Registration Rights Agreement


    Exhibit
      10.2

     

     

    REGISTRATION
      RIGHTS AGREEMENT

    


    This
      Registration Rights Agreement (this “Agreement”) is made and entered into as of
      March 24, 2006, among Markland Technologies, Inc., a Florida corporation
      (“Markland”), and the investor signatories hereto (each such investor is an
“Investor” and all such investors are, collectively, the
“Investors”).

    


    This
      Agreement is made pursuant to the Redemption and Securities Purchase Agreement,
      dated as of the date hereof, among Markland and the Investors (the “Redemption
      Agreement”).

    


    Markland
      and the Investors hereby agree as follows:

    


    1. Definitions

    


    Capitalized
      terms used and not otherwise defined herein that are defined in the Redemption
      Agreement shall have the meanings given such terms in the Redemption
      Agreement.
      As used
      in this Agreement, the following terms shall have the following
      meanings:

    


    “Effectiveness
      Date”
means
      the ninetieth (90th) calendar day following the date of the Initial
      Closing.

    


    “Effectiveness
      Period”
shall
      have the meaning set forth in Section 2(a).

    


    “Escrow
      Agent”
is
      the
      escrow agent under the Escrow Agreement.

    


    “Escrow
      Agreement”
has
      the
      meaning ascribed to such term in the Redemption Agreement.

    


    “Escrow
      Shares”
means
      the shares of Technest Common Stock held by the Escrow Agent pursuant to the
      terms of the Escrow Agreement.

    


    “Exchange
      Act”
mean
      the Securities Exchange Act of 1934, as amended.

    


    “Holder”
or
      “Holders”
means
      the holder or holders, as the case may be, from time to time of Registrable
      Securities.

    


    “Indemnified
      Party”
shall
      have the meaning set forth in Section 6(c) hereof.

    


    “Indemnifying
      Party”
shall
      have the meaning set forth in Section 6(c) hereof.

    


    “Losses”
shall
      have the meaning set forth in Section 6(a).

    


    “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.

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    “Prospectus”
means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by a Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

    


    “Registrable
      Securities”
means
      (1) shares of Technest Common Stock issuable upon conversion of the Series
      E
      Preferred Stock issued to the Investors pursuant to the Redemption Agreement,
      including the Redemption Series E Shares and the Purchased Series E Shares,
      (2)
      shares of Technest Common Stock that may be issued to the Investors under
      Section 9 of the Redemption Agreement and (3) shares of Technest Common Stock
      issuable as payment of liquidated damages (the “Liquidated Damage Shares”)
      pursuant to Sections 2(b) of this Agreement, and (4) any securities issued
      or
      issuable upon any stock split, dividend or other distribution recapitalization
      or similar event with respect to the foregoing.

    


    “Registration
      Statement”
means
      the registration statements required to be filed hereunder and any additional
      registration statements contemplated by Section 3(c), including (in each case)
      the Prospectus, amendments and supplements to such registration statement or
      Prospectus, including pre- and post-effective amendments, all exhibits thereto,
      and all material incorporated by reference or deemed to be incorporated by
      reference in such registration statement.

    


    “Rule
      415”
means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, to time,
      or any similar rule or regulation hereafter adopted by the Commission having
      substantially the same purpose and effect as such Rule.

    


    “Rule
      424”
means
      Rule 424 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 purpose and
      effect as such Rule.

    


    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

    


    “Series
      E Preferred Stock”
means
      shares of Series E Preferred Stock, par value $.0001 per share, of
      Markland.

    


    “Technest”
means
      Technest Holdings, Inc., a Nevada corporation.

    


    “Technest
      Common Stock”
means
      shares of Common Stock, par value $.001 per share, of Technest.

