Document:

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.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
            	(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.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	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.

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    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);

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    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”):

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    
      	
            	
              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.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	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;

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    
      	
            	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

        
          

        

      

      
        
        

      

    

     

    
      	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

        
          

        

      

      
        
        

      

    

     

    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. 

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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

              	 	 	 
	 	 	 	 	 	 	 	 

      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    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 ExecutiveExhibit
      10.2 

    FORM
      OF

    
 

    THIS
      WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933 ACT, AS AMENDED (THE "1933 ACT"). THE HOLDER
      HEREOF, BY PURCHASING THIS WARRANT, AGREES FOR THE BENEFIT OF THE COMPANY THAT
      SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
      COMPANY, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT
      AND
      ANY APPLICABLE STATE SECURITES LAWS, OR (C) IF REGISTERED UNDER THE 1933 ACT
      AND
      ANY APPLICABLE STATE SECURITIES LAWS.

    

    ---------------------------------------

    

    MICROHELIX,
      INC.

    

    WARRANT
      TO PURCHASE

    

    SHARES
      OF
      COMMON STOCK

    

    Expires
      November 1, 2011

    

    

    Portland,
      Oregon

    Issue
      Date:
      November 2, 2006

    

    

    IN
      CONSIDERATION OF the representations and covenants set forth herein, and other
      good and valuable consideration received, and subject to the provisions
      hereinafter set forth, microHelix,
      Inc.,
      an
      Oregon corporation (the "Company"),
      hereby certifies that MH
      Financial Associates, LLC,
      an
      Oregon limited liability company or its registered assigns (the "Warrant
      Holder") is
      entitled to subscribe for and purchase, during the period specified in this
      Warrant, up to _______ shares ("Warrant
      Shares")
      (subject to adjustment as hereinafter provided) of the duly authorized, validly
      issued, fully paid and non-assessable Common Stock of the Company, at an
      exercise price per share equal to $0.30
      per
      share (subject to adjustment as hereinafter provided, the "Exercise
      Price")
      subject, however, to the provisions and upon the terms and conditions
      hereinafter set forth. The right to purchase Warrant Shares will expire at
      12:01
      a.m., Pacific Time, on November 1, 2011.

     

    1. Registration
      of Warrant.
      The
      Company will register this Warrant upon records to be maintained by the Company
      for that purpose (the "Warrant
      Register"),
      in
      the name of the record Warrant Holder hereof from time to time. The Company
      may
      deem and treat the registered Warrant Holder of this Warrant as the absolute
      owner hereof for the purpose of any exercise hereof or any distribution to
      the
      Warrant Holder, and for all other purposes, and the Company will not be affected
      by notice to the contrary.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2. Representations
      and Covenants of the Warrant Holder.
      This
      Warrant has been entered into by the Company in reliance upon the following
      representations and covenants of the Warrant Holder:

     

    (a) The
      Warrant Holder by accepting this Warrant represents that the Warrant Holder
      is
      acquiring this Warrant for its own account or the account of an affiliate for
      investment purposes and not with the view to any offering or distribution and
      that the Warrant Holder will not sell or otherwise dispose of this Warrant
      or
      the underlying Warrant Shares in violation of applicable securities laws.

     

    (b) The
      Warrant Holder acknowledges that the certificates representing any Warrant
      Shares will bear a legend indicating that they have not been registered under
      the United States Securities Act of 1933, as amended (the "1933
      Act"),
      and
      may not be sold by the Warrant Holder except pursuant to an effective
      registration statement or pursuant to an exemption from registration
      requirements of the 1933 Act and in accordance with federal and state securities
      laws. 

     

    (c) In
      no
      event will the Warrant Holder make a disposition of any of its rights to acquire
      Common Stock or Common Stock issuable upon exercise of such rights unless and
      until (i) it has notified the Company of the proposed disposition, and (ii)
      if
      requested by the Company, it has furnished the Company with an opinion of
      counsel satisfactory to the Company and its counsel to the effect that (A)
      appropriate action necessary for compliance with the 1933 Act has been taken,
      or
      (B) an exemption from the registration requirements of the 1933 Act is
      available. Notwithstanding the foregoing, the restrictions on the
      transferability of any security will terminate when such security is effectively
      registered under the 1933 Act and sold by the holder thereof in accordance
      with
      such registration, or such security is sold without registration in compliance
      with Rule 144 under the 1933 Act. Whenever the restrictions imposed under this
      section terminate, the Warrant Holder or holder of a share of Common Stock
      then
      outstanding as to which such restrictions have terminated will be entitled
      to
      receive from the Company one or more new certificates for the Warrant or for
      such shares of Common Stock not bearing any restrictive legend.

