Document:

Security Agreement

    Exhibit
      10.5

    

    SECURITY
      AGREEMENT

    

    

    1.
      THE
      SECURITY. The undersigned Genex Technologies Incorporated, a Maryland
      corporation (the "Pledgor"), hereby assigns and grants to Shelter Island
      Opportunity Fund, LLC (the "Purchaser") a security interest in all assets of
      Pledgor, now owned or hereafter acquired while this Agreement is in effect,
      including the following described property now owned or hereafter acquired
      by
      the Pledgor ("Collateral"):

    

    (a)
      All
      accounts, contract rights, chattel paper, instruments, deposit accounts, letter
      of credit rights, payment intangibles and general intangibles, including all
      amounts due to the Pledgor from a factor; and all returned or repossessed goods
      which, on sale or lease, resulted in an account or chattel paper.

    

    (b)
      All
      inventory, including all materials, work in process and finished
      goods.

    

    (c)
      All
      machinery, furniture, fixtures and other equipment of every type now owned
      or
      hereafter acquired by the Pledgor.

    

    (d)
      All
      instruments, notes, chattel paper, documents, certificates of deposit,
      securities and investment property of every type. The Collateral shall include
      all liens, security agreements, leases and other contracts securing or otherwise
      relating to the foregoing.

    

    (e)
      All
      general intangibles, including, but not limited to, all Intellectual Property
      Rights. The Collateral shall include all good will connected with or symbolized
      by any of such general intangibles; all contract rights, documents,
      applications, licenses, materials and other matters related to such general
      intangibles; all tangible property embodying or incorporating any such general
      intangibles; and all chattel paper and instruments relating to such general
      intangibles.

    

    (f)
      All
      negotiable and nonnegotiable documents of title covering any
      Collateral.

    

    (g)
      All
      accessions, attachments and other additions to the Collateral, and all tools,
      parts and equipment used in connection with the Collateral.

    

    (h)
      All
      substitutes or replacements for any Collateral, all cash or non-cash proceeds,
      product, rents and profits of any Collateral, all income, benefits and property
      receivable on account of the Collateral, all rights under warranties,
      indemnities and insurance contracts, letters of credit, guaranties or other
      supporting obligations covering the Collateral, and any causes of action
      relating to the Collateral.

     

    
      
         

      

      
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    (i)
      All
      books and records pertaining to any Collateral, including but not limited to
      any
      computer-readable memory and any computer hardware or software necessary to
      process such memory ("Books and Records").

    

    2.
      THE
      INDEBTEDNESS. The Collateral secures and will secure all Indebtedness of the
      Pledgor and Technest Holdings, Inc., a Nevada corporation (the “Company”), to
      the Purchaser. "Indebtedness" means all debts, obligations or liabilities now
      or
      hereafter existing, absolute or contingent of the Pledgor and the Company to
      the
      Purchaser, whether voluntary or involuntary, whether due or not due, or whether
      incurred directly or indirectly or acquired by the Purchaser by assignment
      or
      otherwise, including, without limitation, the Termination Fee (as such term
      is
      defined in the Debenture referred to in the Securities Purchase Agreement
      referenced in Section 8(e) of this Agreement). 

    

    3.
      PLEDGOR'S COVENANTS. The Pledgor represents, covenants and warrants that unless
      compliance is waived by the Purchaser in writing:

    

    (a)
      The
      Pledgor will properly preserve the Collateral; defend the Collateral against
      any
      adverse claims and demands; and keep accurate Books and Records.

    

    (b)
      The
      Pledgor’s chief executive office is located in the state specified on the
      signature page hereof. In addition, the Pledgor is incorporated in or organized
      under the laws of the state specified on such signature page. The Pledgor shall
      give the Purchaser at least thirty (30) days notice before changing its chief
      executive office or state of incorporation or organization. The Pledgor will
      notify the Purchaser in writing prior to any change in the location of any
      Collateral, including the Books and Records.

    

    (c)
      The
      Pledgor will notify the Purchaser in writing prior to any change in the
      Pledgor's name, identity or business structure.

    

    (d)
      Except to the Purchaser and the security interest granted by Pledgor in the
      Collateral to (i) Silicon Valley Bank and (ii) the Persons named in the
      Subordinated Debt Subordination Agreements, or as Purchaser may hereafter agree,
      the Pledgor has not granted and will not grant any security interest in any
      of
      the Collateral, and will keep the Collateral free of all liens, claims, security
      interests and encumbrances of any kind or nature.

    

    (e)
      The
      Pledgor will promptly notify the Purchaser in writing of any event which
      materially and adversely affects the value of the Collateral, the ability of
      the
      Pledgor or the Purchaser to dispose of the Collateral, or the rights and
      remedies of the Purchaser in relation thereto, including, but not limited to,
      the levy of any legal process against any Collateral and the adoption of any
      marketing order, arrangement or procedure affecting the Collateral, whether
      governmental or otherwise.

