Document:

Exhibit 10.2

Exhibit 10.2

THIS NOTE AND THE SECURITIES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, (THE “ACT”) OR ANY STATE SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.

NON-NEGOTIABLE

PROMISSORY NOTE

			
	 	 	 
	$2,500,000.00
	 	                    , 2011

FOR VALUE RECEIVED, the undersigned PERMA-FIX ENVIRONMENTAL SERVICES, INC., a Delaware
corporation (“PESI”), promises to pay to the order of HOMELAND SECURITY CAPITAL CORPORATION, a
Delaware corporation (“Homeland”), having a notice address at 1005 North Glebe Road, Suite 550,
Arlington, Virginia 22201, or at such other place as may be designated in writing by Homeland, the
principal sum of TWO MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($2,500,000.00), together
with interest thereon at the annual interest rate hereinafter stated, payable as set forth below.

Unless otherwise defined herein, all terms defined or referenced in that certain Stock
Purchase Agreement of even date herewith (the “Purchase Agreement”) between PESI, Homeland and
Safety & Ecology Holdings Corporation, will have the same meanings herein as therein.

1. Until paid in full in accordance with the terms hereof, interest on this Note shall accrue
from the date hereof at the Interest Rate (calculated on the basis of a 360-day year consisting of
twelve 30 day months). For purposes of this Note, the Interest Rate shall mean six percent (6.0%)
per annum, except upon the occurrence of an Event of Default (as defined herein), in which case,
during the period from the date of such Event of Default until the earlier of (i) the date such
Event of Default is cured or (ii) the date on which such payment is made as set forth herein, the
Interest Rate shall mean twelve percent (12.0%) per annum. Notwithstanding any other provision of
this Note, Homeland does not intend to charge, and PESI shall not be required to pay, any interest
or other fees or charges in excess of the maximum interest permitted by applicable law; any
payments in excess of such maximum shall be refunded to PESI or credited to reduce principal
hereunder. The principal and accrued interest due thereon shall be payable over a three (3) year
period in thirty-six (36) monthly installments of principal and interest, with the first monthly
installment of $76,054.84 in principal and interest due and payable on                     , 2011, and a like
installment due and payable on the 15th day of each month thereafter for 34 months, and
the remaining unpaid principal balance of this Note and all accrued interest thereon due and
payable on                     , 2014 (the “Maturity Date”).

 

 

 

2. This Note is executed and delivered in connection with, and subject to the terms and
conditions contained in, the Purchase Agreement. It is specifically agreed that the entire
principal amount of this Note has been advanced as of the date hereof, and that no additional
advances will be made hereunder. Subject to the provisions of Section 4, all payments will first
be applied to the payment of accrued interest, and the remainder will be applied in reduction of
the principal balance hereof. Payments of principal and interest on this Note shall be made by
wire transfer of immediately available funds to an account designated by Homeland in Exhibit A
attached hereto, which may be changed by Homeland in writing from time to time.

3. PESI will have the right to prepay this Note in whole or in part at any time and from time
to time without premium or penalty, but with interest accrued to the date of prepayment.

4. PESI agrees that, upon an occurrence of an Event of Default (as defined below), and, as a
result, this Note is placed in the hands of an attorney for collection or to defend or enforce any
of Homeland’s rights hereunder, PESI will pay, subject to the terms hereof, Homeland’s reasonable
attorneys’ fees and expenses and all other reasonable expenses incurred by Homeland in connection
therewith, provided that Homeland is represented by a single attorney or law firm, as determined by
a court of competent jurisdiction or as agreed to by PESI and the Parent (the “Expenses”).

5. The payment and performance of this Note is unsecured. This Note is non-negotiable, and
neither this Note nor the right to receive the payments due and to become due under this Note may
be sold, transferred or assigned by Homeland without the prior written consent of PESI which may be
withheld by PESI in PESI’s sole discretion. This Note is subject to PESI’s right to offset
payments hereunder as a result of any Claim that PESI or PESI Indemnitees may have against Homeland
in accordance with Article VIII of the Purchase Agreement, pursuant to Section 9.3 of the Purchase
Agreement.

