Escrow Agreement


    Exhibit
      10.3

    


    


    ESCROW
      AGREEMENT

    


    


    ESCROW
      AGREEMENT (this “Agreement”) made as of March 24, 2006 by and among Markland
      Technologies, Inc., a Florida corporation (“Markland”), James LLC, Southridge
      Partners LP, Southshore Capital Fund Ltd. and Brittany Capital Management,
      Ltd.
      (collectively, the “Investors”), Greenfield Capital Partners, LLC
      (“Greenfield”), Southridge Capital Management LLC, as representative of the
      Investors and Greenfield (the “Representative”), and Greenberg Traurig, LLP, as
      escrow agent (the “Escrow Agent”).

    


    WHEREAS,
      Markland and the Investors are parties to that certain Redemption and Securities
      Purchase Agreement, dated as of the date hereof (the “Redemption Agreement”),
      pursuant to which the Investors will acquire shares of Markland’s Series E
      Preferred Stock, par value $.0001 per share (the “Series E Preferred
      Stock”);

    


    WHEREAS,
      Markland and Greenfield are parties to that certain Termination Agreement,
      dated
      as of the date hereof, pursuant to which Greenfield will acquire shares of
      Series E Preferred Stock;

    


    WHEREAS,
      pursuant to its terms, the Series E Preferred Stock is convertible into
      outstanding shares of common stock, par value $.001 per share (the “Technest
      Common Stock”), of Technest Holdings, Inc., a Nevada corporation (“Technest”),
      which shares are currently held by Markland;

    


    WHEREAS,
      Markland and the Investors are also party to that certain Registration Rights
      Agreement, dated as of the date hereof (the “Registration Rights
      Agreement”);

    


    WHEREAS,
      in connection with certain “Events” outlined in the Registration Rights
      Agreement, Markland may be required to pay, as partial liquidated damages,
      additional shares of Technest Common Stock to the Investors; and

    


    WHEREAS,
      in order to secure the conversion rights associated with the Series E Preferred
      Stock and the potential payment of liquidated damages under the Registration
      Rights Agreement, Section 5 of the Redemption Agreement provides for Markland
      to
      deposit an aggregate 3,804,000 shares of Technest Common Stock with the Escrow
      Agent to hold and distribute pursuant to this Agreement (an additional 500,000
      shares of Technest Common Stock will be deposited hereunder to help secure
      the
      conversion rights of Greenfield’s shares of Series E Preferred
      Stock).

    


    NOW,
      THEREFORE, in consideration of these premises and for other good and valuable
      consideration, the receipt and sufficiency of which is hereby acknowledged,
      the
      parties hereto hereby agree as follows.

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    1. Appointment
      of the Escrow Agent and Representative.

     

    1.1 Escrow
      Agent. The Escrow Agent is hereby appointed as escrow agent for the purposes
      set
      forth herein, and the Escrow Agent hereby accepts such appointment on the terms
      set forth herein.

     

    1.2 Representative.
      The Representative is hereby appointed as agent and representative of the
      Investors and Greenfield for the purposes set forth herein, and the
      Representative accepts such appointment on the terms set forth
      herein.

     

    2. Escrow
      Shares.

     

    2.1 Deposit.
      In
      accordance with Section 5 of the Redemption Agreement, on the date of the
      Initial Closing (as defined in the Redemption Agreement), Markland shall deposit
      with the Escrow Agent one or more certificates representing an aggregate of
      3,804,000 shares of Technest Common Stock. In addition, on the date of the
      Initial Closing, Markland shall deposit with the Escrow Agent an additional
      500,000 shares of Technest Common Stock to help secure the conversion rights
      of
      Greenfield’s shares of Series E Preferred Stock. The aggregate 4,304,000 shares
      of Technest Common Stock being deposited hereunder are referred to herein as
      the
“Escrow Shares.” Although the Escrow Shares shall be issued in the name of the
      Escrow Agent or its nominee, as Escrow Agent, all Escrow Shares shall be held
      by
      the Escrow Agent for the benefit of Markland until such shares become the
      property of the Investors and/or Greenfield in accordance with this Agreement.
      If during the term of this Agreement there is declared a stock dividend or
      stock
      split, all securities thereby issuable with respect to the Escrow Shares shall
      be deposited hereunder and shall be deemed “Escrow Shares” for the purposes of
      this Agreement and if, in connection therewith, the Escrow Agent is required
      by
      the terms of such stock dividend or stock split to exchange the certificates
      then held by it for a different number of shares or certificates it is hereby
      irrevocably authorized to do so. If during the term of this Agreement, and
      prior
      to the Escrow Shares becoming property of the Investors and/or Greenfield,
      there
      is paid to the Escrow Agent any dividends in cash or other property (other
      than
      securities) in respect of the Escrow Shares, such dividends shall be paid
      promptly by the Escrow Agent to Markland. If during the term of this Agreement,
      and following the Escrow Shares becoming property of the Investors and/or
      Greenfield, but prior to the distribution of such Escrow Shares to the Investors
      and/or Greenfield, there is paid to the Escrow Agent any dividends in cash
      or
      other property (other than securities) in respect of the Escrow Shares, such
      dividends shall be paid promptly by the Escrow Agent to the Representative,
      who
      shall then disburse such dividends to the proper Investors and/or Greenfield.
      The Escrow Shares shall be disbursed by the Escrow Agent in accordance with
      the
      terms of this Agreement.

