Document:

Unassociated Document

     

    

      SECURITIES
        PURCHASE AGREEMENT

       

      This
        Securities Purchase Agreement (this “Agreement”)
        is
        dated as of April 24, 2007, by and between EVCI Career Colleges Holding Corp.,
        a
        Delaware corporation (the “Company”),
        and
        ComVest Investment Partners III, L.P., a Delaware limited partnership
        (“Purchaser”).

       

      WHEREAS,
        subject to the terms and conditions set forth in this Agreement and in
        accordance with and in reliance upon the exemption from securities registration
        afforded by Section 4(2) of the Securities Act of 1933, as amended, and the
        rules and regulations of the Commission promulgated thereunder (the
“Securities
        Act”),
        including Regulation D (“Regulation
        D”),
        and/or upon such other exemption from the registration requirements of the
        Securities Act as may be available with respect to any or all of the investments
        to be made hereunder, the Company desires to issue and sell to Purchaser,
        and
        Purchaser desires to purchase from the Company on the Closing Date (i) a
        secured
        convertible note (the “Secured
        Note”),
        in a
        form attached hereto as Exhibit
        A,
        in an
        aggregate principal amount of $9,202,313 (such amount representing the principal
        amount plus the addition of prepayment of certain interest as set forth in
        Section 4.3(b) of this Agreement and reimbursement of fees and expenses of
        Purchaser in accordance with Section 5.1(b) of this Agreement), (ii) 2,374,922
        shares (the “Shares”)
        of
        common stock, $0.0001 par value per share (“Common
        Stock”),
        of
        the Company for an aggregate purchase price of $1,282,458, (iii) warrants
        to
        purchase up to 25,863,095 shares of Common Stock (the “Warrant”);

       

      WHEREAS,
        Purchaser has agreed to assist the Company in procuring a one-year letter(s)
        of
        credit (the “Letter(s)
        of Credit”)
        in an
        amount up to $6,700,000 and has further agreed to guarantee such Letter(s)
        of
        Credit, if required, with an irrevocable corporate guaranty or irrevocable
        letter of credit (the “L/C
        Guaranty”)
        in a
        form to be reasonably acceptable to Purchaser and the applicable letter(s)
        of
        credit bank;

       

      WHEREAS,
        the Board of Directors (the “Board”)
        of the
        Company, upon the unanimous recommendation of a special committee comprised
        of
        independent directors of the Company (the “Special
        Committee”),
        has
        approved this Agreement and the other Transaction Documents, including but
        not
        limited to those transactions contemplated by the Management Subscription
        Documents and the Employment Agreements, and has deemed it advisable and
        in the
        best interests of its stockholders to consummate the transactions contemplated
        hereby;

       

      WHEREAS,
        simultaneous with the execution of this Agreement, Dr. Arol I. Buntzman,
        Dr.
        John J. McGrath, Joseph D. Alperin and Stephen Schwartz (collectively, the
        “Management
        Group”)
        will
        enter into employment letters or employment agreements (collectively, the
        “Employment
        Agreements”),
        in
        the forms attached hereto as Exhibits
        B-1, B-2, B-3 and B-4,
        as the
        case may be, each effective as of the Closing, amending certain current
        employment arrangements with the Company (including, without limitation,
        any
        change of control payments possibly owed as a result of the transactions
        contemplated hereby) with the Company;

       

      WHEREAS,
        the Management Group, simultaneous with the execution of this Agreement,
        has
        entered into the Management Subscription Documents agreeing to purchase the
        Management Securities on the Closing Date;

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      WHEREAS,
        simultaneous with the execution of this Agreement, the Company, Purchaser,
        each
        member of the Management Group and Harris N. A. (the “Senior
        Lender”)
        have
        entered into an Intercreditor Agreement (the “Intercreditor
        Agreement”),
        a
        copy of which is attached hereto as Exhibit
        C,
        relating to, among other things, the subordination of the Company’s obligations
        under the Notes to the Senior Debt (as such term is defined in the Intercreditor
        Agreement) and any Encumbrance securing the Company’s obligations under the
        Notes to the Senior Debt to any Encumbrance and security interest in favor
        of
        the Senior Lender;

       

      WHEREAS,
        simultaneous with the execution of this Agreement, the Company and the Senior
        Lender have agreed to further amend and restate that certain Credit Agreement,
        originally dated as of September 16, 2005, as amended and restated as of
        March
        31, 2006 and further amended as of April 30, 2006 and June 26, 2006 (as so
        amended and restated, the “Credit
        Agreement”),
        on
        commercially reasonable terms acceptable to each of the Company, the Senior
        Lender and Purchaser (as so further amended and restated on the date hereof,
        the
“Amended
        and Restated Credit Agreement”);
        and

