Intell. Property Secy Agreement


    EXHIBIT
      10.3


    INTELLECTUAL
      PROPERTY SECURITY AGREEMENT

     

    This
      Intellectual Property Security Agreement (this “IP Agreement”) is made as of the
      4th
      day of
      August, 2006 by and among (i) TECHNEST
      HOLDINGS, INC.,
      a
      Nevada corporation, with its principal place of business at 1 McKinley Square,
      Fifth Floor, Boston, Massachusetts 02109 (“Technest”), E-OIR
      TECHNOLOGIES, INC., a
      Virginia corporation with its principal place of business 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 “Grantor”),
      and (ii) SILICON
      VALLEY BANK,
      a
      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 (“Lender”).

     

    RECITALS

     

    A. Lender
      has agreed to make advances of money and to extend certain financial
      accommodations to Grantor (the “Loan”), pursuant to: (i) a certain Loan and
      Security Agreement dated as of August 4, 2006 between Grantor and Lender, 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 Grantor and Lender, 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”). The
      Loan is secured pursuant to the terms of the Loan Agreement. Lender is willing
      to enter into certain financial accommodations with Grantor, but only upon
      the
      condition, among others, that Grantor shall grant to Lender a security interest
      in certain Copyrights, Trademarks, Patents, and Mask Works, and other assets,
      to
      secure the obligations of Grantor under the Loan Agreement. Defined terms used
      but not defined herein shall have the same meanings as in the Loan Agreement,
      as
      applicable.

     

    B.    Pursuant
      to the terms of the Loan Agreement, Grantor has granted to Lender a security
      interest in all of Grantor’s right title and interest, whether presently
      existing or hereafter acquired in, to and under all of the Collateral (as
      defined therein).

     

    NOW,
      THEREFORE,
      for
      good and valuable consideration, receipt of which is hereby acknowledged and
      intending to be legally bound, as collateral security for the prompt and
      complete payment when due of Grantor’s Indebtedness (as defined below), Grantor
      hereby represents, warrants, covenants and agrees as follows:

     

    1.    Grant
      of Security Interest.
      As
      collateral security for the prompt and complete payment and performance of
      all
      of Grantor’s present or future indebtedness, obligations and liabilities to
      Lender (hereinafter, the “Indebtedness”), including, without limitation, under
      the Loan Agreement, Grantor hereby grants a security interest in all of
      Grantor’s right, title and interest in, to and under its registered and
      unregistered intellectual property collateral (all of which shall collectively
      be called the “Intellectual Property Collateral”), including, without
      limitation, the following:

     

    (a)    Any
      and
      all copyright rights, copyright applications, copyright registrations and like
      protections in each work or authorship and derivative work thereof, whether
      published or unpublished, registered or unregistered, and whether or not the
      same also constitutes a trade secret, now or hereafter existing, created,
      acquired or held, including without limitation those set forth on EXHIBIT
      A
      attached
      hereto (collectively, the “Copyrights”);

     

    (b)    Any
      and
      all trade secret rights, including any rights to unpatented inventions,
      know-how, operating manuals, license rights and agreements, and confidential
      information, and any and all intellectual property rights in computer software
      and computer software products now or hereafter existing, created, acquired
      or
      held;

     

     

    
      
        
        

      

      
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    (c)    Any
      and
      all design rights which may be available to Grantor now or hereafter existing,
      created, acquired or held;

     

    (d)    All
      patents, patent applications and like protections including, without limitation,
      improvements, divisions, continuations, renewals, reissues, extensions and
      continuations-in-part of the same, including without limitation the patents
      and
      patent applications set forth on EXHIBIT
      B
      attached
      hereto (collectively, the “Patents”);

     

    (e)    Any
      trademark and service mark rights, slogans, trade dress, and tradenames, trade
      styles, whether registered or not, applications to register and registrations
      of
      the same and like protections, and the entire goodwill of the business of
      Grantor connected with and symbolized by such trademarks, including without
      limitation those set forth on EXHIBIT
      C
      attached
      hereto (collectively, the “Trademarks”);

     

    (f)    All
      mask
      works or similar rights available for the protection of semiconductor chips,
      now
      owned or hereafter acquired, including, without limitation those set forth
      on
EXHIBIT
      D
      attached
      hereto (collectively, the “Mask Works”);

