Document:

Security Agreement

    Exhibit
      10.2

     

    SECURITY
      AGREEMENT

     

    SECURITY
      AGREEMENT (this “Agreement”),
      is
      made and entered into as of June 11, 2007, among Markland Technologies, Inc.,
      a
      Florida corporation (the “Company”),
      and
      the secured parties signatory hereto, and their endorsees, transferees and
      assigns (each such secured parties, and collectively, the “Secured
      Party”).

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
      pursuant to a Litigation Settlement, Securities Purchase, Relinquishment and
      Exchange Agreement, dated as of the date hereof, between the Company and the
      Secured Party (the “Purchase
      Agreement”),
      the
      Secured Party has agreed to relinquish certain rights (the “Secured
      Party’s Relinquishments”)
      in
      addition to those enumerated in the Purchase Agreement including in particular
      Section 9 thereof; and

     

    WHEREAS,
      in
      order to induce the Secured Party to undertake the Secured Party’s
      Relinquishments, the Company has agreed to execute and deliver to the Secured
      Party this Agreement for the benefit of the Secured Party and to grant to it
      a
      second priority security interest in certain property of Company to secure
      the
      prompt payment, performance and discharge in full of all of Company’s
      obligations under this Agreement and in partial discharge of the Company’s
      obligations under the Purchase Agreement as they relate to the Secured Party’s
      Relinquishments.

     

    NOW,
      THEREFORE,
      in
      consideration of the agreements herein contained and for other good and valuable
      consideration, the receipt and sufficiency of which is hereby acknowledged,
      the
      parties hereto hereby agree as follows:

     

    1.    Certain
      Definitions.
      As used
      in this Agreement, the following terms shall have the meanings set forth in
      this
      Section 1. Terms used but not otherwise defined in this Agreement that are
      defined in Article 9 of the UCC (such as “general
      intangibles”
and
      “proceeds”)
      shall
      have the respective meanings given such terms in Article 9 of the
      UCC.

     

    (a)    “Collateral”
means
      the collateral in which the Secured Party is granted a security interest by
      this
      Agreement and which shall specifically include 1,739,130 of Technest Holdings
      Inc.’s (“Technest”)
      Common
      Stock, par value $0.001 per share, which is currently pledged to Silicon Valley
      Bank pursuant to that certain agreement between Technest and Silicon Valley
      Bank.

     

    (b)    “Company”
shall
      mean, collectively, Company and all of the subsidiaries of Company, a list
      of
      which is contained in Schedule
      A,
      attached hereto.

     

    (c)    “UCC”
means
      the Uniform Commercial Code, as currently in effect in the State of New
      York.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    2.    Grant
      of Security Interest.
      As an
      inducement for the Secured Party to undertake the Secured Party’s
      Relinquishments and to secure the prompt payment, performance and discharge
      in
      full of all of Company’s obligations under this Agreement and in partial
      discharge of the Company’s obligations under the Purchase Agreement as they
      relate to the Secured Party’s Relinquishments, the Company hereby,
      unconditionally and irrevocably, pledges, grants and hypothecates to the Secured
      Party, a continuing security interest in, a continuing second (and ultimately
      a
      first) lien upon, an unqualified right to possession and disposition of and
      a
      right of set-off against, in each case to the fullest extent permitted by law,
      all of the Company’s right, title and interest of whatsoever kind and nature in
      and to the Collateral (the “Security
      Interest”).
      The
      Security Interest shall only be subordinated to the security interest of Silicon
      Valley Bank and shall be amended to a first priority lien after Silicon Valley
      Bank has relinquished its interest in the Collateral until such time as the
      Company and the Secured Party have taken all necessary steps to transfer full
      ownership of the Collateral to the Secured Party in consideration of the
      undertakings in the Purchase Agreement and related documents.

     

    3.    Representations,
      Warranties, Covenants and Agreements of the Company.
      The
      Company represents and warrants to, and covenants and agrees with, the Secured
      Party as follows: 

     

    (a)    The
      Company has the requisite corporate power and authority to enter into this
      Agreement and otherwise to carry out its obligations hereunder. The execution,
      delivery and performance by the Company of this Agreement and the filings
      contemplated herein have been duly authorized by all necessary action on the
      part of the Company and no further action is required by the Company. This
      Agreement constitutes a legal, valid and binding obligation of the Company
      enforceable in accordance with its terms, except as enforceability may be
      limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
      affecting the enforcement of creditor’s rights generally.

     

    (b)    The
      Company represents and warrants that it has no place of business or offices
      where its respective books of account and records are kept (other than
      temporarily at the offices of its attorneys or accountants) or places where
      Collateral is stored or located, except as set forth on Schedule
      A
      attached
      hereto;

     

    (c)    The
      Company is the sole owner of the Collateral, free and clear of any liens,
      security interests, encumbrances, rights or claims, and is fully authorized
      to
      grant the Security Interest in and to pledge the Collateral, except as set
      forth
      on Schedule
      C.
      There
      is not on file in any governmental or regulatory authority, agency or recording
      office an effective financing statement, security agreement, license or transfer
      or any notice of any of the foregoing (other than those that have been filed
      in
      favor of the Secured Party pursuant to this Agreement) covering or affecting
      any
      of the Collateral, except as set forth on Schedule
      C.
      So long
      as this Agreement shall be in effect, the Company shall not execute and shall
      not knowingly permit to be on file in any such office or agency any such
      financing statement or other document or instrument (except to the extent filed
      or recorded in favor of the Secured Party pursuant to the terms of this
      Agreement), except as set forth on Schedule
      C.