6. Upon the occurrence of an Event of Default (as defined below), Homeland will have the
option to declare this Note in default and to be immediately due and payable, whereupon this Note
shall become forthwith due and payable upon such written demand received by PESI (“Written Demand
Notice”), and Homeland will thereafter have the right, at its option and in its sole discretion, by
written election delivered to PESI to receive in full and complete satisfaction of all PESI’s
obligations under this Note, either:

	 	a.	 	the cash amount equal to the sum of the unpaid principal
balance owing under this Note and all accrued and unpaid interest thereon, plus
the Expenses (the “Payoff Amount”);

	 	b.	 	the number of fully paid and non-assessable shares of the
common stock, par value $.001 per share, of PESI (the “PESI Common Stock”)
equal to the quotient determined by dividing the Payoff Amount by the average
of the closing prices per share of the PESI Common Stock as reported by the
primary national securities exchange or automatic quotation system on which
PESI Common Stock is traded during the 30 consecutive trading day period ending
on the trading day immediately prior to receipt by PESI of the Written Demand
Notice delivered in accordance with Section 9.4 of
the Purchase Agreement (the “Payoff Shares”); provided, however, that the
number of Payoff Shares plus the number of shares of PESI Common Stock
issued or to be issued to the Management Investors pursuant to Section 5.21
of the Purchase Agreement shall not exceed 19.9% of the voting power of all
of PESI voting securities issued and outstanding as of the date of the
Purchase Agreement; or

 

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	 	c.	 	any combination of the Payoff Amount or the Payoff Shares,
provided, however, that the aggregate amount of the Payoff Amount and the
Payoff Shares shall not exceed the unpaid principal balance and accrued
interest due under this Note as of receipt by PESI of the Written Demand
Notice, with the number of Payoff Shares to be determined by dividing the
amount of the Payoff Amount which is to be paid in Payoff Shares by the average
of the closing prices per share of the PESI Common Stock as reported by the
primary national securities exchange or automatic quotation system on which
PESI Common Stock is traded during the thirty (30) consecutive trading day
period ending on the trading day immediately prior to receipt by PESI of the
Written Demand Notice and Homeland’s written election to receive a portion of
the Payoff Amount in Payoff Shares, with such notice to specify the amount of
the Payoff Amount to be paid in Payoff Shares.

7. If Homeland elects to receive Payoff Shares, (i) the issuance of the Payoff Shares will be
subject to Homeland providing in writing to PESI within three Business Days prior to the issuance
of the Payoff Shares, substantially the same representations, warranties and covenants as set forth
in Exhibit C attached to the Purchase Agreement and (ii) Homeland shall not, at anytime or for any
reason, assign, transfer or convey the Payoff Shares or any portion thereof, if issued by PESI to
Homeland, to Yorkville. If issued, the Payoff Shares will not be registered, and Homeland will not
be entitled to registration rights with respect to the Payoff Shares, except for those certain
Piggyback Registration Rights set forth in the Registration Rights Agreement attached as Exhibit D
to the Purchase Agreement, which PESI and Homeland shall execute immediately prior to the issuance
of the Payoff Shares. The Payoff Shares issued to Homeland pursuant to this Note, if any, will be
restricted securities and subject to the restrictions, qualifications, and limitations set forth in
the Purchase Agreement, Exhibits C and D of the Purchase Agreement, and this Note, including
without limitation, compliance with federal and state securities laws and the limitations on the
maximum number of Payoff Shares to be issued to Homeland set forth in Section 6(b) hereof.

8. Events of Default. Notwithstanding any provision of this Note to the contrary,
subject to the terms hereof and the Purchase Agreement, the outstanding principal and accrued
interest under this Note shall become due and payable, without notice or demand, upon the happening
of any one of the following specified events (each, an “Event of Default”):

	 	a.	 	PESI fails to pay any installment of principal and interest due
hereunder within 30 days of when due; or

 

