EXHIBIT 10.8
 
EMPLOYEE RESTRICTED STOCK GRANT AGREEMENT

 
This Restricted Stock Purchase Agreement dated as of August 4, 2006 (this
“Agreement”) is made by and between Technest Holdings, Inc., a Nevada
corporation (including, as context requires, its subsidiaries the “Company”),
and Joseph P. Mackin (the “Grantee”).
 
1. Definitions. As used in this Agreement, the following terms shall have the
following meanings:
 
Cause: The Executive has (i) willfully or recklessly breached the provisions of
the Employee Proprietary Information and Non-Competition Agreement between
Grantee and the Company, in any material respect; (ii) engaged in willful
misconduct which has resulted in material financial harm to the Company; (iii)
committed fraud or embezzlement in connection with the Company’s business; or
(iv) been convicted or has pleaded nolo contendere to a felony or a crime of
moral turpitude.
 
Qualified Sale: The sale of all or substantially all of assets or issued and
outstanding capital stock of the Company, or merger or consolidation involving
the Company in which stockholders of the Company immediately before such merger
or consolidation do not own immediately after such merger or consolidation
capital stock or other equity interests of surviving corporation or entity
representing more than fifty percent in voting power of capital stock or other
equity interests of such surviving corporation or entity outstanding immediately
after such merger or consolidation.
 
Service: Service as an employee, officer or director of, or a consultant or
advisor to, the Company or its successors.
 
Shares: The shares of Common Stock issued to Grantee hereunder and any other
securities of the Company which may be issued in exchange for or in respect of
such shares of Common Stock, whether by way of stock split, stock dividend,
combination of shares, reclassification, recapitalization, reorganization or any
other means.
 
Unvested Shares: Any Shares that are not Vested Shares.
 
Vested: Released from the Company’s Forfeiture Right (as defined in Section
5(a)).
 
Vested Shares: Any Shares that have vested in accordance with Section 5(b).
 
 
 

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2. Grant of Shares. The Company hereby grants to Grantee, and Grantee hereby
accepts from the Company, that number of shares of the Company’s common stock,
$0.001 par value per share (“Common Stock”), that equals $82,500 (which is
twenty-five percent of Grantee’s assumed remaining debt with the Company1 )
divided by the closing price of the Company’s Common Stock on the closing date
of the Bank Financing (as defined below). After the date hereof, the exact
number of shares granted pursuant to this Agreement shall be set forth in
Schedule A, which shall be deemed to be part of this Agreement. Grantee and the
Company hereby agree that such shares are granted as consideration for the
Grantee agreeing to subordinate Grantee’s promissory note dated June 29, 2004 in
connection with the Company’s bank financing with Silicon Valley Bank (the “Bank
Financing”).
 
3. Representations of Grantee. Grantee understands that the Shares are not
registered under the Securities Act of 1933, as amended (the “Act”), and
represents to the Company, and agrees that the Company is entitled to rely on
such representations, as follows:
 
(a) Grantee understands that the Shares have not been registered under the Act,
or registered or qualified under the securities or “Blue Sky” laws of any
jurisdiction, and are being sold pursuant to exemptions contained in the Act and
exemptions contained in other applicable securities or “Blue Sky” laws. Grantee
understands further that the Company’s reliance on these exemptions is based in
part on the representations made by Grantee in the Agreement. In this
connection, Grantee represents and warrants that the offer and sale of the
Shares were made solely in Virginia.
 
(b) Grantee is acquiring the Shares for Grantee’s own account for investment,
and not for, with a view to, or in connection with the resale or distribution
thereof. Grantee has no present intention to sell, hypothecate, distribute or
otherwise transfer the Shares or any portion thereof or any interest therein.
 
(c) Grantee understands that the Shares will constitute “restricted securities”
within the meaning of Rule 144 promulgated under the Act and that, as such, the
Shares must be held indefinitely unless they are subsequently registered under
the Act or unless an exemption from the registration requirements thereof is
available.
 
(d) In connection with Grantee’s acquisition of the Shares, Grantee accepts the
condition that the Company may maintain “stop transfer” orders with respect to
the Shares and that each certificate or other document evidencing the Shares
will bear conspicuous legends in substantially the form set forth in Section 7
of this Agreement. 
 
(e) Grantee has obtained all financial or legal advice as Grantee deems
necessary with respect to Grantee’s acquisition of the Shares. Grantee has fully
investigated the Company and its business and financial condition, to include a
review of the Company’s pubic filings with the Securities and Exchange
Commission, and has knowledge of the Company’s current activities.
 
 

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1 The amount of remaining debt with the Company assumes that a June 2006
principal payment of $305,620.47 was made, when, in fact, it was deferred until
July 2007.

