STOCK LOAN AGREEMENT
This Agreement (the "Agreement") is made this 15th day of October 2003,
by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("Lender"), Californian Securities S.A. ("CSSA"),
LaserLock Technologies, Inc. ("LL") and Pacific Continental Securities (UK)
Nominees Limited ("Nominees")
R E C I T A L S
WHEREAS, CSSA has entered into an agreement with LL dated May 2, 2003
wherein LL agreed to sell and CSSA has agreed to purchase up to 18,000,000
shares of common stock of LL ("Shares") in a transaction that is exempt from
registration under Regulation S to the Securities Act of 1933, as amended (the
"Reg. S Agreement");
WHEREAS, LL and CSSA have fully performed under the Reg. S Agreement;
WHEREAS, CSSA has resold some the shares purchased from LL to third
parties including clients of Nominees;
WHEREAS, Nominees has received offers to purchase from its clients to
purchase shares in excess of the Shares;
WHEREAS, LL desires to sell CSSA an additional 4,629,639 shares of
common stock (the "Additional Shares") in exchange for a payment of $347,223;
and
WHEREAS, LL will deliver 2,250,000 of the Additional Shares in a
separate closing to take place on or about October 21, 2003; and
WHEREAS, LL is unable to deliver the 2,379,639 shares of common stock
("Remainder Shares") because it has previously issued, or reserved for issuance,
all of the shares of common stock of the Company authorized under its Articles
of Incorporation;
WHEREAS, LL has agreed in a writing dated as of October 15, 2003 (the
"Amendment") to sell and deliver the Additional Shares and to take all steps
necessary to issue the Additional Shares including holding a shareholders
meeting to procure shareholder consent to increasing the authorized number of
shares of common stock the Company, amending its articles of incorporation in
accordance with the resolution, filing the amended articles of incorporation
with the Secretary of State of the State of Nevada and issuing a certificate for
the Additional Shares;
WHEREAS, LL does not believe that it will be authorized to issue the
Additional Shares until early December 2003. LL has agreed with CSSA to deliver
the Additional Shares on or before December 31, 2003 (the "Delivery Date");
WHEREAS, Lender is an officer, director and principal shareholder of LL
who would benefit by LL receiving the Proceeds; and
WHEREAS, Lender has agreed to loan to LL for delivery into escrow up to
2,379,639 shares of common stock ("Pledged Shares") as security for LL's promise
to deliver a new certificate for the Remainder Shares; and
WHEREAS, the agreed purchase price for the Remainder Shares is $178,473
("Proceeds"); and
WHEREAS, CSSA and Nominees have agreed to accept the Pledged Shares as
constructive delivery for purposes of the Amendment to the Reg. S Agreement for
Remainder Shares which were not otherwise sold and delivered and to pay out the
balance of the purchase price to LL.
NOW THEREFORE, in consideration of the promises, covenants and
undertakings hereinafter set out and other good and valuable consideration, the
receipt and adequacy of which each party acknowledges, one to the other, the
parties hereto, agreeing to be legally bound, covenant and agree as follows:
1. Loan of Stock: Lender will lend the Pledged Shares to LL on the
terms and subject to the conditions hereinafter set forth, said loan
to take the form of a certificate or certificates totally at least
2,379,639 Shares, endorsed in blank and with signature medallion
guaranteed. LL will deliver the Pledged Shares into an escrow (the
"Escrow") to which CSSA, Lender, and the Escrow Agent, as hereafter
to be named, shall be parties and shall be in the form attached
hereto as Exhibit A. The Escrow Agent shall hold the Pledged Shares
according to the terms of this Loan Agreement and the Escrow
Agreement.
2. Term: This Agreement shall commence on the date first above written
and shall terminate unless earlier terminated by the parties upon
the first to occur of (i) the delivery by LL to the Escrow Agent of
a certificate ("Substitute Certificate") for the Remainder Shares or
(ii) December 31, 2003 unless extended by the parties from time to
time in accordance with Paragraph ** below, but in no event later
than 100 days following the date of this Agreement.