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	 	b.	 	Any legal proceeding is commenced by or against PESI seeking
reorganization, arrangement, adjustment, liquidation, dissolution or
composition of its structure or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or seeking
appointment of a receiver, trustee, custodian or other similar official for
PESI or for all or substantially all of PESI’s property, or shall take any
such action to authorize any of the foregoing, and such case or proceeding
(x) results in the entry of an order for relief against it which is not
stayed within twenty (20) Business Days after the entry thereof or (y) is
not dismissed within sixty (60) days of commencement; or

	 	c.	 	Change in Control (as defined below) of PESI. For the purposes
of this Note, a “Change in Control” shall mean any of the following:

	 	i.	 	consummation of a transaction in which
any person, entity, corporation, or group (as such terms are defined
in sections 13 (d)(3) and 14 (d)(2) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) (other than PESI, or a
profit sharing, employee ownership or other employee benefit plan
sponsored by PESI or any subsidiary of PESI) has purchased PESI’s
voting securities for cash, securities or other consideration
pursuant to a tender offer, or has become the “beneficial owner” (as
such term is defined in Rule 13d-3 under the Exchange Act (in one
transaction or a series of transactions), of securities of PESI
representing more than 50% of the total voting power of the then
outstanding securities of PESI ordinarily having the right to vote
in the election of directors; or

	 
	 	ii.	 	a change, without approval of at least a
majority of the Board of Directors then in office, of a majority of
PESI’s Board of Directors; or

	 
	 	iii.	 	consummation by PESI of PESI selling all
or substantially all of PESI’s assets to a purchaser which is not a
subsidiary of PESI; or

	 
	 	iv.	 	PESI shareholders’ approval of a plan of
dissolution or liquidation of PESI; or

	 
	 	v.	 	PESI’s consummation of a merger or
consolidation, in which PESI or a subsidiary of PESI is not the
surviving corporation, and immediately following such merger or
consolidation less than fifty percent (50%) of the surviving
corporation’s outstanding voting stock is held by persons who are
stockholders of PESI immediately prior to such merger or
consolidation.

9. All notices required or permitted hereunder shall be in writing and shall be deemed
effectively given if given in accordance with the notice provisions in the Purchase Agreement,
unless otherwise agreed to by the parties. In addition any notice otherwise required or permitted
hereunder, PESI shall give Homeland written notice not less than ten (10) days prior to the
consummation of any Change in Control.

 

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10. PESI hereby expressly waives presentment, demand, and protest, notice of demand, dishonor
and nonpayment of this Note, and all other notices or demands of any kind in connection with the
delivery, acceptance, performance, default or enforcement hereof, and hereby consents to any
delays, extensions of time, renewals, waivers or modifications that may be granted or consented to
by Homeland hereof with respect to the time of payment or any other provision hereof.

11. The rights and remedies of Homeland under this Note shall be cumulative. It is agreed
that no delay or omission to exercise any right, power or remedy accruing to Homeland upon any
breach or default of PESI under this Note shall impair any such right, power or remedy, nor shall
it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or
in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or thereafter occurring.

12. In the event any one or more of the provisions of this Note shall for any reason be held
to be invalid, illegal or unenforceable, in whole or in part or in any respect, or in the event
that any one or more of the provisions of this Note operate or would prospectively operate to
invalidate this Note, then and in any such event, such provision(s) only shall be deemed null and
void and shall not affect any other provision of this Note and the remaining provisions of this
Note shall remain operative and in full force and effect and in no way shall be affected,
prejudiced, or disturbed thereby.

13. This Note shall be governed by and construed and enforced in accordance with the laws of
The State of Delaware, without regard to its conflicts of laws provisions. The parties irrevocably
and unconditionally submit to the exclusive jurisdiction of the courts sitting in the State of
Delaware over any suit, action or proceeding arising out of or relating to this Note. The parties
irrevocably and unconditionally waive any objection to the laying of venue of any such suit, action
or proceeding brought in such court and any claim that any such suit, action or proceeding brought
in such court has been brought in an inconvenient forum. The parties agree that a final judgment
in any such suit, action or proceeding brought in such court shall be conclusive and binding upon
the parties and may be enforced in any other courts to whose jurisdiction other parties are or may
be subject, by suit upon such judgment.