     

    (g)    Any
      and
      all claims for damages by way of past, present and future infringements of
      any
      of the rights included above, with the right, but not the obligation, to sue
      for
      and collect such damages for said use or infringement of the intellectual
      property rights identified above;

     

    (h)    All
      licenses or other rights to use any of the Copyrights, Patents, Trademarks,
      or
      Mask Works and all license fees and royalties arising from such use to the
      extent permitted by such license or rights, including, without limitation those
      set forth on EXHIBIT
      E
      attached
      hereto (collectively, the “Licenses”); and

     

    (i)    All
      amendments, extensions, renewals and extensions of any of the Copyrights,
      Trademarks, Patents, or Mask Works; and

     

    (j)    All
      proceeds and products of the foregoing, including without limitation all
      payments under insurance or any indemnity or warranty payable in respect of
      any
      of the foregoing.

     

    2.    Authorization
      and Request.
      Grantor
      authorizes and requests that the Register of Copyrights and the Commissioner
      of
      Patents and Trademarks record this IP Agreement, and any amendments thereto,
      or
      copies thereof.

     

    3.    Covenants
      and Warranties.
      Grantor
      represents, warrants, covenants and agrees as follows:

     

    (a)    Grantor
      is now the sole owner of the Intellectual Property Collateral, except for
      non-exclusive licenses granted by Grantor to its customers in the ordinary
      course of business and except as set forth on EXHIBIT
      E
      attached
      hereto.

     

    (b)    Performance
      of this IP Agreement does not conflict with or result in a breach of any
      material agreement to which Grantor is bound.

     

    (c)    During
      the term of this IP Agreement, Grantor will not transfer or otherwise encumber
      any interest in the Intellectual Property Collateral, except for non-exclusive
      licenses granted by Grantor in the ordinary course of business or as set forth
      in this IP Agreement;

     

    (d)    To
      its
      knowledge, each of the Patents is valid and enforceable, and no part of the
      Intellectual Property Collateral has been judged invalid or unenforceable,
      in
      whole or in part, and no claim has been made that any part of the Intellectual
      Property Collateral violates the rights of any third party;

     

     

    
      
        
        

      

      
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    (e)    Grantor
      shall promptly advise Lender of any material adverse change in the composition
      of the Collateral, including but not limited to any subsequent ownership right
      of the Grantor in or to any Trademark, Patent, Copyright, or Mask Work specified
      in this IP Agreement;

     

    (f)    Grantor
      shall (i) protect, defend and maintain the validity and enforceability of the
      Trademarks, Patents, Copyrights, and Mask Works that are material to its
      business (“Material IP”), (ii) use its best efforts to detect infringements of
      Material IP and promptly advise Lender in writing of material infringements
      detected and (iii) not allow any Material IP to be abandoned, forfeited or
      dedicated to the public without the written consent of Lender, which shall
      not
      be unreasonably withheld, unless Grantor determines that reasonable business
      practices suggest that abandonment is appropriate.

     

    (g)    Grantor
      shall take such further actions as Lender may reasonably request from time
      to
      time to perfect or continue the perfection of Lender’s interest in the
      Intellectual Property Collateral;

     

    (h)    This
      IP
      Agreement creates, and in the case of after acquired Intellectual Property
      Collateral this IP Agreement will create, at the time Grantor first has rights
      in such after acquired Intellectual Property Collateral, in favor of Lender
      a
      valid and perfected first priority security interest and collateral assignment
      in the Intellectual Property Collateral in the United States securing the
      payment and performance of the obligations evidenced by the Loan
      Agreement;

     

    (i)    To
      its
      knowledge, except for, and upon, the filing of UCC financing statements, or
      other notice filings or notations in appropriate filing offices, if necessary
      to
      perfect the security interests created hereunder, no authorization, approval
      or
      other action by, and no notice to or filing with, any U.S. governmental
      authority or U.S. regulatory body is required either (a) for the grant by
      Grantor of the security interest granted hereby, or for the execution, delivery
      or performance of this IP Agreement by Grantor in the U.S. or (b) for the
      perfection in the United States or the exercise by Lender of its rights and
      remedies thereunder;

     

    (j)    All
      information heretofore, herein or hereafter supplied to Lender by or on behalf
      of Grantor with respect to the Intellectual Property Collateral is accurate
      and
      complete in all material respects.

