DIVERSIFIED SECURITY SOLUTIONS INC
EXHIBIT 10.1
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>ex10-1.txt
<DESCRIPTION>EXHIBIT 10.1
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                                                                    EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT

         This Securities Purchase Agreement (this "Agreement") is dated as of
July 20, 2004, among Diversified Security Solutions, Inc., a Delaware
corporation (the "Company"), and the investors identified on the signature pages
hereto (each, an "Investor" and collectively, the "Investors").

         WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act (as defined below)
and Rule 506 promulgated thereunder, the Company desires to issue and sell to
each Investor, and each Investor, severally and not jointly, desires to purchase
from the Company certain securities of the Company, as more fully described in
this Agreement.

         NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Investors agree
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

         1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms shall have
the meanings indicated in this Section 1.1:

             "Action" means any action, suit, inquiry, notice of violation,
proceeding (including any partial proceeding such as a deposition) or
investigation pending or threatened in writing against or affecting the Company,
any Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency, regulatory authority
(federal, state, county, local or foreign), stock market, stock exchange or
trading facility.

             "Affiliate" means any Person that, directly or indirectly through
one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 144.

             "Business Day" means any day except Saturday, Sunday and any day
which is a federal legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.

             "Closing" means the closing of the purchase and sale of the
Securities pursuant to Article II.

             "Closing Date" means the Business Day immediately following the
date on which all of the conditions set forth in Sections 5.1 and 5.2 hereof are
satisfied, or such other date as the parties may agree.






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             "Commission" means the Securities and Exchange Commission.

             "Common Stock" means the common stock of the Company, par value
$0.01 per share, and any securities into which such common stock may hereafter
be reclassified.

             "Common Stock Equivalents" means any securities of the Company or
any Subsidiary which entitle the holder thereof to acquire Common Stock at any
time, including without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock or other securities that entitle the holder to receive, directly or
indirectly, Common Stock.

             "Company Counsel" means Milberg Weiss Bershad & Schulman LLP.

             "Company Deliverables" has the meaning set forth in Section 2.2(a).

             "Disclosure Materials" has the meaning set forth in Section 3.1(h).

             "Effective Date" means the date that the Registration Statement
required by Section 2(a) of the Registration Rights Agreement is first declared
effective by the Commission.

             "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

             "GAAP" means U.S. generally accepted accounting principles.

             "Intellectual Property Rights" has the meaning set forth in Section
3.1(p).

             "Investment Amount" means, with respect to each Investor, the
Investment Amount indicated on such Investor's signature page to this Agreement.

             "Investor Deliverables" has the meaning set forth in Section
2.2(b).

             "Investor Party" has the meaning set forth in Section 4.7.

             "Lien" means any lien, charge, encumbrance, security interest,
right of first refusal or other restrictions of any kind.

             "Material Adverse Effect" means any of (i) a material and adverse
effect on the legality, validity or enforceability of any Transaction Document,
(ii) a material and adverse effect on the results of operations, assets,
prospects, business or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) an adverse impairment to the Company's
ability to perform on a timely basis its obligations under any Transaction
Document.

             "New York Courts" means the state and federal courts sitting in the
City of New York, Borough of Manhattan.



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             "Per Unit Purchase Price" equals $6.00.

             "Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.

             "Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

             "Registration Statement" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale by the Investors of the Shares and the Warrant Shares.

             "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company and the
Investors, in the form of Exhibit B hereto.

             "Rule 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

             "SEC Reports" has the meaning set forth in Section 3.1(h).

             "Securities" means the Shares, the Warrants and the Warrant Shares.

             "Securities Act" means the Securities Act of 1933, as amended.

             "Shares" means the shares of Common Stock issued or issuable to the
Investors pursuant to this Agreement.

             "Short Sales" has the meaning set forth in Section 2.3(f).

             "Subsidiary" means any "significant subsidiary" as defined in Rule
1-02(w) of the Regulation S-X promulgated by the Commission under the Exchange
Act.

             "Trading Day" means (i) a day on which the Common Stock is traded
on a Trading Market (other than the OTC Bulletin Board), or (ii) if the Common
Stock is not listed on a Trading Market (other than the OTC Bulletin Board), a
day on which the Common Stock is traded in the over-the-counter market, as
reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted
on any Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day
shall mean a Business Day.



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             "Trading Market" means whichever of the New York Stock Exchange,
the American Stock Exchange, the NASDAQ National Market, the NASDAQ SmallCap
Market or OTC Bulletin Board on which the Common Stock is listed or quoted for
trading on the date in question.

             "Transaction Documents" means this Agreement, the Warrants, the
Registration Rights Agreement, and any other documents or agreements executed in
connection with the transactions contemplated hereunder.

             "Warrants" means the Common Stock purchase warrants in the form of
Exhibit A, which are issuable to the Investors at the Closing.

             "Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.

                                  ARTICLE II.
                                PURCHASE AND SALE

         2.1 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to each Investor, and
each Investor shall, severally and not jointly, purchase from the Company, the
Shares and the Warrants representing such Investor's Investment Amount. The
Closing shall take place at the offices of Lowenstein Sandler PC, 1251 Avenue of
the Americas, New York, NY 10020 on the Closing Date or at such other location
or time as the parties may agree.

