Unconditional Guaranty


    
      EXHIBIT
        10.4

       
UNCONDITIONAL
      GUARANTY

     

    This
      continuing Unconditional Guaranty (“Guaranty”) is entered into as of August 4,
      2006, by MARKLAND
      TECHNOLOGIES, INC.,
      a
      Florida corporation with a principal place of business located at 222 Metro
      Center Blvd., Warwick, Rhode Island 02886 (“Guarantor”), in favor of Silicon
      Valley Bank, California-chartered bank, with its principal place of business
      at
      3003 Tasman Drive, Santa Clara, California 95054 and with a loan production
      office located at One Newton Executive Park, Suite 200, 2221 Washington Street,
      Newton, Massachusetts 02462 (“Bank”).

     

    Recitals

     

    A.    Concurrently
      herewith, Bank and Technest Holdings, Inc., a Nevada corporation, with offices
      at 1
      McKinley Sq., Fifth Floor, Boston, Massachusetts 02109
      (“Technest”), E-OIR Technologies, Inc., a Virginia corporation, with offices at
10300
      Spotsylvania Ave., Suite 220, Fredericksburg, Virginia 22408
      (“EOIR”), and Genex Technologies Incorporated, a Maryland corporation, with
      offices at 10411
      Motor City Drive, Suite 650, Bethesda, Maryland 20817
      (“Genex”) (hereinafter,
      Technest, EOIR and Genex are jointly and severally, individually and
      collectively, referred to as “Borrower”),
      are
      entering into (i) a certain Loan and Security Agreement dated as of August
      4,
      2006 between Borrower and Bank, as amended from time to time (as amended, the
      “Term Loan Agreement”), and (ii) a certain Loan and Security Agreement (Working
      Capital Line of Credit) dated as of August 4, 2006 between Borrower and Bank,
      as
      amended from time to time (as amended, the “WCL Loan Agreement”) (hereinafter
      the Term Loan Agreement and the WCL Loan Agreement are collectively referred
      to
      as, the “Loan Agreement”) pursuant to which Bank has agreed to make certain
      advances of money and to extend certain financial accommodations to Borrower
      (collectively, the “Loans”), subject to the terms and conditions set forth
      therein. Capitalized terms used but not otherwise defined herein shall have
      the
      meanings given them in the Loan Agreement (as applicable).

     

    B.    In
      consideration of the agreement of Bank to make the Loans to Borrower under
      the
      Loan Agreement, Guarantor is willing to guaranty a portion of the payment and
      performance by Borrower of its obligations thereunder and under the other Loan
      Documents, all as further set forth herein.

     

    C.    Guarantor
      is the majority shareholder of Technest and will obtain substantial direct
      and
      indirect benefit from the Loans made by Bank to Borrower under the Loan
      Agreement.

     

    Now,
      Therefore,
      to
      induce Bank to enter into the Loan Agreement, and for other good and valuable
      consideration, the receipt and adequacy of which are hereby acknowledged, and
      intending to be legally bound, Guarantor hereby represents, warrants, covenants
      and agrees as follows: 

     

    
      
        
        

      

      
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    Section
      1.    Guaranty.
      

     

    1.1    Unconditional
      Guaranty of Payment. In consideration of the foregoing, Guarantor hereby
      irrevocably, absolutely and unconditionally guarantees to Bank the prompt and
      complete payment and performance when due (whether at stated maturity, by
      acceleration or otherwise) of all Obligations, provided, however, the
      maximum liability of Guarantor hereunder shall not exceed at any time the sum
      of
      (a) $6,000,000.00, plus (b) all amounts owed pursuant to Section 13 of this
      Guaranty. Guarantor
      agrees that it shall execute such other documents or agreements and take such
      action as Bank shall reasonably request to effect the purposes of this Guaranty.
      This Guaranty shall terminate on the earlier to occur of (i) the date which
      is
      two (2) years from the Effective Date of the Loan Agreement (the “Release
      Date”), provided no Event of Default has occurred and is continuing thereunder,
      and (ii) if an Event of Default has occurred and is continuing on the Release
      Date, immediately upon the cure of such Event of Default.