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3. Rights and Duties of the Lender:
a. Subject only to the rights of CSSA and Nominees hereunder
and the Escrow Agreement, the Lender shall have and retain
full legal and beneficial ownership of the Pledged Shares
including the right to vote the shares until surrendered
by the Escrow Agent to LL's stock transfer agent for
reissue to Nominees as hereinafter provided. The foregoing
to the contrary notwithstanding, all economic benefits and
obligations including (i) the benefit of increase and risk
of decrease in the value of the Pledged Shares, any cash
or stock dividends payable to shareholders of record
occurring during the term of this Agreement shall be for
the account of CSSA and Nominees and shall be evidenced by
the Lender's written acknowledgement of the amount due
("Due ▇▇▇▇") from Lender to CSSA and Nominees which shall
become part of the Escrow Deposits (as defined in Exhibit
1 hereto) or any new shares issued as part of a stock
split or reverse stock split shall be for the account of
CSSA and Nominees (collectively, the "Economic Benefit")
or (ii) all taxes, assessments or other charges upon or
with respect to the Pledged Shares or the income therefore
or distributions thereon or the gain or loss in value
thereof. In the event LL delivers a substitute
certificate(s) for the Remainder Shares, then all such
economic benefits shall become the sole property of CSSA
and Nominees and Lender shall pay or arrange to pay to
CSSA and Nominees all cash or other property covered by
the Due ▇▇▇▇. Lender shall have the right to net gains and
income against losses and expenses before paying over the
Economic Benefit to CSSA and Nominees.
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b. The Lender shall, except as hereinafter set forth, have
the right to withdraw excess Pledged Shares, to substitute
other shares of common stock of LL provided they are of
the same class and subject to the same restrictions as the
Pledged Shares, and subject to the termination date of
this Agreement, to determine the timing of any transfer of
the Pledged Shares from Lender to Nominees.
c. The Escrow Agent, CSSA and Nominees shall have no right to
pledge, repledge, lend or relend, hypothecate or
rehpothecate the Pledged Shares during the term of this
Agreement.
d. Lender may at any time after the Delivery Date but before
the termination of this Agreement, and so long as LL has
failed to deliver a certificate for the Remainder Shares,
extend the term of this Agreement for fourteen (14)
business days by written notice to the Escrow Agent, CSSA,
and Nominees.
e. Lender shall execute the Escrow Agreement in the form
attached hereto as Exhibit A.
4. Rights and Duties of CSSA:
a. CSSA shall execute the Escrow Agreement in the form
attached hereto as Exhibit A.
b. CSSA shall pay the Proceeds directly to LL and not as part
of the Escrow Agreement within two business days upon
receipt of evidence that the Company has deposited the
Pledged Shares with the Escrow Agent.
c. CSSA shall have no other duties or obligations thereafter.
5. Rights and Duties of LL:
a. LL shall execute the Escrow Agreement in the form attached
hereto as Exhibit A.
b. LL shall, upon receipt from Lender, deliver the Pledged
Shares to the Escrow to be held and administered in
accordance with the terms of this Agreement and the Escrow
Agreement.
c. LL shall pay the Proceeds to Lender in the event that the
Pledged Shares are transferred on the books of LL from
Lender to CSSA and/or Nominees. Payments shall be made
within 3 business days of the transfer unless LL and
Lender agree otherwise in writing. LL shall cooperate with
Lender in closing any separate account and transferring
the Proceeds to Lender if Lender's Pledged Shares are
transferred to Nominees.
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d. LL shall retain the Proceeds upon delivery of a substitute
certificate(s) for the Remainder Shares to the Escrow
Agent. Lender shall cooperate with LL in transferring the
Proceeds to LL if LL delivers the certificate for the
Additional Shares.
