EXHIBIT
      10.1

    


    SECURITIES
      PURCHASE AGREEMENT

    


    THIS SECURITIES
      PURCHASE AGREEMENT
      (this
“Agreement”),
      dated
      as of June 1, 2007, by and among HOMELAND
      SECURITY CAPITAL CORPORATION,
      a
      Delaware corporation (the “Company”),
      and
      the Buyers listed on Schedule I attached hereto (individually, a
“Buyer”
or
      collectively “Buyers”).

     

    WITNESSETH

    


    WHEREAS,
      the
      Company and the Buyer(s) are executing and delivering this Agreement in reliance
      upon an exemption from securities registration pursuant to Section 4(2) and/or
      Rule 506 of Regulation D (“Regulation
      D”)
      as
      promulgated by the U.S. Securities and Exchange Commission (the “SEC”)
      under
      the Securities Act of 1933, as amended (the “Securities
      Act”);

     

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Buyer(s), as provided herein,
      and the Buyer(s) shall purchase Two Million Seven Hundred Fifty Thousand Dollars
      ($2,750,000) of secured convertible debentures (the “Convertible
      Debentures”),
      which
      shall be convertible into shares of the Company’s common stock, par value $0.001
      (the “Common
      Stock”)
      (as
      converted, the “Conversion
      Shares”)
      which
      shall be funded on the fifth (5th)
      business day following the date hereof (the “Closing”),
      for a
      total purchase price of Two Million Seven Hundred Fifty Thousand Dollars
      ($2,750,000) (the “Purchase
      Price”)
      in the
      respective amounts set forth opposite each Buyer(s) name on Schedule I (the
      “Subscription
      Amount”);
      and

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Registration Rights Agreement (the
“Investor
      Registration Rights Agreement”)
      pursuant to which the Company has agreed to provide certain registration rights
      under the Securities Act and the rules and regulations promulgated there under,
      and applicable state securities laws; and

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the
      Company, its wholly owned subsidiaries and the Buyers are executing and
      delivering a Security Agreement (the “Security
      Agreement”)
      pursuant to which the Company and its wholly owned subsidiaries agreed to
      provide the Buyers a security interest in Pledged Collateral (as this term
      is
      defined in the each Security Agreement) to secure the Company’s obligations
      under this Agreement, the Transaction Documents, or any other obligations of
      the
      Company to the Buyer; 

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the
      Company, and the Buyers are executing and delivering a Pledge and Escrow
      Agreement (the “Pledge
      Agreement”)
      pursuant to which the Company has agreed to provide the Buyers a security
      interest in Pledged Collateral (as this term is defined in the each Pledge
      Agreement) to secure the Company’s obligations under this Agreement, the
      Transaction Documents, or any other obligations of the Company to the Buyer;
      and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering Irrevocable Transfer Agent Instructions
      (the
“Irrevocable
      Transfer Agent Instructions”)

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and other agreements contained in this
      Agreement the Company and the Buyer(s) hereby agree as follows:

     

    1.  PURCHASE
      AND SALE OF CONVERTIBLE DEBENTURES.

     

    (a)  Purchase
      of Convertible Debentures.
      Subject
      to the satisfaction (or waiver) of the terms and conditions of this Agreement,
      each Buyer agrees, severally and not jointly, to purchase at each Closing and
      the Company agrees to sell and issue to each Buyer, severally and not jointly,
      at the Closing, Convertible Debentures in amounts corresponding with the
      Subscription Amount set forth opposite each Buyer’s name on Schedule I hereto.


     

    (b)  Closing
      Date.
      The
      Closing of the purchase and sale of the Convertible Debentures shall take place
      at 10:00 a.m. Eastern Standard Time on the third (3rd)
      business day following the date hereof, subject to notification of satisfaction
      of the conditions to the First Closing set forth herein and in Sections 6 and
      7
      below (or such later date as is mutually agreed to by the Company and the
      Buyer(s)) (the “Closing
      Date”).
      The
      Closing shall occur on the Closing Date at the offices of Yorkville Advisors,
      LLC, 3700 Hudson Street, Suite 3700, Jersey City, New Jersey 07302 (or such
      other place as is mutually agreed to by the Company and the Buyer(s)).


     

    (c)  Form
      of Payment.
      Subject
      to the satisfaction of the terms and conditions of this Agreement, on the
      Closing Dates, (i) the Buyers shall deliver to the Company such aggregate
      proceeds for the Convertible Debentures to be issued and sold to such Buyer(s),
      minus the fees to be paid directly from the proceeds of the Closings as set
      forth herein, and (ii) the Company shall deliver to each Buyer, Convertible
      Debentures which such Buyer(s) is purchasing in amounts indicated opposite
      such
      Buyer’s name on Schedule I, duly executed on behalf of the Company.

     

    2.  BUYER’S
      REPRESENTATIONS AND WARRANTIES.

     

    Each
      Buyer represents and warrants, severally and not jointly, that:

     

    (a)  Investment
      Purpose.
      Each
      Buyer is acquiring the Convertible Debentures and, upon conversion of
      Convertible Debentures, the Buyer will acquire the Conversion Shares then
      issuable, for its own account for investment only and not with a view towards,
      or for resale in connection with, the public sale or distribution thereof,
      except pursuant to sales registered or exempted under the Securities Act;
      provided, however, that by making the representations herein, such Buyer
      reserves the right to dispose of the Conversion Shares at any time in accordance
      with or pursuant to an effective registration statement covering such Conversion
      Shares or an available exemption under the Securities Act.

     

    (b)  Accredited
      Investor Status.
      Each
      Buyer is an “Accredited
      Investor”
as
      that
      term is defined in Rule 501(a)(3) of Regulation D.

     

    
      
        
        

      

      
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    (c)  Reliance
      on Exemptions.
      Each
      Buyer understands that the Convertible Debentures are being offered and sold
      to
      it in reliance on specific exemptions from the registration requirements of
      United States federal and state securities laws and that the Company is relying
      in part upon the truth and accuracy of, and such Buyer’s compliance with, the
      representations, warranties, agreements, acknowledgments and understandings
      of
      such Buyer set forth herein in order to determine the availability of such
      exemptions and the eligibility of such Buyer to acquire such
      securities.

     

    (d)  Information.
      Each
      Buyer and its advisors (and his or, its counsel), if any, have been furnished
      with all materials relating to the business, finances and operations of the
      Company and information he deemed material to making an informed investment
      decision regarding his purchase of the Convertible Debentures and the Conversion
      Shares, which have been requested by such Buyer. Each Buyer and its advisors,
      if
      any, have been afforded the opportunity to ask questions of the Company and
      its
      management. Neither such inquiries nor any other due diligence investigations
      conducted by such Buyer or its advisors, if any, or its representatives shall
      modify, amend or affect such Buyer’s right to rely on the Company’s
      representations and warranties contained in Section 3 below. Each Buyer
      understands that its investment in the Convertible Debentures and the Conversion
      Shares involves a high degree of risk. Each Buyer is in a position regarding
      the
      Company, which, based upon employment, family relationship or economic
      bargaining power, enabled and enables such Buyer to obtain information from
      the
      Company in order to evaluate the merits and risks of this investment. Each
      Buyer
      has sought such accounting, legal and tax advice, as it has considered necessary
      to make an informed investment decision with respect to its acquisition of
      the
      Convertible Debentures and the Conversion Shares.

     

    (e)  No
      Governmental Review.
      Each
      Buyer understands that no United States federal or state agency or any other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Convertible Debentures or the Conversion Shares, or the
      fairness or suitability of the investment in the Convertible Debentures or
      the
      Conversion Shares, nor have such authorities passed upon or endorsed the merits
      of the offering of the Convertible Debentures or the Conversion
      Shares.

     

    (f)  Transfer
      or Resale.
      Each
      Buyer understands that except as provided in the Investor Registration Rights
      Agreement: (i) the Convertible Debentures have not been and are not being
      registered under the Securities Act or any state securities laws, and may not
      be
      offered for sale, sold, assigned or transferred unless (A) subsequently
      registered thereunder, or (B) such Buyer shall have delivered to the Company
      an
      opinion of counsel, in a generally acceptable form, to the effect that such
      securities to be sold, assigned or transferred may be sold, assigned or
      transferred pursuant to an exemption from such registration requirements; (ii)
      any sale of such securities made in reliance on Rule 144 under the Securities
      Act (or a successor rule thereto) (“Rule 144”)
      may be
      made only in accordance with the terms of Rule 144 and further, if Rule 144
      is
      not applicable, any resale of such securities under circumstances in which
      the
      seller (or the person through whom the sale is made) may be deemed to be an
      underwriter (as that term is defined in the Securities Act) may require
      compliance with some other exemption under the Securities Act or the rules
      and
      regulations of the SEC thereunder; and (iii) neither the Company nor any other
      person is under any obligation to register such securities under the Securities
      Act or any state securities laws or to comply with the terms and conditions
      of
      any exemption thereunder. The Company reserves the right to place stop transfer
      instructions against the shares and certificates for the Conversion Shares
      in
      the event either (i) the Buyer is in possession of material non-public
      information or (ii) the registration statement registering the Conversion Shares
      is no longer in effect (assuming the Conversion Shares are being transferred
      pursuant to such registration statement).