14. Jury Trial Waiver. PESI HEREBY KNOWINGLY AND VOLUNTARILY IRREVOCABLY WAIVES TRIAL
BY JURY AND THE RIGHT THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND, ARISING UNDER OR OUT OF, OR
OTHERWISE RELATED TO, THIS NOTE. PESI FURTHER ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO
REVIEW THIS NOTE WITH ITS COUNSEL AND THAT IT ON ITS OWN HAS MADE THE DETERMINATION TO EXECUTE THIS
NOTE AFTER CONSIDERATION OF ALL OF THE TERMS OF THIS NOTE AND OF ALL OTHER FACTORS WHICH IT
CONSIDERS RELEVANT.

 

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IN WITNESS WHEREOF, PESI has executed this instrument effective the date first above written.

	 	 	 	 	 
	 	PERMA-FIX ENVIRONMENTAL SERVICES, INC.,
 a Delaware
corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

6Exhibit 10.3

Exhibit 10.3

EXCHANGE AGREEMENT

This Exchange Agreement (“Agreement”) is made as of this
 _____ 
day of August, 2011 by and among
Homeland Security Capital Corporation (“Parent”), the persons listed on Schedule A attached
hereto (each, a “Management Investor” and collectively, the “Management Investors”) and Chris
Leichtweis, solely in his capacity as representative of the Management Investors
(“Representative”).

RECITALS:

A. Pursuant to that certain Stock Purchase Agreement by and among Parent, Safety & Ecology
Holdings Corporation (the “Company”), and Perma-Fix Environmental Services, Inc. (“PESI”), dated as
of July 15, 2011 (the “Purchase Agreement”), Parent is selling all of its capital stock in the
Company to PESI (the “Sale”) in exchange for (i) PESI’s payment to Parent of $22,000,000 in cash
payable at closing (the “Initial Cash Consideration”), $2,000,000 of which will be held in escrow
to satisfy certain indemnification obligations of Parent pursuant to the Purchase Agreement (the
“Escrow Amount” and together with the Initial Cash Consideration, the “Cash Consideration”) and
(ii) PESI’s delivery to Parent of an unsecured promissory note in the aggregate principal amount of
$2,500,000 issued by PESI to Parent (the “Note”), each as more fully described therein.
Capitalized terms used herein but not otherwise defined shall have the meanings ascribed thereto in
the Purchase Agreement.

B. The Management Investors hold shares of Parent’s Series I Preferred Stock, par value $0.01
per share (the “Series I Preferred”), and certain warrants to purchase Parent’s common stock, par
value $0.001 per share (the “Warrants”), each as set forth on Exhibit A attached hereto.

C. As more fully set forth in the Purchase Agreement, Parent has agreed to transfer a portion
of the Initial Cash Consideration to the Management Investors in order to enable them to purchase
the number of shares of PESI’s common stock, par value $0.001 (“PESI Common Stock”), set forth on
Exhibit B attached hereto, pursuant to, and in accordance with, certain subscription
agreements to be entered into with PESI, in substantially the form attached as Exhibit _____ to the
Purchase Agreement (the “Subscription Agreements”).

D. In connection with the Sale, the Management Investors desire to cancel their shares of
Series I Preferred and Warrants and in exchange therefor, receive a portion of (i) the Initial Cash
Consideration, (ii) the Escrow Amount and (iii) the Note, and (iv) shares of PESI Common Stock, all
on the terms set forth herein (collectively, the “Exchange Consideration”).

THEREFORE, THE PARTIES AGREE AS FOLLOWS:

A. Cancellation of Series I Preferred. Each Management Investor hereby agrees that,
effective simultaneously with the closing of the Sale, each share of Series I Preferred and each
Warrant held by such Management Investor, as applicable, shall be cancelled and of no further force
or effect.

