controversy, proceedings or claim of whatever
nature arising out of or in any way relating to this letter or its formation)
shall be governed by and construed in accordance with English law. The Company
and Athanor irrevocably agree that the courts of England shall have exclusive
jurisdiction and each party irrevocably submits to the jurisdiction of the
courts of England.
 

7
CLAIMS

 

7.1
The Company covenants to Athanor for itself, and as trustee for its affiliates
and its or their officers, directors, employees and associates and all of their
successors and assigns (together with Athanor, “Indemnified Persons”):

 
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7.1.3
to indemnify each Indemnified Person against any losses, claims, damages,
proceedings or liabilities (each a “Loss”) incurred by, or asserted against, any
Indemnified Person related to or arising out of Athanor’s provision of services
under this Engagement Letter except to the extent that any Loss is judicially
determined to have arisen out of the negligence, bad faith or wilful default of
the relevant Indemnified Person or their breach of a term of the Engagement
Letter;

 

7.1.4
that no claim will be made against any director, officer or employee of Athanor
in connection with the Engagement except to the extent that any loss is
judicially determined to have arisen out of their negligence, bad faith or
wilful default; and

 

7.1.5
that no claim will be made against any Indemnified Person in respect of any Loss
that the Company may suffer by reason of, or arising out of, or in connection
with, the Engagement except to the extent that such Loss is judicially
determined to have arisen out of the negligence, bad faith or wilful default of
the relevant Indemnified Person or their breach of a term of the Engagement
Letter.

 

7.2
Paragraph 7.1 does not seek to exclude or restrict any duty or liability which
Athanor or any other Indemnified Person has to the Company or any other person
in connection with the Engagement under FSMA, the Rules or any other principles,
rules or guidance in the FSA Handbook. In addition the limitations and
exclusions of liability and the indemnity of this Letter shall only have effect
insofar as they are not prohibited under the Rules or under any other Applicable
Law. All sums payable to any Indemnified Person pursuant to this paragraph 7
shall be paid within 30 days of written demand and free and clear of all
deductions or withholdings unless such deduction or withholding is required by
law, in which event the Company shall pay such additional amount as shall be
required to ensure that the net amount received by the Indemnified Person will
equal the full amount which would have been received by it had no such deduction
or withholding been made.

 

7.3
The rights and remedies of Indemnified Persons arising under this paragraph 7
are cumulative with and not exclusive of any rights or remedies provided by law.

 

7.4
Forthwith, after it becomes aware of any claim made or threatened within the
scope of the indemnity contained in this paragraph 7, Athanor shall notify the
Company of the relevant claim and shall thereafter on request (i) keep the
Company informed of the progress of the claim, (ii) provide the Company with
copies of such documentation relating to the claim as the Company may reasonably
request and (iii) give the Company such opportunities as the Company may
reasonably request to make representations regarding the conduct of the claim
reasonably provided that nothing in this paragraph 7 shall require Athanor to: .

 

7.4.1
provide a copy of any document or provide any information which is legally
privileged in the context of any litigation connected with the claim; or

 

7.4.2
do, or refrain from doing, anything which would prejudice any insurance cover to
which any of the Indemnified Persons are entitled to or from which it or any of
them would otherwise benefit.

 
However any short delay in notifying the Company will not relieve it from any
liability which it may have to any Indemnified Person.
 

8
INDEMNIFICATION

 
The Company agrees to the provisions with respect to indemnification of Athanor
and other matters set forth in this Appendix, which is incorporated by reference
into this letter.
 

9
LIMIT ON LIABILITY

 

9.1
Where any Indemnified Person is the subject of a claim alleging liability in
respect of any loss or damage suffered by the Company arising from or in any way
connected with the Engagement (“Client Losses”), then (subject to this paragraph
9) the total amount of such Client Losses recoverable from any such Indemnified
Persons shall be limited to such proportion of the Client Losses as is
determined to be just and equitable, having regard to the relative
responsibility of:

 

9.1.3
each Indemnified Person so liable;

 

9.1.4
the Company and any of its directors,officers, associates employees, ,
subsidiaries or affiliates; and

 

9.1.5
any other person who is jointly or severally liable for the Client Losses or any
part thereof (a “Third Party”).

 
Any limitation or exclusion or restriction on the liability of any Third Party
under any jurisdiction, whether arising under statute or contract or resulting
from death, bankruptcy or insolvency (a “Liability Limitation”) shall be ignored
for the purposes of determining the extent of responsibility of that Third Party
under paragraph 9.1 above.
 