       

      WHEREAS,
        the Company has agreed to seek stockholder approval for an amendment to the
        Company’s certificate of incorporation to increase the Company’s authorized
        Common Stock to accommodate the issuance of the Conversion Shares and the
        Warrant Shares upon full conversion of the Secured Note and exercise of the
        Warrant, as the case may be, in excess of the Available Capitalization
        (including the filing of such amendment in the State of Delaware, the
“Share
        Authorization”).

       

      NOW,
        THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
        and for other good and valuable consideration the receipt and adequacy of
        which
        are hereby acknowledged, the Company and Purchaser agree as
        follows:

       

      ARTICLE
        I.

      DEFINITIONS

       

      1.1   Definitions

       

      .
        In
        addition to the terms defined elsewhere in this Agreement, for all purposes
        of
        this Agreement, the following terms have the meanings indicated in this Section
        1.1:

       

      “Action”
means
        any claim, action, suit, arbitration, mediation, inquiry, action, proceeding
        or
        investigation by or before any Governmental Authority.

       

      “Advisory
        Fee”
shall
        have the meaning set forth in Section 5.2.

       

      “Affiliate”
means,
        with respect to any specified Person, any other Person that directly, or
        indirectly through one or more intermediaries, controls, is controlled by,
        or is
        under common control with, such specified Person.

       

      “Agreement”
shall
        have the meaning set forth in the Preamble.

       

      “Amended
        and Restated Credit Agreement”
shall
        have the meaning set forth in the Recitals.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      “Available
        Capitalization”
shall
        mean the number of authorized but unissued shares of Common Stock of the
        Company
        immediately prior to the Closing less (i) the Shares and the shares of Common
        Stock of the Company purchased by the Management Group at the Closing pursuant
        to the Management Subscription Documents, (ii) the L/C Shares, (iii) 362,592
        shares of Common Stock that are reserved for issuance upon currently outstanding
        options and warrants as set forth in Section 3.1(c)(i), (iv) 2,157,113 Shares
        of
        Common Stock that are reserved for issuance upon stock options to be issued
        pursuant to the Employment Agreements, (v) 1,000,000 shares of Common Stock
        that
        are reserved for issuance upon exercise of the Warrant, and (vi) 1,000,000
        shares of Common Stock that are reserved for issuance under Company stock
        options relating to grants to a new director appointed to the Board in
        accordance with the Company’s governing documents.

       

      “Board”
shall
        have the meaning set forth in the Recitals.

       

      “Board
        Recommendation”
shall
        have the meaning set forth in Section 4.15.

       

      “Business
        Day”
means
        any day that is not a Saturday, a Sunday or other day on which banks are
        required or authorized by Law to be closed in The City of New York.

       

      “Claims”
means
        any and all administrative, regulatory or judicial actions, suits, petitions,
        appeals, demands, demand letters, claims, Encumbrances, notices of noncompliance
        or violation, investigations, Actions, consent orders or consent
        agreements.

       

      “Closing”
shall
        have the meaning set forth in Section 2.1(a).

       

      “Closing
        Date”
shall
        have the meaning set forth in Section 2.1(a).

       

      “Code”
means
        the Internal Revenue Code of 1986, as amended from time to time.

       

      “Commission”
means
        the Securities and Exchange Commission.

       

      “Common
        Stock”
shall
        have the meaning set forth in the Recitals.

       

      “Common
        Stock Equivalents”
means
        any securities of the Company or the Subsidiaries which would entitle the
        holder
        thereof to acquire at any time Common Stock, including without limitation,
        any
        debt, preferred stock, rights, options, warrants or other instrument that
        is at
        any time convertible into or exchangeable for, or otherwise entitles the
        holder
        thereof to receive, Common Stock.

       

      “Company”
shall
        have the meaning set forth in the Preamble.

       

      “Company
        Counsel”
means
        Phillips Nizer LLP with offices located at 666 Fifth Avenue, New York, New
        York
        10103.

       

      “Company
        Indemnified Party”
shall
        have the meaning set forth in Section 4.8(b).