         2.2 Closing Deliveries. (a) At the Closing, the Company shall deliver
or cause to be delivered to each Investor the following (the "Company
Deliverables"):

               (i) a certificate evidencing a number of Shares equal to such
Investor's Investment Amount divided by the Per Unit Purchase Price, registered
in the name of such Investor;

               (ii) a Warrant, registered in the name of such Investor, pursuant
to which such Investor shall have the right to acquire the number of shares of
Common Stock equal [ ]% of the number of Shares issuable to such Investor
pursuant to Section 2.2(a)(i);

               (iii) the legal opinion of Company Counsel, in agreed form,
addressed to the Investors; and

               (iv) the Registration Rights Agreement, duly executed by the
Company.

             (b) At the Closing, each Investor shall deliver or cause to be
delivered to the Company the following (the "Investor Deliverables"):



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               (i) its Investment Amount, in United States dollars and in
immediately available funds, by wire transfer to an account designated in
writing by the Company for such purpose; and

               (ii) the Registration Rights Agreement, duly executed by such
Investor.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

         3.1 Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to each Investor:

             (a) Subsidiaries. The Company has no direct or indirect
Subsidiaries other than as specified in the SEC Reports. Except as disclosed in
Schedule 3.1(a), the Company owns, directly or indirectly, all of the capital
stock of each Subsidiary free and clear of any and all Liens, and all the issued
and outstanding shares of capital stock of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar rights.

             (b) Organization and Qualification. The Company and each Subsidiary
are duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. The Company and each Subsidiary are duly
qualified to conduct its respective businesses and are in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect.

             (c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company in
connection therewith. Each Transaction Document has been (or upon delivery will
have been) duly executed by the Company and, when delivered in accordance with
the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.



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             (d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) conflict with, or constitute a default (or an event that 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 (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect.

             (e) Filings, Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than (i) the filing with the Commission of one or more Registration
Statements in accordance with the requirements of the Registration Rights
Agreement, (ii) filings required by state securities laws, (iii) the filing of a
Notice of Sale of Securities on Form D with the Commission under Regulation D of
the Securities Act (iv) the filings required in accordance with Section 4.5, and
(iv) those that have been made or obtained prior to the date of this Agreement.

             (f) Issuance of the Securities. The Securities have been duly
authorized and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens. The Company has reserved from its duly authorized
capital stock the shares of Common Stock issuable pursuant to this Agreement and
the Warrants in order to issue the Shares and the Warrant Shares.

             (g) Capitalization. The number of shares and type of all
authorized, issued and outstanding capital stock of the Company, and all shares
of Common Stock reserved for issuance under the Company's various option and
incentive plans, is specified in the SEC Reports. Except as specified in the SEC
Reports, no securities of the Company are entitled to preemptive or similar
rights, and no Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as specified in the SEC
Reports, there are no outstanding options, warrants, scrip rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exchangeable for, or giving any Person
any right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or



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may become bound to issue additional shares of Common Stock, or securities or
rights convertible or exchangeable into shares of Common Stock. The issue and
sale of the Securities will not, immediately or with the passage of time,
obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Investors) and will not result in a right of any holder
of Company securities to adjust the exercise, conversion, exchange or reset
price under such securities.

             (h) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months
preceding the date hereof (or such shorter period as the Company was required by
law to file such reports) (the foregoing materials being collectively referred
to herein as the "SEC Reports" and, together with the Schedules to this
Agreement (if any), the "Disclosure Materials") on a timely basis or has timely
filed a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
GAAP applied on a consistent basis during the periods involved, except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
and its consolidated Subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.

             (i) Press Releases. The press releases disseminated by the Company
during the twelve months preceding the date of this Agreement taken as a whole
do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made and
when made, not misleading.

             (j) Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports, (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables, accrued expenses and
other liabilities incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting or the identity of its auditors, (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its stockholders
or purchased, redeemed or



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made any agreements to purchase or redeem any shares of its capital stock, and
(v) the Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company stock option plans. The Company
does not have pending before the Commission any request for confidential
treatment of information.

             (k) Litigation. There is no Action which (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents or the Securities or (ii) except as specifically disclosed in the SEC
Reports, could, if there were an unfavorable decision, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any director or officer
thereof (in his or her capacity as such), is or has been the subject of any
Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty, except as specifically
disclosed in the SEC Reports. There has not been, and to the knowledge of the
Company, there is not pending any investigation by the Commission involving the
Company or any current or former director or officer of the Company (in his or
her capacity as such). The Commission has not issued any stop order or other
order suspending the effectiveness of any registration statement filed by the
Company or any Subsidiary under the Exchange Act or the Securities Act.

             (l) Labor Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company.

             (m) Compliance. Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as could not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect. The Company is in compliance
with all effective requirements of the Sarbanes-Oxley Act of 2002, as amended,
and the rules and regulations thereunder, that are applicable to it, except
where such noncompliance could not have or reasonably be expected to result in a
Material Adverse Effect.