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9.2
Without prejudice to paragraph 9.1 above, where:

 

9.2.3
it has been judicially determined that one or more Indemnified Persons is liable
to the Company for any Client Losses in any way connected with the Engagement or
any transaction; and

 

9.2.4
any Third Party has the benefit of a limitation or exclusion or restriction of
liability arising under a contract with the Company (the “Contractual Liability
Limitation”), then the total liability of any such Indemnified Person to the
Company in respect of the Client Losses shall not exceed the maximum amount
which the Company could recover from such Indemnified Person after deducting
such sums as that Indemnified Person would have been entitled to recover from
any Third Party in respect of the Client Losses, but is prevented from
recovering as a result of the Contractual Liability Limitation.

 

9.3
Athanor shall not be under any liability in respect of any specialist advice or
services provided to the Company by persons other than Athanor or its affiliates
or associates, notwithstanding that Athanor may be in possession of such advice.

 

10
AUTHORITY

 
It is agreed that only written instructions received by Athanor from the chief
executive or duly appointed officer of the Company will have been properly
authorised by the Company.
 

11
CONFIDENTIALITY

 

11.1
Athanor agrees to and agrees to procure that its affiliates and associates shall
keep confidential all information which it or they may receive concerning the
Company in the course of the Engagement, use such information solely for the
purposes of the Engagement and not to disclose the same otherwise than as
contemplated by the Engagement or as it may be authorised in writing to do by
the Company.

 

11.2
This undertaking shall not apply to any information which:

 

11.2.3
Is or comes into the public domain (other than as a result of a breach of its
obligations by Athanor or its affiliates or associates); or

 

11.2.4
Is required to be disclosed by Athanor (or any of its affiliates) by law, any
court of competent jurisdiction or any competent, judicial, governmental or
regulatory body; or

 

11.2.5
is known by Athanor before the date of the Engagement Letter and in respect of
which Athanor is not under an existing obligation of confidentiality to the
Company, as evidenced by the written records of the Company or Athanor; or

 

11.2.6
Becomes available to Athanor other than from the Company (and other than subject
to an obligation of confidentiality to the Company).

 

11.3
Any advice rendered by Athanor or any of its affiliates or associates is
intended solely for the benefit and use of the Company in connection with the
Engagement. It may not be disclosed to any third party (other than the Company’s
professional and other advisors from time to time) unless the Company comes or
reasonably believes that it is, under a legal or regulatory obligation to do so
or with the prior written consent of Athanor.

 

12
TERMINATION

 
Without prejudice to any outstanding rights and obligations hereunder, the
provisions for termination in this paragraph 12 shall apply with respect to the
Engagement.
 

12.1
The Engagement shall terminate on completion of the fundraising and/or Admission
to trading on;

 

12.2
Notwithstanding anything to the contrary, either party may forthwith terminate
the Engagement at any time on written notice to the other, subject to clause 14
below, for Cause, at which time clause 12.3 or 12.4 shall apply. “Cause” shall
mean;

 
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12.2.1
the negligence, fraud, or wilful default of the other party; or

 

12.2.2
a material breach of this agreement by the other party which is incapable of
remedy within 7 days (seven days) of the party informing the other in writing of
the breach or is incapable of remedy.

 

12.3
In the event of termination under clause 12.2.1 or 12.2.2 by Athanor, the
Company shall be liable only for the fees and expenses incurred at the
termination date under clauses 4.1.1, 4.1.3, 4.2 and 4.5 in the above Engagement
Letter.

 

12.4
In the event of termination by the Company under clause 12.2.1 or 12.2.2 the
Company shall pay whichever of the fees and expenses referred to in 4.1.1, 4.2
and 4.5 but shall not be liable for any other Costs under this Engagement.

 

12.5
If the Engagement is terminated otherwise than by the Company for Cause and in
circumstances where no Success Fee has been paid, or is payable to Athanor and
the Company subsequently enters into a financing or fundraising arrangement (of
any kind) within six months of such termination with entities first introduced
to the Company by Athanor and not otherwise known to the Company prior to the
date thereof, and notified to Athanor, then the Company shall pay Athanor a fee
equal to 6% (six per cent.) of the funds so raised of any securities issued by
the Company in connection with such financing as are subscribed by such
entities. This shall include monies subscribed by such entities in a public
offering of securities of the Company or its subsidiaries.

The provisions of paragraph 4 in the Engagement Letter (Fees and Expenses), and
paragraphs 3 (Publicity), 4 (Regulatory Compliance), 5 (Legal and Regulatory
Requirements), 6 (Governing Law and Jurisdiction), 7 (Claims), 8
(Indemnification), 9 (Limit on Liability), 10 (Authority), 11 (Confidentiality),
12 (Termination), and 15 (General) of Appendix I to this letter shall survive
any termination of the Engagement. Moreover, the terms of the Engagement and the
Company’s obligations hereunder, shall survive any change of ownership of the
Company during the period of the Engagement.
 