     


    
      
        
        

      

      
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    2.2 Voting
      of
      Escrow Shares. The Escrow Shares held by the Escrow Agent pursuant to this
      Agreement shall be deemed issued and outstanding, shall appear as issued and
      outstanding in Technest’s stock records, and shall be legally outstanding under
      applicable state law. With respect to any matter on which stockholders of
      Technest have a right to vote, the Escrow Agent, upon receipt of written notices
      to such effect, on behalf of Markland, acting at the written direction of
      Markland received not less than three (3) business days prior to such vote,
      shall exercise the right to vote, or not vote, all Escrow Shares (or any portion
      thereof); provided, however, that the Escrow Agent shall at the expense of
      Markland promptly forward, or cause to be forwarded, copies of any proxies,
      proxy statements or other materials which it receives to Markland, and shall
      vote the applicable portion of the Escrow Shares in accordance with any written
      instructions timely received by the Escrow Agent from Markland. Absent any
      such
      written instructions, the Escrow Agent shall not vote any Escrow
      Shares.

     

    3. Distribution
      of Escrow Shares. The Escrow Agent shall not distribute all or any portion
      of
      the Escrow Shares to any party, except in accordance with this Section
      3.

     

    3.1 Distribution
      Upon Conversion of Series E Preferred Stock.

     

    a. Notice
      of Conversion.
      Upon
      the Escrow Agent’s receipt of a duly executed Notice of Conversion (as defined
      in the Articles of Amendment to the Articles of Incorporation of Markland
      creating the Series E Preferred Stock (the “Series E Articles”)) from a holder
      of Series E Preferred Stock in accordance with the Series E Articles, the Escrow
      Agent shall deliver (or cause to be delivered) certificates representing the
      shares of Technest Common Stock issuable upon conversion of the shares of Series
      E Preferred Stock being converted (the “Conversion Shares”) out of the Escrow
      Shares to the holder of the Series E Preferred Stock being converted (a
“Converting Holder”) at the address specified in the Notice of Conversion, via
      express courier, by electronic transfer or otherwise. The number of Conversion
      Shares shall be based on the most recent existing Conversion Ratio (as defined
      in the Series E Articles) as to which the Escrow Agent has then been notified
      by
      Markland.

     

    b. Dispute
      Notices.
      The
      Escrow Agent will use commercially reasonable efforts to cause the Conversion
      Shares to be issued to the Converting Holders as soon as practicable, but no
      earlier than three (3) Business Days following receipt by the Escrow Agent
      of
      the Notice of Conversion; provided, however, that if within the period of two
      (2) Business Days following receipt by the Escrow Agent of the Notice of
      Conversion, the Escrow Agent shall have received from Markland a written notice
      (a “Conversion Dispute Notice”) stating that Markland disputes in good faith the
      validity of or the number of Conversion Shares specified in such Notice of
      Conversion or any portion thereof (a “Conversion Disputed Amount”) and providing
      in reasonable detail the reasons therefor, the Escrow Agent shall transfer
      any
      Conversion Shares to the Converting Holder that are not the subject of a
      dispute, but shall not transfer any such Conversion Disputed Amount, with
      respect to such disputed conversion, to the Converting Holder other than
      pursuant to Section 4.1 of this Agreement. Markland shall send a copy of each
      Conversion Dispute Notice to the Converting Holder at the same time that such
      Conversion Dispute Notice is sent to the Escrow Agent. For purposes of this
      Agreement, the term “Business Day” means any day (other than a Saturday or
      Sunday) on which (A) the New York Stock Exchange is open and (B) banks are
      not
      authorized or required to close in Boston, Massachusetts or Wilmington,
      Delaware.