       

      “Company
        Intellectual Property”
means
        Intellectual Property owned by the Company or any Subsidiary.THIS
      NOTE AND THE SECURITIES REPRESENTED BY THIS NOTE HAVE BEEN ACQUIRED FOR
      INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED (THE “SECURITIES
      ACT”),
      OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD OR
      OTHERWISE TRANSFERRED OR PLEDGED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS,
      OR
      IF THE PROPOSED TRANSFER MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
      SECURITIES ACT OR REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE
      SECURITIES LAWS. 

     

    LASERLOCK
      TECHNOLOGIES, INC.

     

    CONVERTIBLE
      PROMISSORY NOTE

     

    
      	
              $140,000

            	
              May
                18, 2007

            

    

    

    Section
      1. General.
      For
      value received, LASERLOCK
      TECHNOLOGIES, INC.,
      a
      Nevada corporation (including any successor thereto (by way of merger,
      consolidation, sale or otherwise), the “Payor”),
      hereby promises to pay to the order of Nob Hill Capital Partners LP or assigns
      (the “Payee”),
      the
      principal amount of One Hundred Forty Thousand Dollars ($140,000) or such
      greater or lesser principal amount which may be outstanding hereunder plus
      accrued interest, on August 31, 2008 (the “Maturity
      Date”).
      All
      payments hereunder shall be made in such coin or currency of the United States
      of America as at the time of payment shall be legal tender therein for the
      payment of public and private debts (unless, prior to accepting such form of
      payment, Payee elects to convert the principal and interest on this Note
      pursuant to Section 4 hereof, in which case such principal and interest
      shall be so converted on the terms set forth herein). The Payor shall pay
      interest in arrears on the unpaid balance of the principal amount of this Note
      from time to time at the rate of ten percent (10.0%) per annum (computed in
      either event on the basis of a 360 day year and the actual number of days
      elapsed) (the “Interest
      Rate”).
      Unless converted pursuant to Section 4, the principal of, and interest on,
      this Note shall be payable by wire transfer in immediately available funds
      to
      the account of the Payee or by certified or official bank check payable to
      the
      Payee mailed to the Payee at the address of the Payee as set forth on the
      records of the Payor or such other address as shall be designated in writing
      by
      the Payee to the Payor.

     

    This
      Convertible Promissory Note (this “Note”)
      is
      issued by the Payor to the Payee pursuant to the Convertible Note Purchase
      Agreement dated as of May 18, 2007 (the “Purchase
      Agreement”)
      among
      the Payor, the Payee and the other signatories thereto, as of even date
      herewith.

     

    Capitalized
      terms used and not otherwise defined herein have the meanings ascribed thereto
      in the Purchase Agreement.

     

    Section
      2. Prepayment.
      Payor
      shall have the right to prepay this Note, in whole or in part, without penalty,
      upon sixty-one (61) days prior written notice to Payee; provided, however,
      that,
      Payee shall have the right at any time during such sixty-one (61) day period
      to
      convert the principal and interest on this Note pursuant to Section 4
      hereof, in which case such principal and interest shall be so converted on
      the
      terms set forth herein.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
      3. Events
      of Default.

     

    (a) In
      each
      case of the happening of the following events (each of which is an “Event
      of Default”):

     

    (i) if
      any
      representation or warranty made herein, in the Purchase Agreement or in any
      agreement executed in connection therewith, or in any report, certificate,
      financial statement or other instrument furnished in connection with this Note
      or the Purchase Agreement shall prove to have been false or misleading in any
      material respect when made; 

     

    (ii) if
      a
      default occurs in the payment of any premium, installment of principal of,
      interest on, or other obligation with respect to, this Note, whether at the
      due
      date hereof or upon acceleration hereof, and such default shall continue for
      more than ten (10) days after notice thereof from the holders of a majority
      in interest of the principal amount of the Notes subject to the Purchase
      Agreement; 

     

    (iii) if
      a
      default occurs in the due observance or performance of any covenant or agreement
      on the part of the Payor to be observed or performed pursuant to the terms
      of
      this Note or the Purchase Agreement and such default remains uncured for thirty
      (30) days; 

     

    (iv) if
      the
      Payor shall (1) discontinue its business, (2) apply for or consent to
      the appointment of a receiver, trustee, custodian or liquidator of it or any
      of
      its property, (3) admit in writing its inability to pay its debts as they
      mature, (4) make a general assignment for the benefit of creditors, or
      (5) file a voluntary petition in bankruptcy, or a petition or an answer
      seeking reorganization or an arrangement with creditors, or to take advantage
      of
      any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution
      or
      liquidation laws or statutes, or an answer admitting the material allegations
      of
      a petition filed against it in any proceeding under any such law; 