13
WARRANTS

 
With reference to Paragraph 4.1.4 of this Engagement Letter, the Company grants
Athanor warrants of the enlarged ordinary share capital of the Company on
Admission. PROVIDED THAT;
 

13.1
the warrants are exerciseable for a period of three years from the date of
Admission and the exercise price shall be the same as the subscription price
paid by subscribers of new ordinary shares in the Company under the proposed
fundraising under the Engagement and/or the Admission price;

 

13.2
Once exercised the ordinary shares shall rank pari passu with the Company’s
existing ordinary share capital;

 

13.3
Athanor executes and delivers all necessary documentation that is reasonably
required by the Company and its Articles of Association to issue and allot
ordinary shares in the Capital of the Company; and

 

14
NOTICES

 

14.1
Any notice to be given in connection with the Engagement shall be in writing and
shall be delivered personally, by fax or by prepaid first class post (airmail,
where appropriate) in the case of the Company to:

 
Laserlock Technologies Inc.
837 Lindy Lane, Bala Cynwyd, PA 19004

Fax No. 1 610 668 2771 Attention Mr. Norman Gardner

and in the case of Athanor to:

Athanor Capital Partners Limited
Queens House, 55-56 Lincoln’s Inn Fields, London WC2A 3LJ

Fax No: +44 (0)20 7430 1992 Attention: Mr. Graham Brown

14.2
Any such notice shall be deemed to have been duly given as follows:

 

14.2.1
If personally delivered, upon such delivery;

 

14.2.2
If by post, three working days after posting (one week in the case of airmail);
and

 

14.2.3
If by fax, when transmitted, followed by letter.

 
8

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15
GENERAL

 

15.1
Telephone conversations between Athanor and the Company may be recorded by
Athanor. Such recordings shall be conclusive evidence of all such conversations.

 

15.2
Athanor may act upon telephone instructions before receipt of any written
confirmations.

 

15.3
The Engagement Letter may be executed in counterparts, each of which when
executed and delivered shall constitute one and the same instrument.

 

15.4
The Engagement Letter constitutes the whole agreement between Athanor and the
Company relating to the Engagement and the Company acknowledges that it has not
been induced to appoint Athanor in reliance upon any warranty, representation or
other commitment or assurance of any nature other than those expressly set out
in the Engagement Letter. The Company waives all rights and remedies which, but
for this paragraph 15, might otherwise be available to it in respect of any such
warranty, representation, other commitment or assurance provided that nothing in
this paragraph 15 shall limit or exclude any liability which cannot be excluded
or limited by law or Applicable Law.

 

15.5
The Engagement Letter may only be amended by further written agreement expressed
to be supplemental to the Engagement Letter and signed on behalf of both Athanor
and the Company.

 

15.6
A person who is not a party to the Engagement Letter shall have no rights under
the Contracts (Rights of Third Parties) Act 1999.

 

16
WAIVER

 
The failure or delay by either party in exercising any right under the
Engagement Letter shall not operate as a waiver of such right. The single or
partial exercise of any right under the Engagement Letter by either party shall
not prevent any other or further exercise of such right or the exercise of any
other right. No breach of any provision of the Engagement Letter by a party to
it shall be waived except with the express written consent of the other.
 

17
DEFINITIONS

 
For the purposes of this Appendix, the following expressions shall have the
following meanings:
 

“Applicable Law”
All relevant laws and regulations in any Jurisdiction which may be applicable to
Athanor, its affiliates and associates from time to time (including in the
United Kingdom, FSMA and the Rules) in connection with the Engagement
   
“FSMA”
Financial Services and Markets Act 2000 (as amended for time to time)
 
   
“Rules”
The Conduct of Business Rules made by the Financial Services Authority and set
out in the Conduct of Business Sourcebook

9

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APPENDIX II
WARNING NOTICE

Notice of Treatment as an Intermediate Customer
 

On the information provided by Laserlock Technologies Inc. (the “Company”),
Athanor Capital Partners Limited (“Athanor”) have categorised you as an
Intermediate Customer, by reason of their assessment of the Company’s experience
and understanding of the investment business and services which Athanor will
transact on the Company’s behalf under the terms of the Letter of Engagement
dated 11 October 2006 (the “Engagement Letter”).
 
As a consequence of this categorisation the Company will lose the protections
afforded to Private Customers under the Rules of The Financial Services
Authority (“FSA”) and described in the Engagement Letter. In particular, Athanor
may have regard to the Company’s expertise when complying with its requirements
under the regulatory system that communications with the Company must be clear,
fair and not misleading.
 
Please note that the Company will also lose the right of access to the Financial
Services Compensation Scheme of the FSA.
 
If the Company has any queries on this notice or require any further information
they contact Athanor’s Compliance Director, Mr. Graham Brown.
 
Please confirm that you have understood this Risk Warning Notice by signing and
returning the enclosed duplicate to Athanor.
 