6. Rights and Duties of Nominees:
a. Nominees shall release the Proceeds to CSSA upon receipt
of the Notice of Confirmation from Escrow Agent.
b. Nominees shall consent to at least one extension of 14
business days to the term of this Agreement if requested
by Lender.
7. Acts of Default:
a. A default shall exist if the Lender fails to deliver the
Pledged Shares to the Escrow Agent; or
b. CSSA fails to pay the Proceeds to LL as prescribed herein;
or
c. LL fails to deliver the substitute certificate for the
Remainder Shares prior to the termination of this
Agreement; or
d. LL fails to deliver the substitute certificate for the
Remainder Shares and fails to pay the Proceeds to Lender
upon transfer of the Pledged Shares to Nominees.
8. Remedies Upon a Default:
a. If LL fails to deliver the certificate for the Additional
Shares, CSSA and Nominees sole remedy is to transfer the
Pledged Shares into its own name and to collect on any Due
▇▇▇▇ issued by Lender.
b. If CSSA fails to pay the Proceeds to LL, LL may exercise
any of its rights in law and in equity against CSSA for
breach of this Agreement.
c. If LL fails to deliver the substitute certificate for the
Pledged Shares, Lender's sole remedy as against Nominees
and CSSA is the Proceeds previously delivered to LL.
Nothing in this Paragraph 8(c) shall limit any other
rights or remedies that Lender may have with respect to
LL.
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d. If LL fails to deliver the substitute certificate for the
Additional Shares and Lender's Pledged Shares are
transferred to Nominees, then, in addition to any other
rights and remedies Lender may have as against LL in law
or in equity, LL shall as soon a practical, deliver a
substitute certificate for the number of shares
transferred to Nominees and shall reimburse Lender for any
costs, including taxes due on account of the transfer of
the Pledged Shares and any Economic Benefit transferred to
Nominees by way of the Due ▇▇▇▇.
9. Indemnification:
a. LL and Lender agree to indemnify and hold harmless CSSA
and Nominees harmless from any all proceedings, charges,
complaints, claims, causes of action, demands,
injunctions, judgments, orders, decrees, rulings, damages,
investigation and/or remediation costs, dues, penalties,
fines, costs of defense and other costs, amounts paid in
settlement, liabilities, obligations, responsibilities,
taxes, liens, losses, expenses, and fees, including court
costs and reasonable attorneys' fees and expenses to which
it becomes liable on account of or arising out of any
disputes between LL and Lender relating to this
Agreement.
b. CSSA and Nominees agree to indemnify and hold harmless LL
and Lender from any and all harmless from any all
proceedings, charges, complaints, claims, causes of
action, demands, injunctions, judgments, orders, decrees,
rulings, damages, investigation and/or remediation costs,
dues, penalties, fines, costs of defense and other costs,
amounts paid in settlement, liabilities, obligations,
responsibilities, taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees
and expenses to which it becomes liable on account of or
arising out of any disputes between CSSA and Nominees
relating to this Agreement..
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10. Warranties and Representations of LL: LL warrants and represents to
CSSA and Nominees:
a. Organization and Standing. The LL has been duly
incorporated and is validly existing and in good standing
under the laws of the State of Nevada and has the
requisite corporate power and authority necessary to own
its properties and to conduct its business as presently
conducted, to deliver this Agreement and all other
agreements required to be executed by LL in connection
with performance under this Agreement (collectively
"Transaction Documents"), to issue and sell the Additional
Shares and to carry out the provisions of this Agreement
and the Transaction Documents, if any.