     

    
      
        
        

      

      
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    (g)  Legends.
      Each
      Buyer understands that the certificates or other instruments representing the
      Convertible Debentures and or the Conversion Shares shall bear a restrictive
      legend in substantially the following form (and a stop transfer order may be
      placed against transfer of such stock certificates):

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
      SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A
      VIEW
      TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      IN
      THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
      THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR
      AN
      OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
      REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS. 

     

    The
      legend set forth above shall be removed and the Company within two (2) business
      days shall issue a certificate without such legend to the holder of the
      Conversion Shares upon which it is stamped, if, unless otherwise required by
      state securities laws, (i) in connection with a sale transaction, provided
      the
      Conversion Shares are registered under the Securities Act or (ii) in connection
      with a sale transaction, after such holder provides the Company with an opinion
      of counsel, which opinion shall be in form, substance and scope customary for
      opinions of counsel in comparable transactions, to the effect that a public
      sale, assignment or transfer of the Conversion Shares may be made without
      registration under the Securities Act. 

     

    (h)  Authorization,
      Enforcement.
      This
      Agreement has been duly and validly authorized, executed and delivered on behalf
      of such Buyer and is a valid and binding agreement of such Buyer enforceable
      in
      accordance with its terms, except as such enforceability may be limited by
      general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation and other similar laws relating to,
      or
      affecting generally, the enforcement of applicable creditors’ rights and
      remedies.

     

    (i)  Receipt
      of Documents.
      Each
      Buyer and his or its counsel has received and read in their entirety: (i) this
      Agreement and each representation, warranty and covenant set forth herein and
      the Transaction Documents (as defined herein); (ii) all due diligence and other
      information necessary to verify the accuracy and completeness of such
      representations, warranties and covenants; (iii) the Company’s Form 10-KSB for
      the fiscal year ended December 31, 2006; (iv) the Company’s Form 10-QSB for the
      fiscal quarter ended March 31, 2007 and (v) answers to all questions each Buyer
      submitted to the Company regarding an investment in the Company; and each Buyer
      has relied on the information contained therein and has not been furnished
      any
      other documents, literature, memorandum or prospectus.

     

    
      
        
        

      

      
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    (j)  Due
      Formation of Corporate and Other Buyers.
      If the
      Buyer(s) is a corporation, trust, partnership or other entity that is not an
      individual person, it has been formed and validly exists and has not been
      organized for the specific purpose of purchasing the Convertible Debentures
      and
      is not prohibited from doing so.

     

    (k)  No
      Legal Advice From the Company.
      Each
      Buyer acknowledges, that it had the opportunity to review this Agreement and
      the
      transactions contemplated by this Agreement with his or its own legal counsel
      and investment and tax advisors. Each Buyer is relying solely on such counsel
      and advisors and not on any statements or representations of the Company or
      any
      of its representatives or agents for legal, tax or investment advice with
      respect to this investment, the transactions contemplated by this Agreement
      or
      the securities laws of any jurisdiction. 

     

    3.  REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

    The
      Company represents and warrants as of the date hereof to each of the Buyers
      that, except as set forth in the SEC Documents (as defined herein) or in the
      Disclosure Schedule attached hereto (the “Disclosure
      Schedule”):

     

    (a)  Organization
      and Qualification.
      The
      Company and its subsidiaries are corporations duly organized and validly
      existing in good standing under the laws of the jurisdiction in which they
      are
      incorporated, and have the requisite corporate power to own their properties
      and
      to carry on their business as now being conducted. Each of the Company and
      its
      subsidiaries is duly qualified as a foreign corporation to do business and
      is in
      good standing in every jurisdiction in which the nature of the business
      conducted by it makes such qualification necessary, except to the extent that
      the failure to be so qualified or be in good standing would not have a material
      adverse effect on the Company and its subsidiaries taken as a
      whole.

     

    (b)  Authorization,
      Enforcement, Compliance with Other Instruments.
      (i) The Company has the requisite corporate power and authority to enter
      into and perform this Agreement, the Security Agreement, the Investor
      Registration Rights Agreement, the Irrevocable Transfer Agent Agreement, the
      Pledge Agreement, the Guaranty Agreement and any related agreements
      (collectively the “Transaction
      Documents”)
      and to
      issue the Convertible Debentures and the Conversion Shares in accordance with
      the terms hereof and thereof, (ii) the execution and delivery of the Transaction
      Documents by the Company and the consummation by it of the transactions
      contemplated hereby and thereby, including, without limitation, the issuance
      of
      the Convertible Debentures the Conversion Shares and the reservation for
      issuance and the issuance of the Conversion Shares issuable upon conversion
      or
      exercise thereof, have been duly authorized by the Company’s Board of Directors
      and no further consent or authorization is required by the Company, its Board
      of
      Directors or its stockholders, (iii) the Transaction Documents have been duly
      executed and delivered by the Company, (iv) the Transaction Documents constitute
      the valid and binding obligations of the Company enforceable against the Company
      in accordance with their terms, except as such enforceability may be limited
      by
      general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally, the enforcement of creditors’ rights and remedies. The
      authorized officer of the Company executing the Transaction Documents knows
      of
      no reason why the Company cannot file the registration statement as required
      under the Investor Registration Rights Agreement or perform any of the Company’s
      other obligations under such documents. 

     

    
      
        
        

      

      
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    (c)  Capitalization.
      The
      authorized capital stock of the Company consists of 20,000,000,000 shares of
      Common Stock and 3,000,000 shares of Preferred Stock, par value $0.001
      (“Preferred
      Stock”)
      of
      which 4,175,525,035 shares of Common Stock and 2,000,000 shares of Preferred
      Stock are issued and outstanding, of which 1,000,000 shares are Series F
      Preferred Stock and 1,000,000 shares are Series G Preferred Stock. All of such
      outstanding shares have been validly issued and are fully paid and
      nonassessable. No shares of Common Stock are subject to preemptive rights or
      any
      other similar rights or any liens or encumbrances suffered or permitted by
      the
      Company. As of the date of this Agreement, (i) there are no outstanding options,
      warrants, scrip, rights to subscribe to, calls or commitments of any character
      whatsoever relating to, or securities or rights convertible into, any shares
      of
      capital stock of the Company or any of its subsidiaries, or contracts,
      commitments, understandings or arrangements by which the Company or any of
      its
      subsidiaries is or may become bound to issue additional shares of capital stock
      of the Company or any of its subsidiaries or options, warrants, scrip, rights
      to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, any shares of capital stock of the
      Company or any of its subsidiaries, (ii) there are no outstanding debt
      securities other than debt securities issued to Cornell Capital Partners, LP
      (“Cornell”) and other than as set forth on Schedule 3.1(c),
      (iv)
      there are no agreements or arrangements under which the Company or any of its
      subsidiaries is obligated to register the sale of any of their securities under
      the Securities Act (except pursuant to the Registration Rights Agreement) and
      (v) there are no outstanding registration statements and there are no
      outstanding comment letters from the SEC or any other regulatory agency. There
      are no securities or instruments containing anti-dilution or similar provisions
      that will be triggered by the issuance of the Convertible Debentures as
      described in this Agreement. The Company has furnished to the Buyer true and
      correct copies of the Company’s Certificate of Incorporation, as amended and as
      in effect on the date hereof (the “Certificate
      of Incorporation”),
      and
      the Company’s By-laws, as in effect on the date hereof (the “By-laws”),
      and
      the terms of all securities convertible into or exercisable for Common Stock
      and
      the material rights of the holders thereof in respect thereto other than stock
      options issued to employees and consultants. 

     

    (d)  Issuance
      of Securities.
      The
      Convertible Debentures are duly authorized and, upon issuance in accordance
      with
      the terms hereof, shall be duly issued, fully paid and nonassessable, are free
      from all taxes, liens and charges with respect to the issue thereof. The
      Conversion Shares issuable upon conversion of the Convertible Debentures have
      been duly authorized and reserved for issuance. Upon conversion or exercise
      in
      accordance with the Convertible Debentures the Conversion Shares will be duly
      issued, fully paid and nonassessable.

     

    (e)  No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated hereby
      will
      not (i) result in a violation of the Certificate of Incorporation, any
      certificate of designations of any outstanding series of preferred stock of
      the
      Company or the By-laws or (ii) conflict with or constitute a default (or an
      event which with notice or lapse of time or both would become a default) under,
      or give to others any rights of termination, amendment, acceleration or
      cancellation of, any agreement, indenture or instrument to which the Company
      or
      any of its subsidiaries is a party, or result in a violation of any law, rule,
      regulation, order, judgment or decree (including federal and state securities
      laws and regulations and the rules and regulations of The National Association
      of Securities Dealers Inc.’s OTC Bulletin Board on which the Common Stock is
      quoted) applicable to the Company or any of its subsidiaries or by which any
      property or asset of the Company or any of its subsidiaries is bound or
      affected. Neither the Company nor its subsidiaries is in violation of any term
      of or in default under its Certificate of Incorporation or By-laws or their
      organizational charter or by-laws, respectively, or any material contract,
      agreement, mortgage, indebtedness, indenture, instrument, judgment, decree
      or
      order or any statute, rule or regulation applicable to the Company or its
      subsidiaries. The business of the Company and its subsidiaries is not being
      conducted, and shall not be conducted in violation of any material law,
      ordinance, or regulation of any governmental entity. Except as specifically
      contemplated by this Agreement and as required under the Securities Act and
      any
      applicable state securities laws, the Company is not required to obtain any
      consent, authorization or order of, or make any filing or registration with,
      any
      court or governmental agency in order for it to execute, deliver or perform
      any
      of its obligations under or contemplated by this Agreement or the Registration
      Rights Agreement in accordance with the terms hereof or thereof. All consents,
      authorizations, orders, filings and registrations which the Company is required
      to obtain pursuant to the preceding sentence have been obtained or effected
      on
      or prior to the date hereof. The Company and its subsidiaries are unaware of
      any
      facts or circumstance, which might give rise to any of the
      foregoing.