             (n) Regulatory Permits. The Company and the Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect, and neither the
Company nor any Subsidiary has received any notice of proceedings relating to
the revocation or modification of any such permits.



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             (o) Title to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to their respective businesses and good and marketable title in all
personal property owned by them that is material to their respective businesses,
in each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries. Any real property and facilities held under lease by the Company
and the Subsidiaries are held by them under valid, subsisting and enforceable
leases of which the Company and the Subsidiaries are in compliance, except as
could not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect.

             (p) Patents and Trademarks. The Company and the Subsidiaries have,
or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in connection with their
respective businesses as described in the SEC Reports and which the failure to
so have could, individually or in the aggregate, have or reasonably be expected
to result in a Material Adverse Effect (collectively, the "Intellectual Property
Rights"). Neither the Company nor any Subsidiary has received a written notice
that the Intellectual Property Rights used by the Company or any Subsidiary
violates or infringes upon the rights of any Person. Except as set forth in the
SEC Reports, to the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights.

             (q) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged. The Company has no reason to believe
that it will not be able to renew its and the Subsidiaries' 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 on terms
consistent with market for the Company's and such Subsidiaries' respective lines
of business.

             (r) Transactions With Affiliates and Employees. Except as set forth
in the SEC Reports, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (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 entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.

             (s) Internal Accounting Controls. The Company and the 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



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conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act rules 13a-14 and 15d-14) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company, including its Subsidiaries, is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company's Form 10-K or 10-Q, as the case may be, is being prepared.
The Company's certifying officers have evaluated the effectiveness of the
Company's controls and procedures in accordance with Item 307 of Regulation S-K
under the Exchange Act for the Company's most recently ended fiscal quarter or
fiscal year-end (such date, the "Evaluation Date"). The Company presented in its
most recently filed Form 10-K or Form 10-Q the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no significant changes in the Company's internal controls (as such
term is defined in Item 308(c) of Regulation S-K under the Exchange Act) or, to
the Company's knowledge, in other factors that could significantly affect the
Company's internal controls.

             (t) Solvency. Based on the financial condition of the Company as of
the Closing Date (and assuming that the Closing shall have occurred), (i) the
Company's fair saleable value of its assets exceeds the amount that will be
required to be paid on or in respect of the Company's existing debts and other
liabilities (including known contingent liabilities) as they mature; (ii) the
Company's assets do not constitute unreasonably small capital to carry on its
business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).

             (u) Certain Fees. Except as described in Schedule 3.1(u), no
brokerage or finder's fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Investors shall have no obligation with
respect to any fees or with respect to any claims (other than such fees or
commissions owed by an Investor pursuant to written agreements executed by such
Investor which fees or commissions shall be the sole responsibility of such
Investor) made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated
by this Agreement.



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             (v) Certain Registration Matters. Assuming the accuracy of the
Investors' representations and warranties set forth in Section 3.2(b)-(e), no
registration under the Securities Act is required for the offer and sale of the
Shares and Warrant Shares by the Company to the Investors under the Transaction
Documents. The Company is eligible to register the resale of its Common Stock
for resale by the Investors under Form S-3 promulgated under the Securities Act.
Except as specified in Schedule 3.1(v), the Company has not granted or agreed to
grant to any Person any rights (including "piggy-back" registration rights) to
have any securities of the Company registered with the Commission or any other
governmental authority that have not been satisfied.

             (w) Listing and Maintenance Requirements. Except as specified in
the SEC Reports, the Company has not, in the two years preceding the date
hereof, received notice from any Trading Market to the effect that the Company
is not in compliance with the listing or maintenance requirements thereof. The
Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with the listing and maintenance
requirements for continued listing of the Common Stock on the Trading Market on
which the Common Stock is currently listed or quoted. The issuance and sale of
the Securities under the Transaction Documents does not contravene the rules and
regulations of the Trading Market on which the Common Stock is currently listed
or quoted, and no approval of the shareholders of the Company thereunder is
required for the Company to issue and deliver to the Investors the Securities
contemplated by Transaction Documents.

             (x) Investment Company. The Company is not, and is not an Affiliate
of, and immediately following the Closing will not have become, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.

             (y) Application of Takeover Protections. The Company has taken all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company's
Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Investors as a
result of the Investors and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation the Company's issuance of the Securities and the Investors' ownership
of the Securities.

             (z) No Additional Agreements. The Company does not have any
agreement or understanding with any Investor with respect to the transactions
contemplated by the Transaction Documents other than as specified in the
Transaction Documents.

             (aa) Disclosure. The Company confirms that neither it nor any
Person acting on its behalf has provided any Investor or its respective agents
or counsel with any information that the Company believes constitutes material,
non-public information except insofar as the existence and terms of the proposed
transactions hereunder may constitute such information. The Company understands
and confirms that the Investors will rely on the foregoing representations and
covenants in effecting transactions in securities of the Company. All disclosure
provided to



                                       11




<PAGE>



the Investors regarding the Company, its business and the transactions
contemplated hereby, furnished by or on behalf of the Company (including the
Company's representations and warranties set forth in this Agreement) are true
and correct and do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.