b. Authority for Agreement. The execution and delivery by the
LL of the Transaction Documents, and the performance by LL
of its obligations thereunder, have been duly and validly
authorized by all requisite corporate action on the part
of LL. The Transaction Documents, when executed and
delivered, will be legally valid and binding obligations
of LL, enforceable against LL in accordance with their
terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors'
rights, and general principles of equity that restrict the
availability of equitable remedies. To LL's knowledge, the
execution and delivery of the Transaction Documents by LL
and the performance by LL of its obligations there under
do not, as of the date hereof, (i) conflict with or
violate the provisions of the LL's Restated Articles of
Incorporation or Bylaws, (ii) except with respect to the
amendment to the Company's Restated Articles to increase
the number of shares of authorized Common Stock of the
Company, require on the part of the Seller any filing
with, or any permit, authorization, consent or approval
of, any Governmental Entity, (iii) conflict with, result
in a breach of, constitute (with or without due notice or
lapse of time or both) a default under,
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result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any contract,
lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, lien, encumbrance or other
arrangement to which the LL is a party or by which the LL
is bound or to which its assets are subject, (iv) result
in the imposition of any security interest upon any assets
of the Seller or (v) violate or contravene any state
statute, rule or regulation applicable to the LL or any
order, writ, judgment, injunction, decree, determination
or award.
11. Representations and Warranties of Lender: Lender warrants and
represents to CSSA and Nominees:
a. Authorization. Lender has full legal right, power and
capacity to enter into this Agreement and all other
Transaction Documents and perform his obligations
hereunder and thereunder. Upon execution and delivery of
this Agreement by the parties hereto and thereto, this
Agreement shall constitute the legal, valid and binding
obligation of the Lender, enforceable against it in
accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
the enforcement of creditor rights generally and by
general equitable principles.
b. Title. The Lender (i) is the sole record and beneficial
owner of the Pledged Shares set forth it the above
recitals, which recital is incorporated herein, free and
clear of all liens or encumbrances, save as disclosed in
this Agreement and (ii) has sole managerial and
dispositive authority with respect to such Pledged Shares.
On the Closing Date, any and all proxies granted with
respect to the Pledged Shares deposited hereunder shall
have been validly revoked, provided however that until
receipt of a Notice of Transfer, Lender may personally
vote the Pledged Shares. Upon delivery to the Escrow Agent
of the Pledged Shares to CSSA and Nominees, Lender will be
deemed to have sold the Pledged Shares to CSSA for
delivery to Nominees, and Nominees will own and hold, good
and marketable title to the Pledged Shares, as reissued to
Nominees, free and clear of any and all liens or
contractual restrictions or limitations whatsoever.
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c. Authorization. Lender has complied with all applicable
agreements, contracts, regulations and orders in
connection with the execution, delivery and performance of
this Agreement, and the transactions contemplated hereby
and thereby. Lender is not required to submit any notice,
report, or other filing with or to the Company or any
governmental authority in connection with such Lender's
execution or delivery of this Agreement, nor the
consummation of the transactions contemplated hereby. No
authorization, consent, approval, exemption or notice is
required to be obtained by such Lender in connection with
the execution, delivery, and performance of this Agreement
and the transactions contemplated hereby.
12. Authority of CSSA and Nominee. The execution and delivery by CSSA
and Nominee of the this Agreement, and the performance by CSSA and
Nominee of their respective obligations hereunder, have been duly
and validly authorized by all requisite corporate action on the
part of CSSA and Nominee. This Agreement, when executed and
delivered, will be legally valid and binding obligations of CSSA
and Nominee, as their interests appear, enforceable against CSSA
and Nominee in accordance with their terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of
creditors' rights, and general principles of equity that restrict
the availability of equitable remedies. To CSSA and Nominee's
knowledge, the execution and delivery of this Agreement by CSSA and
Nominee and the performance by CSSA and Nominee of their respective
obligations there under do not, as of the date hereof, (i) conflict
with or violate the provisions of either CSSA or Nominee's Articles
of Incorporation or Bylaws, (ii) require on the part of either CSSA
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and Nominee any filing with, or any permit, authorization, consent
or approval of, any Governmental Entity, (iii) conflict with,
result in a breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice, consent ore waiver under, any
contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, lien, encumbrance or other arrangement to which CSSA
or Nominee is a party or by which CSSA or Nominee is bound or to
which its assets are subject, (iv) result in the imposition of any
security interest upon any assets of CSSA or Nominee, or (v)
violate or contravene any state statute, rue or regulation
applicable to CSSA or Nominee or any order, writ, judgment,
injunction, decree, determination or award.