    



    
      
        
        

      

      
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    2. Shelf
      Registration

    


    (a) As
      soon
      as practicable following the date hereof, Markland shall cause Technest to
      prepare and file with the Commission a “Shelf” Registration Statement covering
      the resale of the Registrable Securities for an offering to be made on a
      continuous basis pursuant to Rule 415. The Registration Statement shall be
      on
      Form SB-2 (unless Technest is not then eligible to register for resale the
      Registrable Securities on Form SB-2, in which case such registration shall
      be on
      another appropriate form in accordance herewith) and shall contain (unless
      otherwise directed by the Holders) substantially the “Plan of Distribution”
attached hereto as Annex
      A.
      Subject
      to the terms of this Agreement, Markland shall cause Technest to use its best
      efforts to cause the Registration Statement to be declared effective under
      the
      Securities Act as promptly as possible after the filing thereof, but in any
      event prior to the Effectiveness Date, and shall cause Technest to use its
      best
      efforts to keep such Registration Statement continuously effective under the
      Securities Act until the earlier of (a) the date that is twenty-four (24) months
      following the date on which the shelf registration becomes effective or (b)
      until all Registrable Securities covered by such Registration Statement have
      been sold or may be sold without volume restrictions pursuant to Rule 144(k)
      as
      determined by the counsel to Technest pursuant to a written opinion letter
      to
      such effect, addressed and acceptable to Technest’s transfer agent and the
      affected Holders (the “Effectiveness Period”). Markland (or Technest) shall
      promptly notify the Holders via email of the effectiveness of the Registration
      Statement.

    


    (b) If
      (i)
      the Registration Statement contemplated by Section 2(a) is not declared
      effective by the Commission by the Effectiveness Date, or (ii) after the
      Effectiveness Date, a Registration Statement ceases for any reason to remain
      continuously effective as to all Registrable Securities for which it is required
      to be effective, or the Holders are not permitted to utilize the Prospectus
      therein to resell such Registrable Securities for an aggregate of twenty (20)
      Trading Days during any 12 month period (which need not be consecutive Trading
      Days) (any such failure or breach being referred to as an “Event”,
      and
      for purposes of clause (i) the date on which such Event occurs, or for purposes
      of clause (ii) the date on which such 20 Trading Day period is exceeded being
      referred to as “Event
      Date”),
      then,
      on each such Event Date and every monthly anniversary thereof until the
      applicable Event is cured, Markland shall pay to each Holder, as liquidated
      damages and not as a penalty, a number of shares of Technest Common Stock equal
      to 1.0% per month, pro rata on a daily basis, of the number of shares of
      Technest Common Stock issuable upon conversion of the Series E Preferred Stock
      then held by such Holder; provided, however, that in no event shall the number
      of shares of Technest Common Stock issued as liquidated damages exceed an
      aggregate of 12.0% of the number of shares of Technest Common Stock issuable
      upon conversion of the Series E Preferred Stock then held by such Holder. The
      shares of Technest Common Stock to be paid as liquidated damages hereunder
      shall
      be paid out of the Escrow Shares in accordance with the procedures set forth
      in
      the Escrow Agreement. The liquidated damages pursuant to the terms hereof shall
      apply on a pro-rata basis for any portion of a month prior to the cure of an
      Event.

    



    
      
        
        

      

      
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    3. Registration
      Procedures

    


    In
      connection with Markland’s registration obligations hereunder, Markland shall
      cause Technest to do the following:

    


    (a) Not
      less
      than two trading days prior to the filing of each Registration Statement or
      any
      related Prospectus or any amendment or supplement thereto (including any
      document that would be incorporated or deemed to be incorporated therein by
      reference), Technest shall, (i) furnish to each Holder copies of all such
      documents proposed to be filed, which documents (other than those incorporated
      or deemed to be incorporated by reference) will be subject to the review of
      such
      Holders, and (ii) cause its officers and directors, counsel and independent
      certified public accountants to respond to such inquiries as shall be necessary,
      in the reasonable opinion of counsel to the Holders conduct a reasonable
      investigation within the meaning of the Securities Act.