     

    (v) if
      there
      shall be filed against the Payor an involuntary petition seeking reorganization
      of the Payor or the appointment of a receiver, trustee, custodian or liquidator
      of the Payor or a substantial part of its assets, or an involuntary petition
      under any bankruptcy, reorganization or insolvency law of any jurisdiction,
      whether now or hereafter in effect (any of the foregoing petitions being
      hereinafter referred to as an “Involuntary
      Petition”)
      and
      such Involuntary Petition shall not have been dismissed within sixty
      (60) days after it was filed; 

     

    (vi) if
      final
      judgment(s) for the payment of money in excess of an aggregate of $150,000
      shall
      be rendered against the Payor and the same shall remain undischarged for a
      period of thirty (30) consecutive days, during which time execution shall not
      be
      effectively stayed; 

     

    (vii) if
      a
      default occurs in the due observance or performance of any material covenant,
      condition or agreement on the part of the Payor under any debt instrument having
      a value of more than $150,000, and such default shall permit the holder thereof
      to accelerate such indebtedness;

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    then,
      upon each and every such Event of Default and at any time thereafter during
      the
      continuance of such Event of Default, at the election of the holders of a
      majority of the outstanding principal amount of the Notes any and all
      indebtedness of the Payor under the Notes shall immediately become due and
      payable, both as to principal and interest (including any deferred interest
      and
      any accrued and unpaid interest), without presentment, demand, or protest,
      all
      of which are hereby expressly waived, anything contained herein or in the
      Purchase Agreement or other evidence of such indebtedness to the contrary
      notwithstanding (except in the case of an Event of Default under
      paragraphs (iv) or (v) of this Section 3(a), in which event such
      indebtedness shall automatically become due and payable).

    

    (b) Remedies
      on Default, Etc.
      In case
      any one or more Events of Default shall occur and be continuing and acceleration
      of this Note shall have occurred, the Payee may, among other things, proceed
      to
      protect and enforce its rights by an action at law, suit in equity or other
      appropriate proceeding, whether for the specific performance of any agreement
      contained herein or in the Purchase Agreement, or for an injunction against
      a
      violation of any of the terms hereof or thereof or in and of the exercise of
      any
      power granted hereby or thereby or by law. No right conferred upon the Payee
      hereby or by the Purchase Agreement shall be exclusive of any other right
      referred to herein or therein or now or hereafter available at law, in equity,
      by statute or otherwise.

     

    Section
      4. Conversion.
      

     

    (a) Subject
      to and upon compliance with the provisions of this Section 4, at the option
      of
      Payee, the entire principal balance of this Note, or any portion of the
      principal amount hereof and the interest related thereto may, at any time and
      from time to time, be converted into fully paid and nonassessable shares of
      the
      Preferred Stock of Payor, at a price equal to the Conversion Price (as
      hereinafter defined), as in effect at the time of conversion.

     

    (b) To
      exercise the conversion privilege, Payee shall surrender this Note, together
      with a written conversion notice, to Payor at its principal office. This Note
      or
      portion thereof shall be deemed to have been converted immediately prior to
      the
      close of business on the date of delivery of this Note, and the giving of such
      notice, to Payor, even if Payor’s stock transfer books are on that date closed,
      and Payee, or the nominee or nominees of Payee, shall be treated for all
      purposes as the record holder of the shares of Preferred Stock deliverable
      upon
      such conversion as of the close of business on such date. Promptly after receipt
      by Payor of this Note and the notice, Payor shall issue and deliver, at its
      expense, to Payee, or to the nominee or nominees of Payee, a certificate or
      certificates for the number of shares of its Preferred Stock due on such
      conversion. Interest shall accrue on the unpaid principal amount of this Note
      converted to the date of conversion, and Payor shall pay such interest at the
      time of conversion.

     

    (c) No
      fractional shares of Preferred Stock shall be issued upon conversion of this
      Note. Instead of any fractional share of Preferred Stock which would otherwise
      be issuable upon conversion of this Note, Payor shall pay a cash adjustment
      in
      respect of such fractional interest. Payee, by its acceptance thereof, expressly
      waives any right to receive any fractional share upon conversion of this
      Note.