     

    
      
         

      

      
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    (f)
      The
      Pledgor shall pay all costs reasonably necessary to preserve, defend, enforce
      and collect the Collateral, including but not limited to taxes, assessments,
      insurance premiums, repairs, rent, storage costs and expenses of sales, and
      any
      costs to perfect the Purchaser’s security interest (collectively, the
“Collateral Costs”). Without waiving the Pledgor's default for failure to make
      any such payment, the Purchaser at its option, upon notice to Pledgor, may
      pay
      any such Collateral Costs, and discharge encumbrances on the Collateral, and
      such Collateral Costs payments shall be a part of the Indebtedness and bear
      interest at the rate set out in the Indebtedness. The Pledgor agrees to
      reimburse the Purchaser on demand for any Collateral Costs so
      incurred.

    

    (g)
      Until
      the Purchaser exercises its rights to make collection, the Pledgor will
      diligently collect all Collateral.

    

    (h)
      If
      any Collateral is or becomes the subject of any registration certificate,
      certificate of deposit or negotiable document of title, including any warehouse
      receipt or bill of lading, the Pledgor shall immediately deliver such document
      to the Purchaser, together with any necessary endorsements.

    

    (i)
      The
      Pledgor will not sell, lease, agree to sell or lease, or otherwise dispose
      of
      any Collateral except with the prior written consent of the Purchaser; provided,
      however, that the Pledgor may sell inventory in the ordinary course of
      business.

    

    (j)
      The
      Pledgor will maintain and keep in force insurance covering the Collateral
      against fire and extended coverages, to the extent that any Collateral is of
      a
      type which can be so insured. Such insurance shall require losses to be paid
      on
      a replacement cost basis, be issued by insurance companies reasonably acceptable
      to the Purchaser and include a loss payable endorsement in favor of the
      Purchaser in a form acceptable to the Purchaser. Upon the request of the
      Purchaser, the Pledgor will deliver to the Purchaser a copy of each insurance
      policy, or, if permitted by the Purchaser, a certificate of insurance listing
      all insurance in force.

    

    (k)
      The
      Pledgor will not attach any Collateral to any real property or fixture in a
      manner which might cause such Collateral to become a part thereof unless the
      Pledgor first obtains the written consent of any owner, holder of any lien
      on
      the real property or fixture, or other person having an interest in such
      property to the removal by the Purchaser of the Collateral from such real
      property or fixture. Such written consent shall be in form and substance
      acceptable to the Purchaser and shall provide that the Purchaser has no
      liability to such owner, holder of any lien, or any other person.

     

    
      
         

      

      
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    (l)
      Exhibit A to this Agreement is a complete list of all Intellectual Property
      Rights of Pledgor throughout the world.
      To the
      extent required by the Purchaser in its discretion, the
      Pledgor
      will promptly notify the Purchaser of any acquisition (by adoption and use,
      purchase, license or otherwise) of any Intellectual Property Rights, throughout
      the world, which are granted or filed or acquired after the date hereof or
      which
      are not listed on the Exhibit.
      The
      Pledgor
      authorizes the Purchaser, without notice to the Pledgor, to modify this
      Agreement by amending the Exhibit to include any such Collateral.

    

    (m)
      The
      Pledgor will, at its expense, diligently prosecute all patent, trademark or
      service mark or copyright applications pending on or after the date hereof,
      will
      maintain in effect all Intellectual Property Rights, except for such rights
      that
      are being sold, donated or abandoned by the Pledgor pursuant to the terms of
      its
      intellectual property management program and consistent with the terms of the
      License Agreement.
      The
      Pledgor
      also will promptly make application on any patentable inventions, registerable
      but unregistered trademarks and service marks, and copyrightable but
      uncopyrighted works which are necessary for Pledgor’s business.
      The
      Pledgor
      will at its expense protect and defend all rights in the Collateral against
      any
      material claims and demands of all persons other than the Purchaser and will,
      at
      its expense, enforce all rights in the Collateral against any and all infringers
      of the Collateral where such infringement would materially impair the value
      or
      use of the Collateral to the Pledgor or the Purchaser.
      The
      foregoing obligations of Pledgor with respect to prosecuting and defending
      Intellectual Property Rights that are subject to the License Agreement shall
      apply to Pledgor only if Markland has failed or refused to perform such
      obligations in accordance with the terms of the License Agreement.
      The
      Pledgor
      will not license or transfer any of the Collateral, except for such licenses
      as
      are customary in the ordinary course of the Pledgor's business, the license
      provided by the License Agreement or except with the Purchaser's prior written
      consent.