     

    
      
        
        

      

      
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    (f)  SEC
      Documents: Financial Statements.
      Except
      as disclosed on Schedule 3.1(f), since January 1, 2005, the Company has filed
      all reports, schedules, forms, statements and other documents required to be
      filed by it with the SEC under the Securities Exchange Act of 1934, as amended
      (the “Exchange
      Act”)
      (all
      of the foregoing filed prior to the date hereof or amended after the date hereof
      and all exhibits included therein and financial statements and schedules thereto
      and documents incorporated by reference therein, being hereinafter referred
      to
      as the “SEC
      Documents”).
      The
      Company has delivered to the Buyers or their representatives, or made available
      through the SEC’s website at http://www.sec.gov., true and complete copies of
      the SEC Documents. As of their respective dates, the financial statements of
      the
      Company disclosed in the SEC Documents (the “Financial
      Statements”)
      complied as to form in all material respects with applicable accounting
      requirements and the published rules and regulations of the SEC with respect
      thereto. Such financial statements have been prepared in accordance with
      generally accepted accounting principles, consistently applied, during the
      periods involved (except (i) as may be otherwise indicated in such Financial
      Statements or the notes thereto, or (ii) in the case of unaudited interim
      statements, to the extent they may exclude footnotes or may be condensed or
      summary statements) and, fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments). No other
      information provided by or on behalf of the Company to the Buyer which is not
      included in the SEC Documents, including, without limitation, information
      referred to in this Agreement, contains any untrue statement of a material
      fact
      or omits to state any material fact necessary in order to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading.

     

    
      
        
        

      

      
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    (g)  10(b)-5.
      Neither
      the Transaction Documents nor the SEC Documents include any untrue statements
      of
      material fact, nor do they omit to state any material fact required to be stated
      therein necessary to make the statements made, in light of the circumstances
      under which they were made, not misleading.

     

    (h)  Absence
      of Litigation.
      There
      is no action, suit, proceeding, inquiry or investigation before or by any court,
      public board, government agency, self-regulatory organization or body pending
      against or affecting the Company, the Common Stock or any of the Company’s
      subsidiaries, wherein an unfavorable decision, ruling or finding would (i)
      have
      a material adverse effect on the transactions contemplated hereby (ii) adversely
      affect the validity or enforceability of, or the authority or ability of the
      Company to perform its obligations under, this Agreement or any of the documents
      contemplated herein, or (iii) have a material adverse effect on the business,
      operations, properties, financial condition or results of operations of the
      Company and its subsidiaries taken as a whole.

     

    (i)  Acknowledgment
      Regarding Buyer’s Purchase of the Convertible Debentures.
      The
      Company acknowledges and agrees that the Buyer(s) is acting solely in the
      capacity of an arm’s length purchaser with respect to this Agreement and the
      transactions contemplated hereby. The Company further acknowledges that the
      Buyer(s) is not acting as a financial advisor or fiduciary of the Company (or
      in
      any similar capacity) with respect to this Agreement and the transactions
      contemplated hereby and any advice given by the Buyer(s) or any of their
      respective representatives or agents in connection with this Agreement and
      the
      transactions contemplated hereby is merely incidental to such Buyer’s purchase
      of the Convertible Debentures or the Conversion Shares. The Company further
      represents to the Buyer that the Company’s decision to enter into this Agreement
      has been based solely on the independent evaluation by the Company and its
      representatives.

     

    (j)  No
      General Solicitation.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has engaged in any form of general solicitation or general advertising
      (within the meaning of Regulation D under the Securities Act) in connection
      with
      the offer or sale of the Convertible Debentures or the Conversion
      Shares.

     

    (k)  No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf has, directly or indirectly, made any offers or sales of any security
      or
      solicited any offers to buy any security, under circumstances that would require
      registration of the Convertible Debentures or the Conversion Shares under the
      Securities Act or cause this offering of the Convertible Debentures or the
      Conversion Shares to be integrated with prior offerings by the Company for
      purposes of the Securities Act.

     

    (l)  Employee
      Relations.
      Neither
      the Company nor any of its subsidiaries is involved in any labor dispute nor,
      to
      the knowledge of the Company or any of its subsidiaries, is any such dispute
      threatened. None of the Company’s or its subsidiaries’ employees is a member of
      a union and the Company and its subsidiaries believe that their relations with
      their employees are good.

     

    
      
        
        

      

      
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    (m)  Intellectual
      Property Rights.
      The
      Company and its subsidiaries own or possess adequate rights or licenses to
      use
      all trademarks, trade names, service marks, service mark registrations, service
      names, patents, patent rights, copyrights, inventions, licenses, approvals,
      governmental authorizations, trade secrets and rights necessary to conduct
      their
      respective businesses as now conducted. The Company and its subsidiaries do
      not
      have any knowledge of any infringement by the Company or its subsidiaries of
      trademark, trade name rights, patents, patent rights, copyrights, inventions,
      licenses, service names, service marks, service mark registrations, trade secret
      or other similar rights of others, and, to the knowledge of the Company there
      is
      no claim, action or proceeding being made or brought against, or to the
      Company’s knowledge, being threatened against, the Company or its subsidiaries
      regarding trademark, trade name, patents, patent rights, invention, copyright,
      license, service names, service marks, service mark registrations, trade secret
      or other infringement; and the Company and its subsidiaries are unaware of
      any
      facts or circumstances which might give rise to any of the
      foregoing.

     

    (n)  Environmental
      Laws.
      The
      Company and its subsidiaries are (i) in compliance with any and all applicable
      foreign, federal, state and local laws and regulations relating to the
      protection of human health and safety, the environment or hazardous or toxic
      substances or wastes, pollutants or contaminants (“Environmental
      Laws”),
      (ii)
      have received all permits, licenses or other approvals required of them under
      applicable Environmental Laws to conduct their respective businesses and (iii)
      are in compliance with all terms and conditions of any such permit, license
      or
      approval.

     

    (o)  Title.
      Any
      real property and facilities held under lease by the Company and its
      subsidiaries are held by them under valid, subsisting and enforceable leases
      with such exceptions as are not material and do not interfere with the use
      made
      and proposed to be made of such property and buildings by the Company and its
      subsidiaries.

     

    (p)  Insurance.
      The
      Company and each of its subsidiaries are insured by insurers of recognized
      financial responsibility against such losses and risks and in such amounts
      as
      management of the Company believes to be prudent and customary in the businesses
      in which the Company and its subsidiaries are engaged. Neither the Company
      nor
      any such subsidiary has been refused any insurance coverage sought or applied
      for and neither the Company nor any such subsidiary has any reason to believe
      that it will not be able to renew its existing insurance coverage as and when
      such coverage expires or to obtain similar coverage from similar insurers as
      may
      be necessary to continue its business at a cost that would not materially and
      adversely affect the condition, financial or otherwise, or the earnings,
      business or operations of the Company and its subsidiaries, taken as a
      whole.

     

    (q)  Regulatory
      Permits.
      The
      Company and its subsidiaries possess all material certificates, authorizations
      and permits issued by the appropriate federal, state or foreign regulatory
      authorities necessary to conduct their respective businesses, and neither the
      Company nor any such subsidiary has received any notice of proceedings relating
      to the revocation or modification of any such certificate, authorization or
      permit.

     

    (r)  Internal
      Accounting Controls.
      The
      Company and each of its subsidiaries maintain a system of internal accounting
      controls sufficient to provide reasonable assurance that (i) transactions are
      executed in accordance with management’s general or specific authorizations,
      (ii) transactions are recorded as necessary to permit preparation of financial
      statements in conformity with generally accepted accounting principles and
      to
      maintain asset accountability, and (iii) the recorded amounts for assets is
      compared with the existing assets at reasonable intervals and appropriate action
      is taken with respect to any differences.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

    

    (s)  No
      Material Adverse Breaches, etc.
      Neither
      the Company nor any of its subsidiaries is subject to any charter, corporate
      or
      other legal restriction, or any judgment, decree, order, rule or regulation
      which in the judgment of the Company’s officers has or is expected in the future
      to have a material adverse effect on the business, properties, operations,
      financial condition, results of operations or prospects of the Company or its
      subsidiaries. Neither the Company nor any of its subsidiaries is in breach
      of
      any contract or agreement which breach, in the judgment of the Company’s
      officers, has or is expected to have a material adverse effect on the business,
      properties, operations, financial condition, results of operations or prospects
      of the Company or its subsidiaries.