     


    
      
        
        

      

      
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    c. If
      the
      Escrow Agent shall not have received a Conversion Dispute Notice with respect
      to
      the number of Conversion Shares specified in a Notice of Conversion, or any
      portion thereof, within the period of two (2) Business Days following its
      receipt of such Notice of Conversion, Markland shall be forever barred and
      precluded from contesting in any manner or forum whatsoever the distribution
      of
      Escrow Shares not so disputed.

     

    d. If
      at any
      time the number of Conversion Shares exceeds the number of Escrow Shares then
      held by the Escrow Agent, the Escrow Agent shall have no liability or
      responsibility for any deficiency.

     

    3.2 Distributions
      to Holders as Payment of Liquidated Damages Under the Registration Rights
      Agreement.

     

    a. If
      the
      Holders (as defined in the Registration Rights Agreement) are entitled to
      liquidated damages under Section 2(b) of the Registration Rights Agreement,
      the
      Representative shall deliver to the Escrow Agent (with a copy to Markland)
      a
      written notice (a “Liquidated Damages Notice”) setting forth in reasonable
      detail the nature of the claim and an estimate of the number of Escrow Shares
      (the “Liquidated Damages Shares”) which the Representative believes the Holders
      are entitled to be paid pursuant to the Registration Rights Agreement. The
      Liquidated Damages Notice shall specify the exact number of Escrow Shares that
      the Representative believes that each Holder is entitled to under the
      Registration Rights Agreement, as well as delivery instructions for each
      Holder.

     

    b. Dispute
      Notices.
      The
      Escrow Agent will use commercially reasonable efforts to cause the Liquidated
      Damages Shares to be issued to the Holders as soon as practicable, but no
      earlier than six (6) Business Days following receipt by the Escrow Agent of
      the
      Liquidated Damages Notice; provided, however, that if within the period of
      five
      (5) Business Days following receipt by the Escrow Agent of the Liquidated
      Damages Notice, the Escrow Agent shall have received from Markland a written
      notice (a “Liquidated Damages Dispute Notice”) stating that Markland disputes in
      good faith the validity of or the number of Liquidated Damages Shares specified
      in such Liquidated Damages Notice or any portion thereof (a “Liquidated Damages
      Disputed Amount”) and providing in reasonable detail the reasons therefor, the
      Escrow Agent shall transfer any Liquidated Damages Shares to the Holders that
      are not the subject of a dispute, but shall not transfer any such Liquidated
      Damages Disputed Amount, with respect to such disputed amount, to the Holders
      other than pursuant to Section 4.2 of this Agreement. Markland shall send a
      copy
      of each Liquidated Damages Dispute Notice to the Representative at the same
      time
      that such Liquidated Damages Notice Dispute Notice is sent to the Escrow
      Agent.

     

    c. If
      the
      Escrow Agent shall not have received a Liquidated Damages Dispute Notice with
      respect to the number of Liquidated Damages Shares specified in a Liquidated
      Damages Notice, or any portion thereof, within the period of five (5) Business
      Days following its receipt of such Liquidated Damages Notice, Markland shall
      be
      forever barred and precluded from contesting in any manner or forum whatsoever
      the distribution of Escrow Shares not so disputed.

     


    
      
        
        

      

      
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    d. If
      at any
      time the number of Liquidated Damages Shares exceeds the number of Escrow Shares
      then held by the Escrow Agent, the Escrow Agent shall have no liability or
      responsibility for any deficiency.

     

    3.3 Release
      of Escrow Shares to Markland.

     

    a. Upon
      the
      effectiveness of the first Registration Statement contemplated by Section 2(a)
      of the Registration Rights Agreement, Markland and the Representative shall
      negotiate in good faith to determine an equitable number of Escrow Shares (the
      “Equitable Number”) to be released to Markland. Markland and the Representative
      shall use their best efforts to determine the Equitable Number within 30 days
      of
      the effective date of such Registration Statement. As soon as practicable
      following the Escrow Agent’s receipt of a fully executed written agreement
      between Markland and the Representative with respect to the Equitable Number,
      a
      number of Escrow Shares equal to the Equitable Number shall be released to
      Markland.