    

    4.
      ADDITIONAL OPTIONAL REQUIREMENTS.
      The
      Pledgor
      agrees that the Purchaser may at its option at any time, upon reasonable prior
      notice to Pledgor, whether or not the Pledgor is in default:

    

    (a)
      Require the Pledgor to deliver to the Purchaser (i) copies of or extracts from
      the Books and Records, and (ii) information on any contracts or other matters
      materially affecting the Collateral.

    

    (b)
      Examine, during normal business hours, the Collateral, including the Books
      and
      Records, and make copies of or extracts from the Books and Records, and for
      such
      purposes enter at any reasonable time upon the property where any Collateral
      or
      any Books and Records are located.

    

    (c)
      To
      the extent necessary to perfect Purchaser’s security interest therein, require
      the Pledgor to deliver to the Purchaser any instruments, chattel paper or
      letters of credit which are part of the Collateral, and to assign to the
      Purchaser the proceeds of any such letters of credit.

     

    
      
         

      

      
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    (d)
      To
      the extent necessary to perfect Purchaser’s security interest therein, notify
      any buyers of the Collateral, or any other Persons, of the Purchaser's interest
      in the Collateral.

    

    5.
      DEFAULTS. Any one or more of the following shall be a default
      hereunder:

    

    (a)
      Any
      Event of Default occurs under the Debenture.

    

    (b)
      The
      Purchaser fails to have a valid lien on or security interest in the Collateral
      (subject only to the prior lien of Silicon Valley Bank in the
      Collateral).

    

    6.
      PURCHASER'S REMEDIES AFTER DEFAULT. In the event of any default, the Purchaser
      may do any one or more of the following:

    

    (a)
      Declare any Indebtedness immediately due and payable, without notice or
      demand.

    

    (b)
      Enforce
      the security interest given hereunder pursuant to the Uniform Commercial Code
      and any other applicable law.

    

    (c)
      Require the Pledgor to obtain the Purchaser's prior written consent to any
      sale,
      lease, agreement to sell or lease, or other disposition of any Collateral
      consisting of inventory.

    

    (d)
      Require the Pledgor to segregate all collections and proceeds of the Collateral
      so that they are capable of identification and deliver daily such collections
      and proceeds to the Purchaser in kind.

    

    (e)
      Require the Pledgor, to the extent not previously required, to direct all
      account debtors to forward all payments and proceeds of the Collateral to a
      post
      office box or account under the Purchaser's exclusive control.

    

    (f)
      Require the Pledgor to assemble the Collateral, including the Books and Records,
      and make them available to the Purchaser at a place designated by the
      Purchaser.

    

    (g)
      Enter
      upon the property where any Collateral, including any Books and Records, are
      located and take possession of such Collateral and such Books and Records,
      and
      use such property (including any buildings and facilities) and any of the
      Pledgor's equipment, if the Purchaser deems such use necessary or advisable
      in
      order to take possession of, hold, preserve, process, assemble, prepare for
      sale
      or lease, market for sale or lease, sell or lease, or otherwise dispose of,
      any
      Collateral.

     

    
      
         

      

      
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    (h)
      Demand and collect any payments on and proceeds of the Collateral. In connection
      therewith, the Pledgor irrevocably authorizes the Purchaser to endorse or sign
      the Pledgor's name on all checks, drafts, collections, receipts and other
      documents, and to take possession of and open the mail addressed to the Pledgor
      and remove therefrom any payments and proceeds of the Collateral.

    

    (i)
      Grant
      extensions and compromise or settle claims with respect to the Collateral for
      less than face value, all without prior notice to the Pledgor.

    

    (j)
      Use
      or transfer any of the Pledgor's rights and interests in any Intellectual
      Property Rights now owned or hereafter acquired by the Pledgor, if the Purchaser
      deems such use or transfer necessary or advisable in order to take possession
      of, hold, preserve, process, assemble, prepare for sale or lease, market for
      sale or lease, sell or lease, or otherwise dispose of, any
      Collateral.
      The
      Pledgor
      agrees that any such use or transfer shall be without any additional
      consideration to the Pledgor. 

    

    (k)
      Have
      a receiver appointed by any court of competent jurisdiction to take possession
      of the Collateral.
      The
      Pledgor
      hereby consents to the appointment of such a receiver and agrees not to oppose
      any such appointment.

    

    (l)
      Take
      such measures as the Purchaser may deem necessary or advisable to take
      possession of, hold, preserve, process, assemble, insure, prepare for sale
      or
      lease, market for sale or lease, sell or lease, or otherwise dispose of, any
      Collateral, and the Pledgor hereby irrevocably constitutes and appoints the
      Purchaser as the Pledgor's attorney-in-fact to perform all acts and execute
      all
      documents in connection therewith.