     

    1.2    Separate
      Obligations. These
      obligations are independent of Borrower’s obligations and separate actions may
      be brought against Guarantor (whether action is brought against Borrower or
      whether Borrower is joined in the action).

     

    Section
      2.    Representations
      and Warranties.

     

    Guarantor
      hereby represents and warrants that:

     

    (a)    Guarantor
      (i) is a corporation duly
      organized, validly existing and in good standing under the laws of the State
      of
      Florida; (ii) is duly qualified to do business and is in good standing in every
      jurisdiction where the nature of its business requires it to be so qualified
      (except where the failure to so qualify would not have a material adverse effect
      on Guarantor’s condition, financial or otherwise, or on Guarantor’s ability to
      pay or perform the obligations hereunder); and (iii) has all requisite power
      and
      authority to execute and deliver this Guaranty and each Loan Document executed
      and delivered by Guarantor pursuant to the Loan Agreement or this Guaranty
      and
      to perform its obligations thereunder and hereunder.

     

    (b)    The
      execution, delivery and performance by Guarantor of this Guaranty (i) are
      within Guarantor’s powers and have been duly authorized by all necessary action;
      (ii) do not contravene Guarantor’s charter documents or any law or any
      contractual restriction binding on or affecting Guarantor or by which
      Guarantor’s property may be affected; (iii) do not require any authorization or
      approval or other action by, or any notice to or filing with, any governmental
      authority or any other Person under any indenture, mortgage, deed of trust,
      lease, agreement or other instrument to which Guarantor is a party or by which
      Guarantor or any of its property is bound, except such as have been obtained
      or
      made; and (iv) do not result in the imposition or creation of any Lien upon
      any
      property of Guarantor, other than the Lien created pursuant to that certain
      Stock Pledge Agreement by and between the Guarantor and Bank executed of even
      date herewith. 

     

    (c)    This
      Guaranty is a valid and binding obligation of Guarantor, enforceable against
      Guarantor in accordance with its terms, except as the enforceability thereof
      may
      be subject to or limited by bankruptcy, insolvency, reorganization, arrangement,
      moratorium or other similar laws relating to or affecting the rights of
      creditors generally. 

     

    
      
        
        

      

      
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    (d)    There
      is
      no action, suit or proceeding affecting Guarantor pending or threatened before
      any court, arbitrator, or governmental authority, domestic or foreign, which
      may
      have a material adverse effect on the ability of Guarantor to perform its
      obligations under this Guaranty. 

     

    (e)    Guarantor’s
      obligations hereunder are not subject to any offset or defense against Bank
      or
      Borrower of any kind.

     

    (f)    The
      financial statements of Guarantor, dated as of ________________, 20__ (audited)
      and ____________, 20__, (unaudited), copies of which have been furnished to
      Bank, fairly present the financial position and results of operations for
      Guarantor for the dates and periods purported to be covered thereby, all in
      accordance with GAAP, and there has been no material adverse change in the
      financial position or operations of Guarantor since the date of such financial
      statements. 

     

    (g)    To
      ensure
      the legality, validity, enforceability or admissibility into evidence of this
      Guaranty in each of the jurisdictions in which Guarantor is incorporated or
      organized and any jurisdiction in which Guarantor conducts business, it is
      not
      necessary that (i) this Guaranty be filed or recorded with any court or
      other authority in such jurisdiction, (ii) any other filings, notices,
      authorizations, approvals be obtained or other actions taken, or (iii) any
      stamp or similar tax be paid on or with respect to this Guaranty, or, if any
      of
      the foregoing actions are necessary, they have been duly taken.

     

    (h)           
      The
      incurrence of Guarantor’s obligations under this Guaranty will not cause
      Guarantor to (i) become insolvent; (ii) be left with unreasonably small capital
      for any business or transaction in which Guarantor is presently engaged or
      plans
      to be engaged; or (iii) be unable to pay its debts as such debts mature.


     

    (i)    
Guarantor
      covenants, warrants, and represents to Bank that all representations and
      warranties contained in this Guaranty shall be true at the time of Guarantor’s
      execution of this Guaranty, and shall continue to be true so long as this
      Guaranty remains in effect. Guarantor expressly agrees that any
      misrepresentation or breach of any warranty whatsoever contained in this
      Guaranty shall be deemed material.