     

    b. Upon
      the
      termination of the Effectiveness Period (as defined in the Registration Rights
      Agreement), a number of shares equal to (i) 465,000 minus
      (ii) the
      number of Escrow Shares released pursuant to Section 3.3(a) minus
      (iii)
      the number of Liquidated Damages Shares transferred pursuant to this Agreement,
      shall be released to Markland.

     

    c. Upon
      termination of this Agreement pursuant to Section 5 below, any remaining Escrow
      Shares shall be released to Markland.

     

    4. Disputed
      Amounts. 

     

    4.1 Conversion
      Disputes. Upon receipt by the Escrow Agent of a written notice from Markland
      and/or a Converting Holder with respect to a Conversion Disputed Amount
      specifying the number of Conversion Shares to which such Converting Holder
      is
      entitled, accompanied by (i) a fully executed written agreement between Markland
      and such Converting Holder with respect to such Conversion Disputed Amount
      or
      (ii) a certified copy of a final, nonappealable order of a court or arbitrator
      or tribunal of arbitrators of competent jurisdiction determining the number
      of
      Conversion Shares to which the Converting Holder is entitled, the Escrow Agent
      shall transfer to such Converting Holder from the Escrow Shares such number
      of
      Conversion Shares (to the extent not previously transferred).

     

    4.2 Liquidated
      Damages Disputes. Upon receipt by the Escrow Agent of a written notice from
      Markland and/or the Representative with respect to a Liquidated Damages Disputed
      Amount specifying the number of Liquidated Damages Shares to which the Holders
      are entitled, accompanied by (i) a fully executed written agreement between
      Markland and the Representative with respect to such Liquidated Damages Disputed
      Amount or (ii) a certified copy of a final, nonappealable order of a court
      or
      arbitrator or tribunal of arbitrators of competent jurisdiction determining
      the
      number of Liquidated Damages Shares to which the Holders are entitled, the
      Escrow Agent shall transfer to the Holders from the Escrow Shares such number
      of
      Liquidated Damages Shares (to the extent not previously
      transferred).

     


    
      
        
        

      

      
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    5. Termination.

     

    5.1 This
      Agreement shall terminate on the later to occur of (i) the termination of the
      Effectiveness Period and (ii) the date on which all shares of Series E Preferred
      Stock have been converted (such later date, the “Termination Date”), if and to
      the extent that there are no outstanding disputes relating to Conversion Shares
      or Liquidated Damages Shares which remain unresolved on the Termination Date.
      If
      that is the case, then on the Termination Date, the Escrow Agent shall release
      any remaining Escrow Shares to Markland.

     

    5.2 If,
      however, on the Termination Date there are outstanding disputes relating to
      Conversion Shares or Liquidated Damages Shares which remain unresolved, then
      this Agreement shall continue in effect until all such disputes have been
      resolved. At such time as all remaining disputes hereunder have been resolved
      pursuant to and in accordance with Sections 4.1 and/or 4.2, as the case may
      be,
      the Escrow Agent shall release any remaining Escrow Shares to
      Markland.

     

    5.3 Anything
      contained herein to the contrary notwithstanding, the provisions of Section
      8
      and Section 10 shall remain in full force and effect and shall survive the
      termination of this Agreement for so long as the Escrow Agent may have any
      liability.

     

    6. Scope
      of
      Undertaking. The Escrow Agent shall have no responsibility or obligation of
      any
      kind in connection with this Agreement and the Escrow Shares, and shall not
      be
      required to deliver the same or any part thereof or take any action with respect
      to any matters that might arise in connection therewith, other than (i) to
      receive, hold, and make delivery of the Escrow Shares as herein expressly
      provided or by reason of a judgment or order of a court of competent
      jurisdiction and (ii) as contemplated by Sections 2.1 and 2.2.

     

    7. Knowledge
      and Sufficiency of Documents. The Escrow Agent shall not be bound by or have
      any
      responsibility with respect to compliance with any agreement between any of
      the
      other parties hereto, irrespective of whether the Escrow Agent has knowledge
      of
      the existence of any such agreement or terms and provisions thereof, the Escrow
      Agent’s only duty, liability, and responsibility being to receive, hold and
      deliver the Escrow Shares as herein provided. The Escrow Agent shall not be
      required in any way to determine the validity or sufficiency, whether in form
      or
      in substance, of the Escrow Shares or the validity, sufficiency, genuineness
      or
      accuracy of any instrument, document, certificate, statement or notice referred
      to in this Agreement or contemplated hereby; or the identity or authority of
      the
      persons executing the same, and it shall be sufficient if any writing purporting
      to be such instrument, document, certificate, statement or notice is delivered
      to the Escrow Agent and purports on its face to be correct in form and signed
      or
      otherwise executed by the party or parties required to sign or execute the
      same
      under this Agreement.