         3.2 Representations and Warranties of the Investors. Each Investor
hereby, for itself and for no other Investor, represents and warrants to the
Company as follows:

             (a) Organization; Authority. Such Investor is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the applicable Transaction Documents and otherwise to carry out
its obligations thereunder. The execution, delivery and performance by such
Investor of the transactions contemplated by this Agreement has been duly
authorized by all necessary corporate or, if such Investor is not a corporation,
such partnership, limited liability company or other applicable like action, on
the part of such Investor. Each of this Agreement and the Registration Rights
Agreement has been duly executed by such Investor, and when delivered by such
Investor in accordance with terms hereof, will constitute the valid and legally
binding obligation of such Investor, enforceable against it in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.

             (b) Investment Intent. Such Investor is acquiring the Securities as
principal for its own account for investment purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof, without
prejudice, however, to such Investor's right at all times to sell or otherwise
dispose of all or any part of such Securities in compliance with applicable
federal and state securities laws. Subject to the immediately preceding
sentence, nothing contained herein shall be deemed a representation or warranty
by such Investor to hold the Securities for any period of time. Such Investor is
acquiring the Securities hereunder in the ordinary course of its business. Such
Investor does not have any agreement or understanding, directly or indirectly,
with any Person to distribute any of the Securities in violation of the
Securities Act.

             (c) Investor Status. At the time such Investor was offered the
Securities, it was, and at the date hereof it is, and on each date on which it
exercises Warrants it will be, an "accredited investor" as defined in Rule
501(a) under the Securities Act. Such Investor is not a registered broker-dealer
under Section 15 of the Exchange Act or an Affiliate of such a broker-dealer.

             (d) General Solicitation. Such Investor is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities



                                       12




<PAGE>



published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.

             (e) Access to Information. Such Investor acknowledges that it has
reviewed the Disclosure Materials and has been afforded (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Shares and the merits and risks of investing in the Securities;
(ii) access to information about the Company and the Subsidiaries and their
respective financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Investor or its representatives or counsel shall modify, amend
or affect such Investor's right to rely on the truth, accuracy and completeness
of the Disclosure Materials and the Company's representations and warranties
contained in the Transaction Documents.

             (f) Certain Trading Activities. Such Investor has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Investor, engaged in any transactions in the securities
of the Company (including, without limitations, any Short Sales involving the
Company's securities) since the time that such Investor was first contacted by
the Company or Roth Capital Partners, LLC regarding an investment in the
Company. For purposes of this Section, "Short Sales" include, without
limitation, all "short sales" as defined in Rule 3b-3 of the Exchange Act and
include all types of direct and indirect stock pledges, forward sale contracts,
options, puts, calls, short sales, swaps and similar arrangements (including on
a total return basis), and sales and other transactions through non-US broker
dealers or foreign regulated brokers having the effect of hedging the securities
or investment made under this Agreement. Such Investor covenants that neither it
nor any Person acting on its behalf or pursuant to any understanding with it
will engage in any transactions in the securities of the Company (including
Short Sales) prior to the time that the transactions contemplated by this
Agreement are publicly disclosed.

             (g) Independent Investment Decision. Such Investor has
independently evaluated the merits of its decision to purchase Securities
pursuant to the Transaction Documents, and such Investor confirms that it has
not relied on the advice of any other Investor's business and/or legal counsel
in making such decision. Such Investor has not relied on the business or legal
advice of Roth Capital Partners, LLC or any of its agents, counsel or Affiliates
in making its investment decision hereunder, and confirms that none of such
Persons has made any representations or warranties to such Investor in
connection with the transactions contemplated by the Transaction Documents.

The Company acknowledges and agrees that no Investor has made or makes any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.



                                       13




<PAGE>



                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

         4.1 (a) Securities may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of the Securities other
than pursuant to an effective registration statement, to the Company, to an
Affiliate of an Investor, in connection with a pledge as contemplated in Section
4.1(b), or in a transaction under Rule 144(k), the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act.

             (b) Certificates evidencing the Securities will contain the
following legend, until such time as they are not required under Section 4.1(c):

             [NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE
             OF THESE SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE
             NOT BEEN REGISTERED] WITH THE SECURITIES AND EXCHANGE COMMISSION OR
             THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
             EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
             AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
             OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
             STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
             EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
             REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
             WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
             OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
             OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. [THESE
             SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
             SECURITIES] [THESE SECURITIES] MAY BE PLEDGED IN CONNECTION WITH A
             BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

             The Company acknowledges and agrees that an Investor may from time
to time pledge, and/or grant a security interest in some or all of the
Securities pursuant to a bona fide margin agreement in connection with a bona
fide margin account and, if required under the terms of such agreement or
account, such Investor may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer would not be subject to
approval or consent of the Company and no legal opinion of legal counsel to the
pledgee, secured party or pledgor shall be required in connection with the
pledge, but such legal opinion may be required in connection with a subsequent
transfer following default by the Investor transferee of the pledge. No notice
shall be required of such pledge. At the appropriate Investor's expense, the
Company will execute and deliver such reasonable documentation as a pledgee or
secured party




                                       14




<PAGE>



of Securities may reasonably request in connection with a pledge or transfer of
the Securities including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) of the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of Selling
Stockholders thereunder.