     

    (j)    
Simultaneously
      with Guarantor’s filing of same with the Securities and Exchange Commission,
      Guarantor agrees that it shall deliver to Bank: (i) a company prepared
      consolidated balance sheet and income statement covering Guarantor’s
      consolidated operations during the period certified by a Responsible Officer
      and
      in a form acceptable to Bank; and (ii) audited consolidated financial statements
      prepared under GAAP, consistently applied, together with an unqualified opinion
      on the financial statements from an independent certified public accounting
      firm
      reasonably acceptable to Bank. In addition, Guarantor shall deliver to Bank
      any
      other financial information reasonably requested by Bank.

     

    Section
      3.    General
      Waivers.
      Guarantor waives:

     

    (a)    Any
      right
      to require Bank to (i) proceed against Borrower or any other person;
      (ii) proceed against or exhaust any security or (iii) pursue any other
      remedy. Bank may exercise or not exercise any right or remedy it has against
      Borrower or any security it holds (including the right to foreclose by judicial
      or nonjudicial sale) without affecting Guarantor’s liability hereunder.


     

    
      
        
        

      

      
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    (b)    Any
      defenses from disability or other defense of Borrower or from the cessation
      of
      Borrowers liabilities.

     

    (c)    Any
      setoff, defense or counterclaim against Bank.

     

    (d)    Any
      defense from the absence, impairment or loss of any right of reimbursement
      or
      subrogation or any other rights against Borrower. Until Borrower’s obligations
      to Bank have been paid, Guarantor has no right of subrogation or reimbursement
      or other rights against Borrower.

     

    (e)    Any
      right
      to enforce any remedy that Bank has against Borrower.

     

    (f)    Any
      rights to participate in any security held by Bank.

     

    (g)    Any
      demands for performance, notices of nonperformance or of new or additional
      indebtedness incurred by Borrower to Bank. Guarantor is responsible for being
      and keeping itself informed of Borrower’s financial condition. 

     

    (h)    The
      benefit of any act or omission by Bank which directly or indirectly results
      in
      or aids the discharge of Borrower from any of the Obligations by operation
      of
      law or otherwise.

     

    Section
      4.    Waiver
      of Defenses.
      Guarantor acknowledges that, to the extent Guarantor has or may have rights
      of
      subrogation or reimbursement against Borrower for claims arising out of this
      Guaranty, those rights may be impaired or destroyed if Bank elects to proceed
      against any real property security of Borrower by non-judicial foreclosure.
      That
      impairment or destruction could, under certain judicial cases and based on
      equitable principles of estoppel, give rise to a defense by Guarantor against
      its obligations under this Guaranty. Guarantor waives that defense and any
      others arising from Bank’s election to pursue non-judicial foreclosure.
      Guarantor waives the benefits, if any, of any statutory or common law rule
      that
      may permit a subordinating creditor to assert any defenses of a surety or
      guarantor, or that may give the subordinating creditor the right to require
      a
      senior creditor to marshal assets, and Guarantor agrees that it shall not assert
      any such defenses or rights.

     

    Section
      5.    Reinstatement.
      Notwithstanding any provision of the Loan Agreement to the contrary, the
      liability of Guarantor hereunder shall be reinstated and revived and the rights
      of Bank shall continue if and to the extent that for any reason any payment
      by
      or on behalf of Guarantor or Borrower is rescinded or must be otherwise restored
      by Bank, whether as a result of any proceedings in bankruptcy or reorganization
      or otherwise, all as though such amount had not been paid. The determination
      as
      to whether any such payment must be rescinded or restored shall be made by
      Bank
      in its sole discretion; provided,
      however,
      that if
      Bank chooses to contest any such matter at the request of Guarantor, Guarantor
      agrees to indemnify and hold harmless Bank from all costs and expenses
      (including, without limitation, reasonable attorneys’ fees) of such litigation.
      To the extent any payment is rescinded or restored, Guarantor’s obligations
      hereunder shall be revived in full force and effect without reduction or
      discharge for that payment.