    


    (b) (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to a Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep a Registration Statement continuously
      effective as to the applicable Registrable Securities for the Effectiveness
      Period and prepare and file with the Commission such additional Registration
      Statements in order to register for resale under the Securities Act all of
      the
      Registrable Securities; (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement (subject to the terms of
      this
      Agreement), and as so supplemented or amended to be filed pursuant to Rule
      424;
      (iii) respond promptly to any comments received from the Commission with respect
      to a Registration Statement or any amendment thereto and promptly provide the
      Holders true and complete copies of all correspondence from and to the
      Commission relating to a Registration Statement; and (iv) comply in all material
      respects with the provisions of the Securities Act and the Exchange Act with
      respect to the disposition of all Registrable Securities covered by a
      Registration Statement during the applicable period in accordance (subject
      to
      the terms of this Agreement) with the intended methods of disposition by the
      Holders thereof set forth in such Registration Statement as so amended or in
      such Prospectus as so supplemented.

    


    (c) If
      during
      the Effectiveness Period, the number of Liquidated Damage Shares at any time
      exceeds the number of Liquidated Damage Shares then registered in a Registration
      Statement, then Markland shall cause Technest to file as soon as reasonably
      practicable, an additional Registration Statement covering the resale by the
      Holders of such additional Liquidated Damage Shares.

    



    
      
        
        

      

      
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    (d) Notify
      the Holders of Registrable Securities to be sold (which notice shall, pursuant
      to clauses (ii) through (vi) hereof, be accompanied by an instruction to suspend
      the use of the Prospectus until the requisite changes have been made) promptly
      (and, in the case of (i)(A) below, not less than two trading days prior to
      such
      filing) (i)(A) when a Prospectus or any Prospectus supplement or post-effective
      amendment to a Registration Statement is proposed to be filed; (B) when the
      Commission notifies Technest whether there will be a “review” of such
      Registration Statement and whenever the Commission comments in writing on such
      Registration Statement (Technest shall provide true and complete copies thereof
      and all written responses thereto to each of the Holders); and (C) with respect
      to a Registration Statement or any post-effective amendment, when the same
      has
      become effective; (ii) of any request by the Commission or any other Federal
      or
      state governmental authority for amendments or supplements to a Registration
      Statement or Prospectus or for additional information; (iii) of the issuance
      by
      the Commission of any stop order suspending the effectiveness of a Registration
      Statement covering any or all of the Registrable Securities or the initiation
      of
      any Proceedings for that purpose; (iv) of the receipt by Technest of any
      notification with respect to the suspension of the qualification or exemption
      from qualification of any of the Registrable Securities for sale in any
      jurisdiction, or the initiation or threatening of any Proceeding for such
      purpose; (v) of the occurrence of any event or passage of time that makes the
      financial statements included in a Registration Statement ineligible for
      inclusion therein or any statement made in a Registration Statement or
      Prospectus or any document incorporated or deemed to be incorporated therein
      by
      reference untrue in any material respect or that requires any revisions to
      a
      Registration Statement, Prospectus or other documents so that, in the case
      of a
      Registration Statement or the Prospectus, as the case may be, it will not
      contain any untrue statement of a material fact or omit to state any material
      fact required to be stated therein or necessary to make the statements therein,
      in light of the circumstances under which they were made, not misleading; and
      (vi) the occurrence or existence of any pending corporate development with
      respect to Technest that Technest believes may be material and that, in the
      determination of Technest, makes it not in the best interest of Technest to
      allow continued availability of the Registration Statement or Prospectus;
provided that
      any and
      all of such information shall remain confidential to each Holder until such
      information otherwise becomes public, unless disclosure by a Holder is required
      by law.

    


    (e) Promptly
      deliver to each Holder, without charge, as many copies of the Prospectus or
      Prospectuses (including each form of prospectus) and each amendment or
      supplement thereto as such Persons may reasonably request. Subject to the terms
      of this Agreement, Markland shall cause Technest to consent to the use of such
      Prospectus and each amendment or supplement thereto by each of the selling
      Holders in connection with the offering and sale of the Registrable Securities
      covered by such Prospectus and any amendment or supplement thereto.

