Guaranty


    Exhibit
      10.7

    


    


    BORROWER:
      Technest Holdings, Inc.

    


    GUARANTOR:
      Genex Technologies Incorporated

    


     

    GUARANTY

    


     

    To: Shelter
      Island Opportunity Fund, LLC


    


    1.
      The
      Guaranty.
      For
      valuable consideration, the undersigned ("Guarantor") hereby unconditionally
      guarantees and promises to pay on demand to Shelter Island Opportunity Fund,
      LLC, its successors and assigns (collectively, "Purchaser"), or order, in lawful
      money of the United States, any and all Indebtedness of Technest Holdings,
      Inc.,
      a Nevada corporation ("Borrower"), to Purchaser when due, whether at stated
      maturity, upon acceleration or otherwise, and at all times thereafter. The
      liability of Guarantor under this Guaranty includes, without limitation,
      liability for all interest, fees, indemnities (including, without limitation,
      hazardous waste indemnities), and other costs and expenses relating to or
      arising out of the Indebtedness. The liability of Guarantor is continuing and
      relates to any Indebtedness, including that arising under successive
      transactions which shall either continue the Indebtedness or from time to time
      renew it after it has been satisfied. 

     

    2.
      Definitions.

     

    (a)
      "Borrower" shall mean the entity listed above.

    


    (b)
      "Guarantor" shall mean the entity signing this Guaranty.

    


    (c)
      "Indebtedness" shall mean any and all debts, liabilities, and obligations of
      Borrower to Purchaser, now or hereafter existing, including, without limitation,
      those arising under the Securities Purchase Agreement, dated the date hereof
      (the “Securities Purchase Agreement”), between the Borrower and Purchaser, and
      the $1,650,000 Secured Original Issue Discount Debenture issued by Borrower
      to
      Purchaser thereunder (the “Debenture”), whether due or not due, absolute or
      contingent, liquidated or unliquidated, determined or undetermined, held or
      to
      be held by Purchaser for its own account or as agent for another or others,
      whether Borrower may be liable individually or jointly with others, whether
      recovery upon such debts, liabilities, and obligations may be or hereafter
      become barred by any statute of limitations, and whether such debts,
      liabilities, and obligations may be or hereafter become otherwise unenforceable,
      and includes without limitation, any and all obligations of Borrower to
      Purchaser for reasonable attorneys' fees and all other costs and expenses
      incurred by Purchaser in the collection or enforcement of any debts,
      liabilities, and obligations of Borrower to Purchaser.

     

    
      
         

      

      
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    3.
      Obligations
      Independent.
      The
      obligations hereunder are independent of the obligations of Borrower or any
      other guarantor, and a separate action or actions may be brought and prosecuted
      against Guarantor whether an action is brought against Borrower or any other
      guarantor or whether Borrower or any other guarantor be joined in any such
      action or actions. 

    


    4.
      Rights
      of Purchaser.
      Guarantor authorizes Purchaser, without notice or demand and without affecting
      its liability hereunder, from time to time in any manner authorized or permitted
      by the Transaction Documents (as such term is defined in the Securities Purchase
      Agreement) to:

    


    (a)
      renew, compromise, extend, accelerate, or otherwise change the time for payment,
      or otherwise change the terms, of the Indebtedness or any part thereof,
      including increase or decrease of the rate of interest thereon, or otherwise
      change the terms of any Transaction Document (as such term is defined in the
      Securities Purchase Agreement);

    


    (b)
      receive and hold security for the payment of this Guaranty or any Indebtedness
      and exchange, enforce, waive, release, fail to perfect, sell, or otherwise
      dispose of any such security;

    


    (c)
      apply
      such security and direct the order or manner of sale thereof as Purchaser in
      its
      discretion may determine; and

    


    (d)
      release or substitute any guarantor or any one or more of any endorsers or
      other
      guarantor of any of the Indebtedness. 