    

    (m)
      Exercise any other remedies available to the Purchaser at law or in
      equity.

    

    7.
      ENVIRONMENTAL MATTERS.

    

    (a)
      The
      Pledgor
      represents and warrants: (i) it is not in violation of any material health,
      safety, or environmental law or regulation regarding hazardous substances and
      (ii) it is not the subject of any claim, proceeding, notice, or other
      communication regarding hazardous substances. "Hazardous substances" means
      any
      substance, material or waste that is or becomes designated or regulated as
      "toxic," "hazardous," "pollutant," or "contaminant" or a similar designation
      or
      regulation under any current or future federal, state or local law (whether
      under common law, statute, regulation or otherwise) or judicial or
      administrative interpretation of such, including without limitation petroleum
      or
      natural gas.

     

    
      
         

      

      
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    (b)
      The
      Pledgor
      shall deliver to the Purchaser, promptly upon receipt, copies of all notices,
      orders, or other communications regarding (i) any enforcement action by any
      governmental authority relating to health, safety, the environment, or any
      hazardous substances with regard to the Pledgor's property, activities, or
      operations, or (ii) any claim against the Pledgor regarding hazardous
      substances.

    

    (c)
      The
      Purchaser and its agents and representatives will have the right at any
      reasonable time, after giving reasonable notice to the Pledgor, to enter and
      visit any locations where the Collateral is located for the purposes of
      observing the Collateral, taking and removing environmental samples, and
      conducting tests.
      The
      Pledgor shall reimburse the Purchaser on demand for the costs of any such
      environmental investigation and testing. The
      Purchaser will make reasonable efforts during any site visit, observation or
      testing conducted pursuant to this paragraph to avoid interfering with the
      Pledgor’s use of the Collateral.
      The
      Purchaser is under no duty to observe the Collateral or to conduct tests, and
      any such acts by the Purchaser will be solely for the purposes of protecting
      the
      Purchaser's security and preserving the Purchaser's rights under this Agreement.
      No site visit, observation or testing or any report or findings made as a result
      thereof (“Environmental Report”) will (i) result in a waiver of any default of
      the Pledgor; (ii) impose any liability on the Purchaser; or (iii) be a
      representation or warranty of any kind regarding the Collateral (including
      its
      condition or value or compliance with any laws) or the Environmental Report
      (including its accuracy or completeness). In the event the Purchaser has a
      duty
      or obligation under applicable laws, regulations or other requirements to
      disclose an Environmental Report to the Pledgor or any other party, the Pledgor
      authorizes the Purchaser to make such a disclosure.
      The
      Purchaser may also disclose an Environmental Report to any regulatory authority,
      and to any other parties as necessary or appropriate in the Purchaser’s
      judgment. The
      Pledgor
      further understands and agrees that any Environmental Report or other
      information regarding a site visit, observation or testing that is disclosed
      to
      the Pledgor by the Purchaser or its agents and representatives is to be
      evaluated (including any reporting or other disclosure obligations of the
      Pledgor) by the Pledgor without advice or assistance from the
      Purchaser.

    

    (d)
      The
      Pledgor
      will indemnify and hold harmless the Purchaser from any loss or liability the
      Purchaser incurs in connection with or as a result of this Agreement, which
      directly or indirectly arises out of the use, generation, manufacture,
      production, storage, release, threatened release, discharge, disposal or
      presence of a hazardous substance. This indemnity will apply whether the
      hazardous substance is on, under or about the Pledgor's property or operations
      or property leased to the Pledgor. The indemnity includes but is not limited
      to
      attorneys' fees (including the reasonable estimate of the allocated cost of
      in-house counsel and staff). The indemnity extends to the Purchaser, its
      affiliates and all of their directors, officers, employees, agents, successors,
      attorneys and assigns.

     

    
      
         

      

      
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    8.
      MISCELLANEOUS.

    

    (a)
      Any
      waiver, express or implied, of any provision hereunder and any delay or failure
      by the Purchaser to enforce any provision shall not preclude the Purchaser
      from
      enforcing any such provision thereafter.

    

    (b)
      The
      Pledgor
      shall, at the request of the Purchaser, execute such other agreements,
      documents, instruments, or financing statements in connection with this
      Agreement as the Purchaser may reasonably deem necessary.

    

    (c)
      This
      Agreement shall be governed by and construed according to the laws of the State
      of New York, to the jurisdiction of which the parties hereto
      submit.

    

    (d)
      All
      rights and remedies herein provided are cumulative and not exclusive of any
      rights or remedies otherwise provided by law. Any single or partial exercise
      of
      any right or remedy shall not preclude the further exercise thereof or the
      exercise of any other right or remedy.