    


    (f) Use
      commercially reasonable efforts to register or qualify the resale of such
      Registrable Securities as required under applicable securities or Blue Sky
      laws
      of each State within the United States as any Holder requests in writing, to
      keep each such registration or qualification (or exemption therefrom) effective
      during the Effectiveness Period; provided that
      Technest
      shall not be required to qualify generally to do business in any jurisdiction
      where it is not then so qualified or subject Technest to any material tax in
      any
      such jurisdiction where it is not then so subject.

    



    
      
        
        

      

      
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    (g) Cooperate
      with the Holders to facilitate the timely preparation and delivery of
      certificates representing Registrable Securities to be delivered to a transferee
      pursuant to a Registration Statement, which certificates shall be free, to
      the
      extent permitted by the Redemption Agreement, of all restrictive legends, and
      to
      enable such Registrable Securities to be in such denominations and registered
      in
      such names as any such Holders may request.

    


    (h) Upon
      the
      occurrence of any event contemplated by this Section 3, as promptly as
      reasonably possible, prepare a supplement or amendment, including a
      post-effective amendment, to a Registration Statement or a supplement to the
      related Prospectus or any document incorporated or deemed to be incorporated
      therein by reference, and file any other required document so that, as
      thereafter delivered, neither a Registration Statement nor such Prospectus
      will
      contain an untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary to make the statements therein,
      in
      light of the circumstances under which they were made, not misleading. If
      Technest notifies the Holders in accordance with clauses (ii) through (vi)
      of
      Section 3(d) above to suspend the use of the use of any Prospectus until the
      requisite changes to such Prospectus have been made, or Technest otherwise
      notifies the Holders of its election to suspend the availability of a
      Registration Statement and Prospectus pursuant to clause (vi) of Section 3(d),
      then the Holders shall suspend use of such Prospectus. Markland will cause
      Technest to use its best efforts to ensure that the use of the Prospectus may
      be
      resumed as promptly as is practicable, except that in the case of suspension
      of
      the availability of a Registration Statement and Prospectus pursuant to clause
      (vi) of Section 3(d), Technest shall not be required to take such action until
      such time as it shall determine that the continued availability of the
      Registration Statement and Prospectus is no longer not in the best interests
      of
      Technest. Technest shall be entitled to exercise the right under this Section
      3(h) to suspend the availability of a Registration Statement and Prospectus,
      subject only to the payment of partial liquidated damages pursuant to Section
      2(b).

    


    (i) Comply
      with all applicable rules and regulations of the Commission.

    


    (j) Use
      its
      best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
      of
      (i) any order suspending the effectiveness of a Registration Statement, or
      (ii)
      any suspension of the qualification (or exemption from qualification) of any
      of
      the Registrable Securities for sale in any jurisdiction, at the earliest
      practicable moment.

    


    (k) Technest
      may require each Holder to furnish to Technest a statement as to the number
      of
      shares of Common Stock beneficially owned by such Holder and the controlling
      person thereof, within two trading days of the such request. During any periods
      that Technest is unable to meet its obligations hereunder with respect to the
      registration of the Registrable Securities solely because any Holder fails
      to
      furnish such information within two trading days of such request, any partial
      liquidated damages that are accruing as to all Holders at such time shall be
      tolled and any Event that may otherwise occur as to such Holder solely because
      of such delay shall be suspended, until such information is delivered to
      Technest.

    



    
      
        
        

      

      
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    4. Obligations
      of the Holders.
      In
      connection with sales of Registrable Securities pursuant to a Registration
      Statement, each Holder agrees as follows:

    


    (a) It
      shall
      be a condition precedent to the obligations of Markland or Techgnest to take
      any
      action pursuant to Section 3 with respect to the Registrable Securities of
      any
      Holder that such Holder shall furnish to Technest such information regarding
      itself, the Registrable Securities held by it, and the intended method of
      disposition of such securities as shall be reasonably required to effect the
      registration of such Holder’s Registrable Securities.

    


    (b) Each
      Holder shall comply with all applicable securities laws in connection with
      its
      sales of Registrable Securities, including, without limitation, any prospectus
      delivery requirement.