     

    (d) The
      Warrant Holder is an "accredited investor" within the meaning of Rule
      501(a) of Regulation D promulgated under the 1933 Act.

     

    (e) The
      Warrant Holder has such knowledge and experience in financial and business
      matters as to be capable of evaluating the merits and risks of its investment,
      and has the ability to bear the economic risks of its investment.

     

    (f) The
      Warrant Holder understands that if a registration statement covering this
      Warrant or the Common Stock is not in effect when it desires to sell this
      Warrant or the Common Stock, it may be required to hold such securities for
      an
      indefinite period. The Warrant Holder also understands that any sale of this
      Warrant or the Common Stock purchased under this Warrant which might be made
      by
      it in reliance upon Rule 144 under the 1933 Act may be made only in accordance
      with the terms and conditions of that Rule.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3. Validity
      of Warrant and Issue of Shares.
      The
      Company represents and warrants that this Warrant has been duly authorized
      and
      validly issued and warrants and agrees that all of Common Stock that may be
      issued upon the exercise of the rights represented by this Warrant will, when
      issued upon such exercise, be duly authorized, validly issued, fully paid and
      nonassessable and free from all taxes, liens and charges with respect to the
      issue thereof. The Company further warrants and agrees that during the period
      within which the rights represented by this Warrant may be exercised, the
      Company will at all times have authorized and reserved a sufficient number
      of
      Common Stock to provide for the exercise of the rights represented by this
      Warrant.

     

    4. Registration
      of Transfers of Warrant.
      Subject
      to compliance with the legend set forth on the face of this Warrant and
Section
      2(c),
      the
      Company will register the transfer of any portion of this Warrant in the Warrant
      in the Warrant Register, upon surrender of this Warrant with the Form of
      Assignment attached hereto duly completed and signed, to the Company. Upon
      any
      such registration or transfer, a new warrant to purchase Common Stock, in
      substantially the form of this Warrant (any such new warrant, a "New
      Warrant"),
      evidencing the portion of this Warrant so transferred will be issued to the
      transferee and a New Warrant evidencing the remaining portion of this Warrant
      not so transferred, if any, will be issued to the transferring Warrant Holder.
      The acceptance of the New Warrant by the transferee thereof will be deemed
      the
      acceptance of such transferee of all of the rights and obligations of a Warrant
      Holder of a Warrant.

     

    5. Exercise
      of Warrants.

     

    (a) Upon
      surrender of this Warrant with the Form of Election to Purchase attached hereto
      duly completed and signed to the Company, and upon payment and delivery of
      the
      Exercise Price per Warrant Share multiplied by the number of Warrant Shares
      that
      the Warrant Holder intends to purchase hereunder, in lawful money of the United
      States of America, in cash or by certified or official bank check or checks,
      to
      the Company, all as specified by the Warrant Holder in the Form of Election
      to
      Purchase, the Company will promptly issue or cause to be issued and cause to
      be
      delivered to or upon the written order of the Warrant Holder and in such name
      or
      names as the Warrant Holder may designate (subject to the restrictions on
      transfer described in Section
      2(c)
      and in
      the legend set forth on the face of this Warrant), a certificate for the Warrant
      Shares issuable upon such exercise, with such restrictive legend as required
      by
      the 1933 Act. Any person so designated by the Holder to receive Warrant Shares
      will be deemed to have become the holder of record of such Warrant Shares as
      of
      the Date of Exercise of this Warrant.

     

    (b) A
      "Date
      of Exercise" means the date on which the Company will have received (i) this
      Warrant (or any New Warrant, as applicable), with the Form of Election to
      Purchase attached hereto (or attached to such New Warrant) appropriately
      completed and duly signed, and (ii) payment of the Exercise Price for the number
      of Warrant Shares indicated by the Warrant Holder to be purchased.

     

    (c) If
      less
      than all of the Warrant Shares which may be purchased under this Warrant are
      exercised at any time, the Company will issue or cause to be issued a New
      Warrant evidencing the right to purchase the remaining number of Warrant
      Shares.

     

    (d) The
      holder of this Warrant may, at its election, exercise this Warrant in whole
      or
      in part and, in lieu of making the cash payment otherwise contemplated to be
      made to the Company upon such exercise in payment of the aggregate Exercise
      Price, elect instead to receive upon such exercise the "Net
      Number"
      of
      shares of Common Stock determined according to the following formula (a
      "Cashless
      Exercise"):

     

    Net
      Number = (A x (B - C))/B

    

    (ii)
      For
      purposes of the foregoing formula:

     

    A
      = the
      total number of shares with respect to which this Warrant is then being
      exercised.