     


    
      
        
        

      

      
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    8. Right
      of
      Interpleader. Should any controversy arise between Markland, on one hand, and
      the Representative, the Investors, Greenfield and/or any Holders, on the other,
      or any other person, firm or entity, with respect to this Agreement, the Escrow
      Shares, or any part thereof, or the right of any party or other person to
      receive the Escrow Shares, or should such parties fail to designate another
      Escrow Agent as provided in Section 15 hereof, or if the Escrow Agent should
      be
      in doubt as to what action to take, the Escrow Agent shall have the right (but
      not the obligation) to (i) withhold delivery of the Escrow Shares until the
      controversy is resolved as provided in Section 4 hereof, the conflicting demands
      are withdrawn or its doubt is resolved as provided in Section 4 hereof, or
      (ii)
      institute a bill of interpleader in any court of competent jurisdiction to
      determine the rights of the parties hereto (the right of the Escrow Agent to
      institute such bill of interpleader, however, shall not be deemed to modify
      the
      manner in which the Escrow Agent is entitled to make disbursements of the Escrow
      Shares as hereinabove set forth, other than to tender the Escrow Shares into
      the
      registry of such court). Should a bill of interpleader be instituted, or should
      the Escrow Agent be threatened with litigation or become involved in litigation
      in any manner whatsoever on account of this Agreement or the Escrow Shares,
      then
      as between themselves and the Escrow Agent, Markland, the Investors and
      Greenfield, jointly and severally, hereby bind and obligate themselves, their
      successors, heirs, executors and assigns to pay the Escrow Agent its reasonable
      attorneys’ fees and any and all other disbursements, expenses, losses, costs and
      damages of the Escrow Agent in connection with or resulting from such threatened
      or actual litigation. Notwithstanding the foregoing, as between themselves,
      Markland, on the one hand, and the Investors and Greenfield, on the other hand,
      shall each pay one-half of all amounts payable to the Escrow Agent pursuant
      to
      this paragraph.

     

    9. Scope
      of
      Duties and Errors in Judgment. It is expressly understood and agreed that the
      Escrow Agent shall be under no duty or obligation to give any notice, or to
      do
      or to omit the doing of any action or anything with respect to the Escrow
      Shares, except to hold the same in the Escrow Account and to make disbursements
      in accordance with the terms of this Agreement. Without limiting the generality
      of the foregoing, it is acknowledged and
      agreed
      that (i) no implied duties shall be read into this Agreement on the part
      of
      the
      Escrow Agent, and (ii) the Escrow Agent shall not be obligated to take any
      legal
      or remedial action which might in its judgment involve it in any expense or
      liability for which it has not been furnished acceptable indemnification. The
      Escrow Agent, its shareholders, associates and employees shall not be liable
      for
      any error in judgment or any
      act
      or
      steps taken or permitted to be taken in good faith, or for any mistake of law
      or
      fact, or for anything it may do or refrain from doing in connection herewith,
      except for its own willful misconduct or gross negligence.

     

    10. Indemnity.
      As between themselves and the Escrow Agent, Markland, the Investors and
      Greenfield, jointly and
      severally,
      agree to indemnify the Escrow Agent against and hold the Escrow Agent harmless
      from any and all losses, costs, damages, expenses, claims, and attorney’s fees
      and expenses suffered or incurred by the Escrow Agent as a result of,
      in
      connection with or arising from or out of the acts or omissions of the Escrow
      Agent in performance of or pursuant to this Agreement, except such acts or
      omissions as may result from the Escrow Agent’s willful misconduct or gross
      negligence. In no event shall the Escrow Agent be liable for indirect, punitive,
      special or consequential damages.