    


    5. Registration
      Expenses.
      Markland shall cause Technest to pay all fees and expenses incident to the
      performance of or compliance with this Agreement, whether or not any Registrable
      Securities are sold pursuant to the Registration Statement. The fees and
      expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without limitation,
      fees and expenses (A) with respect to filings required to be made with the
      principal market on which the Technest Common Stock is then listed for trading,
      and (B) in compliance with applicable state securities or Blue Sky laws
      reasonably agreed to by Technest in writing (including, without limitation,
      fees
      and disbursements of counsel for Technest in connection with Blue Sky
      qualifications or exemptions of the Registrable Securities and determination
      of
      the eligibility of the Registrable Securities for investment under the laws
      of
      such jurisdictions as requested by the Holders )), (ii) printing expenses
      (including, without limitation, printing prospectuses requested by the Holders),
      (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements
      of
      counsel for Technest, and (v) fees and expenses of all other persons retained
      by
      Technest in connection with the consummation of the transactions contemplated
      by
      this Agreement. In addition, Technest shall be responsible for all of its
      internal expenses incurred in connection with the consummation of the
      transactions contemplated by this Agreement (including, without limitation,
      all
      salaries and expenses of its officers and employees performing legal or
      accounting duties), the expense of any annual audit and the fees and expenses
      incurred in connection with the listing of the Registrable Securities on any
      securities exchange as required hereunder. In no event shall Technest be
      responsible for any broker or similar commissions or any legal fees or other
      costs of the Holders.

    



    
      
        
        

      

      
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    6. Indemnification

    


    (a) Indemnification
      by Technest.
      Markland shall cause Technest to indemnify and hold harmless each Holder, the
      officers, directors, agents, and employees of each of them, each person who
      controls any such Holder (within the meaning of Section 15 of the Securities
      Act
      or Section 20 of the Exchange Act) and the officers, directors, agents and
      employees of each such controlling person, to the fullest extent permitted
      by
      applicable law, from and against any and all losses, claims, damages,
      liabilities, costs (including, without limitation, costs of preparation and
      reasonable attorneys’ fees) and expenses (collectively, “Losses”),
      as
      incurred, arising out of or relating to any untrue or alleged untrue statement
      of a material fact contained in a Registration Statement, any Prospectus or
      any
      form of prospectus or in any amendment or supplement thereto or in any
      preliminary prospectus, or arising out of or relating to any omission or alleged
      omission of a material fact required to be stated therein or necessary to make
      the statements therein (in the case of any Prospectus or form of prospectus
      or
      supplement thereto, in light of the circumstances under which they were made)
      not misleading, except to the extent, but only to the extent, that (1) such
      untrue statements or omissions or alleged untrue statements or omissions are
      based upon information regarding such Holder furnished in writing to Technest
      by
      such Holder expressly for use therein, or to the extent that such information
      relates to such Holder or such Holder’s proposed method of distribution of
      Registrable Securities and was reviewed and expressly approved in writing by
      such Holder expressly for use in a Registration Statement, such Prospectus
      or
      such form of Prospectus or in any amendment or supplement thereto or (2) in
      the
      case of an occurrence of an event of the type specified in Section
      3(d)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus
      after Technest has notified such Holder in writing that the Prospectus is
      outdated or defective and prior to the receipt by such Holder of the Advice
      contemplated in Section 7(c). Markland shall cause Technest to notify the
      Holders promptly of the institution, threat or assertion of any Proceeding
      arising from or in connection with the transactions contemplated by this
      Agreement of which Technest is aware.