     

    (t)  Tax
      Status.
      The
      Company and each of its subsidiaries has made and filed all federal and state
      income and all other tax returns, reports and declarations required by any
      jurisdiction to which it is subject and (unless and only to the extent that
      the
      Company and each of its subsidiaries has set aside on its books provisions
      reasonably adequate for the payment of all unpaid and unreported taxes) has
      paid
      all taxes and other governmental assessments and charges that are material
      in
      amount, shown or determined to be due on such returns, reports and declarations,
      except those being contested in good faith and has set aside on its books
      provision reasonably adequate for the payment of all taxes for periods
      subsequent to the periods to which such returns, reports or declarations apply.
      There are no unpaid taxes in any material amount claimed to be due by the taxing
      authority of any jurisdiction, and the officers of the Company know of no basis
      for any such claim.

     

    (u)  Certain
      Transactions.
      Except
      for arm’s length transactions pursuant to which the Company makes payments in
      the ordinary course of business upon terms no less favorable than the Company
      could obtain from third parties and other than the grant of stock options
      disclosed in the SEC Documents, none of the officers, directors, or employees
      of
      the Company is presently a party to any transaction with the Company (other
      than
      for services as employees, officers and directors), including any contract,
      agreement or other arrangement providing for the furnishing of services to
      or
      by, providing for rental of real or personal property to or from, or otherwise
      requiring payments to or from any officer, director or such employee or, to
      the
      knowledge of the Company, any corporation, partnership, trust or other entity
      in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner.

     

    (v)  Fees
      and Rights of First Refusal.
      The
      Company is not obligated to offer the securities offered hereunder on a right
      of
      first refusal basis or otherwise to any third parties including, but not limited
      to, current or former shareholders of the Company, underwriters, brokers, agents
      or other third parties.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (w)  Fortress
      America Acquisition Holdings, LLC.
      Fortress America Acquisition Holdings, LLC (“FAAH”)
      is a
      subsidiary of the Company and has been created for the purpose of investing
      in
      Fortress America Acquisition Corporation II (the “SPAC”).
      

     

    4.  COVENANTS.

     

    (a)  Best
      Efforts.
      Each
      party shall use its best efforts to timely satisfy each of the conditions to
      be
      satisfied by it as provided in Sections 6 and 7 of this Agreement.

     

    (b)  Form
      D.
      The
      Company agrees to file a Form D with respect to the Conversion Shares as
      required under Regulation D and to provide a copy thereof to each Buyer promptly
      after such filing. The Company shall, on or before the Closing Date, take such
      action as the Company shall reasonably determine is necessary to qualify the
      Conversion Shares, or obtain an exemption for the Conversion Shares for sale
      to
      the Buyers at the Closing pursuant to this Agreement under applicable securities
      or “Blue Sky” laws of the states of the United States, and shall provide
      evidence of any such action so taken to the Buyers on or prior to the Closing
      Date.

     

    (c)  Reporting
      Status.
      Until
      the earlier of (i) the date as of which the Buyer(s) may sell all of the
      Conversion Shares without restriction pursuant to Rule 144(k) promulgated under
      the Securities Act (or successor thereto), or (ii) the date on which (A) the
      Buyer(s) shall have sold all the Conversion Shares and (B) none of the
      Convertible Debentures are outstanding (the “Registration
      Period”),
      the
      Company shall file in a timely manner all reports required to be filed with
      the
      SEC pursuant to the Exchange Act and the regulations of the SEC thereunder,
      and
      the Company shall not terminate its status as an issuer required to file reports
      under the Exchange Act even if the Exchange Act or the rules and regulations
      thereunder would otherwise permit such termination.

     

    (d)  Use
      of
      Proceeds.
      The
      Company will use the proceeds from the sale of the Convertible Debentures as
      outlined in the Disclosure Schedule. 

     

    (e)  Reservation
      of Shares.
      The
      Company shall take all action reasonably necessary to at all times have
      authorized, and reserved for the purpose of issuance, such number of shares
      of
      Common Stock as shall be necessary to effect the issuance of the Conversion
      Shares. If at any time the Company does not have available such shares of Common
      Stock as shall from time to time be sufficient to effect the conversion of
      all
      of the Conversion Shares, the Company shall call and hold a special meeting
      of
      the shareholders within thirty (30) days of such occurrence, for the sole
      purpose of increasing the number of shares authorized. The Company’s management
      shall recommend to the shareholders to vote in favor of increasing the number
      of
      shares of Common Stock authorized. Management shall also vote all of its shares
      in favor of increasing the number of authorized shares of Common
      Stock.

     

    (f)  Listings
      or Quotation.
      The
      Company shall promptly secure the listing or quotation of the Conversion Shares
      upon each national securities exchange, automated quotation system or The
      National Association of Securities Dealers Inc.’s Over-The-Counter Bulletin
      Board (“OTCBB”)
      or
      other market, if any, upon which shares of Common Stock are then listed or
      quoted (subject to official notice of issuance) and shall use its best efforts
      to maintain, so long as any other shares of Common Stock shall be so listed,
      such listing of all Conversion Shares from time to time issuable under the
      terms
      of this Agreement. The Company shall maintain the Common Stock’s authorization
      for quotation on the OTCBB.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (g)  Fees
      and
      Expenses. 

     

    (i)  Each
      of
      the Company and the Buyer(s) shall pay all costs and expenses incurred by such
      party in connection with the negotiation, investigation, preparation, execution
      and delivery of the Transaction Documents. The Company shall pay Yorkville
      Advisors LLC a fee equal to six percent (6%) of the Purchase Price.


     

    (ii)  The
      Company shall pay a structuring fee to Yorkville Advisors LLC of Twenty Thousand
      Dollars ($20,000) directly from the proceeds of the Closing. 

     

    (iii)  The
      Company shall pay Yorkville Advisors, LLC a non-refundable due diligence fee
      of
      Five Thousand Dollars ($5,000) which shall be paid directly from the proceeds
      of
      the Closing.

     

    (iv)  The
      Company shall issue to the Buyer a warrant to purchase eighty million
      (80,000,000) shares of the Company’s Common Stock for a period of five (5)
      years at an exercise price of $0.0015 per share (the “Warrant”).
      The
      shares of Common Stock issuable under the Warrant shall collectively be referred
      to as the “Warrant
      Shares”.
      

     

    (v)  The
      Warrant Shares shall have “piggy-back” and demand registration rights.


     

    (h)  Corporate
      Existence.
      So long
      as any of the Convertible Debentures remain outstanding, the Company shall
      not
      directly or indirectly consummate any merger, reorganization, restructuring,
      reverse stock split consolidation, sale of all or substantially all of the
      Company’s assets or any similar transaction or related transactions (each such
      transaction, an “Organizational
      Change”)
      unless, prior to the consummation an Organizational Change, the Company obtains
      the written consent of each Buyer. In any such case, the Company will make
      appropriate provision with respect to such holders’ rights and interests to
      insure that the provisions of this Section 4(h) will thereafter be applicable
      to
      the Convertible Debentures.

     

    (i)  Transactions
      With Affiliates.
      So long
      as any Convertible Debentures are outstanding, the Company shall not, and shall
      cause each of its subsidiaries not to, enter into, amend, modify or supplement,
      or permit any subsidiary to enter into, amend, modify or supplement any
      agreement, transaction, commitment, or arrangement with any of its or any
      subsidiary’s officers, directors, person who were officers or directors at any
      time during the previous two (2) years, stockholders who beneficially own five
      percent (5%) or more of the Common Stock, or Affiliates (as defined below)
      or
      with any individual related by blood, marriage, or adoption to any such
      individual or with any entity in which any such entity or individual owns a
      five
      percent (5%) or more beneficial interest (each a “Related
      Party”),
      except for (a) customary employment arrangements and benefit programs on
      reasonable terms, (b) any investment in an Affiliate of the Company, (c) any
      agreement, transaction, commitment, or arrangement on an arms-length basis
      on
      terms no less favorable than terms which would have been obtainable from a
      person other than such Related Party, (d) any agreement, transaction,
      commitment, or arrangement which is approved by a majority of the disinterested
      directors of the Company; for purposes hereof, any director who is also an
      officer of the Company or any subsidiary of the Company shall not be a
      disinterested director with respect to any such agreement, transaction,
      commitment, or arrangement. “Affiliate”
for
      purposes hereof means, with respect to any person or entity, another person
      or
      entity that, directly or indirectly, (i) has a ten percent (10%) or more equity
      interest in that person or entity, (ii) has ten percent (10%) or more common
      ownership with that person or entity, (iii) controls that person or entity,
      or
      (iv) shares common control with that person or entity. “Control”
or
      “controls”
for
      purposes hereof means that a person or entity has the power, direct or indirect,
      to conduct or govern the policies of another person or entity.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (j)  Transfer
      Agent.
      The
      Company covenants and agrees that, in the event that the Company’s agency
      relationship with the transfer agent should be terminated for any reason prior
      to a date which is two (2) years after the Closing Date, the Company shall
      immediately appoint a new transfer agent and shall require that the new transfer
      agent execute and agree to be bound by the terms of the Irrevocable Transfer
      Agent Instructions (as defined herein).