         (c) Certificates evidencing the Shares and Warrant Shares shall not
contain any legend (including the legend set forth in Section 4.1(b)): (i)
following a sale of such Securities pursuant to an effective registration
statement (including the Registration Statement), or (ii) following a sale of
such Shares or Warrant Shares pursuant to Rule 144 (assuming the transferor is
not an Affiliate of the Company), or (iii) while such Shares or Warrant Shares
are eligible for sale under Rule 144(k). Following such time as restrictive
legends are not required to be placed on certificates representing Shares or
Warrant Shares pursuant to the preceding sentence, the Company will, no later
than three Trading Days following the delivery by an Investor to the Company or
the Company's transfer agent of a certificate representing Shares or Warrant
Shares containing a restrictive legend, deliver or cause to be delivered to such
Investor a certificate representing such Shares or Warrant Shares that is free
from all restrictive and other legends. The Company may not make any notation on
its records or give instructions to any transfer agent of the Company that
enlarge the restrictions on transfer set forth in this Section.

         4.2 Furnishing of Information. As long as any Investor owns the
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as any Investor owns Securities, if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish to
the Investors and make publicly available in accordance with Rule 144(c) such
information as is required for the Investors to sell the Shares and Warrant
Shares under Rule 144. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, all to the
extent required from time to time to enable such Person to sell the Shares and
Warrant Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.

         4.3 Integration. The Company shall not, and shall use its best efforts
to ensure that no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Investors, or that
would be integrated with the offer or sale of the Securities for purposes of the
rules and regulations of any Trading Market in a manner that would require
stockholder approval of the sale of the securities to the Investors.

         4.4 Subsequent Registrations. Other than pursuant to the Registration
Statement, prior to the Effective Date, the Company may not file any
registration statement (other than on Form S-8) with the Commission with respect
to any securities of the Company.

         4.5 Securities Laws Disclosure; Publicity. By 9:00 a.m. (New York time)
on the Trading Day following the execution of this Agreement, and by 9:00 a.m.
(New York time) on



                                       15




<PAGE>



the Closing Date, the Company shall issue press releases disclosing the
transactions contemplated hereby and the Closing. On the Trading Day following
the execution of this Agreement the Company will file a Current Report on Form
8-K disclosing the material terms of the Transaction Documents (and attach as
exhibits thereto the Transaction Documents), and on the Closing Date the Company
will file an additional Current Report on Form 8-K to disclose the Closing. In
addition, the Company will make such other filings and notices in the manner and
time required by the Commission and the Trading Market on which the Common Stock
is listed. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Investor, or include the name of any Investor in any
filing with the Commission (other than the Registration Statement and any
exhibits to filings made in respect of this transaction in accordance with
periodic filing requirements under the Exchange Act) or any regulatory agency or
Trading Market, without the prior written consent of such Investor, except to
the extent such disclosure is required by law or Trading Market regulations.

         4.6 Limitation on Issuance of Future Priced Securities. During the six
months following the Closing Date, the Company shall not issue any "Future
Priced Securities" as such term is described by NASD IM-4350-1.

         4.7 Indemnification of Investors. In addition to the indemnity provided
in the Registration Rights Agreement, the Company will indemnify and hold the
Investors and their directors, officers, shareholders, partners, employees and
agents (each, an "Investor Party") harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys' fees and costs of investigation (collectively, "Losses") that any
such Investor Party may suffer or incur as a result of or relating to any
misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in any Transaction Document. In
addition to the indemnity contained herein, the Company will reimburse each
Investor Party for its reasonable legal and other expenses (including the cost
of any investigation, preparation and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred.

         4.8 Non-Public Information. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Investor
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Investor
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Investor shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.

         4.9 Listing of Securities. The Company agrees, (i) if the Company
applies to have the Common Stock traded on any other Trading Market, it will
include in such application the Shares and Warrant Shares, and will take such
other action as is necessary or desirable to cause the Shares and Warrant Shares
to be listed on such other Trading Market as promptly as possible, and (ii) it
will take all action reasonably necessary to continue the listing and trading of
its Common Stock on a Trading Market and will comply in all material respects
with the



                                       16




<PAGE>



Company's reporting, filing and other obligations under the bylaws or rules of
the Trading Market.

         4.10 Use of Proceeds. The Company will use the net proceeds from the
sale of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables and accrued expenses in the ordinary course of the Company's business
and consistent with prior practices), or to redeem any Common Stock or Common
Stock Equivalents.