    

    (e)
      All
      terms not defined herein are used as set forth in the Uniform Commercial Code
      and capitalized terms used herein without definition have the meanings set
      forth
      in the Securities Purchase Agreement, dated the date hereof, between the Company
      and Purchaser.

    

    (f)
      In the
      event of any action by the Purchaser to enforce this Agreement or to protect
      the
      security interest of the Purchaser in the Collateral, or to take possession
      of,
      hold, preserve, process, assemble, insure, prepare for sale or lease, market
      for
      sale or lease, sell or lease, or otherwise dispose of, any Collateral, the
      Pledgor agrees to pay immediately the costs and expenses thereof, together
      with
      reasonable attorney's fees and allocated costs for in-house legal services
      to
      the extent permitted by law.

    

    (g)
      In
      the event the Purchaser seeks to take possession of any or all of the Collateral
      by judicial process, the Pledgor hereby irrevocably waives any bonds and any
      surety or security relating thereto that may be required by applicable law
      as an
      incident to such possession, and waives any demand for possession prior to
      the
      commencement of any such suit or action.

    

    (h)
      The
      Purchaser's rights hereunder shall inure to the benefit of its successors and
      assigns. In the event of any assignment or transfer by the Purchaser of any
      of
      the Indebtedness or its security interest in the Collateral, the Purchaser
      thereafter shall be fully discharged from any responsibility with respect to
      the
      Collateral so assigned or transferred, but the Purchaser shall retain all rights
      and powers hereby given with respect to any of the Indebtedness or the
      Collateral not so assigned or transferred. All representations, warranties
      and
      agreements of the Pledgor shall be binding upon the successors and assigns
      of
      the Pledgor.

    

    (i)
      The
      Pledgor agrees that the Collateral may be sold as provided for in this Agreement
      and expressly waives any rights of notice of sale, advertisement procedures,
      or
      related provisions granted under applicable law, including the New York Lien
      Law.

    
      
         

         

      

      
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    The
      parties executed this Agreement as of May 31, 2007.

    

      

      
        	 	 
	 	
                SHELTER
                  ISLAND OPPORTUNITY FUND, LLC

              
	 	
                By:
                  Shelter Island GP, LLC, its Manager

              
	 	 
	 	 
	 	
                By:
                  /s/ Randall P. Stern 

              
	 	
                Title:
                  President

              
	 	 
	 	
                Address
                  for Notices:

              
	 	
                One
                  East 52nd
                  Street

              
	 	
                New
                  York, New York 10022

              
	 	 
	 	
                Attention:
                  Randall P. Stern

              
	 	 
	 	
                GENEX
                  TECHNOLOGIES INCORPORATED 

              
	 	 
	 	
                By:/s/Gino
                  M. Pereira

              
	 	
                Title:
                  Chief Financial Officer

              
	 	 
	 	 
	 	
                Pledgor's
                  Location:

              
	 	
                10411
                  Motor City Drive,

              
	
                 

              	
                Suite
                  650

              
	 	
                Bethesda,
                  Maryland 20817

              
	 	
                Pledgor’s
                  state of

              
	
                 

              	
                incorporation:
                  Maryland

              

      

      

    

    
      
         

         

      

      
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    EXHIBIT
      A

    Intellectual
      Property

    

     

     

    10Guaranty

    Exhibit
      10.6

    

    

    BORROWER:
      Technest Holdings, Inc.

    

    GUARANTOR:
      E-OIR Technologies, Inc.

    

     

    

    GUARANTY

    

    

    

    To: Shelter
      Island Opportunity Fund, LLC

    

    1.
      The
      Guaranty.
      For
      valuable consideration, the undersigned ("Guarantor") hereby unconditionally
      guarantees and promises to pay on demand to Shelter Island Opportunity Fund,
      LLC, its successors and assigns (collectively, "Purchaser"), or order, in lawful
      money of the United States, any and all Indebtedness of Technest Holdings,
      Inc.,
      a Nevada corporation ("Borrower"), to Purchaser when due, whether at stated
      maturity, upon acceleration or otherwise, and at all times thereafter. The
      liability of Guarantor under this Guaranty includes, without limitation,
      liability for all interest, fees, indemnities (including, without limitation,
      hazardous waste indemnities), and other costs and expenses relating to or
      arising out of the Indebtedness. The liability of Guarantor is continuing and
      relates to any Indebtedness, including that arising under successive
      transactions which shall either continue the Indebtedness or from time to time
      renew it after it has been satisfied. 

     

    2.
      Definitions.

     

    (a)
      "Borrower" shall mean the entity listed above.

    

    (b)
      "Guarantor" shall mean the entity signing this Guaranty.