    


    (b) Indemnification
      by Holders.
      Each
      Holder shall, severally and not jointly, indemnify and hold harmless Technest,
      the directors, officers, agents and employees of each of them, each person
      who
      controls either of them (within the meaning of Section 15 of the Securities
      Act
      and Section 20 of the Exchange Act), and the directors, officers, agents or
      employees of such controlling persons, to the fullest extent permitted by
      applicable law, from and against all Losses (as determined by a court of
      competent jurisdiction in a final judgment not subject to appeal or review)
      arising out of or based upon any untrue statement of a material fact contained
      in any Registration Statement, any Prospectus, or any form of prospectus, or
      in
      any amendment or supplement thereto, or arising solely out of or based solely
      upon: (i) such Holder’s failure to comply with the prospectus delivery
      requirements of the Securities Act or (ii) any omission of a material fact
      required to be stated therein or necessary to make the statements therein not
      misleading to the extent, but only to the extent, such untrue statement or
      omission is contained in any information so furnished in writing by such Holder
      to Technest specifically for inclusion in such Registration Statement or such
      Prospectus or to the extent that (1) such untrue statements or omissions are
      based upon information regarding such Holder furnished in writing to Technest
      by
      such Holder expressly for use therein, or to the extent such information relates
      to such Holder or such Holder’s proposed method of distribution of Registrable
      Securities and was reviewed and expressly approved in writing by such Holder
      expressly for use in the Registration Statement, such Prospectus or such form
      of
      Prospectus or in any amendment or supplement thereto or (2) in the case of
      an
      occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the
      use
      by such Holder of an outdated or defective Prospectus after Technest has
      notified such Holder in writing that the Prospectus is outdated or defective
      and
      prior to the receipt by such Holder of the Advice contemplated in Section 7(c).
      In no event shall the liability of any selling Holder hereunder be greater
      in
      amount than the dollar amount of the net proceeds received by such Holder upon
      the sale of the Registrable Securities giving rise to such indemnification
      obligation.

    



    
      
        
        

      

      
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    (c) Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall assume the defense thereof, including
      the employment of counsel reasonably satisfactory to the Indemnified Party
      and
      the payment of all fees and expenses incurred in connection with defense
      thereof; provided, that the failure of any Indemnified Party to give such notice
      shall not relieve the Indemnifying Party of its obligations or liabilities
      pursuant to this Agreement, except (and only) to the extent that such failure
      shall have prejudiced the Indemnifying Party.

    


    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
      expenses; or (2) the Indemnifying Party shall have failed promptly to assume
      the
      defense of such Proceeding and to employ counsel reasonably satisfactory to
      such
      Indemnified Party in any such Proceeding; or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and such Indemnified Party shall have been advised
      by counsel that a material conflict of interest is likely to exist if the same
      counsel were to represent such Indemnified Party and the Indemnifying Party
      (in
      which case, if such Indemnified Party notifies the Indemnifying Party in writing
      that it elects to employ separate counsel at the expense of the Indemnifying
      Party, the Indemnifying Party shall not have the right to assume the defense
      thereof and the expense of one such counsel for all Holders shall be at the
      expense of the Indemnifying Party). The Indemnifying Party shall not be liable
      for any settlement of any such Proceeding effected without its written consent,
      which consent shall not be unreasonably withheld. No Indemnifying Party shall,
      without the prior written consent of the Indemnified Party, effect any
      settlement of any pending Proceeding in respect of which any Indemnified Party
      is a party, unless such settlement includes an unconditional release of such
      Indemnified Party from all liability on claims that are the subject matter
      of
      such Proceeding.

    


    Subject
      to the terms of this Agreement, all fees and expenses of the Indemnified Party
      (including reasonable fees and expenses to the extent incurred in connection
      with investigating or preparing to defend such Proceeding in a manner not
      inconsistent with this Section) shall be paid to the Indemnified Party, as
      incurred, within thirty days of written notice thereof to the Indemnifying
      Party
      (regardless of whether it is ultimately determined that an Indemnified Party
      is
      not entitled to indemnification hereunder; provided, that the Indemnifying
      Party
      may require such Indemnified Party to undertake to reimburse all such fees
      and
      expenses to the extent it is finally judicially determined that such Indemnified
      Party is not entitled to indemnification hereunder).