     

    (k)    Grantor
      shall not enter into any agreement that would materially impair or conflict
      with
      Grantor’s obligations hereunder without Lender’s prior written consent, which
      consent shall not be unreasonably withheld. Grantor shall not permit the
      inclusion in any material contract to which it becomes a party of any provisions
      that could or might in any way prevent the creation of a security interest
      in
      Grantor’s rights and interest in any property included within the definition of
      the Intellectual Property Collateral acquired under such contracts.

     

    (l)    Promptly
      after any executive officer of Grantor obtains actual knowledge thereof, Grantor
      will promptly notify Lender in writing of any event that materially adversely
      affects the value of any material Intellectual Property Collateral, the ability
      of Grantor to dispose of any material Intellectual Property Collateral or the
      rights and remedies of Lender in relation thereto, including the levy of any
      legal process against any of the Intellectual Property Collateral.

     

    4.    Lender’s
      Rights.
      Lender
      shall have the right, but not the obligation, to take, at Grantor’s sole
      expense, any actions that Grantor is required under this IP Agreement to take
      but which Grantor fails to take, after fifteen (15) days’ notice to Grantor.
      Grantor shall reimburse and indemnify Lender for all reasonable costs and
      reasonable expenses incurred in the reasonable exercise of its rights under
      this
      section 4.

     

    5.    Inspection
      Rights.
      Grantor
      hereby grants to Lender and its employees, representatives and agents the right
      to visit, during reasonable hours upon prior reasonable written notice to
      Grantor, any of Grantor’s plants and facilities that manufacture, install or
      store products (or that have done so during the prior six-month period) that
      are
      sold utilizing any of the Intellectual Property Collateral, and to inspect
      the
      products and quality control records relating thereto upon reasonable written
      notice to Grantor and as often as may be reasonably requested, but not more
      than
      once in every six (6) months; provided, however, nothing herein shall entitle
      Lender access to Grantor’s trade secrets and other proprietary
      information.

     

     

    
      
        
        

      

      
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    6.    Further
      Assurances; Attorney in Fact.

     

    (a)    On
      a
      continuing basis, Grantor will, upon request by Lender, subject to any prior
      licenses, encumbrances and restrictions and prospective licenses, make, execute,
      acknowledge and deliver, and file and record in the proper filing and recording
      places in the United States, all such instruments, including appropriate
      financing and continuation statements and collateral agreements and filings
      with
      the United States Patent and Trademark Office and the Register of Copyrights,
      and take all such action as may reasonably be deemed necessary or advisable,
      or
      as reasonably requested by Lender, to perfect Lender’s security interest in all
      Copyrights, Patents, Trademarks, and Mask Works and otherwise to carry out
      the
      intent and purposes of this IP Agreement, or for assuring and confirming to
      Lender the grant or perfection of a security interest in all Intellectual
      Property Collateral.

     

    (b)    In
      addition to section 6(a) above, Grantor shall not register any Copyrights or
      Mask Works in the United States Copyright Office unless it: (i) has given at
      least fifteen (15) days’ prior written notice to Lender of its intent to
      register such Copyrights or Mask Works and has provided Lender with a copy
      of
      the application it intends to file with the United States Copyright Office
      (excluding exhibits thereto); (ii) executes a security agreement or such other
      documents as Lender may reasonably request in order to maintain the perfection
      and priority of Lender’s security interest in the Copyrights proposed to be
      registered with the United States Copyright Office; and (iii) records such
      security documents with the United States Copyright Office contemporaneously
      with filing the Copyright application(s) with the United States Copyright
      Office. Grantor shall promptly provide to Lender a copy of the Copyright
      application(s) filed with the United States Copyright Office, together with
      evidence of the recording of the security documents necessary for Lender to
      maintain the perfection and priority of its security interest in such Copyrights
      or Mask Works. Grantor shall provide written notice to Lender of any application
      filed by Grantor in the United States Patent Trademark Office for a patent
      or to
      register a trademark or service mark within 30 days of any such
      filing.

