Share Lock-up And Escrow Agreement

SHARE LOCK-UP AND ESCROW AGREEMENT





THIS SHARE LOCK-UP AND ESCROW AGREEMENT (this "Agreement") is made and entered into as of the 16th day of April 2004 by and among Raice Paykin & Krieg LLP (the "Escrow Agent"), Laser Recording Systems Inc., a New Jersey corporation (" Laser"), SCL Ventures Ltd., a British Virgin Islands company ("SCL"), certain shareholders of Laser signatory hereto (the "Laser Signatory Shareholders"), A. Giordano Family Limited Partnership (the "Family Partnership") having various partners including Anthony Giordano, EPG Limited, a limited liability company organized under the laws of the British Virgin Islands ("EPG") having various members including Anthony Giordano, and Anthony Giordano ("Mr. Giordano" and together with Family Partnership and EPG, the "SCL Investors").





WITNESSETH :





WHEREAS, on May 20, 2003, Laser, SCL, the Laser Signatory Shareholders and certain shareholders of SCL signatory thereto entered into that certain Share Exchange Agreement (as amended on November 30, 2003 and further amended on March 31, 2004, the "Exchange Agreement") related to the issuance of shares of Laser common stock to the shareholders of SCL in exchange for all of the issued and outstanding shares of SCL common stock (the "Exchange");





WHEREAS, the Laser Signatory Shareholders have agreed not to sell or otherwise transfer shares of Laser common stock held by them for a period of one year following the closing of the Exchange, subject to certain exceptions set forth in the Exchange Agreement (the "Lock Up");





WHEREAS, the SCL Investors hereby agree that they will not sell or otherwise transfer any shares of Laser common stock they currently hold or may receive during the term of the Lock Up, including shares of Laser common stock to be issued in the Exchange, without the consent of a majority of Laser92s independent directors for a period of one year following the closing of the Exchange, such agreement to be on the same terms, conditions and exceptions applicable to the Laser Signatory Shareholders subject to the Lock Up;





WHEREAS, each of the Laser Signatory Shareholders and the SCL Investors desire to place stock certificates evidencing (i) the shares of Laser common stock currently held by such parties and (ii) any shares of Laser common stock that may be received by such parties during the term of the Lock Up, including shares of Laser common stock to be issued in the Exchange (such stock certificates being referred to herein as the "Escrow Deposit"), into escrow with the Escrow Agent to be held and released by the Escrow Agent in accordance herewith; and





WHEREAS, the Escrow Agent is willing to receive the Escrow Deposit and otherwise perform its obligations hereunder.





NOW, THEREFORE, in consideration of the mutual agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:










1. Terms . Capitalized terms used but not otherwise defined herein shall be defined as set forth in the Exchange Agreement.





2. Lock Up of Certain SCL Investors .





2.1 Giordano Share Lock-Up . For a period of one year following the Closing Date, the SCL Investors shall not sell or otherwise transfer any shares of Laser common stock they currently hold or may purchase in which Mr. Giordano has or will have a pecuniary interest, including shares of Laser common stock to be issued in the Exchange, without the consent of a majority of Laser92s independent directors or the consent of all Laser Signatory Shareholders, except on the same terms, conditions and exceptions applicable to the Laser Signatory Shareholders subject to the Lock Up as set forth in Section 10.9 of the Exchange Agreement, including termination pursuant to Section 10.9.2 (e) of the Exchange Agreement. In addition, if the Lock-Up set forth in Section 10.9 of the Exchange Agreement lapses or is terminated by Laser as to the Laser Signatory Shareholders, then the restrictions described herein with respect to the SCL Investors shall also lapse or be terminated.





2.2 Limitations . Notwithstanding the foregoing and the Escrow Deposit and Release provisions of Section 3 hereof, the parties hereto acknowledge that the SCL Investors are holders of record for parties other than other than Mr. Giordano, including unaffiliated investors who are members of EPG and/or partners of the Family Partnership, and the parties intend, and this Agreement shall at all times be construed and interpreted by all, including the Escrow Agent in the performance of its duties hereunder, to apply solely to those shares of Laser common stock in which Giordano has a pecuniary interest in addition to having beneficial ownership. To that end, the parties agree that the restrictions and escrow provisions hereof shall not apply to any shares of Laser common stock that are the subject of proposed sale or transfer by or on behalf of persons other than Mr. Giordano. The Escrow Agent may and shall rely without independent investigation upon an affidavit signed by (a) Mr. Giordano and (b) either the Managing Member of EPG or the General Partner of the Family Partnership (provided they are not Mr. Giordano), as to the identity of those persons holding a pecuniary interest in any portion of the Escrow Deposit attributable to the SCL Investors which are sought to be sold, transferred or released from the Escrow Deposit.





2.3 Future Registration Not Affected . Nothing in this Agreement shall impair or restrict SCL or Laser92s right at any time or from time to time to grant registration rights to one or more of the parties hereto or to other holders of SCL common stock or Laser common stock, or to effect such registration of any shares for future sale, provided such proposed sales remain subject to the lock-up and escrow provisions of this Agreement, to the extent then not terminated and otherwise still applicable thereto.





3. Escrow Deposit .





3.1. Delivery of Escrow Deposit . On the Closing Date, and for a period of one year after the Closing Date, each of the Laser Signatory Shareholders and the SCL Investors shall deliver to the Escrow Agent the Escrow Deposit to be held by the Escrow Agent in escrow pursuant to the terms and conditions of this Agreement.





3.2. Acceptance of Escrow Deposit . Upon receipt of the Escrow Deposit, the Escrow Agent shall acknowledge such receipt in writing to the parties hereto and shall hold and












release the same pursuant to the terms and conditions of this Agreement. The Escrow Agent shall have no duty to verify whether the share amounts and documents delivered comport with the requirements of any other agreement.





3.3. Release of Escrow Deposit . The Escrow Deposit shall be held and released by the Escrow Agent as follows:





(a) If, prior to the one year anniversary of the Closing Date, Mitchell Sepaniak accepts a bona fide third party offer for the purchase of Laser common stock, or an offer to participate in the public sale, pursuant to a registration statement or otherwise, and a Laser Signatory Shareholder or an SCL Investor, as the case may be, agrees to participate in such third party offer or public sale, then the Escrow Agent shall release the Escrow Deposit with respect to such Laser Signatory Shareholder or SCL Investor, as applicable, to extent such party agrees to participate in such third party offer.





(b) If, prior to the one year anniversary of the Closing Date, Laser enters into any transaction for the sale of common stock at a price which values Laser on a pre-investment basis at less than $10 million, then the Escrow Agent shall return the Escrow Deposit to the Laser Signatory Shareholders and SCL Investors.





(c) If the Lock-Up set forth in Section 10.9 of the Exchange Agreement lapses or is terminated in whole or in part (whether by consent or action of Laser or otherwise) as to any part of the Escrow Deposit applicable to a Laser Signatory Shareholder or SCL Investor, then the Escrow Agent shall release such part of the Escrow Deposit with respect to such Laser Signatory Shareholder or SCL Investor, as applicable.





(d) In the event that all or a portion of the Escrow Deposit was not released to the Laser Signatory Shareholders or SCL Investors, as the case may be, in accordance with Section 3.3(a), 3.3(b) ...