     

    (k)  Restriction
      on Issuance of the Capital Stock.
      So long
      as any Convertible Debentures are outstanding, the Company shall not, without
      the prior written consent of the Buyer(s), (i) issue or sell shares of Common
      Stock or Preferred Stock without consideration or for a consideration per share
      less than the bid price of the Common Stock determined immediately prior to
      its
      issuance, (ii) issue any preferred stock, warrant, option, right, contract,
      call, or other security or instrument granting the holder thereof the right
      to
      acquire Common Stock without consideration or for a consideration less than
      such
      Common Stock Bid Price determined immediately prior to its issuance, (iii)
      enter
      into any security instrument granting the holder a security interest in any
      and
      all assets of the Company, or (iv) file any registration statement on Form
      S-8
      except to register stock options issued to officers and directors of the Company
      pursuant to the Company’s existing stock option plan or currently outstanding
      options issued outside of the stock option plan.

     

    (l)  Neither
      the Buyer(s) nor any of its affiliates have an open short position in the Common
      Stock of the Company, and the Buyer(s) agrees that it shall not, and that it
      will cause its affiliates not to, engage in any short sales of or hedging
      transactions with respect to the Common Stock as long as any Convertible
      Debentures shall remain outstanding. 

     

    (m)  Rights
      of First Refusal.
      So
      long
      as any portion of Convertible Debentures are outstanding, if the Company intends
      to raise additional capital by the issuance or sale of capital stock of the
      Company, including without limitation shares of any class of common stock,
      any
      class of preferred stock, options, warrants or any other securities convertible
      or exercisable into shares of common stock (whether the offering is conducted
      by
      the Company, underwriter, placement agent or any third party) the Company shall
      be obligated to offer to the Buyers such issuance or sale of capital stock,
      by
      providing in writing the principal amount of capital it intends to raise and
      outline of the material terms of such capital raise, prior to the offering
      such
      issuance or sale of capital stock  to any third parties including, but not
      limited to, current or former officers or directors, current or former
      shareholders and/or investors of the obligor, underwriters, brokers, agents
      or
      other third parties.  The Buyers shall have ten (10) business days from
      receipt of such notice of the sale or issuance of capital stock to accept or
      reject all or a portion of such capital raising offer. 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (n)  Review
      of Public Disclosures.
      All SEC
      filings (including, without limitation, all filings required under the Exchange
      Act, which include Forms 10-Q and 10-QSB, 10-K and 10K-SB, 8-K, etc) and other
      public disclosures made by the Company, including, without limitation, all
      press
      releases, investor relations materials, and scripts of analysts meetings and
      calls, shall be reviewed and approved for release by the Company’s attorneys
      and, if containing financial information, the Company’s independent certified
      public accountants.

     

    5.  TRANSFER
      AGENT INSTRUCTIONS.

     

    (a)  The
      Company shall issue the Irrevocable Transfer Agent Instructions to its transfer
      agent irrevocably appointing David Gonzalez, Esq. as the Company’s agent for
      purpose of having certificates issued, registered in the name of the Buyer(s)
      or
      its respective nominee(s), for the Conversion Shares representing such amounts
      of Convertible Debentures as specified from time to time by the Buyer(s) to
      the
      Company upon conversion of the Convertible Debentures, for interest owed
      pursuant to the Convertible Debenture, and for any and all Liquidated Damages
      (as this term is defined in the Investor Registration Rights Agreement). David
      Gonzalez, Esq. shall be paid a cash fee of Fifty Dollars ($50) for every
      occasion they act pursuant to the Irrevocable Transfer Agent Instructions.
      The
      Company shall not change its transfer agent without the express written consent
      of the Buyer(s), which may be withheld by the Buyer(s) in its sole discretion.
      Prior to registration of the Conversion Shares under the Securities Act, all
      such certificates shall bear the restrictive legend specified in Section 2(g)
      of
      this Agreement. The Company warrants that no instruction other than the
      Irrevocable Transfer Agent Instructions referred to in this Section 5, and
      stop
      transfer instructions to give effect to Section 2(g) hereof (in the case of
      the
      Conversion Shares prior to registration of such shares under the Securities
      Act)
      will be given by the Company to its transfer agent and that the Conversion
      Shares shall otherwise be freely transferable on the books and records of the
      Company as and to the extent provided in this Agreement and the Investor
      Registration Rights Agreement. Nothing in this Section 5 shall affect in any
      way
      the Buyer’s obligations and agreement to comply with all applicable securities
      laws upon resale of Conversion Shares. If the Buyer(s) provides the Company
      with
      an opinion of counsel, in form, scope and substance customary for opinions
      of
      counsel in comparable transactions to the effect that registration of a resale
      by the Buyer(s) of any of the Conversion Shares is not required under the
      Securities Act, the Company shall within two (2) business days instruct its
      transfer agent to issue one or more certificates in such name and in such
      denominations as specified by the Buyer. The Company acknowledges that a breach
      by it of its obligations hereunder will cause irreparable harm to the Buyer
      by
      vitiating the intent and purpose of the transaction contemplated hereby.
      Accordingly, the Company acknowledges that the remedy at law for a breach of
      its
      obligations under this Section 5 will be inadequate and agrees, in the event
      of
      a breach or threatened breach by the Company of the provisions of this
      Section 5, that the Buyer(s) shall be entitled, in addition to all other
      available remedies, to an injunction restraining any breach and requiring
      immediate issuance and transfer, without the necessity of showing economic
      loss
      and without any bond or other security being required.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    6.  CONDITIONS
      TO THE COMPANY’S OBLIGATION TO SELL.

     

    The
      obligation of the Company hereunder to issue and sell the Convertible Debentures
      to the Buyer(s) at the Closings is subject to the satisfaction, at or before
      the
      Closing Dates, of each of the following conditions, provided that these
      conditions are for the Company’s sole benefit and may be waived by the Company
      at any time in its sole discretion:

     

    (a)  Each
      Buyer shall have executed the Transaction Documents and delivered them to the
      Company.

     

    (b)  The
      Buyer(s) shall have delivered to the Company the Purchase Price for Convertible
      Debentures in respective amounts as set forth next to each Buyer as outlined
      on
      Schedule I attached hereto, minus any fees to be paid directly from the proceeds
      the Closings as set forth herein, by wire transfer of immediately available
      U.S.
      funds pursuant to the wire instructions provided by the Company.

     

    (c)  The
      representations and warranties of the Buyer(s) shall be true and correct in
      all
      material respects as of the date when made and as of the Closing Dates as though
      made at that time (except for representations and warranties that speak as
      of a
      specific date), and the Buyer(s) shall have performed, satisfied and complied
      in
      all material respects with the covenants, agreements and conditions required
      by
      this Agreement to be performed, satisfied or complied with by the Buyer(s)
      at or
      prior to the Closing Dates. 

     

    7.  CONDITIONS
      TO THE BUYER’S OBLIGATION TO PURCHASE.

     

    (a)  The
      obligation of the Buyer(s) hereunder to purchase the Convertible Debentures
      at
      the Closing is subject to the satisfaction, at or before the First Closing
      Date,
      of each of the following conditions:

     

    (i)  The
      Company shall have executed the Transaction Documents and delivered the same
      to
      the Buyer(s).

     

    (ii)  The
      Common Stock shall be authorized for quotation on the OTCBB, trading in the
      Common Stock shall not have been suspended for any reason, and all the
      Conversion Shares issuable upon the conversion of the Convertible Debentures
      shall be approved by the OTCBB. 

     

    (iii)  The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except to the extent that any of such representations and
      warranties is already qualified as to materiality in Section 3 above, in which
      case, such representations and warranties shall be true and correct without
      further qualification) as of the date when made and as of the Closing Date
      as
      though made at that time (except for representations and warranties that speak
      as of a specific date) and the Company shall have performed, satisfied and
      complied in all material respects with the covenants, agreements and conditions
      required by this Agreement to be performed, satisfied or complied with by the
      Company at or prior to the Closing Date

     

    (iv)  The
      Company shall have executed and delivered to the Buyer(s) the Convertible
      Debentures in the respective amounts set forth opposite each Buyer(s) name
      on
      Schedule I attached hereto.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (v)  The
      Buyer(s) shall have received an opinion of counsel from counsel to the Company
      in a form satisfactory to the Buyer(s).

     

    (vi)  The
      Company shall have provided to the Buyer(s) a certificate of good standing
      from
      the secretary of state from the state in which the company is
      incorporated.

     

    (vii)  The
      Company shall have filed a form UCC-1 or such other forms as may be required
      to
      perfect the Buyer’s interest in the Pledged Property as detailed in the Security
      Agreement dated the date hereof and provided proof of such filing to the
      Buyer(s).

     

    (viii)  The
      Company shall have the shares pledge pursuant to the Pledge Agreement as well
      as
      executed and medallion guaranteed stock powers.

     

    (ix)  The
      Company shall have provided to the Buyer an acknowledgement, to the satisfaction
      of the Buyer, from the Company’s independent certified public accountants as to
      its ability to provide all consents required in order to file a registration
      statement in connection with this transaction.

     

    (x)  The
      Company shall have reserved out of its authorized and unissued Common Stock,
      solely for the purpose of effecting the conversion of the Convertible
      Debentures, shares of Common Stock to effect the conversion of all of the
      Conversion Shares then outstanding. 

     

    (xi)  The
      Irrevocable Transfer Agent Instructions, in form and substance satisfactory
      to
      the Buyer, shall have been delivered to and acknowledged in writing by the
      Company’s transfer agent.