    



    
      
        
        

      

      
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    (d) Contribution.
      If a
      claim for indemnification under Section 6(a) or 6(b) is unavailable to an
      Indemnified Party (by reason of public policy or otherwise), then each
      Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
      contribute to the amount paid or payable by such Indemnified Party as a result
      of such Losses, in such proportion as is appropriate to reflect the relative
      fault of the Indemnifying Party and Indemnified Party in connection with the
      actions, statements or omissions that resulted in such Losses as well as any
      other relevant equitable considerations. The relative fault of such Indemnifying
      Party and Indemnified Party shall be determined by reference to, among other
      things, whether any action in question, including any untrue or alleged untrue
      statement of a material fact or omission or alleged omission of a material
      fact,
      has been taken or made by, or relates to information supplied by, such
      Indemnifying Party or Indemnified Party, and the parties’ relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      action, statement or omission. The amount paid or payable by a party as a result
      of any Losses shall be deemed to include, subject to the limitations set forth
      in Section 6(c), any reasonable attorneys’ or other reasonable fees or expenses
      incurred by such party in connection with any Proceeding to the extent such
      party would have been indemnified for such fees or expenses if the
      indemnification provided for in this Section was available to such party in
      accordance with its terms.

    


    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 6(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph.
      Notwithstanding the provisions of this Section 6(d), no Holder shall be required
      to contribute, in the aggregate, any amount in excess of the amount by which
      the
      proceeds actually received by such Holder from the sale of the Registrable
      Securities subject to the Proceeding exceeds the amount of any damages that
      such
      Holder has otherwise been required to pay by reason of such untrue or alleged
      untrue statement or omission or alleged omission.

    


    7. Miscellaneous

    


    (a) Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by Markland and the Holders of a majority of the then outstanding
      Registrable Securities. Notwithstanding the foregoing, a waiver or consent
      to
      depart from the provisions hereof with respect to a matter that relates
      exclusively to the rights of one or some Holders and that does not directly
      or
      indirectly affect the rights of other Holders may be given by Holders of all
      of
      the Registrable Securities to which such waiver or consent relates; provided,
      however,
      that
      the
      provisions of this sentence may not be amended, modified, or supplemented except
      in accordance with the provisions of the immediately preceding
      sentence.

    


    (b) Compliance.
      Each
      Holder covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it in connection with sales
      of Registrable Securities pursuant to the Registration Statement.

    



    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    (c) Discontinued
      Disposition.
      Each
      Holder agrees by its acquisition of such Registrable Securities that, upon
      receipt of a notice from Technest of the occurrence of any event of the kind
      described in Sections 3(d)(ii), (iii) or (vi), such Holder will forthwith
      discontinue disposition of such Registrable Securities under a Registration
      Statement until such Holder’s receipt of the copies of the supplemented
      Prospectus and/or amended Registration Statement contemplated by Section 3(h),
      or until it is advised in writing (the “Advice”)
      by
      Technest that the use of the applicable Prospectus may be resumed, and, in
      either case, has received copies of any additional or supplemental filings
      that
      are incorporated or deemed to be incorporated by reference in such Prospectus
      or
      Registration Statement. Markland or Technest may provide appropriate stop orders
      to enforce the provisions of this paragraph.

    


    (d) Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be delivered as set forth in the Redemption
      Agreement.

    


    (e) Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties and shall inure to the benefit of
      each
      Holder. Markland may not assign its rights or obligations hereunder without
      the
      prior written consent of the Holders of a majority of the then-outstanding
      Registrable Securities. Each Holder may assign their respective rights hereunder
      in the manner and to the persons as permitted under the Redemption
      Agreement.

    


    (f) Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

    


    (g) Governing
      Law.
      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 hereby irrevocably submits
      to
      the jurisdiction of the state and federal courts sitting in the City of New
      York, Borough of Manhattan, for the adjudication of any dispute hereunder or
      in
      connection herewith or with any transaction contemplated hereby or discussed
      herein, and hereby irrevocably waives, and agrees not to assert in any suit,
      action or proceeding, any claim that it is not personally subject to the
      jurisdiction of any such court, that such suit, action or proceeding is
      improper. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof 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.

    



    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    (h) Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any remedies
      provided by law.

    


    (l) Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their reasonable efforts to
      find and employ an alternative means to achieve the same or substantially the
      same result as that contemplated by such term, provision, covenant or
      restriction.