                                   ARTICLE V.
                         CONDITIONS PRECEDENT TO CLOSING

         5.1 Conditions Precedent to the Obligations of the Investors to
Purchase Securities. The obligation of each Investor to acquire Securities at
the Closing is subject to the satisfaction or waiver by such Investor, at or
before the Closing, of each of the following conditions:

             (a) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing as though made
on and as of such date;

             (b) Performance. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by it at or prior to the Closing;

             (c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents;

             (d) Adverse Changes. Since the date of execution of this Agreement,
no event or series of events shall have occurred that reasonably could have or
result in a Material Adverse Effect;

             (e) No Suspensions of Trading in Common Stock; Listing. Trading in
the Common Stock shall not have been suspended by the Commission or any Trading
Market (except for any suspensions of trading of not more than one Trading Day
solely to permit dissemination of material information regarding the Company) at
any time since the date of execution of this Agreement, and the Common Stock
shall have been at all times since such date listed for trading on a Trading
Market;

             (f) Amex Listing. The American Stock Exchange shall have approved
the listing of the Shares and the Warrant Shares upon official notice of
issuance;

             (g) Company Deliverables. The Company shall have delivered the
Company Deliverables in accordance with Section 2.2(a); and


                                       17




<PAGE>



             (h) Timing. The Closing shall have occurred no later than July 23,
2004.

         5.2 Conditions Precedent to the Obligations of the Company to sell
Securities. The obligation of the Company to sell Securities at the Closing is
subject to the satisfaction or waiver by the Company, at or before the Closing,
of each of the following conditions:

             (a) Representations and Warranties. The representations and
warranties of each Investor contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made on and as of such date;

             (b) Performance. Each Investor shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by such Investor at or prior to the Closing;

             (c) Amex Listing. The American Stock Exchange shall have approved
the listing of the Shares and the Warrant Shares upon official notice of
issuance;

             (d) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents;

             (e) Investors Deliverables. Each Investor shall have delivered its
Investors Deliverables in accordance with Section 2.2(b); and

             (f) Timing. The Closing shall have occurred no later than July 23,
2004.

                                  ARTICLE VI.
                                  MISCELLANEOUS

         6.1 Fees and Expenses. At the Closing, the Company shall pay to
Lowenstein Sandler PC $25,000 as partial reimbursement of Roth Capital Partners
LLC for its legal fees in connection with the preparation of the Transaction
Documents, it being understood that Lowenstein Sandler PC has only rendered
legal advice to Roth Capital Partners LLC, and not to the Company or any
Investor in connection with the transactions contemplated hereby, and that each
of the Company and each Investor has relied for such matters on the advice of
its own respective counsel. Except as specified in the immediately preceding
sentence, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of the Transaction Documents. The Company shall pay all stamp and
other taxes and duties levied in connection with the sale of the Shares.

         6.2 Entire Agreement. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements,
understandings, discussions and



                                       18




<PAGE>



representations, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules.

         6.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile (provided the sender
receives a machine-generated confirmation of successful transmission) at the
facsimile number specified in this Section prior to 6:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section on a day that is not a Trading Day or later
than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as follows:

         If to the Company:  Diversified Security Solutions, Inc.
                             280 Midland Avenue
                             Saddle Brook, New Jersey 07662
                             Facsimile:  201-794-8341
                             Attn.:  Brian L. Reach


         With a copy to:     Milberg Weiss Bershad & Schulman LLP
                             One Pennsylvania Plaza
                             New York, NY 10119
                             Facsimile: 212-868-1229
                             Attn: Arnold N. Bressler, Esq.

         If to an Investor:  To the address set forth under such Investor's name
                             on the signature pages hereof;


or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

         6.4 Amendments; Waivers; No Additional Consideration. No provision of
this Agreement may be waived or amended except in a written instrument signed by
the Company and the Investors holding a majority of the Shares. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right. No
consideration shall be offered or paid to any Investor to amend or consent to a
waiver or modification of any provision of any Transaction Document unless the
same consideration is also offered to all Investors who then hold Shares.



                                       19




<PAGE>



         6.5 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. 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. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.

         6.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investors. Any Investor may assign any
or all of its rights under this Agreement to any Person to whom such Investor
assigns or transfers any Securities, provided such transferee agrees in writing
to be bound, with respect to the transferred Securities, by the provisions
hereof that apply to the "Investors."

         6.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.7 (as to each
Investor Party).

         6.8 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced exclusively in the New York Courts. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of the any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any such New York Court, or
that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. If either party shall commence a Proceeding to enforce any provisions of
a



                                       20




<PAGE>



Transaction Document, then the prevailing party in such Proceeding shall be
reimbursed by the other party for its reasonable attorneys' fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such Proceeding.

         6.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery of the Securities.

         6.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together 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, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

         6.11 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

         6.12 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Investor exercises a right, election, demand
or option under a Transaction Document and the Company does not timely perform
its related obligations within the periods therein provided, then such Investor
may rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights.

         6.13 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities. If a replacement
certificate or instrument evidencing any Securities is requested due to a
mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.

         6.14 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Investors and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any



                                       21




<PAGE>



action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

         6.15 Payment Set Aside. To the extent that the Company makes a payment
or payments to any Investor pursuant to any Transaction Document or an Investor
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

         6.16 Independent Nature of Investors' Obligations and Rights. The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. The decision of each Investor to
purchase Securities pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Securities or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the Investors
has been provided with the same Transaction Documents for the purpose of closing
a transaction with multiple Investors and not because it was required or
requested to do so by any Investor.