    

    (c)
      "Indebtedness" shall mean any and all debts, liabilities, and obligations of
      Borrower to Purchaser, now or hereafter existing, including, without limitation,
      those arising under the Securities Purchase Agreement, dated the date hereof
      (the “Securities Purchase Agreement”), between the Borrower and Purchaser, and
      the $1,650,000 Secured Original Issue Discount Debenture issued by Borrower
      to
      Purchaser thereunder (the “Debenture”), whether due or not due, absolute or
      contingent, liquidated or unliquidated, determined or undetermined, held or
      to
      be held by Purchaser for its own account or as agent for another or others,
      whether Borrower may be liable individually or jointly with others, whether
      recovery upon such debts, liabilities, and obligations may be or hereafter
      become barred by any statute of limitations, and whether such debts,
      liabilities, and obligations may be or hereafter become otherwise unenforceable,
      and includes without limitation, any and all obligations of Borrower to
      Purchaser for reasonable attorneys' fees and all other costs and expenses
      incurred by Purchaser in the collection or enforcement of any debts,
      liabilities, and obligations of Borrower to Purchaser.

     

    
      
         

      

      
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    3.
      Obligations
      Independent.
      The
      obligations hereunder are independent of the obligations of Borrower or any
      other guarantor, and a separate action or actions may be brought and prosecuted
      against Guarantor whether an action is brought against Borrower or any other
      guarantor or whether Borrower or any other guarantor be joined in any such
      action or actions. 

    

    4.
      Rights
      of Purchaser.
      Guarantor authorizes Purchaser, without notice or demand and without affecting
      its liability hereunder, from time to time in any manner authorized or permitted
      by the Transaction Documents (as such term is defined in the Securities Purchase
      Agreement) to:

    

    (a)
      renew, compromise, extend, accelerate, or otherwise change the time for payment,
      or otherwise change the terms, of the Indebtedness or any part thereof,
      including increase or decrease of the rate of interest thereon, or otherwise
      change the terms of any Transaction Document (as such term is defined in the
      Securities Purchase Agreement);

    

    (b)
      receive and hold security for the payment of this Guaranty or any Indebtedness
      and exchange, enforce, waive, release, fail to perfect, sell, or otherwise
      dispose of any such security;

    

    (c)
      apply
      such security and direct the order or manner of sale thereof as Purchaser in
      its
      discretion may determine; and

    

    (d)
      release or substitute any guarantor or any one or more of any endorsers or
      other
      guarantor of any of the Indebtedness. 

    

    5.
      Guaranty
      to be Absolute.
      Guarantor agrees that Guarantor shall not be released hereunder by or because
      of
      the Purchaser taking, or failure to take, any action that might in any manner
      or
      to any extent vary the risks of Guarantor under this Guaranty in any manner
      or
      to any extent permitted by the Transaction Documents or that, but for this
      paragraph, might discharge or otherwise reduce, limit, or modify Guarantor's
      obligations under this Guaranty. Guarantor waives and surrenders any defense
      to
      any liability under this Guaranty based upon any such action, including but
      not
      limited to any action of Purchaser described in the immediately preceding
      paragraph of this Guaranty. 

    

    6.
      Guarantor's
      Waivers of Certain Rights and Certain Defenses.
      Guarantor waives:

    

    (a)
      any
      right to require Purchaser to proceed against Borrower or any other guarantor
      of
      the Indebtedness, proceed against or exhaust any security for the Indebtedness,
      or pursue any other remedy in Purchaser's power whatsoever;

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    
 

    (b)
      any
      defense arising by reason of any disability or other defense of Borrower, or
      the
      cessation from any cause whatsoever of the liability of Borrower;

    

    (c)
      any
      defense based on any claim that Guarantor’s obligations exceed or are more
      burdensome than those of Borrower; and

    

    (d)
      the
      benefit of any statute of limitations affecting Guarantor's liability hereunder.
      

    

    No
      provision or waiver in this Guaranty shall be construed as limiting the
      generality of any other waiver contained in this Guaranty.

    

    7.
      Waiver
      of Subrogation.
      Until
      the Indebtedness has been paid in full, Guarantor waives to the extent permitted
      by applicable law any right of subrogation, reimbursement, indemnification,
      and
      contribution (contractual, statutory, or otherwise) including, without
      limitation, any claim or right of subrogation under the Bankruptcy Code (Title
      11, United States Code) or any successor statute, arising from the existence
      or
      performance of this Guaranty, and Guarantor waives to the extent permitted
      by
      applicable law any
      right
      to enforce any remedy that Purchaser now has or may hereafter have against
      Borrower, and waives any benefit of, and any right to participate in, any
      security now or hereafter held by Purchaser. 