     


    
      
        
        

      

      
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    Markland,
      the Investors and Greenfield, jointly and severally, agree to assume any and
      all
      obligations imposed now or hereafter by any applicable tax
      law
      with
      respect to the distribution of Escrow Shares under this Agreement, and to
      indemnify and hold the Escrow Agent harmless from and against any taxes,
      additions for late payment, interest, penalties and other expenses, that may
      be
      assessed against the Escrow Agent in any such payment or other activities under
      this Agreement. Markland and the Representative undertake to instruct the Escrow
      Agent in writing with respect to the Escrow Agent’s responsibility for
      withholding and other taxes, assessments, or other governmental charges,
      certifications and
      governmental
      reporting in connection with its acting as Escrow Agent under this Agreement.
      Markland, the Investors and Greenfield, jointly and severally, agree to
      indemnify and
      hold
      the
      Escrow Agent harmless from any
      liability
      on account of taxes, assessments or other governmental charges, including,
      without limitation, the withholding or deduction or the failure to withhold
      or
      deduct the same, and any liability for failure to obtain proper certifications
      or to properly report to governmental authorities, to which the Escrow Agent
      may
      be or become subject in connection with or which arises out of this Agreement,
      including costs and expenses (including reasonable legal fees and expenses),
      interest and penalties.

     

    Notwithstanding
      the foregoing, as between themselves, Markland, on the one hand, and the
      Investors and Greenfield, on the other, shall each pay one-half of all amounts
      payable to the Escrow Agent pursuant to this paragraph.

     

    11. Responsibilities
      of the Representative.

     

    11.1 General.
      The Representative has been designated by the Investors and Greenfield to
      represent the Investors and Greenfield with respect to the Escrow Shares
      pursuant to the terms of this Agreement. The duties of the Representative
      hereunder shall be limited to the observance of the express provisions of this
      Agreement. The Representative shall not be subject to, or be obliged to
      recognize, any other agreement between the parties hereto or directions or
      instructions not specifically set forth or provided for herein or in the
      Redemption Agreement.

     

    11.2 Reimbursement
      of Expenses of the Representative. The Investors and Greenfield shall reimburse
      the Representative for reasonable out-of-pocket expenses incurred by the
      Representative in the performance of his duties hereunder.

     

    11.3 Duties.
      The Investors and Greenfield hereby authorize and direct the Representative
      to
      take all action necessary in connection with the implementation of this
      Agreement on behalf of the Investors, including, without limitation, giving
      and
      receiving all notices required to be given under this Agreement, settling any
      dispute arising hereunder and executing all such documents as the Representative
      shall deem necessary or appropriate in connection with the transactions
      contemplated by this Agreement. All decisions and actions by the Representative
      shall be binding upon all of the Investors and Greenfield, and the Investors
      and
      Greenfield shall have no right to object, dissent, protest or otherwise contest
      the same.

     


    
      
        
        

      

      
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    11.4 Reliance.
      By their execution of this Agreement, the Investors and Greenfield agree that
      (i) Markland and the Escrow Agent shall be able to rely conclusively on the
      instructions and decisions of the Representative as to any actions required
      or
      permitted to be taken by the Investors, Greenfield or the Representative
      hereunder, and no party hereto shall have any cause of action against any other
      for any action taken in reliance upon the instructions or decisions of the
      Representative, (ii) all actions, decisions and instructions of the
      Representative shall be conclusive and binding upon all of the Investors and
      Greenfield, and the Investors and Greenfield shall have no cause of action
      against the Representative or any other person for any action taken, decision
      made or instruction given by the Representative under this Agreement, except
      for
      gross negligence, breach of fiduciary duties owed to the Investors and
      Greenfield, fraud or willful breach of this Agreement by the Representative
      and
      (iii) the provisions of this Section 11 are independent and severable, shall
      constitute an irrevocable power of attorney, coupled with an interest and
      surviving death, granted by the Investors and Greenfield to the Representative
      and shall be binding upon the executors, heirs, legal representatives and
      successors of each Investor and Greenfield.

     

    12. Notices.
      Any notice, request, demand or other communication required or permitted
      hereunder shall be in writing and shall be deemed to have been given if
      delivered or sent by facsimile transmission, upon receipt, or if sent by
      registered or certified mail, upon the sooner of the date on which receipt
      is
      acknowledged or the expiration of three days after deposit in United States
      post
      office facilities properly addressed with postage prepaid. All notices to a
      party will be sent to the addresses set forth below or to such other address
      or
      person as such party may designate by notice to each other party
      hereunder:

     

    
      	
              TO
                MARKLAND:

            	 	
              Markland
                Technologies, Inc.