         6.17 Limitation of Liability. Notwithstanding anything herein to the
contrary, the Company acknowledges and agrees that the liability of an Investor
arising directly or indirectly, under any Transaction Document of any and every
nature whatsoever shall be satisfied solely out of the assets of such Investor,
and that no trustee, officer, other investment vehicle or any other Affiliate of
such Investor or any investor, shareholder or holder of shares of beneficial
interest of such a Investor shall be personally liable for any liabilities of
such Investor.



                                       22




<PAGE>



                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGES FOLLOW]




                                       23




<PAGE>



         IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

                                DIVERSIFIED SECURITY SOLUTIONS, INC.


                                By:    /s/  Brian Reach
                                   -------------------------------------
                                   Name: Brian Reach
                                   Title: Vice Chairman


                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGES FOR INVESTORS FOLLOW]


                                       24




<PAGE>




         IN WITNESS WHEREOF, the parties have executed this Security Purchase
Agreement as of the date first written above.

                          NAME OF INVESTOR

                          LAKESHORE INTERNATIONAL, LTD.
                          By: Hunter Capital Management, L.P., Investment
                                  Manager
                          By: EBF & Associates, L.P., General Partner
                          By: Global Capital Management, Inc., General
                                  Partner

                          By:  /s/ Andrew E. Fraley
                               -------------------------------------------
                          By:  Name: Andrew E. Fraley
                               Title:  Vice President

                          Investment Amount: $1,320,000.00
                                             -----------------------------

                          Tax ID No.:   N/A
                                     -------------------------------------

                          ADDRESS FOR NOTICE

                          Lakeshore International, Ltd.
                          ------------------------------------------------
                          Street:   601 Carlson Parkway, Suite 200
                                    --------------------------------------

                          City/State/Zip:   Minnetonka, MN 55305
                                            ------------------------------

                          Attention:  --
                                     -------------------------------------

                          Tel:       952-476-7200
                                   ---------------------------------------

                          Fax:       952-476-7201
                                   ---------------------------------------

                          DELIVERY INSTRUCTIONS
                          (if different from above)

                          c/o:
                               -------------------------------------------

                          Street:
                                 -----------------------------------------

                          City/State/Zip:
                                          --------------------------------

                          Attention:
                                     -------------------------------------

                          Tel:
                                   ---------------------------------------


                                       25




<PAGE>



IN WITNESS WHEREOF, the parties have executed this Security Purchase Agreement
as of the date first written above.

                          NAME OF INVESTOR

                          GLOBAL BERMUDA LIMITED PARTNERSHIP
                          By:  Global Capital Management, Inc., General
                                Partner

                          By:  /s/ Andrew E. Fraley
                               -------------------------------------------
                          By:  Name: Andrew E. Fraley
                               Title: Vice President

                          Investment Amount: $330,000.00
                                             -----------------------------

                          Tax ID No.:
                                      ------------------------------------


                          ADDRESS FOR NOTICE

                            Global Bermuda Limited Partnership
                          ------------------------------------------------

                          Street:   601 Carlson Parkway, Suite 200
                                  ----------------------------------------

                          City/State/Zip:   Minnetonka, MN 55305
                                          --------------------------------

                          Attention:  --
                                     -------------------------------------

                          Tel:       952-476-7200
                                   ---------------------------------------

                          Fax:       952-476-7201
                                   ---------------------------------------

                          DELIVERY INSTRUCTIONS
                          (if different from above)

                          c/o:
                               -------------------------------------------

                          Street:
                                 -----------------------------------------

                          City/State/Zip:
                                          --------------------------------

                          Attention:
                                     -------------------------------------

                          Tel:
                                   ---------------------------------------


                                       26




<PAGE>




IN WITNESS WHEREOF, the parties have executed this Security Purchase Agreement
as of the date first written above.

                           NAME OF INVESTOR

                           MERCED PARTNERS LIMITED PARTNERSHIP
                           By:  Global Capital Management, Inc., General
                                  Partner

                           By:  /s/ Andrew E. Fraley
                               ----------------------------------------------
                           By: Name: Andrew E. Fraley
                               Title: Vice President

                           Investment Amount:  $375,000.00
                                               -------------------------------

                           Tax ID No.:
                                       ---------------------------------------


                           ADDRESS FOR NOTICE

                             Merced Partners Limited Partnership
                           ---------------------------------------------------

                           Street:   601 Carlson Parkway, Suite 200
                                   -------------------------------------------

                           City/State/Zip:   Minnetonka, MN 55305
                                           -----------------------------------

                           Attention:  --
                                      ----------------------------------------

                           Tel:       952-476-7200
                                    ------------------------------------------

                           Fax:       952-476-7201
                                    ------------------------------------------

                           DELIVERY INSTRUCTIONS
                           (if different from above)

                           c/o:
                                ----------------------------------------------

                           Street:
                                  --------------------------------------------

                           City/State/Zip:
                                           -----------------------------------

                           Attention:
                                      ----------------------------------------

                           Tel:
                                    ------------------------------------------

                                       27





<PAGE>




IN WITNESS WHEREOF, the parties have executed this Security Purchase Agreement
as of the date first written above.