    

    8.
      Waiver
      of Notices.
      Guarantor waives all presentments, demands for performance, notices of
      nonperformance, protests, notices of protest, notices of dishonor, notices
      of
      intent to accelerate, notices of acceleration, notices of any suit or any other
      action against Borrower or any other person, any other notices to any party
      liable on any Transaction Document (including Guarantor), notices of acceptance
      of this Guaranty, notices of the existence, creation, or incurring of new or
      additional Indebtedness to which this Guaranty applies or any other indebtedness
      of Borrower to Purchaser, and
      notices of any fact that might increase Guarantor’s risk.

    

    9.
      Subordination.
      Any
      obligations of Borrower to Guarantor, now or hereafter existing, including
      but
      not limited to any obligations to Guarantor as subrogee of Purchaser or
      resulting from Guarantor’s performance under this Guaranty, are hereby
      subordinated to the Indebtedness (other than reasonable obligations of the
      Borrower to Guarantor for the payment of (i) services actually rendered or
      goods
      actually delivered by Guarantor and (ii) expenses paid by Guarantor on behalf
      of
      Borrower in the ordinary course of business related to Borrower’s reporting
      obligations as a public company). In addition to Guarantor's waiver of any
      right
      of subrogation as set forth in this Guaranty with respect to any obligations
      of
      Borrower to Guarantor as subrogee of Purchaser, Guarantor agrees that, if
      Purchaser so requests, Guarantor shall not demand, take, or receive from
      Borrower, by setoff or in any other manner, payment of any other obligations
      of
      Borrower to Guarantor (other than reasonable obligations of the Company to
      Guarantor for the payment of (i) services actually rendered or goods actually
      delivered by Guarantor and (ii) expenses paid by Guarantor on behalf of Borrower
      in the ordinary course of business related to Borrower’s reporting obligations
      as a public company) until the Indebtedness has been paid in full. If any
      payments are received by Guarantor in violation of such waiver or agreement,
      such payments shall be received by Guarantor as trustee for Purchaser and shall
      be paid over to Purchaser on account of the Indebtedness, but without reducing
      or affecting in any manner the liability of Guarantor under the other provisions
      of this Guaranty. Any security interest, lien, or other encumbrance that
      Guarantor may now or hereafter have on any property of Borrower is hereby
      subordinated to any security interest, lien, or other encumbrance that Purchaser
      may have on any such property.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    
 

    10.
      Stay
      of Acceleration.
      In the
      event that acceleration of the time for payment of any of the Indebtedness
      is
      stayed upon the insolvency, bankruptcy, or reorganization of Borrower or
      otherwise, all such Indebtedness guaranteed by Guarantor shall nonetheless
      be
      payable by Guarantor immediately if requested by Purchaser if such payment
      by
      Guarantor is not stayed as a result of such insolvency, bankruptcy or
      reorganization.

    

    11.
      Information
      Relating to Borrower.
      Guarantor acknowledges and agrees that it shall have the sole responsibility
      for, and have adequate means of, obtaining from Borrower such information
      concerning Borrower's financial condition or business operations as Guarantor
      may require, and that Purchaser has no duty, and Guarantor is not relying on
      Purchaser, at any time to disclose to Guarantor any information relating to
      the
      business operations or financial condition of Borrower.

    

    12.
      Remedies.
      If
      Guarantor fails to fulfill its duty to pay all Indebtedness guaranteed
      hereunder, Purchaser shall have all of the remedies of a creditor and, to the
      extent applicable, of a secured party, under all applicable law. Without
      limiting the foregoing, Purchaser may, at its option and without notice or
      demand:

    

    (a)
      declare any Indebtedness due and payable at once;

    

    (b)
      take
      possession of any collateral pledged by Borrower, wherever located, and sell,
      resell, assign, transfer, and deliver all or any part of the collateral at
      any
      public or private sale or otherwise dispose of any or all of the collateral
      in
      its then condition, for cash or on credit or for future delivery, and in
      connection therewith Purchaser may impose reasonable conditions upon any such
      sale. Further, Purchaser, unless prohibited by law the provisions of which
      cannot be waived, may purchase all or any part of the collateral to be sold,
      free from and discharged of all trusts, claims, rights of redemption and
      equities of Borrower or Guarantor whatsoever. Guarantor acknowledges and agrees
      that the sale of any collateral through any nationally recognized broker-dealer,
      investment bank, or any other method common in the securities industry shall
      be
      deemed a commercially reasonable sale under the Uniform Commercial Code or
      any
      other equivalent statute or federal law, and expressly waive notice thereof
      except as provided herein; and 

    

    (c)
      set
      off against any or all liabilities of Guarantor all money owed by Purchaser
      or
      any of its agents or affiliates in any capacity to Guarantor, whether or not
      due, and also set off against all other liabilities of Guarantor to Purchaser
      all money owed by Purchaser in any capacity to Guarantor. If exercised by
      Purchaser, Purchaser shall be deemed to have exercised such right of setoff
      and
      to have made a charge against any such money immediately upon the occurrence
      of
      such default although made or entered on the books subsequent thereto.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    
 