    


    5.
      Guaranty
      to be Absolute.
      Guarantor agrees that Guarantor shall not be released hereunder by or because
      of
      the Purchaser taking, or failure to take, any action that might in any manner
      or
      to any extent vary the risks of Guarantor under this Guaranty in any manner
      or
      to any extent permitted by the Transaction Documents or that, but for this
      paragraph, might discharge or otherwise reduce, limit, or modify Guarantor's
      obligations under this Guaranty. Guarantor waives and surrenders any defense
      to
      any liability under this Guaranty based upon any such action, including but
      not
      limited to any action of Purchaser described in the immediately preceding
      paragraph of this Guaranty. 

    


    6.
      Guarantor's
      Waivers of Certain Rights and Certain Defenses.
      Guarantor waives:

    


    (a)
      any
      right to require Purchaser to proceed against Borrower or any other guarantor
      of
      the Indebtedness, proceed against or exhaust any security for the Indebtedness,
      or pursue any other remedy in Purchaser's power whatsoever;

     

    
      
         

      

      
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    (b)
      any
      defense arising by reason of any disability or other defense of Borrower, or
      the
      cessation from any cause whatsoever of the liability of Borrower;

    


    (c)
      any
      defense based on any claim that Guarantor’s obligations exceed or are more
      burdensome than those of Borrower; and

    


    (d)
      the
      benefit of any statute of limitations affecting Guarantor's liability hereunder.
      

    


    No
      provision or waiver in this Guaranty shall be construed as limiting the
      generality of any other waiver contained in this Guaranty.

    


    7.
      Waiver
      of Subrogation.
      Until
      the Indebtedness has been paid in full, Guarantor waives to the extent permitted
      by applicable law any right of subrogation, reimbursement, indemnification,
      and
      contribution (contractual, statutory, or otherwise) including, without
      limitation, any claim or right of subrogation under the Bankruptcy Code (Title
      11, United States Code) or any successor statute, arising from the existence
      or
      performance of this Guaranty, and Guarantor waives to the extent permitted
      by
      applicable law any
      right
      to enforce any remedy that Purchaser now has or may hereafter have against
      Borrower, and waives any benefit of, and any right to participate in, any
      security now or hereafter held by Purchaser. 

    


    8.
      Waiver
      of Notices.
      Guarantor waives all presentments, demands for performance, notices of
      nonperformance, protests, notices of protest, notices of dishonor, notices
      of
      intent to accelerate, notices of acceleration, notices of any suit or any other
      action against Borrower or any other person, any other notices to any party
      liable on any Transaction Document (including Guarantor), notices of acceptance
      of this Guaranty, notices of the existence, creation, or incurring of new or
      additional Indebtedness to which this Guaranty applies or any other indebtedness
      of Borrower to Purchaser, and
      notices of any fact that might increase Guarantor’s risk.

    


    9.
      Subordination.
      Any
      obligations of Borrower to Guarantor, now or hereafter existing, including
      but
      not limited to any obligations to Guarantor as subrogee of Purchaser or
      resulting from Guarantor’s performance under this Guaranty, are hereby
      subordinated to the Indebtedness (other than reasonable obligations of the
      Borrower to Guarantor for the payment of (i) services actually rendered or
      goods
      actually delivered by Guarantor and (ii) expenses paid by Guarantor on behalf
      of
      Borrower in the ordinary course of business related to Borrower’s reporting
      obligations as a public company). In addition to Guarantor's waiver of any
      right
      of subrogation as set forth in this Guaranty with respect to any obligations
      of
      Borrower to Guarantor as subrogee of Purchaser, Guarantor agrees that, if
      Purchaser so requests, Guarantor shall not demand, take, or receive from
      Borrower, by setoff or in any other manner, payment of any other obligations
      of
      Borrower to Guarantor (other than reasonable obligations of the Company to
      Guarantor for the payment of (i) services actually rendered or goods actually
      delivered by Guarantor and (ii) expenses paid by Guarantor on behalf of Borrower
      in the ordinary course of business related to Borrower’s reporting obligations
      as a public company) until the Indebtedness has been paid in full. If any
      payments are received by Guarantor in violation of such waiver or agreement,
      such payments shall be received by Guarantor as trustee for Purchaser and shall
      be paid over to Purchaser on account of the Indebtedness, but without reducing
      or affecting in any manner the liability of Guarantor under the other provisions
      of this Guaranty. Any security interest, lien, or other encumbrance that
      Guarantor may now or hereafter have on any property of Borrower is hereby
      subordinated to any security interest, lien, or other encumbrance that Purchaser
      may have on any such property.