     

    (c)    Grantor
      hereby irrevocably appoints Lender as Grantor’s attorney-in-fact, with full
      authority in the place and stead of Grantor and in the name of Grantor, Lender
      or otherwise, from time to time in Lender’s discretion, upon Grantor’s failure
      or inability to do so, to take any action and to execute any instrument which
      Lender may deem necessary or advisable to accomplish the purposes of this IP
      Agreement, including:

     

    (i)    To
      modify, in its sole discretion, this IP Agreement without first obtaining
      Grantor’s approval of or signature to such modification by amending Exhibit A,
      Exhibit B, Exhibit C, and Exhibit D hereof, as appropriate, to include reference
      to any right, title or interest in any Copyrights, Patents, Trademarks or Mask
      Works acquired by Grantor after the execution hereof or to delete any reference
      to any right, title or interest in any Copyrights, Patents, Trademarks, or
      Mask
      Works in which Grantor no longer has or claims any right, title or interest;
      and

     

    (ii)    To
      file,
      in its sole discretion, one or more financing or continuation statements and
      amendments thereto, or other notice filings or notations in appropriate filing
      offices, relative to any of the Intellectual Property Collateral, without notice
      to Grantor, with all appropriate jurisdictions, as Lender deems appropriate,
      in
      order to further perfect or protect Lender’s interest in the Intellectual
      Property Collateral.

     

    7.    Events
      of Default.
      The
      occurrence of any of the following shall constitute an Event of Default under
      this IP Agreement:

     

    (a)    An
      Event
      of Default occurs under the Loan Agreement; or any document from Grantor to
      Lender; or

     

     

    
      
        
        

      

      
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    (b)    Grantor
      breaches any warranty or agreement made by Grantor in this IP Agreement, and
      as
      to any default (other than those specified in subsection (a) above) under such
      other term, provision, condition, covenant or agreement that can be cured,
      has
      failed to cure the default within ten (10) days after the occurrence thereof;
      provided, however, that if the default cannot by its nature be cured within
      the
      ten (10) day period or cannot after diligent attempts by Grantor be cured within
      such ten (10) day period, and such default is likely to be cured within a
      reasonable time, then Grantor shall have an additional period (which shall
      not
      in any case exceed thirty (30) days) to attempt to cure such default, and within
      such reasonable time period the failure to cure the default shall not be deemed
      an Event of Default. Grace periods provided under this section shall not apply,
      among other things, subsection (a) above. 

     

    8.    Remedies.
      Upon
      the occurrence and continuance of an Event of Default, Lender shall have the
      right to exercise all the remedies of a secured party under the Massachusetts
      Uniform Commercial Code, including without limitation the right to require
      Grantor to assemble the Intellectual Property Collateral and any tangible
      property in which Lender has a security interest and to make it available to
      Lender at a place designated by Lender. Lender shall have a nonexclusive,
      royalty free license to use the Copyrights, Patents, Trademarks, and Mask Works
      to the extent reasonably necessary to permit Lender to exercise its rights
      and
      remedies upon the occurrence of an Event of Default. Grantor will pay any
      expenses (including reasonable attorney’s fees) incurred by Lender in connection
      with the exercise of any of Lender’s rights hereunder, including without
      limitation any expense incurred in disposing of the Intellectual Property
      Collateral. All of Lender’s rights and remedies with respect to the Intellectual
      Property Collateral shall be cumulative.

     

    9.    Indemnity.
      Grantor
      agrees to defend, indemnify and hold harmless Lender and its officers,
      employees, and agents against: (a) all obligations, demands, claims, and
      liabilities claimed or asserted by any other party in connection with the
      transactions contemplated by this IP Agreement, and (b) all losses or expenses
      in any way suffered, incurred, or paid by Lender as a result of or in any way
      arising out of, following or consequential to transactions between Lender and
      Grantor, whether under this IP Agreement or otherwise (including without
      limitation, reasonable attorneys fees and reasonable expenses), except for
      losses arising from or out of Lender’s gross negligence or willful misconduct.


     

    10.   Termination.
      At such
      time as Grantor shall completely satisfy all of the obligations secured
      hereunder, Lender shall execute and deliver to Grantor all releases,
      terminations, and other instruments as may be necessary or proper to release
      the
      security interest hereunder.

     

    11.   Course
      of Dealing.
      No
      course of dealing, nor any failure to exercise, nor any delay in exercising
      any
      right, power or privilege hereunder shall operate as a waiver
      thereof.