     

    (d) The
      Conversion Price at which the Preferred Stock shall be issuable upon conversion
      of this Note shall initially be equal to $0.005333 (the “Conversion
      Price”);
      provided, however, that the Conversion Price and the conversion terms shall
      be
      subject to adjustment as set forth in Section 4(e) below.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (e) If
      at any
      time Payor shall:

     

    (i) subdivide
      its outstanding shares of Preferred Stock into a larger number of shares of
      Preferred Stock, or

     

    (ii) combine
      its outstanding shares of Preferred Stock into a smaller number of shares of
      Preferred Stock,

     

    then
      (A)
      the number of shares of Preferred Stock for which this Note is convertible
      into
      immediately after the occurrence of any such event shall be adjusted to equal
      the number of shares of Preferred Stock which a record holder of the same number
      of shares of Preferred Stock for which this Note is convertible into immediately
      prior to the occurrence of such event would own or be entitled to receive after
      the happening of such event, and (B) the Conversion Price shall be adjusted
      to
      equal (x) the current Conversion Price multiplied by the number of shares of
      Preferred Stock for which this Note is convertible into immediately prior to
      the
      adjustment divided by (y) the number of shares of Preferred Stock for which
      this
      Note is convertible into immediately after such adjustment.

     

    (f) In
      the
      event that Payor shall be a party to (i) any recapitalization or
      reclassification of the Preferred Stock (other than a change in par value or
      as
      a result of a subdivision or combination of the Preferred Stock); (ii) any
      consolidation or merger of Payor with or into another corporation as a result
      of
      which holders of Preferred Stock shall be entitled to receive securities or
      other property or assets (including cash) with respect to or in exchange for
      Preferred Stock (other than a merger which does not result in a
      reclassification, conversion, exchange or cancellation of the outstanding
      Preferred Stock); (iii) any sale or transfer of all or substantially all of
      the
      assets of Payor; or (iv) any compulsory share exchange, pursuant to any of
      which
      holders of Preferred Stock shall be entitled to receive other securities, cash
      or other property (each, a “Fundamental
      Change”),
      then,
      if this Note is not converted prior to such Fundamental Change, appropriate
      provision shall be made so that the holder of this Note shall have the right
      thereafter to convert such security only into the kind and amount of the
      securities, cash or other property that would have been receivable upon such
      recapitalization, reclassification, consolidation, merger, sale, transfer or
      share exchange by a holder of the number of shares of Preferred Stock issuable
      upon conversion of this Note immediately prior to such recapitalization,
      reclassification, consolidation, merger, sale, transfer or share exchange,
      at
      the Conversion Price (subject to adjustment pursuant to Section
      4(e)).

     

    (g) Payor
      will not, by amendment of its Articles of Incorporation or through any
      reorganization, recapitalization, transfer of assets, consolidation, merger,
      dissolution, issue or sale of securities or any other voluntary action, avoid
      or
      seek to avoid the observance or performance of any of the terms to be observed
      or performed hereunder by Payor, but will at all times in good faith assist
      in
      the carrying out of all the provisions of this Section 4 and in the taking
      of
      all such action as may be necessary or appropriate in order to protect the
      conversion rights of Payee of this Note against impairment.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (h) The
      issue
      of stock certificates upon conversion of this Note shall be made without charge
      to the converting holder for any tax in respect of such issue. Payor shall
      not,
      however, be required to pay any tax which may be payable in respect of any
      transfer involved in the issue and delivery of shares in any name other than
      that of the holder of any of this Note converted, and Payor shall not be
      required to issue or deliver any such stock certificate unless and until the
      person or persons requesting the issue thereof shall have paid to Payor the
      amount of such tax or shall have established to the satisfaction of Payor that
      such tax has been paid.

     

    (i) The
      holder of this Note shall not have any voting rights.

     

    Section
      5. Defenses.
      The
      obligations of the Payor under this Note shall not be subject to reduction,
      limitation, impairment, termination, defense, set-off, counterclaim or
      recoupment for any reason. 

     

    Section
      6. Exchange
      or Replacement of Notes.

     

    (a) The
      Payee
      may, at its option, in person or by duly authorized attorney, surrender this
      Note, including all accrued and unpaid interest hereon, for exchange at the
      principal business office of the Payor, and receive in exchange therefor, a
      new
      Note in the same principal amount as the unpaid principal amount of this Note
      and bearing interest at the same annual rate as this Note, each such new Note
      to
      be dated as of the date of this Note and to be in such principal amount as
      remains unpaid and payable to such person or persons, or order, as the Payee
      may
      designate in writing. 