     

    
      
        
        

      

      
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    Section
      6.    Intentionally
      omitted.

     

    Section
      7.    No
      Waiver; Amendments.
      No
      failure on the part of Bank to exercise, no delay in exercising and no course
      of
      dealing with respect to, any right hereunder shall operate as a waiver thereof;
      nor shall any single or partial exercise of any right hereunder preclude any
      other or further exercise thereof or the exercise of any other right. The
      remedies herein provided are cumulative and not exclusive of any remedies
      provided by law. This Guaranty may not be amended or modified except by written
      agreement between Guarantor and Bank, and no consent or waiver hereunder shall
      be valid unless in writing and signed by Bank. 

     

    Section
      8.    Compromise
      and Settlement.
      Except
      to the extent agreed to in writing by Bank, no compromise, settlement, release,
      renewal, extension, indulgence, change in, waiver or modification of any of
      the
      Obligations or the release or discharge of Borrower from the performance of
      any
      of the Obligations shall release or discharge Guarantor from this Guaranty
      or
      the performance of the obligations hereunder. 

     

    Section
      9.    Notice.
      Any
      notice or other communication herein required or permitted to be given shall
      be
      in writing and may be delivered in person or sent by facsimile transmission,
      overnight courier, or by United States mail, registered or certified, return
      receipt requested, postage prepaid and addressed as follows:

     

    If
      to
      Guarantor:                                   
Markland
      Technologies, Inc.

    222
      Metro
      Center Blvd.

    Warwick,
      Rhode Island 02886

    Attn:
      Mr.
      Robert Tarini

    Facsimile
      No.: (401) 454-1806

    Email:
      rtarini@aol.com

    


    with
      copies
      to:                                     
Greenberg
      Traurig, LLP

    One
      International Place

    Boston,
      Massachusetts 02110

    Attn:
      Jonathan Bell, Esquire

    Facsimile
      No.: (617) 310-6001

    Email:
      bellj@gtlaw.com

     

    If
      to
      Bank:                                             
Silicon
      Valley Bank

    One
      Newton Executive Park, Suite 200

    2221
      Washington Street

    Newton,
      Massachusetts 02462         

                                                               
      Attn:
      Mr.
      Michael Tramack    

    Facsimile
      No.: (617) 969-5962

    Email:
      mtramack@svb.com

     

    
      
        
        

      

      
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    with
      copies
      to:                                     
Riemer
      & Braunstein LLP

    Three
      Center Plaza

    Boston,
      Massachusetts 02108

    Attn:
      David A. Ephraim, Esquire

    Facsimile
      No.: (617) 880-3456

    Email:
      dephraim@riemerlaw.com

     

    or
      at
      such other address as may be substituted by notice given as herein provided.
      Every notice, demand, request, consent, approval, declaration or other
      communication hereunder shall be deemed to have been duly given or served on
      the
      date on which personally delivered or sent by facsimile transmission or three
      (3) Business Days after the same shall have been deposited in the United States
      mail. If
      sent
      by overnight courier service, the date of delivery shall be deemed to be the
      next Business Day after deposited with such service. 

     

    Section
      10.    Entire
      Agreement.
      This
      Guaranty constitutes and contains the entire agreement of the parties and
      supersedes any and all prior and contemporaneous agreements, negotiations,
      correspondence, understandings and communications between Guarantor and Bank,
      whether written or oral, respecting the subject matter hereof. 

     

    Section
      11.    Severability.
      If any
      provision of this Guaranty is held to be unenforceable under applicable law
      for
      any reason, it shall be adjusted, if possible, rather than voided in order
      to
      achieve the intent of Guarantor and Bank to the extent possible. In any event,
      all other provisions of this Guaranty shall be deemed valid and enforceable
      to
      the full extent possible under applicable law. 