     

    B
      = the
      average Market Price (as defined below) over a twenty-one (21) day period ending
      three trading days before the effective date of the Exercise
      Notice.

     

    C
      = the
      Warrant Exercise Price then in effect at the time of such exercise.

    

    "Market
      Price"
      means,
      with respect to Warrant Shares, if (i) the shares are listed or admitted for
      listing on any national securities exchange or included in The Nasdaq National
      Market or the Nasdaq
      SmallCap Market, the last reported sales price as reported on such exchange
      or
      market; (ii) if the shares are not so listed or admitted for trading, the
      average of the last reported closing bid and asked quotation for the shares
      as
      reported on the National Association of Securities Dealers Automated Quotation
      System ("Nasdaq") or a similar service if Nasdaq is not reporting such
      information; or (iii) if the shares are not so listed or admitted for trading
      or
      quoted by Nasdaq or a similar service, the average of the last reported bid
      and
      asked quotation for the shares as quoted by a market maker in the shares (or
      if
      there is more than one market maker, then the average of the lowest bid and
      highest asked quotation). In the absence of any available public quotations
      for
      the shares, the Board of Directors of the Company will determine in good faith
      the fair market value of the shares, which determination will be set forth
      in a
      certificate signed by the Secretary of the Company.

     

    6. Adjustment
      of Exercise Price and Number of Shares.
      The
      character of the shares of stock or other securities at the time issuable upon
      exercise of this Warrant, the number of Warrant Shares, and the Exercise Price
      are subject to adjustment upon the occurrence of the following events, and
      all
      such adjustments will be cumulative:

    

      (a)
        The
        Exercise Price of this Warrant and the number of shares of Common Stock or
        other
        securities at the time issuable upon exercise of this Warrant will be
        appropriately adjusted to reflect any stock dividend, stock split, combination
        of shares, reclassification, recapitalization or other similar event affecting
        the number of outstanding shares of stock or securities.

      

      (b)
        In
        case of any consolidation or merger of the Company with or into any other
        corporation, entity or person, or any other corporate reorganization, in
        which
        the Company will not be the continuing or surviving entity of such
        consolidation, merger or reorganization (any such transaction being hereinafter
        referred to as a "Reorganization"), then, in each case, the holder of this
        Warrant, on exercise at any time after the consummation or effective date
        of
        such Reorganization (the "Effective Date"), will receive, in lieu of the
        shares
        of stock or other securities at any time issuable upon the exercise of the
        Warrant issuable on such exercise prior to the Effective Date, the stock
        and
        other securities and property (including cash) to which such holder would
        have
        been entitled upon the Effective Date if such holder had exercised this Warrant
        immediately prior thereto (all subject to further adjustment as provided
        in this
        Warrant).

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
         

        (c)
          In
          case of any default under the terms of (i) that certain amended and restated
          promissory note dated as of October 19, 2006 in the original principal
          amount of
          $1,028,982 (ii) secured indebtedness of the Company to any third party
          in
          principal amount exceeding $100,000, which default is not cured within
          any
          applicable cure period with respect to (i) or (ii) above, then the Exercise
          Price will be automatically reduced to $0.15 per share (subject to any
          other
          applicable adjustments under this Section 6).

         

        
          (d)
            In
            case of any adjustment or readjustment in the price or kind of securities
            issuable on the exercise of this Warrant, the Company will promptly give
            written
            notice thereof to the holder of this Warrant, setting forth such adjustment
            or
            readjustment and showing in reasonable detail the facts upon which such
            adjustment or readjustment is based.

        

         

        7. Fractional
          Shares.
          The
          Company will not be required to issue or cause to be issued
          fractional Warrant Shares on the exercise of this Warrant. The number of
          full
          Warrant Shares that will be issuable upon the exercise of this Warrant
          will be
          computed on the basis of the aggregate number of Warrant Shares purchasable
          on
          exercise of this Warrant so presented. If any fraction of a Warrant Share
          would,
          except for the provisions of this Section
          7,
          be
          issuable on the exercise of this Warrant, the Company will, at its option,
          (i)
          pay an amount in cash equal to the Exercise Price multiplied by such fraction
          or
          (ii) round the number of Warrant Shares issuable, up to the next whole
          number.

      

    

     

    8. Notice
      of Intent to Sell or Merge the Company. The
      Company will give Warrant Holder ten (10) days notice before the event of a
      sale
      of all or substantially all of the assets of the Company or the merger or
      consolidation of the Company in a transaction in which the Company is not the
      surviving entity.