                          NAME OF INVESTOR

                          TAMARACK INTERNATIONAL, LTD.
                          By:  Hunter Capital Management, L.P., Investment
                                 Manager
                          By: EBF & Associates, L.P., General Partner
                          By:  Global Capital Management, Inc., General
                                 Partner

                          By:  /s/ Andrew E. Fraley
                              -----------------------------------------------
                          By: Name: Andrew E. Fraley
                              Title: Vice President

                          Investment Amount: $375,000.00
                                             --------------------------------

                          Tax ID No.:   N/A
                                      ---------------------------------------

                          ADDRESS FOR NOTICE

                            Tamarack International, Ltd.
                          ---------------------------------------------------

                          Street:   601 Carlson Parkway, Suite 200
                                  -------------------------------------------

                          City/State/Zip:   Minnetonka, MN 55305
                                          -----------------------------------

                          Attention:  --
                                     ----------------------------------------

                          Tel:       952-476-7200
                                   ------------------------------------------

                          Fax:       952-476-7201
                                   ------------------------------------------

                          DELIVERY INSTRUCTIONS
                          (if different from above)

                          c/o:
                               ----------------------------------------------

                          Street:
                                 --------------------------------------------

                          City/State/Zip:
                                          -----------------------------------

                          Attention:
                                     ----------------------------------------

                          Tel:
                                   ------------------------------------------


                                       28





<PAGE>



IN WITNESS WHEREOF, the parties have executed this Security Purchase Agreement
as of the date first written above.

                           NAME OF INVESTOR

                           SRG CAPITAL, LLC

                           By:  /s/ Andrew J. Turchin
                              -----------------------------------------------
                           By: Name: Andrew J. Turchin
                               Title: Chief Financial Officer

                           Investment Amount: $420,000.00
                                             --------------------------------

                           Tax ID No.:
                                       --------------------------------------

                           ADDRESS FOR NOTICE

                           c/o  SRG Capital, LLC
                              -----------------------------------------------

                           Street:   120 Broadway, 49th Fl.
                                   ------------------------------------------

                           City/State/Zip:   New York, NY 10271
                                           ----------------------------------

                           Attention:  Yoav Roth
                                      ---------------------------------------

                           Tel:       212-571-1244
                                    -----------------------------------------

                           Fax:       212-571-1279
                                    -----------------------------------------

                           DELIVERY INSTRUCTIONS
                           (if different from above)

                           c/o:
                                ---------------------------------------------

                           Street:
                                  -------------------------------------------

                           City/State/Zip:
                                           ----------------------------------

                           Attention:
                                      ---------------------------------------

                           Tel:
                                    -----------------------------------------

                                       29





<PAGE>




IN WITNESS WHEREOF, the parties have executed this Security Purchase Agreement
as of the date first written above.

                           NAME OF INVESTOR

                           TCMP3 PARTNERS

                           By:  /s/ Steven E. Slawson
                              --------------------------------------------
                           By: Name: Steven E. Slawson
                               Title: Principal

                           Investment Amount: $200,000.00
                                               ---------------------------

                           Tax ID No.:
                                       -----------------------------------

                           ADDRESS FOR NOTICE

                           c/o Titan Capital Management
                              --------------------------------------------

                           Street:   7 Century Drive, Suite 201
                                   ---------------------------------------

                           City/State/Zip:   Parsippany, NJ 07054
                                          --------------------------------
                           Attention: Steven Slawson

                           Tel:       973-829-1334
                                    --------------------------------------

                           Fax:       973-540-0702
                                    --------------------------------------

                           DELIVERY INSTRUCTIONS
                           (if different from above)

                           c/o:
                                ------------------------------------------

                           Street:
                                  ----------------------------------------

                           City/State/Zip:
                                           -------------------------------

                           Attention:
                                      ------------------------------------

                           Tel:
                                    --------------------------------------


                                       30





<PAGE>



IN WITNESS WHEREOF, the parties have executed this Security Purchase Agreement
as of the date first written above.

                          NAME OF INVESTOR

                          BRISTOL INVESTMENT FUND, LTD.

                          By:  /s/ Paul Kessler
                             --------------------------------------------
                          By: Name: Paul Kessler
                              Title: Director

                          Investment Amount: $300,000.00
                                             ----------------------------

                          Tax ID No.:
                                      -----------------------------------

                          ADDRESS FOR NOTICE

                          c/o  Bristol Capital Advisors, LLC
                             --------------------------------------------

                          Street:   10990 Wilshire Boulevard, Suite 1410
                                 ----------------------------------------

                          City/State/Zip:   Los Angeles, CA 90024
                                         --------------------------------

                          Attention: Amy Wang, Esq.
                                     ------------------------------------

                          Tel:       (310) 696-0333 ext. 100
                                   --------------------------------------

                          Fax:       (310) 696-0334
                                   --------------------------------------

                          DELIVERY INSTRUCTIONS
                            (if different from above)

                          c/o:
                               ------------------------------------------

                          Street:
                                 ----------------------------------------

                          City/State/Zip:
                                          -------------------------------

                          Attention:
                                     ------------------------------------

                          Tel:
                                   --------------------------------------


                                       31

</TEXT>
</DOCUMENT>