     

    Section
      12.    Subordination
      of Indebtedness.
      Any
      indebtedness or other obligation of Borrower now or hereafter held by or owing
      to Guarantor is hereby subordinated in time and right of payment to all
      obligations of Borrower to Bank until payment in full of Obligations and
      termination of the Loan Agreement and this Guaranty, except as such indebtedness
      or other obligation is expressly permitted to be paid under the Credit
      Agreement; and such indebtedness of Borrower to Guarantor is assigned to Bank
      as
      security for this Guaranty, and if Bank so requests shall be collected, enforced
      and received by Guarantor in trust for Bank and to be paid over to Bank on
      account of the Obligations of Borrower to Bank, but without reducing or
      affecting in any manner the liability of Guarantor under the other provisions
      of
      this Guaranty. Any notes now or hereafter evidencing such indebtedness of
      Borrower to Guarantor shall be marked with a legend that the same are subject
      to
      this Guaranty and shall be delivered to Bank.

     

    Section
      13.    Payment
      of Expenses.
      Guarantor shall pay,
      promptly
      on demand,
      all
      Expenses incurred by Bank in defending and/or enforcing this Guaranty. For
      purposes hereof, “Expenses” shall mean costs and expenses (including reasonable
      fees and disbursements of any law firm or other external counsel and the
      allocated cost of internal legal services and all disbursements of internal
      counsel) for defending and/or enforcing this Guaranty (including those incurred
      in connection with appeals or proceedings by or against any Guarantor under
      the
      United States Bankruptcy Code, or any other bankruptcy or insolvency law,
      including assignments for the benefit of creditors, compositions, extensions
      generally with its creditors, or proceedings seeking reorganization,
      arrangement, or other relief).

     

    
      
        
        

      

      
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    Section
      14.    Assignment; Governing
      Law.
      This
      Guaranty shall be binding upon and inure to the benefit of Guarantor and Bank
      and their respective successors and assigns, except that Guarantor shall not
      have the right to assign its rights hereunder or any interest herein without
      the
      prior written consent of Bank, which may be granted or withheld in Bank’s sole
      discretion. Any such purported assignment by Guarantor without Bank’s written
      consent shall be void. This Guaranty shall be governed by, and construed in
      accordance with, the laws of the Commonwealth of Massachusetts without regard
      to
      principles thereof regarding conflict of laws.

     

    Section
      15.    JURISDICTION. Guarantor
      hereby irrevocably agrees that any legal action or proceeding with respect
      to
      this Guaranty or any of the agreements, documents or instruments delivered
      in
      connection herewith may be brought in the STATE AND FEDERAL courts LOCATED
      IN
      the Commonwealth of Massachusetts as BANK may elect (PROVIDED THAT GUARANTOR
      ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
      LOCATED OUTSIDE OF THE STATE OF MASSACHUSETTS), and, by execution and delivery
      hereof, Guarantor accepts and consents to, generally and unconditionally, the
      jurisdiction of the aforesaid courts and agrees that such jurisdiction shall
      be
      exclusive, unless waived by BANK in writing, with respect to any action or
      proceeding brought by Guarantor against BANK. If for any reason Bank cannot
      avail itself of such courts in the Commonwealth of Massachusetts, Guarantor
      hereby irrevocably agrees to and accepts jurisdiction of the courts and venue
      in
      Santa Clara County, California. Nothing herein shall limit the right of BANK
      to
      bring proceedings against Guarantor in the courts of any other jurisdiction.
      Guarantor hereby waives, to the full extent permitted by law, any right to
      stay
      or to dismiss any action or proceeding brought before said courts on the basis
      of forum non conveniens.

     

    Section
      16.    WAIVER
      OF JURY TRIAL.
      EACH OF
BANK
      AND
      GUARANTOR HEREBY WAIVES, TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, ANY
      RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY
      OR
      INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY. EACH
      PARTY
      HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
      PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
      NOT,
      IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND
      (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED
      TO ENTER INTO THIS GUARANTY AND ANY RELATED INSTRUMENTS, AS APPLICABLE, BY,
      AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
      16.

     

    
      
        
        

      

      
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      	 	GUARANTOR 
	 	 
	 	MARKLAND TECHNOLOGIES, INC.
	 	 
	 	By: Gino
              Pereira                                    
                      
	 	Name: Gino
              Pereira                                     
               
	 	Title: Chief
              Financial
              Officer                      
               


    

     

     

     

     

     

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