     

    (xii)  C.
      Thomas
      McMillen shall have delivered the Guaranty Agreement (in the form attached
      as
Exhibit
      A)
      executed with the Company that includes Cornell and providing Cornell a priority
      over the Company in the event Cornell is seeking repayment of an amount equal
      to
      Five Hundred Thousand Dollars ($500,000) under the Debenture.

     

    8.  INDEMNIFICATION.

     

    (a)  In
      consideration of the Buyer’s execution and delivery of this Agreement and
      acquiring the Convertible Debentures and the Conversion Shares hereunder, and
      in
      addition to all of the Company’s other obligations under this Agreement, the
      Company shall defend, protect, indemnify and hold harmless the Buyer(s) and
      each
      other holder of the Convertible Debentures and the Conversion Shares, and all
      of
      their officers, directors, employees and agents (including, without
      limitation, those retained in connection with the transactions contemplated
      by
      this Agreement) (collectively, the “Buyer
      Indemnitees”)
      from
      and against any and all actions, causes of action, suits, claims, losses, costs,
      penalties, fees, liabilities and damages, and expenses in connection therewith
      (irrespective of whether any such Buyer Indemnitee is a party to the action
      for
      which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified
      Liabilities”),
      incurred by the Buyer Indemnitees or any of them as a result of, or arising
      out
      of, or relating to (a) any misrepresentation or breach of any representation
      or
      warranty made by the Company in this Agreement, the Convertible Debentures
      or
      the Investor Registration Rights Agreement or any other certificate, instrument
      or document contemplated hereby or thereby, (b) any breach of any covenant,
      agreement or obligation of the Company contained in this Agreement, or the
      Investor Registration Rights Agreement or any other certificate, instrument
      or
      document contemplated hereby or thereby, or (c) any cause of action, suit or
      claim brought or made against such Indemnitee and arising out of or resulting
      from the execution, delivery, performance or enforcement of this Agreement
      or
      any other instrument, document or agreement executed pursuant hereto by any
      of
      the parties hereto, any transaction financed or to be financed in whole or
      in
      part, directly or indirectly, with the proceeds of the issuance of the
      Convertible Debentures or the status of the Buyer or holder of the Convertible
      Debentures the Conversion Shares, as a Buyer of Convertible Debentures in the
      Company. To the extent that the foregoing undertaking by the Company may be
      unenforceable for any reason, the Company shall make the maximum contribution
      to
      the payment and satisfaction of each of the Indemnified Liabilities, which
      is
      permissible under applicable law.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (b)  In
      consideration of the Company’s execution and delivery of this Agreement, and in
      addition to all of the Buyer’s other obligations under this Agreement, the Buyer
      shall defend, protect, indemnify and hold harmless the Company and all of its
      officers, directors, employees and agents (including, without limitation, those
      retained in connection with the transactions contemplated by this Agreement)
      (collectively, the “Company
      Indemnitees”)
      from
      and against any and all Indemnified Liabilities incurred by the Indemnitees
      or
      any of them as a result of, or arising out of, or relating to (a) any
      misrepresentation or breach of any representation or warranty made by the
      Buyer(s) in this Agreement, instrument or document contemplated hereby or
      thereby executed by the Buyer, (b) any breach of any covenant, agreement or
      obligation of the Buyer(s) contained in this Agreement, the Investor
      Registration Rights Agreement or any other certificate, instrument or document
      contemplated hereby or thereby executed by the Buyer, or (c) any cause of
      action, suit or claim brought or made against such Company Indemnitee based
      on
      material misrepresentations or due to a material breach and arising out of
      or
      resulting from the execution, delivery, performance or enforcement of this
      Agreement, the Investor Registration Rights Agreement or any other instrument,
      document or agreement executed pursuant hereto by any of the parties hereto.
      To
      the extent that the foregoing undertaking by each Buyer may be unenforceable
      for
      any reason, each Buyer shall make the maximum contribution to the payment and
      satisfaction of each of the Indemnified Liabilities, which is permissible under
      applicable law.

     

    9.  GOVERNING
      LAW: MISCELLANEOUS.

     

    (a)  Governing
      Law.
      This
      Agreement shall be governed by and interpreted in accordance with the laws
      of
      the State of Delaware without regard to the principles of conflict of laws.
      The
      parties further agree that any action between them shall be heard in Hudson
      County, New Jersey, and expressly consent to the jurisdiction and venue of
      the
      Superior Court of New Jersey, sitting in Hudson County and the United States
      District Court for the District of New Jersey sitting in Newark, New Jersey
      for
      the adjudication of any civil action asserted pursuant to this
      Paragraph.

     

    (b)  Counterparts.
      This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party.
      In
      the event any signature page is delivered by facsimile transmission, the party
      using such means of delivery shall cause four (4) additional original executed
      signature pages to be physically delivered to the other party within five (5)
      days of the execution and delivery hereof.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (c)  Headings.
      The
      headings of this Agreement are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Agreement.

     

    (d)  Severability.
      If any
      provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

     

    (e)  Entire
      Agreement, Amendments.
      This
      Agreement supersedes all other prior oral or written agreements between the
      Buyer(s), the Company, their affiliates and persons acting on their behalf
      with
      respect to the matters discussed herein, and this Agreement and the instruments
      referenced herein contain the entire understanding of the parties with respect
      to the matters covered herein and therein and, except as specifically set forth
      herein or therein, neither the Company nor any Buyer makes any representation,
      warranty, covenant or undertaking with respect to such matters. No provision
      of
      this Agreement may be waived or amended other than by an instrument in writing
      signed by the party to be charged with enforcement.

     

    (f)  Notices.
      Any
      notices, consents, waivers, or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered (i) upon receipt, when delivered personally; (ii) upon
      confirmation of receipt, when sent by facsimile; (iii) three (3) days after
      being sent by U.S. certified mail, return receipt requested, or (iv) one (1)
      day
      after deposit with a nationally recognized overnight delivery service, in each
      case properly addressed to the party to receive the same. The addresses and
      facsimile numbers for such communications shall be:

     

    
      	
              If
                to the Company, to:

            	
              Homeland
                Security Capital Corporation

            
	 	
              4100
                North Fairfax Drive, Suite 1150

            
	 	
              Arlington,
                Virginia 22203

            
	 	
              Attention: C.
                Thomas McMillen

            
	 	
              Telephone: (703)
                528-7073

            
	 	
              Facsimile: (703)
                528 0956

            
	 	 
	
              With
                a copy to:

            	
              Kirkpatrick
                & Lockhart Preston Gates Ellis, LLP

            
	 	
              201
                South Biscayne Boulevard, Suite 2000

            
	 	
              Miami,
                Florida 33131

            
	 	
              Attention: Clayton
                E. Parker, Esq.

            
	 	
              Telephone: (305)
                539-3306

            
	 	
              Facsimile: (305)
                358-7095

            


    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    If
      to the
      Buyer(s), to its address and facsimile number on Schedule I, with copies to
      the
      Buyer’s counsel as set forth on Schedule I. Each party shall provide five (5)
      days’ prior written notice to the other party of any change in address or
      facsimile number.

     

    (g)  Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and assigns. Neither the Company nor any Buyer
      shall
      assign this Agreement or any rights or obligations hereunder without the prior
      written consent of the other party hereto.

     

    (h)  No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person.

     

    (i)  Survival.
      Unless
      this Agreement is terminated under Section 9(l), the representations and
      warranties of the Company and the Buyer(s) contained in Sections 2 and 3, the
      agreements and covenants set forth in Sections 4, 5 and 9, and the
      indemnification provisions set forth in Section 8, shall survive the Closing
      for
      a period of two (2) years following the date on which the Convertible Debentures
      are converted in full. The Buyer(s) shall be responsible only for its own
      representations, warranties, agreements and covenants hereunder.

     

    (j)  Publicity.
      The
      Company and the Buyer(s) shall have the right to approve, before issuance any
      press release or any other public statement with respect to the transactions
      contemplated hereby made by any party; provided, however, that the Company
      shall
      be entitled, without the prior approval of the Buyer(s), to issue any press
      release or other public disclosure with respect to such transactions required
      under applicable securities or other laws or regulations (the Company shall
      use
      its best efforts to consult the Buyer(s) in connection with any such press
      release or other public disclosure prior to its release and Buyer(s) shall
      be
      provided with a copy thereof upon release thereof).

     

    (k)  Further
      Assurances.
      Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    (l)  Termination.
      In the
      event that the First Closing shall not have occurred with respect to the Buyers
      on or before five (5) business days from the date hereof due to the Company’s or
      the Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7
      above (and the non-breaching party’s failure to waive such unsatisfied
      condition(s)), the non-breaching party shall have the option to terminate this
      Agreement with respect to such breaching party at the close of business on
      such
      date without liability of any party to any other party; provided, however,
      that
      if this Agreement is terminated by the Company pursuant to this Section 9(l),
      the Company shall remain obligated to reimburse the Buyer(s) for the fees and
      expenses of Yorkville Advisors LLC described in Section 4(g) above.

     

    (m)  Brokerage.
      The
      Company represents that no broker, agent, finder or other party has been
      retained by it in connection with the transactions contemplated hereby and
      that
      no other fee or commission has been agreed by the Company to be paid for or
      on
      account of the transactions contemplated hereby.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (n)  No
      Strict Construction.
      The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent, and no rules of strict construction
      will
      be applied against any party.