     

    (b) Upon
      receipt by the Payor of evidence satisfactory to it of the loss, theft,
      destruction, or mutilation of this Note, and (in case of loss, theft or
      destruction) of an indemnity reasonably satisfactory to it, and upon surrender
      and cancellation of this Note, if mutilated, the Payor will deliver a new Note
      of like tenor in lieu of this Note. Any Note delivered in accordance with the
      provisions of this Section 7 shall be dated as of the date of this Note.

     

    Section
      7. Extension
      of Maturity.
      Should
      the principal of or interest on this Note become due and payable on other than
      a
      business day, the maturity date thereof shall be extended to the next succeeding
      business day, and, in the case of principal, interest shall be payable thereon
      at the rate per annum herein specified during such extension. For the purposes
      of the preceding sentence, a business day shall be any day that is not a
      Saturday, Sunday, or legal holiday in the State of New York. 

     

    Section
      8. Attorneys’
      and Collection Fees.
      Should
      the indebtedness evidenced by this Note or any part hereof be collected at
      law
      or in equity or in bankruptcy, receivership or other court proceedings, or
      this
      Note be placed in the hands of attorneys for collection, the Payor agrees to
      pay, in addition to principal and interest due and payable hereon, all costs
      of
      collection, including reasonable attorneys’ fees and expenses, incurred by the
      Payee in collecting or enforcing this Note. 

     

    Section
      9. Waivers.
      The
      Payor hereby waives presentment, demand for payment, notice of dishonor, notice
      of protest and all other notices or demands in connection with the delivery,
      acceptance, performance or default of this Note. No delay by the Payee in
      exercising any power or right hereunder shall operate as a waiver of any power
      or right, nor shall any single or partial exercise of any power or right
      preclude other or further exercise thereof, or the exercise of any other power
      or right hereunder or otherwise; and no waiver whatsoever or modification of
      the
      terms hereof shall be valid unless set forth in writing by the Payee and then
      only to the extent set forth therein. 

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    Section
      10. Amendments
      and Waivers.
      No
      provision of this Note may be amended or waived except as provided in the
      Purchase Agreement. 

     

    Section
      11. Highest
      Lawful Rate.
      Notwithstanding anything herein to the contrary, if during any period for which
      interest is computed hereunder, the amount of interest computed on the basis
      provided for in this Note, together will all fees, charges, and other payments
      or rights which are treated as interest under applicable law, as provided for
      herein or in any other document executed in connection herewith, would exceed
      the amount of such interest computed on the basis of the Highest Lawful Rate,
      the Corporation shall not be obligated to pay, and the Holder shall not be
      entitled to charge, collect, receive, reserve, or take, interest in excess
      of
      the Highest Lawful Rate, and during any such period the interest payable
      hereunder shall be computed on the basis of the Highest Lawful Rate. As used
      herein, “Highest
      Lawful Rate”
means
      the maximum non-usurious rate of interest, as in effect from time to time,
      which
      may be charged, contracted for, reserved, received, or collected by the Holder
      in connection with this Note under applicable law. In accordance with this
      section, any amounts received in excess of the Highest Lawful Rate shall be
      applied towards the prepayment of principal then outstanding. 

     

    Section
      12. Governing
      Law.
      This
      Note is made and delivered in, and shall be governed by and construed in
      accordance with the internal laws of, the Commonwealth of Pennsylvania (without
      giving effect to principles of conflicts of laws). 

     

    Section
      13. Notices.
      The
      terms and provisions of Section 7.6 of the Purchase Agreement are expressly
      incorporated into this Note.

     

    (remainder
      of page intentionally left blank; signature page to follow)

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      the
      Payor has duly executed and delivered this Note as of the date first written
      above.

     

    

    
      	 	
              LASERLOCK
                TECHNOLOGIES, INC.

            
	 	 
	 	 
	 	 
	 	
              By:      
                /s/
                NORMAN
                GARDNER                             
                 

              Name: Norman
                Gardner

              Title:  
                President
                and Chief Executive Officer

            
	 	 
	 	 
	
              ACKNOWLEDGED
                AND ACCEPTED BY:

            	 
	 	 
	
              NOB
                HILL CAPITAL PARTNERS LP

            	 
	 	 
	
              By
                its General Partner, Nob Hill Capital Management, Inc., a California
                corporation

            	 
	 	 
	
              By:     
                /s/
                STEPHEN
                MITTEL                                       
                

              Name:
                Stephen Mittel

              Its:     
                President

            	 

    

     

    
      
         

      

      
        7

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