THIS NOTE AND THE SECURITIES REPRESENTED BY THIS NOTE HAVE BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“
SECURITIES ACT
”), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED OR PLEDGED, EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS, OR IF THE
PROPOSED TRANSFER MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR REGISTRATION OR QUALIFICATION UNDER APPLICABLE
STATE SECURITIES LAWS.
LASERLOCK TECHNOLOGIES, INC.
CONVERTIBLE PROMISSORY NOTE
Section 1.
General .
For value received,
LASERLOCK TECHNOLOGIES, INC. ,
a Nevada corporation (including any successor thereto (by way of
merger, consolidation, sale or otherwise), the “
Payor ”),
hereby promises to pay to the order of Clydesdale Partners II, LLC
or assigns (the “
Payee ”),
the principal amount of One Hundred Ten Thousand Dollars ($110,000)
or such greater or lesser principal amount which may be outstanding
hereunder plus accrued interest, on August 31, 2008 (the
“
Maturity Date ”).
All payments hereunder shall be made in such coin or currency of
the United States of America as at the time of payment shall be
legal tender therein for the payment of public and private debts
(unless, prior to accepting such form of payment, Payee elects to
convert the principal and interest on this Note pursuant to
Section 4 hereof, in which case such principal and interest
shall be so converted on the terms set forth herein). The Payor
shall pay interest in arrears on the unpaid balance of the
principal amount of this Note from time to time at the rate of ten
percent (10.0%) per annum (computed in either event on the basis of
a 360 day year and the actual number of days elapsed) (the
“
Interest Rate ”).
Unless converted pursuant to Section 4, the principal of, and
interest on, this Note shall be payable by wire transfer in
immediately available funds to the account of the Payee or by
certified or official bank check payable to the Payee mailed to the
Payee at the address of the Payee as set forth on the records of
the Payor or such other address as shall be designated in writing
by the Payee to the Payor.
This
Convertible Promissory Note (this “
Note ”)
is issued by the Payor to the Payee pursuant to the Convertible
Note Purchase Agreement dated as of May 18, 2007 (the
“
Purchase Agreement ”)
among the Payor, the Payee and the other signatories thereto, as of
even date herewith.
Capitalized
terms used and not otherwise defined herein have the meanings
ascribed thereto in the Purchase Agreement.
Section 2.
Prepayment .
Payor shall have the right to prepay this Note, in whole or in
part, without penalty, upon sixty-one (61) days prior written
notice to Payee; provided, however, that, Payee shall have the
right at any time during such sixty-one (61) day period to convert
the principal and interest on this Note pursuant to Section 4
hereof, in which case such principal and interest shall be so
converted on the terms set forth herein.
Section 3.
Events of Default .
(a)
In
each case of the happening of the following events (each of
which is an “
Event of Default ”):
(i)
if
any representation or warranty made herein, in the Purchase
Agreement or in any agreement executed in connection
therewith, or in any report, certificate, financial statement
or other instrument furnished in connection with this Note or
the Purchase Agreement shall prove to have been false or
misleading in any material respect when made;
(ii)
if
a default occurs in the payment of any premium, installment of
principal of, interest on, or other obligation with respect
to, this Note, whether at the due date hereof or upon
acceleration hereof, and such default shall continue for more
than ten (10) days after notice thereof from the holders
of a majority in interest of the principal amount of the Notes
subject to the Purchase Agreement;
(iii)
if
a default occurs in the due observance or performance of any
covenant or agreement on the part of the Payor to be observed
or performed pursuant to the terms of this Note or the
Purchase Agreement and such default remains uncured for thirty
(30) days;
(iv)
if
the Payor shall (1) discontinue its business,
(2) apply for or consent to the appointment of a
receiver, trustee, custodian or liquidator of it or any of its
property, (3) admit in writing its inability to pay its
debts as they mature, (4) make a general assignment for
the benefit of creditors, or (5) file a voluntary
petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors, or to take
advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation laws or
statutes, or an answer admitting the material allegations of a
petition filed against it in any proceeding under any such
law;
(v)
if
there shall be filed against the Payor an involuntary petition
seeking reorganization of the Payor or the appointment of a
receiver, trustee, custodian or liquidator of the Payor or a
substantial part of its assets, or an involuntary petition
under any bankruptcy, reorganization or insolvency law of any
jurisdiction, whether now or hereafter in effect (any of the
foregoing petitions being hereinafter referred to as an
“
Involuntary Petition ”)
and such Involuntary Petition shall not have been dismissed within
sixty (60) days after it was filed;
(vi)
if
final judgment(s) for the payment of money in excess of an
aggregate of $150,000 shall be rendered against the Payor and
the same shall remain undischarged for a period of thirty (30)
consecutive days, during which time execution shall not be
effectively stayed;
(vii)
if
a default occurs in the due observance or performance of any
material covenant, condition or agreement on the part of the
Payor under any debt instrument having a value of more than
$150,000, and such default shall permit the holder thereof to
accelerate such indebtedness;
then,
upon each and every such Event of Default and at any time
thereafter during the continuance of such Event of Default, at
the election of the holders of a majority of the outstanding
principal amount of the Notes any and all indebtedness of the
Payor under the Notes shall immediately become due and
payable, both as to principal and interest (including any
deferred interest and any accrued and unpaid interest),
without presentment, demand, or protest, all of which are
hereby expressly waived, anything contained herein or in the
Purchase Agreement or other evidence of such indebtedness to
the contrary notwithstanding (except in the case of an Event
of Default under paragraphs (iv) or (v) of this
Section 3(a), in which event such indebtedness shall
automatically become due and payable).
(b)
Remedies on Default, Etc .
In case any one or more Events of Default shall occur and be
continuing and acceleration of this Note shall have occurred, the
Payee may, among other things, proceed to protect and enforce its
rights by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement
contained herein or in the Purchase Agreement, or for an injunction
against a violation of any of the terms hereof or thereof or in and
of the exercise of any power granted hereby or thereby or by law.
No right conferred upon the Payee hereby or by the Purchase
Agreement shall be exclusive of any other right referred to herein
or therein
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