            
	 	 	
              88
                Royal Little Drive

            
	 	 	
              Providence,
                RI 02904

            
	 	 	
              Attn:
                Robert Tarini

            
	 	 	
              Fax:401-454-1806

            
	 	 	 
	
              With
                a copy to:

            	 	
              Greenberg
                Traurig, LLP

            
	 	 	
              One
                International Place

            
	 	 	
              Boston,
                MA 02110

            
	 	 	
              Attn:
                Jonathan Bell, Esq.

            
	 	 	
              Fax:
                (617) 310-6001

            
	 	 	 
	
              TO
                REPRESENTATIVE:

            	 	
              Southridge
                Capital Management LLC

            
	 	 	
              90
                Grove Street, Suite 204

            
	 	 	
              Ridgefield,
                CT 06877

            
	 	 	
              Attn:
                Stephen Hicks

            
	 	 	
              Fax:
                (203) 431-8301

            
	 	 	 
	 	 	 
	
              TO
                ESCROW AGENT:

            	 	
              Greenberg
                Traurig, LLP

            
	 	 	
              One
                International Place

            
	 	 	
              Boston,
                MA 02110

            
	 	 	
              Attn:
                Jonathan Bell, Esq.

            
	 	 	
              Fax:
                (617) 310-6001

            


    

     


    
      
        
        

      

      
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    13. Consultation
      with Legal Counsel. The Escrow Agent may consult with its in--house counsel
      or
      other counsel satisfactory to it in respect to questions relating to its duties
      or responsibilities hereunder or otherwise in connection herewith and shall
      not
      be liable for any action taken, suffered, or omitted by the Escrow Agent in
      good
      faith upon the advice of such counsel. The Escrow Agent may act through its
      shareholders, associates, employees, agents and attorneys.

     

    14. Reimbursement
      of Expenses. The Escrow Agent shall be entitled to reimbursement from Markland
      of all its reasonable costs and expenses, including reasonable fees and expenses
      of legal counsel incurred by it in connection with the preparation, operating,
      administration and enforcement of this Agreement. The Escrow Agent shall be
      entitled to reimbursement on demand for all expenses incurred in connection
      with
      the administration of this Agreement or the escrow created hereby which are
      in
      excess of its compensation for normal services hereunder, including, without
      limitation, payment of any legal fees and expenses incurred by the Escrow Agent
      in connection with resolution of any dispute by any party hereunder.
      Notwithstanding the foregoing, with respect to any such costs and expenses
      incurred in connection with a dispute, Markland, on the one hand, and the
      Investors and Greenfield, on the other, shall each pay one-half of all amounts
      payable to the Escrow Agent pursuant to this paragraph.

     

    15. Resignation.
      The Escrow Agent may resign upon 10 days’ prior written notice to Markland and
      the Representative, and upon the written instruction of Markland and the
      Representative, the Escrow Agent shall deliver the Escrow Shares to any
      designated substitute Escrow Agent mutually agreeable to such parties. If
      Markland and the Representative fail to designate a substitute Escrow Agent
      within 10 days, the Escrow Agent, in its sole discretion and its sole option,
      either may (i) continue to hold the Escrow Shares, or (ii) institute a bill
      of
      interpleader as contemplated by Section 8 hereof.

     

    16. Compensation.
      Markland covenants and agrees to pay to the Escrow Agent the fee determined
      by
      the Escrow Agent, from time to time, to be applicable to this escrow and bear
      all costs and expenses incurred by the Escrow Agent in connection therewith;
      provided that the Investors and Greenfield agree to collectively pay one-half
      of
      such costs and expenses to the extent they are incurred in connection with
      a
      dispute.

     

    17. Governing
      Law. This Agreement shall be construed under and governed by the internal laws
      of the State of New York without regard to its conflict of laws provisions.
      The
      parties hereto hereby submit themselves to the jurisdiction of the state and
      federal courts of the State of New York for the resolution of any disputes
      hereunder and agree that New York shall constitute a convenient forum for the
      resolution of any such disputes.

     

    18. Force
      Majeure. Neither Markland, the Representative nor the Escrow Agent shall be
      responsible for delays or failures in performance resulting from acts beyond
      their control. Such acts shall include but not be limited to acts of God,
      strikes, lockouts, riots, acts of war or terrorism, epidemics, governmental
      regulations superimposed after the fact, fire, communication line failures,
      computer viruses, power failures, earthquakes or other disasters.