 
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4. Restrictions on Transfer. The following restrictions on transfer of the
Shares shall apply:
 
(a) Securities Laws. Except for the forfeiture of Unvested Shares to the Company
as contemplated by Section 5, no Shares, nor any interest therein, may be sold,
assigned, pledged or otherwise transferred at any time or under any
circumstances unless the Shares proposed to be transferred have been registered
under the Act and qualified under applicable state securities laws, or (ii) the
Company has received, or agreed to waive, an opinion of counsel acceptable to
the Company to the effect that such transfer may be effected without
registration under the Act or qualification under the securities laws of
relevant states and the proposed transferee has made such representations and
agreements as the Company shall require to assure compliance with the Act and
such laws.
 
(b) Unvested Shares. Except for forfeitures of Unvested Shares to the Company as
contemplated by Section 5, no Shares, nor any interest therein, may be sold,
assigned, pledged or otherwise transferred until such Shares shall have Vested
as defined in Section 5.
 
(c) Remedies. No sale, assignment, pledge or other transfer of Shares shall be
effective or given effect on the books of the Company unless all of the
applicable provisions of this Section 4 have been duly complied with. In
addition to any other legal or equitable remedies which it may have, the Company
may enforce its rights by actions for specific performance (to the extent
permitted by law) and may refuse to recognize any transferee as one of its
stockholders for any purpose, including, without limitation, for purposes of
dividend and voting rights, until all applicable provisions hereof have been
complied with.
 
5.  Forfeiture of Unvested Shares. 
 
(a) Forfeiture upon Termination. In the event of the termination of Grantee’s
Service by Grantee voluntarily (other than through a planned retirement which
the Company has been already notified of) or the termination of Grantee’s
Service by the Company for Cause, upon the date of such termination (the
“Termination Date”) all the Unvested Shares shall be forfeited to the Company.
As a result of any forfeiture of Unvested Shares pursuant to this Section 5(a),
the Company shall become the legal and beneficial owner of the Unvested Shares
being forfeited and shall have all rights and interest therein or related
thereto, and the Company shall have the right to transfer to its own name the
number of Unvested Shares being forfeited to the Company, without further action
by Grantee.
 
(b) Vesting.
 
(i) The Shares will become vested on the 18-month anniversary of the closing
date of the Bank Financing, provided, however, that the vesting of Shares on any
such vesting date shall be conditioned upon Grantee’s continuing Service with
the Company from the date hereof through such vesting date in accordance with
Section 5 (a).
 
(ii) Notwithstanding Section 5(b)(i), all Shares shall be deemed to have vested
immediately prior to the consummation of a Qualified Sale. 
 
 
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6. Custody of Certificates. In order to facilitate the exercise of Section 5(a),
the Company or its counsel shall hold all certificates representing Unvested
Shares, together with an adequate number of undated and otherwise blank stock
powers executed by Grantee. The Company shall have the right to cause transfers
of Unvested Shares to be effected pursuant to Section 5. After any Shares become
Vested Shares, the Company shall, upon request of Grantee, deliver to Grantee a
certificate or certificates representing such Vested Shares.
 
7. Legends. Each certificate representing Shares shall prominently bear legends
in substantially the following forms, to the extent applicable:
 
These securities have not been registered under the Securities Act of 1933. They
may not be sold, offered for sale, pledged or hypothecated in the absence of a
registration statement in effect with respect to the securities under such Act
or an opinion of counsel satisfactory to the Company that such registration is
not required.
 
The Company is authorized to issue more than one class or series of stock. The
powers, designations, preferences and relative participating, optional or other
special rights, and the qualifications, limitations or restrictions of such
preferences and/or rights of each class of stock or series of any class set
forth in the Articles of Incorporation of the Company. The Company will furnish
a copy of the Certificate of Incorporation of the Company to the holder of this
certificate without charge upon request.
 
The securities represented by this certificate are subject to restrictions on
transfer and forfeiture rights pursuant to the terms of a Restricted Stock Grant
Agreement, as amended from time to time, between the owner of this certificate
and the Company. The Company will furnish a copy of this agreement to the holder
hereof without charge upon written request.
 
8. Miscellaneous.
 
(a) Entire Agreement. This Agreement in conjunction with the Employment
Agreement constitute the entire agreement between the parties with respect to
the subject matter hereof, and supersedes all prior agreements, negotiations,
representations and proposals, written or oral, relating to such subject matter.
 
(b) Amendments. Neither this Agreement nor any provision hereof may be changed
or modified except by an agreement in writing executed by Grantee and on behalf
of the Company.
 
(c) Binding Effect of the Agreement. This Agreement shall inure to the benefit
of, and be binding upon, the Company, Grantee and their respective estates,
heirs, executors, transferees, successors, assigns and legal representatives.
 
 
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(d) Provisions Severable. In the event that any provision of this Agreement
shall be determined to be invalid, illegal or otherwise unenforceable by any
court of competent jurisdiction, the validity, legality and enforceability of
the other provisions of this Agreement shall not be affected thereby. Any
invalid, illegal or unenforceable provision of this Agreement shall be severed,
and after any such severance, all other provisions hereof shall remain in full
force and effect.
 