     

    


    [REMAINDER
      PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    


    IN
      WITNESS WHEREOF,
      the
      Buyers and the Company have caused this Securities Purchase Agreement to be
      duly
      executed as of the date first written above.

    
      	 	 	 
	 	
              COMPANY:

            
	 	
              HOMELAND
                SECURITY CAPITAL CORPORATION 

            
	 
 	 
 	 
 
	
            	By:  	/s/ C. Thomas McMillen
	 	
              

              Name: C.
                Thomas McMillen

            
	 	
              Title: Chief
                Executive Officer

            


    

    


     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      I

     

    SCHEDULE
      OF BUYERS 

    


    
      	
              Name

            	
              Signature

            	
              Address/Facsimile
                

              Number
                of Buyer

            	
              Amount
                of Subscription

            
	 	 	 	 
	 	 	 	 
	
              Cornell
                Capital Partners, L.P.

            	
              By: Yorkville
                Advisors, LLC

            	
              101
                Hudson Street - Suite 3700

            	
              $2,750,000

            
	 	
              Its: Investment
                Manager

            	
              Jersey
                City, NJ 07303

            	 
	 	 	
              Facsimile: (201)
                985-8266

            	 
	 	 	 	 
	 	
              By:
                /s/
                Mark Angelo 

            	 	 
	 	
              
                

              

              Name: Mark
                Angelo

            	 	 
	 	
              Its: Portfolio
                Manager

            	 	 
	 	 	 	 
	
              With
                a copy to: 

            	
              David
                Gonzalez, Esq.

            	
              101
                Hudson Street - Suite 3700

            	 
	 	 	
              Jersey
                City, NJ 07302

            	 
	 	 	
              Facsimile:
                (201) 985-8266

            	 


    

     

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    FORM
      OF GUARANTY

     

    GUARANTY

     

    GUARANTY,
      dated
      as of ________, 2007 made by C. Thomas McMillen (the “Guarantor”),
      in
      favor of HOMELAND
      SECURITY CAPITAL CORPORATION,
      a
      Delaware corporation (“HMSC”).

     

    WHEREAS,
      FORTRESS
      AMERICA ACQUISITION HOLDINGS LLC,
      a
      Delaware limited liability company (the “Company”),
      and
      HMSC are parties to the Promissory Note of even date herewith (the “Note”);

     

    WHEREAS,
      it is a
      condition precedent to HMSC entering into the Note that the Guarantor execute
      and deliver to HMSC a guaranty guaranteeing all of the obligations of the
      Company under the Note; 

     

    WHEREAS,
      Cornell
      Capital Partners, LP, a Cayman Island limited partnership (“Cornell”)
      holds
      certain convertible debentures issued by HMSC of even date herewith (the
“Debentures”)
      which
      are secured by the assets of HMSC, including the Note; 

     

    WHEREAS,
      it is a
      condition precedent to Cornell’s purchase of the Debentures that Cornell will
      have a priority over HMSC in payment from the Guarantor under this Guaranty
      in
      the event that Cornell is seeking repayment under the Debentures of an amount
      equal to that owed by the Company to HMSC under the Note; and

     

    WHEREAS,
      the
      Guarantor has determined that the execution, delivery and performance of this
      Guaranty directly benefits, and is in the best interest of, such
      Guarantor;

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the agreements herein and in order to induce
      HMSC to perform under the Note and under its obligations to Cornell, the
      Guarantor and HMSC hereby agree as follows:

     

    II.  Definitions.
      Reference is hereby made to the Note issued to HMSC for a statement of the
      terms
      thereof. All terms used in this Guaranty, which are defined in the Note are
      not
      otherwise defined herein, shall have the same meanings herein as set forth
      therein. 

     

    III.  Guaranty.
      

     

    A.  The
      Guarantor hereby unconditionally and irrevocably, guaranties the punctual
      payment, as and when due and payable, by stated maturity or otherwise, of all
      obligations of the Company from time to time owing by it pursuant to the Note,
      including, without limitation, all fees, commissions, expense reimbursements,
      indemnifications and all other amounts due or to become due of the Company
      under
      the Note (such obligations, to the extent not paid by the Company, being the
      “Guaranteed
      Obligations”),
      and
      agrees to pay any and all expenses (including reasonable counsel fees and
      expenses) reasonably incurred by HMSC in enforcing any rights under this
      Guaranty. Without limiting the generality of the foregoing, the Guarantor’s
      liability hereunder shall extend to all amounts that constitute part of the
      Guaranteed Obligations and would be owed by the Company to HMSC under the Note
      but for the fact that they are unenforceable or not allowable due to the
      existence of an insolvency proceeding involving any Guarantor or the Company
      (each, a "Transaction
      Party").

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    B.  The
      Guarantor and HMSC hereby agree that in the event that Cornell is seeking
      repayment under the Debentures of an amount equal to the amount of the
      Guaranteed Obligations, Cornell will have priority over HMSC in enforcing the
      guaranty provided in subsection (a) hereof. In the case that Cornell, rather
      than HMSC, enforces this Guaranty, the Guarantor agrees to pay any and all
      expenses (including reasonable counsel fees and expenses) reasonably incurred
      by
      Cornell in enforcing any rights under this Guaranty.

     

    IV.  Guaranty
      Absolute; Continuing Guaranty; Assignments.

     

    A.  The
      Guarantor guaranties that the Guaranteed Obligations will be paid strictly
      in
      accordance with the terms of the Note and this Guaranty, regardless of any
      law,
      regulation or order now or hereafter in effect in any jurisdiction affecting
      any
      of such terms or the rights of HMSC or Cornell with respect thereto. The
      obligations of the Guarantor under this Guaranty are independent of the
      Guaranteed Obligations, and a separate action or actions may be brought and
      prosecuted against the Guarantor to enforce such obligations, irrespective
      of
      whether any action is brought against any Transaction Party or whether any
      Transaction Party is joined in any such action or actions. The liability of
      the
      Guarantor under this Guaranty shall be irrevocable, absolute and unconditional
      irrespective of, the Guarantor hereby irrevocably waives, to the extent
      permitted by law, any defenses it may now or hereafter have in any way relating
      to, any or all of the following:

     

    1.  any
      lack
      of validity or enforceability of any agreement or instrument relating to the
      Note;

     

    2.  any
      change in the time, manner or place of payment of, or in any other term of,
      all
      or any of the Guaranteed Obligations, or any other amendment or waiver of or
      any
      consent to departure from the Note;

     

    3.  any
      change, restructuring or termination of the corporate, limited liability company
      or partnership structure or existence of any Transaction
      Party;
      or

     

    4.  any
      other
      circumstance (including any statute of limitations) or any existence of or
      reliance on any representation by HMSC or Cornell that might otherwise
      constitute a defense available to, or a discharge of, any Transaction Party
      or
      any other guarantor or surety.

     

    This
      Guaranty shall continue to be effective or be reinstated, as the case may be,
      if
      at any time any payment of any of the Guaranteed Obligations is rescinded or
      must otherwise be returned by HMSC or Cornell or any other Person upon the
      insolvency, bankruptcy or reorganization of any Transaction Party or otherwise,
      all as though such payment had not been made.

     

    B.  This
      Guaranty is a continuing guaranty and shall (i) remain in full force and effect
      until the indefeasible cash payment in full of the Guaranteed Obligations (other
      than inchoate indemnity obligations) and payment of all other amounts payable
      under this Guaranty (other
      than inchoate indemnity obligations) and
      shall
      not terminate for any reason prior to the respective Maturity Date of the Note
      and (ii) be binding upon the Guarantor and its respective successors and
      assigns. This Guaranty shall inure to the benefit of and be enforceable by
      HMSC
      or Cornell and their successors, and permitted pledgees, transferees and
      assigns. Without limiting the generality of the foregoing sentence, HMSC and
      Cornell may pledge, assign or otherwise transfer all or any portion of their
      rights and obligations under and subject to the terms of any other Person,
      and
      such other Person shall thereupon become vested with all the benefits in respect
      thereof granted to it herein or otherwise, in each case as provided in the
      Note.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    V.  Waivers.
      To the
      extent permitted by applicable law, each Guarantor hereby
      waives promptness, diligence, notice of acceptance and any other notice with
      respect to any of the Guaranteed Obligations and this Guaranty and any
      requirement that the HMSC or Cornell exhaust any right or take any action
      against any Transaction Party or any other Person or any collateral. The
      Guarantor acknowledges that it will receive direct and indirect benefits from
      the financing arrangements contemplated herein and that the waiver set forth
      in
      this Section 4 is knowingly made in contemplation of such benefits. The
      Guarantor hereby waives any right to revoke this Guaranty, and acknowledges
      that
      this Guaranty is continuing in nature and applies to all Guaranteed Obligations,
      whether existing now or in the future.