     


    
      
        
        

      

      
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    19. Entire
      Agreement. This Agreement evidences the entire agreement among Markland, the
      Investors, Greenfield, the Representative and the Escrow Agent in connection
      with the Escrow Shares and no other agreement entered into between the parties
      or any of them shall be considered or adopted or binding, in whole or in part,
      by or upon the Escrow Agent, notwithstanding that any other such agreement
      may
      be deposited herewith or the Escrow Agent may have knowledge
      thereof.

     

    20. Binding
      Effect. This Agreement shall be binding upon the respective parties hereto
      and
      their heirs, executors, successors and assigns.

     

    21. Amendments
      and Waivers. This Agreement may be amended, modified and supplemented, and
      compliance with any provision hereof may be waived, only by a writing signed
      by
      Markland, the Escrow Agent and the Representative.

     

    22. Severability.
      If one or more of the provisions contained herein for any reason shall be held
      to be invalid, illegal or unenforceable in any respect, such invalidity,
      illegality or unenforceability shall not affect any other provisions hereof,
      and
      this Agreement shall be construed as if such invalid, illegal or unenforceable
      provision had never been contained herein.

     

    23. Reproduction
      of Documents. This Agreement and all documents relating thereto, including,
      without limitation, (a) consents, waivers and modifications which may hereafter
      be executed, and (b) certificates and other information previously or hereafter
      furnished, may be reproduced by any photographic, photostatic, microfilm,
      optical disk, micro-card, miniature photographic or other similar process.
      The
      parties agree that any such reproduction shall be admissible in evidence as
      the
      original itself in any judicial or administrative proceeding, whether or not
      the
      original is in existence and whether or not such reproduction was made by a
      party in the regular course of business, and that any enlargement, facsimile
      or
      further reproduction of such reproduction shall likewise be admissible in
      evidence.

     

    24. Captions.
      Section headings and captions have been inserted for convenience only and do
      not
      in anyway limit the provisions set out in the various sections
      hereof.

     

    25. Execution
      in Counterparts. For the convenience of the parties and to facilitate execution,
      this Agreement may be executed in two or more counterparts, each of which shall
      be deemed an original, but all of which shall constitute one and the same
      document and such counterparts may be delivered by facsimile.

     

    


    


    [End
      of
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    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed as of the date first written above.

    


    
      	 	
              MARKLAND
                TECHNOLOGIES, INC.

            
	 	 
	 	 
	 	
              By:
                /s/
                Robert
                Tarini                                                             

            
	 	
              Name:
                Robert Tarini

            
	 	
              Title:
                Chief Executive Officer

            
	 	 
	 	 
	 	
              GREENBERG
                TRAURIG, LLP, as Escrow Agent

            
	 	 
	 	 
	 	
              By:
                /s/
                Brad
                Jacobson                                                         

            
	 	
              Name:
                Brad Jacobson, Esq.

            
	 	 
	 	 
	 	
              SOUTHRIDGE
                CAPITAL MANAGEMENT LLC, as Representative

            
	 	 
	 	 
	 	
              By:
                /s/
                Stephen
                Hicks                                                         

            
	 	
              Name:
                Stephen Hicks

            
	 	 
	 	 
	 	
              JAMES
                LLC

            
	 	 
	 	 
	 	
              By:
                Illegible                                                                           
                

            
	 	
              Name:
                Navigator Management Ltd. - Director

            
	 	 
	 	 
	 	
              SOUTHRIDGE
                PARTNERS LP

            
	 	 
	 	 
	 	
              By:
                /s/
                Stephen
                Hicks                                                           
                

            
	 	
              Name:
                Stephen Hicks

            
	 	 
	 	 


    

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              SOUTHSHORE
                CAPITAL FUND LTD.

            
	 	 
	 	 
	 	
              By:Illegible                                                                              
                

            
	 	
              Name:
                Navigator Management Ltd. - Director

            
	 	 
	 	 
	 	
              BRITTANY
                CAPITAL MANAGEMENT, LTD.

            
	 	 
	 	 
	 	
              By:/s/
                Barry W.
                Herman                                                        
                

            
	 	
              Name:
                Barry W. Herman, President

            
	 	 
	 	 
	 	
              GREENFIELD
                CAPITAL PARTNERS, LLC

            
	 	 
	 	 
	 	
              By:/s/
                Michael
                Byl                                                                   
                

            
	 	
              Name:
                Michael Byl

            


    

     

     

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