 

 

 

B. Exchange Consideration. Each Management Investor hereby agrees that in exchange
for the cancellation of such Management Investor’s Series I Preferred and Warrants, such Management
Investor will:

1. receive the number of shares of PESI Common Stock set forth opposite such Management
Investor’s name on Exhibit B in accordance with the terms of the Subscription Agreement (the
“Exchange Stock Consideration”);

2. be entitled, contemporaneously with the Closing, to receive a cash amount (the “Exchange
Cash Consideration”) equal to (i) $25,000 multiplied by (ii) the percentage set forth opposite such
Management Investor’s name on Exhibit A (such
Management Investor’s “Percentage Interest”), the total Exchange Cash Consideration payable to the Management Investors not to exceed in the aggregate $25,000;

3. be entitled to a portion of the proceeds of the Note, in an amount equal to such Management
Investor’s respective Percentage Interest of the Representative Proceeds (as defined in that
certain Instruction to Pay attached hereto as Exhibit C (the “Instruction to Pay”)) to be paid by
PESI to the Representative in accordance with the terms and conditions set forth in the Instruction
to Pay and the Note, and subject to reduction as described in Section 4 hereof (the “Exchange Note
Consideration”), the total Exchange Note Consideration payable to all such Management Investors not to exceed in the aggregate $100,000; and

4. be entitled, upon receipt by Parent of all or any portion of the Escrow Amount, to receive
a cash amount equal to (i) five percent (5%) of all or such portion of the Escrow Amount that is
released to Parent, multiplied by (ii) such Management Investor’s Percentage Interest (the
“Exchange Escrow Consideration”), the total Exchange Escrow Consideration payable to all such Management Investors not to exceed in the aggregate five percent (5%) of all or such portion of the Escrow Amount that is released to Parent.

C. Payment of Consideration.

1. Each Management Investor acknowledges that PESI will issue and deliver the Exchange Stock
Consideration to such Management Investor at Closing.

2. At Closing, Parent shall wire (or cause to be wired) the Exchange Cash Consideration to
Representative in accordance with the wire instructions provided in writing by Representative to
Parent at least one business day prior to Closing, to be distributed to the Management Investors in
the amounts set forth on Exhibit B attached hereto.

3. At Closing, Parent and the Representative shall execute the Instruction to Pay such that
the Management Investors will be entitled to the Exchange Note Consideration. Each Management
Investor acknowledges and agrees that with respect to the payment of the Exchange Note
Consideration, (i) the Exchange Note Consideration is payable only if Parent is paid by PESI in
accordance with the Note, (ii) upon certain Events of Default (as defined in the Note) under the
Note, Parent may elect to receive from PESI (A) Payoff Shares (as defined in the Note), (B) the
Payoff Amount (as defined in the Note) or (C) a combination of the Payoff Shares and Payoff Amount,
(y) any election by Parent to receive Payoff Shares, the Payoff Amount or any combination thereof
will be made in Parent’s sole discretion, and (iii) upon any such election to receive a combination
of the Payoff Shares and the Payoff Amount, such Management Investor will receive his or her
portion of the Exchange Note Consideration in the same proportion as Parent is receiving from
PESI. Upon receipt of the proper allocation of the Payoff Amount or Payoff Shares or any
combination thereof, each Management Investor agrees
that delivery of such Payoff Amount or Payoff Shares to the Management Investors will be the
full and final settlement of Parent’s obligations with respect to the Exchange Note Consideration.
Each Management Investor hereby acknowledges that Parent will only be able to transfer any Payoff
Shares in compliance with applicable state and federal securities laws, and Parent undertakes to
transfer such Payoff Shares promptly after such shares have either been registered under the
Securities Act of 1933, as amended, or the transfer of such shares is exempt therefrom.

 

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4. Each Management Investor acknowledges that PESI will deposit the Escrow Amount with the
Escrow Agent at Closing, to be distributed to Parent in accordance with the terms of the Escrow
Agreement and subject to reduction for certain indemnification obligations of Parent set forth in
the Purchase Agreement. Upon the release to Parent of all or any portion of the Escrow Amount in
accordance with the Escrow Agreement, Parent shall wire (or cause to be wired) the Exchange Escrow
Consideration to an account designated by the Representative for distribution to the Management
Investors as set forth on Exhibit B, subject to any reduction for outstanding claims or resolution
of any outstanding claims under the Escrow Agreement.