13. Escrow Agent: The parties designate Close Brothers (Caymans)
Limited as Escrow Agent.
14. Miscellaneous:
a. No Waiver; Cumulative Remedies. No failure or delay on the
part of any party to this Agreement in exercising any
right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power
or remedy hereunder. The remedies herein provided are
cumulative and not exclusive of any remedies provided by
law.
b. Amendments, Waivers and Consents. Any provision in the
Agreement to the contrary notwithstanding, and except as
hereinafter provided, changes in, termination or
amendments of or additions to this Agreement may be made,
and compliance with any covenant or provision set forth
herein may be omitted or waived, if the party seeking such
action shall obtain consent thereto in writing from the
other parties. Any waiver or consent may be given subject
to satisfaction of conditions stated therein and any
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
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c. Addresses for Notices. All notices, requests, demands and
other communications provided for hereunder shall be in
writing (including telegraphic communication) and mailed,
telegraphed or delivered to each applicable party at the
address set forth above or at such other address as to
which such party may inform the other parties in writing
in compliance with the terms of this Article. All such
notices, requests, demands and other communications shall
be considered to be effective when delivered.
d. Costs, Expenses and Taxes. All parties to bear their own
expenses.
e. Effectiveness; Binding Effect; Assignment. This Agreement
shall be binding upon and inure to the benefit of LL,
Lender, CSSA and Nominees and the respective successors
and assigns; provided, that, no party may assign any of
its rights or obligations under this Agreement without the
prior written consent of all other parties.
f. Prior Agreements. The Transaction Documents executed and
delivered in connection herewith constitute the entire
agreement between the parties and supersede any prior
understandings or agreements concerning the subject matter
hereof.
g. Governing Law; Venue. This Agreement shall be enforced,
governed and construed in accordance with the laws the
State of New York or federal securities law where
applicable without giving effect to choice of laws
principles or conflict of laws provisions. Any dispute
arising out of this agreement shall first be submitted to
arbitration before a single arbitrator sitting in
Philadelphia, Pennsylvania, said arbitration to be
conducted in accordance with the commercial rules of the
American Arbitration Association. Any discovery permitted
by the arbitrator shall be conducted in accordance with
the Federal Rules of Civil Procedure relating to the
conduct of written and oral discovery. Judgment may be
entered upon the award of the arbitrator in any
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court of competent jurisdiction. The arbitrator shall
render his or her findings and award within 30 days of the
completion of the hearing. The award shall be in writing
and shall state the reasons for the award. The arbitrator
may award costs and expenses at his or her discretion.
h. Headings. Article, section and subsection headings in this
Agreement are included herein for convenience of reference
only and shall not constitute a part of this Agreement for
any other purpose.
i. Survival of Representations and Warranties. All
representations and warranties made in the Transaction
Documents, or any other instrument or document delivered
in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof for a period of
two (2) years.
j. Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the
parties hereto may execute this Agreement by signing any
such counterpart.
k. Further Assurances. From and after the date of this
Agreement, any party may request that any other party or
parties hereto execute and deliver such instruments,
documents and other writings as may be reasonably
necessary or desirable to confirm and carry out and to
effectuate fully the intent and purposes of the
Transaction Documents.
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IN WITNESS HEREOF, THE PARTIES SET THEIR HANDS AS OF THE DATE FIRST ABOVE
WRITTEN:
LaserLock Technologies, Inc. Californian Securities S.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Edificio Bilbao Plaza, Suite 418,
Bala Cynwyd, Pennsylvania ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ of Panama
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President & CEO Title: President
Pacific Continental Securities (UK)
Nominees, Limited
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By:________________________________
------------------------------------ Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Individually Title:
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