     

    12.   Amendments.
      This IP
      Agreement may be amended only by a written instrument signed by both parties
      hereto.

     

    13.   Counterparts.
      This IP
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original but all of which together shall constitute the same
      instrument.

     

    14.   Law
      and Jurisdiction.
      This IP
      Agreement shall be governed by and construed in accordance with the laws of
      the
      Commonwealth of Massachusetts. GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION
      WITH
      ITS PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE
      OR
      FEDERAL COURT OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS
      IN
      ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND, AGAINST IT WHICH ARISES OUT OF
      OR
      BY REASON OF THIS AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY REASON LENDER
      CANNOT AVAIL ITSELF OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS, GRANTOR
      ACCEPTS JURISDICTION OF THE COURTS AND VENUE IN SANTA CLARA COUNTY, CALIFORNIA.
      NOTWITHSTANDING THE FOREGOING, THE LENDER SHALL HAVE THE RIGHT TO BRING ANY
      ACTION OR PROCEEDING AGAINST THE GRANTOR OR ITS PROPERTY IN THE COURTS OF ANY
      OTHER JURISDICTION WHICH THE LENDER DEEMS NECESSARY OR APPROPRIATE IN ORDER
      TO
      REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE LENDER’S RIGHTS AGAINST
      THE GRANTOR OR ITS PROPERTY.

     

     

    
      
        
        

      

      
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    GRANTOR
      AND LENDER EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
      CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS
      OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS,
      TORT
      CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
      EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A
      MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS
      AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT
      IT
      KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
      WITH LEGAL COUNSEL.

     

    15.    Confidentiality.
      In
      handling any confidential information, Lender shall exercise the same degree
      of
      care that it exercises for its own proprietary information, but disclosure
      of
      information may be made: (i) to Lender’s subsidiaries or affiliates in
      connection with their present or prospective business relations with Grantor;
      (ii) to prospective transferees or purchasers of any interest in the Loans;
      (iii) as required by law, regulation, subpoena, or other order, (iv) as required
      in connection with Lender’s examination or audit; and (v) as Lender considers
      appropriate in exercising remedies under this Agreement. Confidential
      information does not include information that either: (a) is in the public
      domain or in Lender’s possession when disclosed to Lender, or becomes part of
      the public domain after disclosure to Lender; or (b) is disclosed to Lender
      by a
      third party, if Lender reasonably does not know that the third party is
      prohibited from disclosing the information.

     

     

    
      
        
        

      

      
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    EXECUTED
      as a
      sealed instrument under the laws of the Commonwealth of Massachusetts on the
      day
      and year first written above.

     

     

    
      	
              Address
                of Grantor:

               

              One
                McKinley Square - 5th
                Floor                                

               

              Boston,
                Massachusetts
                02109                                      

               

               

               

               

               

               

               

              1308
                Devils Reach
                Road                                              

               

              Woodbridge,
                Virginia
                22192                                        

               

               

               

               

               

               

              10411
                Motor City Drive - Suite
                650                            

               

              Bethesda,
                Maryland
                20817                                          

               

               

               

               

               

               

               

              One
                Newton Executive Park - Suite
                200                    

               

              2221
                Washington
                Street                                              

               

              Newton,
                Massachusetts
                02462                                  

            	
              GRANTOR:

               

              By: /s/ Gino
                Pereira                                                    

               

              Name: Gino
                Pereira                                                     

               

              Title: Chief Financial
                Officer                                     

               

               

               

              E-OIR TECHNOLOGIES, INC.

               

              
                By: /s/ Gino
                  Pereira                                                    

                 

                Name: Gino
                  Pereira                                                     

                 

                Title: Chief Financial
                  Officer                                     

              

               

               
GENEX TECHNOLOGIES INCORPORATED
               

              
                
                  By: /s/ Gino
                    Pereira                                                    

                   

                  Name: Gino
                    Pereira                                                     

                   

                  Title: Chief Financial
                    Officer                                     

                

              

               

               
SILICON VALLEY BANK
               

              By: /s/ Michael
                Tramack                                           

               

              Name: Michael
                Tramack                                           

               
Title: Senior Vice
              President                                      


    

     

     

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