D. Indemnification; Offset.

1. The Management Investors acknowledge and agree that in the Purchase Agreement, Parent and
the Company have made certain representations and warranties to PESI regarding the Company and the
subsidiaries of the Company, and subject to the provisions contained therein, Parent has agreed to
indemnify PESI and others for certain indemnifiable claims. If Parent is required pursuant to the
Purchase Agreement to indemnify PESI, such indemnification obligations will reduce the Escrow
Amount and may reduce the amount payable under the Note and accordingly reduce the Exchange Escrow
Consideration and the Exchange Note Consideration, respectively. The Management Investors
acknowledge and agree that they are responsible, severally and not jointly, for up to five percent
of any indemnification claims that may be made against Parent under the Purchase Agreement and each
Management Investor is responsible for an amount of such indemnification claim up to his or her
Percentage Interest of five percent (5%) of the Exchange Escrow Consideration and the Exchange Note
Consideration. For illustrative purposes only, if Parent becomes subject to an indemnification
obligation of $1,000, the Management Investors in the aggregate will be responsible for five
percent (or $50) of such obligation, with each Management Investor responsible for his or her
Percentage Interest of $50.

2. The Management Investors acknowledge and agree that if Parent is required to indemnify PESI
pursuant to the Purchase Agreement for claims in excess of the Escrow Amount, PESI may offset
against its obligations to make payments under the Note, including payments of Exchange Note
Consideration. Any offset shall be made among Parent and the Management Investors such that the
Management Investors will be responsible for up to five percent (5%) of any amounts offset against
the Exchange Note Consideration and each Management Investor is responsible for an amount of such
offset up to his or her Percentage Interest of the Exchange Note Consideration. For illustrative
purposes only, if Parent becomes subject to an indemnification obligation of $1,000, and PESI seeks
to offset against the Note an amount equal to $1,000, the Management Investors in the aggregate
will be responsible for five
percent of such offset (or $50), with each Management Investor responsible for his or her
Percentage Interest of $50.

 

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3. Each Management Investor acknowledges that, pursuant to the terms of the Purchase
Agreement, Parent is obligated to cause certain of the Management Investors to purchase an
aggregate number of restricted shares of PESI Common Stock valued at not less than $900,000 nor
more than $1,000,000, as calculated on the basis of the per share price set forth in Section 5.21
of the Purchase Agreement. Each Management Investor agrees to purchase that number of shares of
PESI Common Stock set forth opposite its name on Exhibit B attached hereto pursuant to the terms
and conditions of the Subscription Agreement and to purchase such additional number of shares of
PESI Common Stock on a pro rata basis as may be required to permit Parent to fulfill its
obligations set forth in Section 5.21.

E. Representation and Warranty of Parent. Parent represents and warrants to
Representative and the Management Investors the following: (a) Parent has the requisite corporate
power and authority to enter into this Agreement and to consummate the transactions contemplated by
this Agreement, (b) this Agreement constitutes the legal, valid and binding obligation of Parent,
enforceable against it in accordance with its terms, except to the extent that such enforceability
may be affected by: (i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors; and (ii) rules of law governing specific performance, injunctive relief and
other equitable remedies, and (c) the execution and delivery of this Agreement has been duly
authorized by all necessary corporate action on the part of Parent.

F. Representations and Warranties of Representative and Management Investors.
Representative and each Management Investor hereby, severally and not jointly, represents and
warrants to Parent as follows:

1. He or she has the requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement.

2. This Agreement constitutes the legal, valid and binding obligation of him or her,
enforceable against him or her in accordance with its terms, except to the extent that such
enforceability may be affected by: (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors; and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.

3. Management Investor is the sole record and beneficial owner of the shares of Series I
Preferred and Warrants set forth opposite such Management Investor’s name on Exhibit A. All of the
shares of Series I Preferred and the Warrants owned by such Management Investor are owned free and
clear of any liens and such Management Investor has not granted any rights to purchase such shares
of Series I Preferred or Warrants to any other person. Neither the execution, delivery or
performance of this Agreement will, or would reasonably be expected to, contravene, conflict with
or result in a violation of any law or order or agreement to which such Management Investor is
subject, and such Management Investor is not required to make any filing or obtain any consent from
any person or entity in connection with the execution, delivery or performance of this Agreement or
the transactions contemplated hereby.