    13.
      Notices.
      All
      notices required under this Guaranty shall be personally delivered or sent
      by
      first class mail, postage prepaid, or by overnight courier, to the addresses
      on
      the signature page of this Guaranty, or sent by facsimile to the fax numbers
      listed on the signature page, or to such other addresses as Purchaser and
      Guarantor may specify from time to time in writing. Notices sent by (a) first
      class mail shall be deemed delivered on the earlier of actual receipt or on
      the
      fourth business day after deposit in the U.S. mail, postage prepaid,
      (b) overnight courier shall be deemed delivered on the next business day,
      and (c) telecopy shall be deemed delivered when transmitted.

    

    14.
      Successors
      and Assigns.
      This
      Guaranty (a) binds Guarantor and Guarantor's successors, and assigns, provided
      that Guarantor may not assign its rights or obligations under this Guaranty
      without the prior written consent of Purchaser, and (b) inures to the benefit
      of
      Purchaser and Purchaser's successors, and assigns. Purchaser may, without notice
      to Guarantor and without affecting Guarantor' s obligations hereunder, sell,
      assign, grant participations in, or otherwise transfer to any other person,
      firm, or corporation the Indebtedness and this Guaranty, in whole or in part.
      Guarantor agrees that Purchaser may disclose to any assignee or purchaser,
      or
      any prospective assignee or purchaser, of all or part of the Indebtedness any
      and all information in Purchaser's possession concerning Guarantor, this
      Guaranty, and any security for this Guaranty.

    

    15.
      Amendments,
      Waivers, and Severability.
      No
      provision of this Guaranty may be amended or waived except in writing. No
      failure by Purchaser to exercise, and no delay in exercising, any of its rights,
      remedies, or powers shall operate as a waiver thereof, and no single or partial
      exercise of any such right, remedy, or power shall preclude any other or further
      exercise thereof or the exercise of any other right, remedy, or power. The
      unenforceability or invalidity of any provision of this Guaranty shall not
      affect the enforceability or validity of any other provision of this
      Guaranty.

    

    16.
      Costs
      and Expenses.
      Guarantor agrees to pay all reasonable attorneys' fees, and all other costs
      and
      expenses that may be incurred by Purchaser (a) in the enforcement of this
      Guaranty or (b) in the preservation, protection, or enforcement of any rights
      of
      Purchaser in any case commenced by or against Guarantor or Borrower under the
      Bankruptcy Code (Title 11, United States Code) or any similar or successor
      statute. 

    

    17.
      Governing
      Law and Jurisdiction.
      This
      Guaranty shall be governed by and construed and enforced in accordance with
      federal law and the law of the State of New York.  Jurisdiction
      and venue for any action or proceeding to enforce this Guaranty shall be the
      forum appropriate for such action or proceeding against Borrower, to which
      jurisdiction Guarantor irrevocably submit and to which venue Guarantor waives
      to
      the fullest extent permitted by law any defense asserting an inconvenient forum
      in connection therewith. Service of process by Purchaser in connection with
      such
      action or proceeding shall be binding on Guarantor if sent to Guarantor by
      registered or certified mail at its address specified below.

    
      
         

         

      

      
        -5-

        
          

        

      

      
         

      

    

    

    

    18.
      FINAL
      AGREEMENT.
      BY
      SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THIS DOCUMENT
      REPRESENTS THE FINAL AGREEMENT BETWEEN PARTIES WITH RESPECT TO THE SUBJECT
      MATTER HEREOF, (B) THIS DOCUMENT SUPERSEDES ANY COMMITMENT LETTER, TERM SHEET,
      OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS RELATING TO THE SUBJECT MATTER
      HEREOF, UNLESS SUCH COMMITMENT LETTER, TERM SHEET, OR OTHER WRITTEN OUTLINE
      OF
      TERMS AND CONDITIONS EXPRESSLY PROVIDES TO THE CONTRARY, (C) THERE ARE NO
      UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (D) THIS DOCUMENT MAY NOT
      BE
      CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
      AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES. 

    

    Executed
      this May 31, 2007

    

    Guarantor:

    E-OIR
      TECHNOLOGIES, INC.

    

    

    

    By:
      /s/ Gino M. Pereira

    Name:
      Gino M. Pereira

    Title:
      Chief Financial Officer

    

    

      
        	
                Address
                  for notices to Purchaser:

              	 	
                Address
                  for notices to Guarantor:

              
	
                One
                  East 52nd
                  Street, New York, NY 10022

              	 	
                10411
                  Motor City Drive, Suite 650, 

              
	 	 	
                Bethesda,
                  Maryland 20817

              

      

    

     

    

    

    -6-

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