 
Yours faithfully
We understand this Risk Warning Notice and agree to our treatment by Athanor
Capital Partners Limited as an Intermediate Customer

 
/s/ Graham Brown
/s/ Norman Gardner
For and on Behalf of
For and on Behalf of
Athanor Capital Partners Limited
Laserlock Technologies Inc.

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APPENDIX III
Cost Estimates
 

 
Total Fee
Upfront
Stage
 Payments
Annual
If
terminated
Comments
AIM Admission (Nomad)
           
4.1.1
Corporate Finance Fee
£12,000
£12,000
     
Non refundable, on signing
4.1.2
Corporate Finance Fee
£22,000
 
£22,000
   
Success Fee on funding & listing
             
50% will be paid on completion of the first $250k of funding
4.1.2
Fund raising
6%
       
6% of funds raised
4.1.2 & 4.1.3
NOMAD Fee & Expenses
£100,000
 
£100,000
   
Staged payments during the engagement
4.1.4
Addit. Corporate Finance Fee
3%
       
Warrants equal to 3% of total o/s shares priced at market
4.4.0
Annual Retainer
£40,000
   
£40,000
 
Upon admission to AIM; payable quarterly in advance
5.0.0
Termination Fee
       
£40,000
Actual out of pocket exp; max. 40,000 if terminated
               
Corporate Advisor & Broker
           
5.1.0
Corporate Advisor & Broker
£24,000
£4,000
£20,000
£24,000
 
Annual on going fee payable on signing - paid quarterly in advance
             
Subject of a separate agreement
Accounting Fees:
           
estimate
Initial
£10,000
£10,000
£0
     
estimate
Short form
£30,000
 
£30,000
   
Staged payments during the engagement - to be agreed
estimate
Long Form
£45,000
 
£45,000
   
Staged payments during the engagement - to be agreed
estimate
Success Fee
£20,000
 
£20,000
   
Success Fee on funding & listing
estimate
Abort Fee
       
£30,000
   
 
           
Legal Fees:
 
           
 
£60,000
£15,000
£45,000
   
Quote received by Laserlock
               
Road Show:
         
Travel
Costs to be agreed
   
Budget estimate
           
Formation of NEWCO
         
Advisor Fees
Costs to be agreed
   
Morgan Lewis preparing a quote
 
Tax Implications and advice
Costs to be agreed
   
Morgan Lewis preparing a quote
 
Company formation etc
Costs to be agreed
   
Morgan Lewis preparing a quote
   
 
     
Printing and Other Selling
and Related Fees
 
       
Printing
Costs to be agreed
   
Costs to be minimised
 
Certificates
Costs to be agreed
   
Costs to be minimised
 
Other
Costs to be agreed
   
Costs to be minimised
           
Other costs
         
Company Secretary, Registrar, etc
Costs to be agreed
   
Quotes to be obtained from two sources
           
Financial PR
           
estimate
Initial
£4,000
£4,000
       
estimate
Annual Retainer
£24,000
   
£24,000
 
Paid monthly
               
Expenses
           
estimate
Travel and expenses estimate
£10,000
£500
£9,500
                     

 
 

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November 2, 2006

Graham Brown
Chief Executive
ATHANOR CAPITAL PARTNERS LIMITED
Queens House
55-56 Lincoln’s Inn Fields
London WC2A 3LJ
United Kingdom

Dear Graham:

Reference is made to the letter agreement re: Proposed Admission through an
Introduction of Laserlock Technologies Inc. to trading on the London Stock
Exchange plc’s AIM, dated November 2, 2006 (the “Agreement”), between Athanor
Capital Partners Limited (“Athanor”) and Laserlock Technologies, Inc.
(“Laserlock”).

This letter will confirm our agreement respecting payment of the certain fees
due to Athanor from Laserlock under the Agreement. In satisfaction of
Laserlock’s obligations under Section 4.1.1 of the Agreement and Laserlock’s
obligation to pay the “Upfront” portion of the fees described in Section 5.1.0
of Appendix III to the Agreement, upon execution hereof by the parties,
Laserlock shall pay to Athanor $10,000 in cash and grant to Athanor an option
immediately exercisable into 1,000,000 shares of Laserlock’s common stock at a
nominal exercise price of $0.0001 per share.

The Agreement, as amended by this Letter, constitutes the entire agreement
between Laserlock and Athanor and supersedes any prior agreement or
understanding relating to the subject matter hereof. Except as expressly set
forth in this letter, all of the terms and provisions of the Agreement shall
continue in full force and effect.
 
 
/s/ Norman A. Gardner
Norman A. Gardner,
Chairman and CEO
   
ACCEPTED AND AGREED:
 
Athanor Capital Partners Limited
 
 
By: /s/ Graham Brown
Name: Graham Brown
Title: Chief Executive

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