    


    (i) Headings.
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

    


    (j) Independent
      Nature of Investors’ Obligations and Rights.
      The
      obligations of each Investor hereunder are several and not joint with the
      obligations of any other Investor hereunder, and no Investor shall be
      responsible in any way for the performance of the obligations of any other
      Investor hereunder. Nothing contained herein or in any other agreement or
      document delivered at any closing, and no action taken by any Investor pursuant
      hereto or 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 with respect
      to
      such obligations or the transactions contemplated by this Agreement. Each
      Investor shall be entitled to protect and enforce its rights, including without
      limitation the rights arising out of this Agreement, and it shall not be
      necessary for any other Investor to be joined as an additional party in any
      proceeding for such purpose.

    


    ********************


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

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

    


    MARKLAND
      TECHNOLOGIES, INC.

     

    By:
      /s/
      Robert
      Tarini                                             


    Name:
      Robert Tarini

    Title:
      Chief Executive Officer

    


    


    


    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

     


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    


    [SIGNATURE
      PAGE OF HOLDERS TO RRA]

    


    


    
      	 	
              JAMES
                LLC

            
	 	 
	 	 
	 	
              By:Illegible                                                                                      
                

            
	 	
              Name:
                Navigator Management Ltd. - Director

            
	 	 
	 	 
	 	
              SOUTHRIDGE
                PARTNERS LP

            
	 	 
	 	 
	 	
              By:/s/
                Stephen
                Hicks                                                              
                       

            
	 	
              Name:
                Stephen Hicks

            
	 	 
	 	 
	 	
              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

            


    

    



    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    


    Plan
      of Distribution

    


    Each
      Selling Stockholder (the “Selling Stockholders”) of the common stock (“Common
      Stock”) of Technest Holdings, Inc., a Nevada corporation (the “Company”), and
      any of their pledgees, assignees and successors-in-interest may, from time
      to
      time, sell any or all of their shares of Common Stock on the Over the Counter
      Bulletin Board or any other stock exchange, market or trading facility on which
      the shares are traded or in private transactions. These sales may be at fixed
      or
      negotiated prices. A Selling Stockholder may use any one or more of the
      following methods when selling shares:

    


    
      	 	
              ·

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            


    

    


    
      	 	
              ·

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            


    

    


    
      	 	
              ·

            	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            


    

    


    
      	 	
              ·

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            


    

    


    
      	 	
              ·

            	
              privately
                negotiated transactions;

            


    

    


    
      	 	
              ·

            	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            


    

    


    
      	 	
              ·

            	
              a
                combination of any such methods of sale;
                or

            


    

    


    
      	 	
              ·

            	
              any
                other method permitted pursuant to applicable law.
                

            


    

    


    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities Act”), if available, rather than under
      this prospectus. Broker-dealers engaged by the Selling Stockholders may arrange
      for other brokers-dealers to participate in sales. Broker-dealers may receive
      commissions or discounts from the Selling Stockholders (or, if any broker-dealer
      acts as agent for the purchaser of shares, from the purchaser) in amounts to
      be
      negotiated. Each Selling Stockholder does not expect these commissions and
      discounts relating to its sales of shares to exceed what is customary in the
      types of transactions involved.

    


    The
      Selling Stockholders may from time to time pledge or grant a security interest
      in some or all of the Shares or Common Stock owned by them and, if they default
      in the performance of their secured obligations, the pledgees or secured parties
      may offer and sell the shares of Common Stock from time to time under this
      prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
      other applicable provision of the Securities Act amending the list of Selling
      Stockholders to include the pledgee, transferee or other successor in interest
      as Selling Stockholders under this prospectus.

    



    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    The
      Selling Stockholders also may transfer the shares of Common Stock in other
      circumstances, in which case the transferees, pledgees or other successors
      in
      interest will be the selling beneficial owners for purposes of this
      prospectus.

    


    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares. The Company has agreed to indemnify
      the Selling Stockholders against certain losses, claims, damages and
      liabilities, including liabilities under the Securities Act. 

     

    16