 

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G. Release. Contingent upon and effective immediately prior to the Closing, each
Management Investor acknowledges on such Management Investor’s own behalf that as of the date
hereof such Management Investor has no rights of action (known or unknown, actual or contingent)
against Parent, any affiliate of Parent, or any of their respective officers, directors, employees,
shareholders, agents and representatives and to the extent there are any such rights of action they
are hereby waived and Parent, each affiliate of Parent, and their respective officers, directors,
employees, shareholders, agents and representatives are hereby released; provided, however, that
the foregoing shall not apply to rights of action, if any, with respect to the right (i) to receive
from Parent any payments arising out of or relating to this Agreement, (ii) to any obligation to
any Management Investor for payroll, expense reimbursement or related employment liabilities, or
(iii) to claim indemnification pursuant to the Parent or the Company’s Certificate of
Incorporation, Bylaws or any insurance policy related to such Management Investor’s position as a
director or officer.

H. Representative.

1. By execution of this Agreement by each Management Investor, the Representative is
appointed, authorized and empowered to be the exclusive proxy, representative, agent and
attorney-in-fact of each Management Investor to make all decisions and determinations and to act
and execute, deliver and receive all documents, instruments and consents on behalf of such
Management Investor, at any time, in connection with, and that may be deemed by Representative to
be necessary or appropriate to accomplish the intent and implement the provisions of this Agreement
and to facilitate the consummation of the transactions contemplated hereby, and in connection with
the activities to be performed by or on behalf of such Management Investor under this Agreement,
and each other agreement or document referred to herein. By executing this Agreement,
Representative accepts such appointment, authority and power. Without limiting the generality of
the foregoing, Representative shall have the power to take any of the following actions on behalf
of such Management Investors: (i) to give and receive notices, communications and consents under
this Agreement; (ii) to receive and distribute payments pursuant to this Agreement; (iii) to waive
any provision of this Agreement; (iv) to agree to any offsets or other additions or subtractions of
amounts to be paid under this Agreement as Representative, in his sole discretion, may deem
necessary or desirable; and (v) to make, execute, acknowledge and deliver all such other
agreements, guarantees, orders, receipts, endorsements, notices, requests, instructions,
certificates, stock powers, letters and other writings, and, in general, to do any and all things
and to take any and all action that Representative, in his sole and absolute discretion, may
consider necessary or proper or convenient in connection with or to carry out the activities
described herein.

2. All decisions of Representative shall be final and binding on all Management Investors, and
no Management Investors shall have the right to object, dissent, protest or otherwise contest the
same. Parent shall be entitled to rely upon, without independent investigation, any act, notice,
instruction or communication from Representative and any document executed by Representative on
behalf of any such Management Investor and shall be fully protected in connection with any action
or inaction taken or omitted to be taken in reliance thereon absent willful misconduct.

 

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3. Representative shall not be responsible for any loss suffered by, or liability of any kind
to, such Management Investors arising out of any act done or omitted by Representative in
connection with the acceptance or administration of Representative’s duties under this Agreement,
unless such act or omission is found by a court of competent jurisdiction not subject to further
appeal to involve gross negligence or willful misconduct on the part of Representative. Further,
the Management Investors shall jointly and severally indemnify Representative and hold him harmless
against any loss, liability or expense incurred by Representative arising out of or in connection
with the acceptance or administration of his duties under this Agreement, including, without
limitation, the legal fees and expenses of any legal counsel retained by Representative (such
losses, liabilities and expenses, collectively referred to as “Representative Expenses”);
provided, that, Representative shall not be entitled to indemnification hereunder or the
reimbursement of any Representative Expenses if, and to the extent, it is found by a court of
competent jurisdiction, not subject to further appeal, that Representative Expenses were a direct
and primary result of Representative’s gross negligence or willful misconduct.

4. Management Investors representing a majority of the Percentage Interest may at any time (or
from time to time), by written notice to Parent and the then current Representative, remove such
Representative and appoint a replacement Representative to serve in accordance with this Agreement;
provided, however, that such appointment shall be subject to such newly-appointed Representative
notifying Parent in writing of his, her or its appointment and appropriate contact information for
purposes of this Agreement, and Parent shall be entitled to rely upon, without independent
investigation, the identity of such newly-appointed Representative as set forth in such written
notice.