     

    9. Registration
      Rights. The
      Warrant Shares are subject to registration under the 1933 Act pursuant to a
      Registration Rights Agreement entered into concurrently between the Company
      and
      the Warrant Holder.

     

    10. Notices.
      All
      notices and other communications hereunder will be in writing and will be deemed
      to have been given (i) on the date they are delivered if delivered in person;
      (ii) on the date initially received if delivered by facsimile transmission
      followed by registered or certified mail confirmation; (iii) on the date
      delivered by an overnight courier service; or (iv) on the third business day
      after it is mailed by registered or certified mail, return receipt requested
      with postage and other fees prepaid as follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    If
      to
      the Company:

    

    microHelix,
      Inc.

    19500
      SW
      90th
      Court

    Tualatin,
      OR 97062

    Fax
      (503)
      692-0878

    Attention:
      President

    

    If
      to
      the Warrant Holder:

    

    

    MH
      Financial Associates, LLC

    c/o
      Aequitas Capital Management, Inc.

    805
      SW
      Broadway

    Portland,
      OR 97205

    Fax:
      503-419-3530

    Attention:
      President

    

    Either
      party may subsequently designate another address for notices by written notice
      to the other party.

     

    11. Miscellaneous.

     

    (a) This
      Warrant constitutes the entire agreement between the Company and Warrant Holder
      with respect to the subject matter hereof, and supersedes all prior agreements
      between the parties with respect to such subject matter. This
      Warrant will be binding on and inure to the benefit of the parties hereto and
      their respective successors and permitted assigns. This Warrant may be amended
      only in a writing signed by the Company and the Warrant Holder.

     

    (b) Nothing
      in this Warrant will be construed to give to any person or corporation other
      than the Company and the Warrant Holder any legal or equitable right, remedy
      or
      cause of action under this Warrant; this Warrant will be for the sole and
      exclusive benefit of the Company and the Warrant Holder.

     

    (c) This
      Warrant will be governed by, construed and enforced in accordance with the
      internal laws of the State of Oregon without
      giving effect to principles of conflicts of law. The parties hereto irrevocably
      submit to the jurisdiction of any state or federal court sitting in Multnomah
      County, Oregon, in any action or proceeding brought to enforce, or otherwise
      arising out of or relating to, this Warrant, and hereby waive any objection
      to
      venue in any such court and any claim that such forum is an inconvenient forum.
      

     

    (d) Each
      party hereby irrevocably waives any right it may have, and agrees not to
      request, a jury trial for the adjudication of any dispute hereunder or in
      connection herewith or arising out of this Warrant or any transaction
      contemplated hereby. In the event suit or action is brought by any party under
      this Warrant to enforce any of its terms, or in any appeal therefrom, it is
      agreed that the prevailing party or parties will be entitled to reasonable
      attorneys fees to be fixed by the arbitrator, trial court, and/or appellate
      court.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e) The
      parties agree that a breach or violation of this Warrant will result in
      immediate and irreparable harm to the non-breaching party in an amount that
      will
      be impossible to ascertain at the time of the breach or violation, and that
      the
      award of monetary damages will not be adequate relief to the non-breaching
      party. The non-breaching party will be entitled to seek equitable or injunctive
      relief, in addition to other remedies to which it may be entitled at law or
      equity. In any action for equitable relief, the parties agree to waive any
      requirement for the posting of a bond or security.

     

    (f) The
      headings herein are for convenience only, do not constitute a part of this
      Warrant and will not be deemed to limit or affect any of the provisions
      hereof.

     

    (g) In
      case
      any one or more of the provisions of this Warrant will be invalid or
      unenforceable in any respect, the validity and enforceability of the remaining
      terms and provisions of this Warrant will not in any way be affected or impaired
      thereby and the parties will attempt in good faith to agree upon a valid and
      enforceable provision which will be a commercially reasonably substitute
      therefor, and upon so agreeing, will incorporate such substitute provision
      in
      this Warrant.

     

    (h) The
      Warrant Holder will not, by virtue hereof, be entitled to any voting or other
      rights of a shareholder of the Company, either at law or equity, and the rights
      of the Warrant Holder are limited to those expressed in this
      Warrant.

     

     

    (i) This
      Warrant may be executed in one or more counterparts, each of which when executed
      will be deemed to be an original, but all of which taken together will
      constitute one and the same agreement. A facsimile transmission of this signed
      Warrant will be legal and binding on all parties hereto. 

     

    

    IN
      WITNESS WHEREOF, each party has caused this Warrant to be duly executed by
      its
      authorized representative effective as of the Original Issue Date.