     

    
      
         

      

      
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    10.
      Stay
      of Acceleration.
      In the
      event that acceleration of the time for payment of any of the Indebtedness
      is
      stayed upon the insolvency, bankruptcy, or reorganization of Borrower or
      otherwise, all such Indebtedness guaranteed by Guarantor shall nonetheless
      be
      payable by Guarantor immediately if requested by Purchaser if such payment
      by
      Guarantor is not stayed as a result of such insolvency, bankruptcy or
      reorganization.

    


    11.
      Information
      Relating to Borrower.
      Guarantor acknowledges and agrees that it shall have the sole responsibility
      for, and have adequate means of, obtaining from Borrower such information
      concerning Borrower's financial condition or business operations as Guarantor
      may require, and that Purchaser has no duty, and Guarantor is not relying on
      Purchaser, at any time to disclose to Guarantor any information relating to
      the
      business operations or financial condition of Borrower.

    


    12.
      Remedies.
      If
      Guarantor fails to fulfill its duty to pay all Indebtedness guaranteed
      hereunder, Purchaser shall have all of the remedies of a creditor and, to the
      extent applicable, of a secured party, under all applicable law. Without
      limiting the foregoing, Purchaser may, at its option and without notice or
      demand:

    


    (a)
      declare any Indebtedness due and payable at once;

    


    (b)
      take
      possession of any collateral pledged by Borrower, wherever located, and sell,
      resell, assign, transfer, and deliver all or any part of the collateral at
      any
      public or private sale or otherwise dispose of any or all of the collateral
      in
      its then condition, for cash or on credit or for future delivery, and in
      connection therewith Purchaser may impose reasonable conditions upon any such
      sale. Further, Purchaser, unless prohibited by law the provisions of which
      cannot be waived, may purchase all or any part of the collateral to be sold,
      free from and discharged of all trusts, claims, rights of redemption and
      equities of Borrower or Guarantor whatsoever. Guarantor acknowledges and agrees
      that the sale of any collateral through any nationally recognized broker-dealer,
      investment bank, or any other method common in the securities industry shall
      be
      deemed a commercially reasonable sale under the Uniform Commercial Code or
      any
      other equivalent statute or federal law, and expressly waive notice thereof
      except as provided herein; and 

    


    (c)
      set
      off against any or all liabilities of Guarantor all money owed by Purchaser
      or
      any of its agents or affiliates in any capacity to Guarantor, whether or not
      due, and also set off against all other liabilities of Guarantor to Purchaser
      all money owed by Purchaser in any capacity to Guarantor. If exercised by
      Purchaser, Purchaser shall be deemed to have exercised such right of setoff
      and
      to have made a charge against any such money immediately upon the occurrence
      of
      such default although made or entered on the books subsequent thereto.


     

    
      
         

      

      
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    13.
      Notices.
      All
      notices required under this Guaranty shall be personally delivered or sent
      by
      first class mail, postage prepaid, or by overnight courier, to the addresses
      on
      the signature page of this Guaranty, or sent by facsimile to the fax numbers
      listed on the signature page, or to such other addresses as Purchaser and
      Guarantor may specify from time to time in writing. Notices sent by (a) first
      class mail shall be deemed delivered on the earlier of actual receipt or on
      the
      fourth business day after deposit in the U.S. mail, postage prepaid,
      (b) overnight courier shall be deemed delivered on the next business day,
      and (c) telecopy shall be deemed delivered when transmitted.