     

    VI.  Subrogation.
      No
      Guarantor may exercise any rights that it may now or hereafter acquire against
      the Note or any Transaction Party or any other guarantor that arise from the
      existence, payment, performance or enforcement of any Guarantor’s obligations
      under this Guaranty, including, without limitation, any right of subrogation,
      reimbursement, exoneration, contribution or indemnification and any right to
      participate in any claim or remedy of HMSC or Cornell against any Transaction
      Party or any other guarantor or any collateral, whether or not such claim,
      remedy or right arises in equity or under contract, statute or common law,
      including, without limitation, the right to take or receive from any Transaction
      Party or any other guarantor, directly or indirectly, in cash or other property
      or by set-off or in any other manner, payment or security solely on account
      of
      such claim, remedy or right, unless and until all of the Guaranteed Obligations
      (other than inchoate indemnity obligations) and all other amounts payable under
      this Guaranty (other than inchoate indemnity obligations) shall have
indefeasibly
      been
      paid
      in full in cash. If any amount shall be paid to the Guarantors in violation
      of
      the immediately preceding sentence at any time prior to the later of the payment
      in full in cash of the Guaranteed Obligations and all other amounts payable
      under this Guaranty, such amount shall be held in trust for the benefit of
      HMSC
      and Cornell and shall forthwith be paid to HMSC or Cornell to be credited and
      applied to the Guaranteed Obligations and all other amounts payable under this
      Guaranty, whether matured or unmatured, in accordance with the terms of the
      Note
      or to be held as collateral for any Guaranteed Obligations or other amounts
      payable under this Guaranty thereafter arising. 

     

    VII.  Representations,
      Warranties and Covenants.
      

     

    (a) The
      Guarantor hereby represents and warrants as of the date first written above
      as
      follows:

     

    (i) Each
      of
      this Guaranty, the Note to which the
      Guarantor
      is or
      will be a party, when delivered, will be, a legal, valid and binding obligation
      of the
      Guarantor,
      enforceable against the
      Guarantor
      in
      accordance with its terms, except as may be limited by applicable bankruptcy,
      insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or
      other similar laws and equitable principles (regardless of whether enforcement
      is sought in equity or at law). 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (ii) There
      is
      no pending or, to the knowledge of the
      Guarantor,
      threatened action, suit or proceeding against the
      Guarantor
      or to
      which any of the properties of the
      Guarantor
      is
      subject, before any court or other governmental authority or any arbitrator
      that
      (A) if adversely determined, could reasonably be expected to have a Material
      Adverse Effect or (B) relates to this Guaranty to which the
      Guarantor
      is a
      party or any transaction contemplated hereby or thereby. 

     

    (iii) The
      Guarantor (A) has read and understands the terms and conditions of the Note,
      and
      (B) now has and will continue to have independent means of obtaining information
      concerning the affairs, financial condition and business of the Company and
      the
      other Transaction Parties, and has no need of, or right to obtain from HMSC
      or
      Cornell any credit or other information concerning the affairs, financial
      condition or business of HMSC or Cornell or the other Transaction Parties that
      may come under the control of HMSC or Cornell.

     

    VIII.  Right
      of Set-off.
      Upon
      the occurrence and during the continuance of any Event of Default, HMSC or
      Cornell may, and are hereby authorized to, at any time and from time to time,
      without notice to the Guarantor (any such notice being expressly waived by
      each
      Guarantor) and to the fullest extent permitted by law, set-off and apply any
      and
      all deposits (general or special, time or demand, provisional or final) at
      any
      time held and other indebtedness at any time owing by HMSC or Cornell to or
      for
      the credit or the account of the Guarantor against any and all obligations
      of
      the Guarantors now or hereafter existing under this Guaranty, irrespective
      of
      whether or not HMSC or Cornell shall have made any demand under this Guaranty
      and although such obligations may be contingent or unmatured. HMSC and Cornell
      agree to notify the Guarantor promptly after any such set-off and application
      made by HMSC or Cornell, provided that the failure to give such notice shall
      not
      affect the validity of such set-off and application. The rights of HMSC and
      Cornell under this Section 7 are in addition to other rights and remedies
      (including, without limitation, other rights of set-off) which HMSC and Cornell
      may have under this Guaranty, in law or otherwise.

     

    IX.  Notices,
      Etc.
      All
      notices and other communications provided for hereunder shall be in writing
      and
      shall be mailed, telecopied or delivered, if to any Guarantor, to it at its
      address set forth on the signature page hereto, if to HMSC, to it at its
      respective address set forth in the Note; or if to Cornell, to it at its address
      set forth on the signature page hereto, or as to such Person at such other
      address as shall be designated by such Person in a written notice to such other
      Person complying as to delivery with the terms of this Section 8. All such
      notices and other communications shall be effective (i) if mailed (by certified
      mail, postage prepaid and return receipt requested), when received or three
      Business Days after deposited in the mails, whichever occurs first; (ii) if
      telecopied, when transmitted and confirmation is received, provided same is
      on a
      Business Day and, if not, on the next Business Day; or (iii) if delivered by
      hand, upon delivery, provided same is on a Business Day and, if not, on the
      next
      Business Day.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    X.  Governing
      Law.
      This
      Agreement shall be governed by and interpreted in accordance with the laws
      of
      the State of Delaware, without giving effect to any choice of law or conflict
      of
      law provision or rule (whether of the State of Delaware or any other
      jurisdictions) that would cause the application of the laws of any jurisdictions
      other than the State of Delaware. Each party hereby irrevocably submits to
      the
      exclusive jurisdiction any
      state
      or federal court sitting in Fairfax County, Virginia for
      the
      adjudication of any civil action asserted pursuant to this
      Paragraph.

     

    XI.  WAIVER
      OF JURY TRIAL, ETC.
      THE
      GUARANTOR HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
      OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS GUARANTY OR UNDER ANY
      AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED
      OR
      WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR
      ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS
      GUARANTY AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL
      BE
      TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH GUARANTOR CERTIFIES THAT NO
      OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF HMSC OR CORNELL HAS REPRESENTED,
      EXPRESSLY OR OTHERWISE, THAT HMSC AND CORNELL WOULD NOT, IN THE EVENT OF ANY
      ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS.
      EACH
      GUARANTOR HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT
      FOR
      HMSC ENTERING INTO THIS AGREEMENT.

     

    XII.  Miscellaneous.
      

     

    A.  The
      Guarantor will make each payment hereunder in lawful money of the United States
      of America and in immediately available funds to HMSC or Cornell, at such
      address specified by HMSC or Cornell from time to time by notice to the
      Guarantor.

     

    B.  No
      amendment or waiver of any provision of this Guaranty and no consent to any
      departure by the Guarantor there from shall in any event be effective unless
      the
      same shall be in writing and signed by the Guarantor, HMSC and Cornell, and
      then
      such waiver or consent shall be effective only in the specific instance and
      for
      the specific purpose for which given.

     

    C.  No
      failure on the part of HMSC or Cornell to exercise, and no delay in exercising,
      any right hereunder, the Note shall operate as a waiver thereof, nor shall
      any
      single or partial exercise of any right hereunder, the Note preclude any other
      or further exercise thereof or the exercise of any other right. The rights
      and
      remedies of HMSC and Cornell provided herein are cumulative and are in addition
      to, and not exclusive of, any rights or remedies provided by law. The rights
      of
      HMSC and Cornell under the Note against any party thereto are not conditional
      or
      contingent on any attempt by HMSC or Cornell to exercise any of their respective
      rights against such party or against any other Person.

     

    D.  Any
      provision of this Guaranty that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining portions
      hereof or affecting the validity or enforceability of such provision in any
      other jurisdiction.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    E.  This
      Guaranty shall (i) be binding on the Guarantor and its respective successors
      and
      assigns, and (ii) inure, together with all rights and remedies of HMSC and
      Cornell hereunder, to the benefit of HMSC and Cornell, HMSC, Cornell and their
      respective successors, transferees and assigns. Without limiting the generality
      of clause (ii) of the immediately preceding sentence, HMSC may assign or
      otherwise transfer its rights and obligations under the Note to any other Person
      in accordance with the terms thereof, and such other Person shall thereupon
      become vested with all of the benefits in respect thereof granted to HMSC,
      as
      the case may be, herein or otherwise. None of the rights or obligations of
      any
      Guarantor hereunder may be assigned or otherwise transferred without the prior
      written consent of HMSC and Cornell.

     

    F.  This
      Guaranty reflects the entire understanding of the transaction contemplated
      hereby and shall not be contradicted or qualified by any other agreement, oral
      or written, entered into before the date hereof.

     

    G.  Section
      headings herein are included for convenience of reference only and shall not
      constitute a part of this Agreement for any other purpose.

     

    [REMAINDER
      OF THIS PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF,
      the
      Guarantor has caused this Guaranty to be executed by its respective duly
      authorized officer, as of the date first above written.

     

     

    
      	 	 	
              C.
                THOMAS MCMILLEN

            
	 
 	 
 	 
 
	
            	
            	
            
	 	
              

            


    

     

    Accepted
      and Agreed to as of the ____

    day
      of
      June, 2007.

     

    


    HOMELAND
      SECURITY CAPTIAL CORPORATION

    


    
      	 	 	 	 
	By:	 	 	
            
	
              
                

              

              Name:

            	 	 	
            
	
              Title:

            	 	 	
            


    

     

    


    CORNELL
      CAPITAL PARTNERS, LP

    


    By:
       Yorkville
      Advisors, LLC

    Its: General
      Partner

    
      


      
        	 	 	 	 
	By:	 	 	
              
	
                
                  

                

                Name:

              	 	 	
              
	
                Title:

              	 	 	
              


      

       

    

    Address
      for Notice:

    


    Cornell
      Capital Partners, LP

    101
      Hudson Street, Suite 3606

    Jersey
      City, New Jersey 07302

    Attn:
      Mark A. Angelo

    Facsimile:
      (201)985-8266