5. Representative may resign by providing written notice to each Management Investor, and
Parent. Upon the resignation of Representative, the Management Investors representing a majority
of the Percentage Interest shall appoint a replacement Representative to serve in accordance with
the terms of this Agreement; provided, however, that such appointment shall be subject to such
newly-appointed Representative’s notifying Parent in writing of his, her or its appointment and
appropriate contact information for purposes of this Agreement and Parent shall be entitled to rely
upon, without independent investigation, the identity of such newly-appointed Representative as set
forth in such written notice.

I. Miscellaneous

1. Entire Agreement. This Agreement is intended by the parties to be the final
expression of their agreement with respect to the terms included in this Agreement and may not be
contradicted by evidence of any prior or contemporaneous agreement and is intended to supersede all
prior written or oral agreements of the parties hereto with respect to the subject matter hereof.

2. Notice. Any notice, demand, request, consent, or approval required or permitted
hereunder to be in writing shall be effective on the day on which same is received by a party
hereto at the address set forth below; such notices shall be hand delivered, or sent by reputable
overnight courier to such party at said address, or by fax with confirmed receipt of same.

 

6

 

3. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the personal representatives, successors and permitted assigns of the parties hereto.

4. Counterparts. This Agreement may be executed in any number of counterparts and all
such counterparts taken together shall be deemed to constitute one and the same instrument.

5. Amendments, Waiver. This Agreement may be modified, amended or terminated, and any
provision of this Agreement may be waived, only by a writing signed by the party or parties
burdened or affected by such modification, amendment, termination or waiver.

6. Captions. The captions and underscoring in this Agreement are for convenience of
reference only and have no legal effect and do not define or limit the provisions hereof.

7. Term. This Agreement shall remain in full force and effect until Parent has
delivered the Stock Consideration or the net proceeds from the sale thereof in accordance with
Section 4.

8. No Joint Venture or Partnership. This Agreement does not constitute, nor is it the
intention of the parties to create, a joint venture or partnership among the parties to this
Agreement.

9. Applicable Law. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Delaware.

10. Jurisdiction. Each of the parties agrees that any claim, suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising out of, under or in
connection with, this Agreement shall be heard and determined in the Chancery Court of the State of
Delaware (and each agrees that no such claim, suit, action or proceeding relating to this Agreement
shall be brought by it except in such court), and the parties hereby irrevocably and
unconditionally submit to the exclusive jurisdiction of such court in any such claim, suit, action
or proceeding and irrevocably and unconditionally waive the defense of an inconvenient forum to the
maintenance of any such claim, suit, action or proceeding; provided, however, that if the Chancery
Court of the State of Delaware declines to accept jurisdiction over a particular matter, any state
or federal court within the State of Delaware shall be deemed sufficient for purposes of this
section. Each of the parties hereto further agree that, to the fullest extent permitted by
applicable law, service of any process, summons, notice or document in any such claim, suit, action
or proceeding may be served on such party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of
process on such party as provided herein shall be deemed effective service of process on such
party. The parties hereto hereby agree that a final, non-appealable judgment in any such claim,
suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions in the
world by suit on the judgment or in any other manner provided by applicable law.

[SIGNATURE PAGE FOLLOWS]

 

7

 

This Agreement is executed as of the date specified above by the parties hereto.

	 	 	 	 	 	 	 	 	 
	PARENT:	 	MANAGEMENT INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	Homeland Security Capital Corporation	 	 	 	 	 	 
	 
	 	 	By	 	 	 	 
	By

	 	 	 	 	 	 

Name:
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	Address:	 	 
	 

	 	Title:
	 	 	 	Fax No.:	 	 
	 

	 	Address:
	 		 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Fax No.:
	 	By	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	
	 	 	 	Name:	 	 
	 	 	 	 	Address:	 	 
	REPRESENTATIVE:

	 	 	 	Fax No.:	 	 
	 
	 	 	 	 	 	 	 	 
	By

	 	 	 	By	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	Name:	 	 
	 

	 	Address:
	 	 	 	Address:	 	 
	 

	 	Fax No.:
	 	 	 	Fax No.:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	Address:	 	 
	 

	 	 	 	 	 	Fax No.:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	Address:	 	 
	 

	 	 	 	 	 	Fax No.:	 	 

 

8

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