    


    14.
      Successors
      and Assigns.
      This
      Guaranty (a) binds Guarantor and Guarantor's successors, and assigns, provided
      that Guarantor may not assign its rights or obligations under this Guaranty
      without the prior written consent of Purchaser, and (b) inures to the benefit
      of
      Purchaser and Purchaser's successors, and assigns. Purchaser may, without notice
      to Guarantor and without affecting Guarantor' s obligations hereunder, sell,
      assign, grant participations in, or otherwise transfer to any other person,
      firm, or corporation the Indebtedness and this Guaranty, in whole or in part.
      Guarantor agrees that Purchaser may disclose to any assignee or purchaser,
      or
      any prospective assignee or purchaser, of all or part of the Indebtedness any
      and all information in Purchaser's possession concerning Guarantor, this
      Guaranty, and any security for this Guaranty.

    


    15.
      Amendments,
      Waivers, and Severability.
      No
      provision of this Guaranty may be amended or waived except in writing. No
      failure by Purchaser to exercise, and no delay in exercising, any of its rights,
      remedies, or powers shall operate as a waiver thereof, and no single or partial
      exercise of any such right, remedy, or power shall preclude any other or further
      exercise thereof or the exercise of any other right, remedy, or power. The
      unenforceability or invalidity of any provision of this Guaranty shall not
      affect the enforceability or validity of any other provision of this
      Guaranty.

    


    16.
      Costs
      and Expenses.
      Guarantor agrees to pay all reasonable attorneys' fees, and all other costs
      and
      expenses that may be incurred by Purchaser (a) in the enforcement of this
      Guaranty or (b) in the preservation, protection, or enforcement of any rights
      of
      Purchaser in any case commenced by or against Guarantor or Borrower under the
      Bankruptcy Code (Title 11, United States Code) or any similar or successor
      statute. 

    


    17.
      Governing
      Law and Jurisdiction.
      This
      Guaranty shall be governed by and construed and enforced in accordance with
      federal law and the law of the State of New York.  Jurisdiction
      and venue for any action or proceeding to enforce this Guaranty shall be the
      forum appropriate for such action or proceeding against Borrower, to which
      jurisdiction Guarantor irrevocably submit and to which venue Guarantor waives
      to
      the fullest extent permitted by law any defense asserting an inconvenient forum
      in connection therewith. Service of process by Purchaser in connection with
      such
      action or proceeding shall be binding on Guarantor if sent to Guarantor by
      registered or certified mail at its address specified below.


    
      
         

         

      

      
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    18.
      FINAL
      AGREEMENT.
      BY
      SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THIS DOCUMENT
      REPRESENTS THE FINAL AGREEMENT BETWEEN PARTIES WITH RESPECT TO THE SUBJECT
      MATTER HEREOF, (B) THIS DOCUMENT SUPERSEDES ANY COMMITMENT LETTER, TERM SHEET,
      OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS RELATING TO THE SUBJECT MATTER
      HEREOF, UNLESS SUCH COMMITMENT LETTER, TERM SHEET, OR OTHER WRITTEN OUTLINE
      OF
      TERMS AND CONDITIONS EXPRESSLY PROVIDES TO THE CONTRARY, (C) THERE ARE NO
      UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (D) THIS DOCUMENT MAY NOT
      BE
      CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
      AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES. 

    


    Executed
      this May 31, 2007

    


    Guarantor:

    GENEX
      TECHNOLOGIES INCORPORATED

    


    


    


    By:
      /s/ Gino M. Pereira        

    Name:
      Gino M. Pereira

    Title:
      Chief Financial Officer

     

    

      


      
        	
                Address
                  for notices to Purchaser:

              	 	
                Address
                  for notices to Guarantor:

              
	
                One
                  East 52nd
                  Street, New York, NY 10022

              	 	
                10411
                  Motor City Drive, Suite 650, 

              
	 	 	
                Bethesda,
                  Maryland 20817

              


      

      


    

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