     

     

    
      	COMPANY:	 	 	WARRANT
              HOLDER:
	 	 	 	
            
	MICROHELIX, INC.	 	 	
              MH
                FINANCIAL ASSOCIATES, LLC  

            
	 	 	 	 
	 	 	 	 
	
               

              By:______________________________

            	 	 	
              By:
                Aequitas Capital Management, Inc., 

              its
                Manager 

            
	
              Name:
                Tyram H. Pettit    

              Title:
                President & Chief Executive Officer

            	 	 	
               

            
	 	 	 	By:
              _________________________ 
                Robert
                J. Jesenik, CEO

            

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    FORM
      OF ELECTION TO PURCHASE

    

    (To
      be
      executed by the Warrant Holder to exercise the right to purchase shares of
      Common Stock under the foregoing Warrant)

     

    To:
      MICROHELIX,
      INC.

     

    In
      accordance with the Warrant enclosed with this Form of Election to Purchase,
      the
      undersigned hereby irrevocably elects to purchase __________ shares
      of
      Common Stock ("Common Stock"), no par value, of microHelix, Inc. and encloses
      the warrant.

     

    Method
      of
      Exercise (Please check one box):

     

    o
The
      undersigned elects to exercise the attached Warrant by means of a cash payment,
      and tenders herewith the Exercise Price (as defined in the Warrant, originally
      $0.30 per Warrant Share) for each Warrant Share being purchased or an aggregate
      of $__________ in
      cash
      or certified or official bank check or checks, which sum represents the
      aggregate Exercise Price together with any applicable taxes payable by the
      undersigned pursuant to the Warrant.

     

    o
      The
      undersigned elects to exercise the attached Warrant by means of the net exercise
      provisions of Section 5(d) of the Warrant.

    

    The
      undersigned requests that certificates for the shares of Common Stock issuable
      upon this exercise be issued in the name of:

    

    __________________________

    __________________________

    __________________________

    (Please
      print name and address)

     

    

    _______________________________________

    (Please
      insert Social Security or Tax Identification Number)

    

    If
      the
      number of shares of Common Stock issuable upon this exercise will not be all
      of
      the shares of Common Stock which the undersigned is entitled to purchase in
      accordance with the enclosed Warrant, the undersigned requests that a New
      Warrant (as defined in the Warrant) evidencing the right to purchase the shares
      of Common Stock not issuable pursuant to the exercise evidenced hereby be issued
      in the name of and delivered to:

     

    __________________________

    
      __________________________

    

    __________________________

    (Please
      print name and address)

    

    

    
      	Dated:___________________	Name
              of Warrant Holder:
	 	 
	 	(Print)__________________________
	 	(By)_______________________________
	 	(Name)_____________________________
	 	(Title)______________________________
	 	
              Signature must conform in all respects to name
                of
                Warrant Holder as 

              specified
                on the face of the Warrant

            
	 	 

    

     

    

        

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    FORM
      OF ASSIGNMENT

    (To
      be
      signed only on transfer of Warrant)

    

    

    TO: MICROHELIX,
      INC.

     

    

     

    FOR
      VALUE
      RECEIVED, the undersigned Registered Holder
      ________________________________    

    Print
      Name of Holder

    

    _____________________________________________________

    (Please
      insert Social Security or Tax Identification Number of Registered
      Holder)

     

    
 

    hereby
      sells, assigns and transfers unto 

     

    
      
        _____________________________

      

      _____________________________

    

    _____________________________

    (Please
      Print Name and Address including Zip Code)

     

    _______________________________________________

    (Please
      insert Social Security or Tax Identification Number of Assignee)

     

    The
      right
      to purchase ________ shares of Common Stock of microHelix, Inc., evidenced
      by
      the attached Warrant, and irrevocably constitutes and appoints
      _____________________________________ attorney to transfer this Warrant on
      the
      books of microHelix, Inc. with the full power of substitution in the
      premises. 

    

    If
      this
      assignment is not an assignment of all of the shares of Common Stock which
      the
      undersigned is entitled to purchase in accordance with the enclosed Warrant,
      the
      undersigned requests that a new Warrant evidencing the right to purchase the
      shares of Common Stock not assigned hereby be issued in the name of and
      delivered to the Registered Holder.

     

    Dated:___________________    

     

    Signature:

     

    ________________________

    By:_____________________ 

    Title:____________________
           

     

    (Signature
      must conform in all respects to the name of the Registered Holder as specified
      on the face of the attached Warrant in every particular, without alteration
      or
      any change whatsoever.)

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