(e) Notices. All notices under this Agreement shall be effective (i) upon
personal or facsimile delivery, (ii) two business days after deposit in the
United States mail as registered or certified mail postage fully prepaid, or
(iii) one business day after pickup by any overnight commercial courier service,
in each case sent or addressed to the Company at its principal office and to
Grantee at his record address as carried in the stock records of the Company or
at such other address as he may from time to time designate in writing to the
Company.
 
(f)  Construction. A reference to a Section shall mean a Section of this
Agreement unless otherwise expressly stated. The titles and headings herein are
for reference purposes only and shall not in any manner limit the construction
of this Agreement which shall be considered as a whole. The words “include,”
“includes” and “including” when used herein shall be deemed in each case to be
followed by the words “without limitation.” Whenever the context may require,
any pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.
 
(g) No Employment Agreement. This Agreement shall not be construed as an
agreement by the Company to employ Grantee, nor is the Company obligated to
employ Grantee by reason of this Agreement or the issuance of the Shares to
Grantee.
 
(h) Section 83(b) Election. Grantee will furnish to the Company a copy of any
election made by Grantee under Section 83(b) of the Internal Revenue Code of
1986, as amended, with respect to his acquisition of the Shares.
 
(i) Applicable Law. This Agreement shall be construed and enforced in accordance
with the laws of The Commonwealth of Virginia, without regard to its principles
of conflicts of laws. Grantee consents to jurisdiction and venue in any state or
federal court in The Commonwealth of Virginia for the purposes of any action
relating to or arising out of this Agreement or any breach or alleged breach
hereof, and to service of process in any such action by certified or registered
mail, return receipt requested.
 
(j) Disposition of Shares; Purchase by Nominee or Designee. Any Shares that the
Company elects to purchase hereunder may be disposed of by it in such manner as
it deems appropriate with or without restrictions on the transfer thereof, and
the Company may require their transfer to a nominee or designee as part of any
purchase of the Shares from Grantee.
 
 
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(k) Withholding Taxes. Grantee acknowledges and agrees that the Company has the
right to deduct from payments of any kind otherwise due to Grantee any federal,
state or local taxes of any kind required by law to be withheld with respect to
the granting and vesting of the Shares to Grantee. Grantee agrees that he shall,
no later than the date as of which the value of any portion of the Shares first
becomes includable in the gross income of the Grantee for Federal income tax
purposes, pay to the Company, or make arrangements satisfactory to the Company
regarding payment of any Federal, state, local and/or payroll taxes of any kind
required by law to be withheld with respect such income. The Company and its
affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the participant.

(l) Arbitration. Any dispute or controversy arising in connection with this
Agreement shall be determined and settled by arbitration in Boston,
Massachusetts by a panel of three members who shall be selected, and such
arbitration shall be conducted, in accordance with the commercial arbitration
rules of the American Arbitration Association. Any award rendered therein shall
be final and binding upon the parties hereto and their legal representatives and
judgment upon any such award may be entered in any court having jurisdiction
thereof. Each party shall bear its own expenses, including fees and
disbursements of its attorneys, accountants, and financial experts, and the
parties shall each pay 50% of all arbitration fees and expenses of the
arbitrators.

(j) Pursuant to Plan. This grant of Restricted Stock shall be subject in every
respect to the provisions of the Company’s 2006 Stock Award Plan (the “Plan”),
as amended from time to time, which is incorporated herein by reference and made
a part hereof. The Grantee hereby accepts this grant of Restricted Stock subject
to all the terms and provisions of the Plan and agrees that (i) in the event of
any conflict between the terms hereof and those of the Plan, the latter shall
prevail, and (ii) all decisions under and interpretations of the Plan by the
Board of Directors of the Company or the Committee, as defined in the Plan,
shall be final, binding and conclusive upon the Grantee and his heirs and legal
representatives.

 
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IN WITNESS WHEREOF, the parties hereto have executed this Restricted Stock Grant
Agreement as of the date first above written.
 
Technest Holdings, Inc. 
 
By: /s/ Gino Pereira                                  
Name: Gino Pereira                                   
Title: Chief Financial Officer                 
 
 
GRANTEE:
 
 
/s/ Joseph P. Mackin                              
Joseph P. Mackin
 
 
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STOCK POWER
([____________])
 
 
FOR VALUE RECEIVED, [____________] hereby sells, assigns and transfers to
Technest Holdings, Inc., a Nevada corporation (the “Company”), a total of
______________ shares of the Common Stock of the Company standing in his name on
the books of the Company represented by stock certificate number ___ to be
delivered herewith, and does hereby irrevocably constitute and appoint
______________________ as attorney to transfer said shares on the books of the
Company with full power of substitution in the premises.
 
 
Dated: ___________________
 
______________________________
[____________]
 

In the Presence of:
 
_______________________________
Name:

 
 
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SCHEDULE A

Number of Shares of Common Stock: 23,913
 
 

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