     

    (d)    No
      part
      of the Collateral has been judged invalid or unenforceable. No written claim
      has
      been received that any Collateral or the Company’s use of any Collateral
      violates the rights of any third party. There has been no adverse decision
      to
      the Company’s claim of ownership rights in or exclusive rights to use the
      Collateral in any jurisdiction or to the Company’s right to keep and maintain
      such Collateral in full force and effect, and there is no proceeding involving
      said rights pending or, to the best knowledge of the Company, threatened before
      any court, judicial body, administrative or regulatory agency, arbitrator or
      other governmental authority. 

     

    
      
        
        

      

      
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    (e)    The
      Company shall at all times maintain its books of account and records relating
      to
      the Collateral at its principal place of business and its Collateral at the
      locations set forth on Schedule
      A
      attached
      hereto and may not relocate such books of account and records or tangible
      Collateral unless it delivers to the Secured Party at least 30 days prior to
      such relocation (i) written notice of such relocation and the new location
      thereof (which must be within the United States) and (ii) evidence that
      appropriate financing statements and other necessary documents have been filed
      and recorded and other steps have been taken to perfect the Security Interest
      to
      create in favor of the Secured Party valid, perfected and continuing second
      priority (and ultimately first priority) liens in the Collateral. 

     

    (f)    This
      Agreement creates in favor of the Secured Party a valid security interest in
      the
      Collateral securing the prompt payment, performance and discharge in full of
      all
      of Company’s obligations under this Agreement and the Company’s obligations
      under the Purchase Agreement as they relate to the Secured Party’s
      Relinquishments, and, upon making the filings described in the immediately
      following sentence, a perfected second priority security interest in such
      Collateral. Except for the filing of financing statements on Form-1 under the
      UCC with the jurisdictions indicated on Schedule
      B,
      attached hereto, no authorization or approval of or filing with or notice to
      any
      governmental authority or regulatory body is required either (i) for
      the grant by the Company of, or the effectiveness of, the Security Interest
      granted hereby or for the execution, delivery and performance of this Agreement
      by the Company or (ii) for
      the perfection of or exercise by the Secured Party of its rights and remedies
      hereunder. 

     

    (g)    On
      the
      date of execution of this Agreement, the Company will deliver to the Secured
      Party one or more executed UCC financing statements on Form-1 with respect
      to
      the Security Interest for filing with the jurisdictions indicated on
Schedule
      B,
      attached hereto and in such other jurisdictions as may be requested by the
      Secured Party.

     

    (h)    Except
      for the documents evidencing the pledge of the Collateral to Silicon Valley
      Bank
      (“SVB”) (which may prohibit the creation of subordinate liens) and as otherwise
      set forth on Schedule
      C,
      the
      execution, delivery and performance of this Agreement does not conflict with
      or
      cause a breach or default, or an event that with or without the passage of
      time
      or notice, shall constitute a breach or default, under any agreement to which
      the Company is a party or by which the Company is bound. No consent (including,
      without limitation, from stock holders or creditors of the Company) is required
      for the Company to enter into and perform its obligations hereunder. In the
      event the SVB documents prohibit a subordinate lien from being created, the
      Company will use its best efforts to have SVB allow the Secured Party a
      subordinate lien. In the event that SVB so refuses, the Company agrees to enter
      into such agreement as requested by the Secured Party to cause the Collateral
      to
      be immediately assigned to it subsequent to SVB’s release of such lien.

     

    (i)    The
      Company shall at all times maintain the lien and the Security Interest provided
      for hereunder as valid and perfected second lien (and perfected first lien
      at
      such time as the first priority lien in favor of Silicon Valley Bank is removed)
      and security interests in the Collateral in favor of the Secured Party until
      this Agreement and the Security Interest hereunder shall terminate pursuant
      to
      Section 11. The Company hereby agrees to defend the same against any and all
      persons. The Company shall safeguard and protect all Collateral for the account
      of the Secured Party. At the request of the Secured Party, the Company will
      sign
      and deliver to the Secured Party at any time or from time to time one or more
      financing statements pursuant to the UCC (or any other applicable statute)
      in
      form reasonably satisfactory to the Secured Party and will pay the cost of
      filing the same in all public offices wherever filing is, or is deemed by the
      Secured Party to be, necessary or desirable to effect the rights and obligations
      provided for herein. Without limiting the generality of the foregoing, the
      Company shall pay all fees, taxes and other amounts necessary to maintain the
      Collateral and the Security Interest hereunder, and the Company shall obtain
      and
      furnish to the Secured Party from time to time, upon demand, such releases
      and/or subordinations of claims and liens which may be required to maintain
      the
      priority of the Security Interest hereunder. 

     

    
      
        
        

      

      
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    (j)    The
      Company will not transfer, pledge, hypothecate, encumber, sell or otherwise
      dispose of any of the Collateral without the prior written consent of the
      Secured Party.

     

    (k)    The
      Company shall, within ten (10) days of obtaining knowledge thereof, advise
      the
      Secured Party promptly, in sufficient detail, of any substantial change in
      the
      Collateral, and of the occurrence of any event which would have a material
      adverse effect on the value of the Collateral or on the Secured Party’s security
      interest therein.

     

    (l)    The
      Company shall promptly execute and deliver to the Secured Party such further
      deeds, mortgages, assignments, security agreements, financing statements or
      other instruments, documents, certificates and assurances and take such further
      action as the Secured Party may from time to time request and may in its sole
      discretion deem necessary to perfect, protect or enforce its security interest
      in the Collateral, substantially in a form acceptable to the Secured Party.
      

     

    (m)    The
      Company shall promptly notify the Secured Party in sufficient detail upon
      becoming aware of any attachment, garnishment, execution or other legal process
      levied against any Collateral and of any other information received by the
      Company that may materially affect the value of the Collateral, the Security
      Interest or the rights and remedies of the Secured Party hereunder.

     

    (n)    All
      information heretofore, herein or hereafter supplied to the Secured Party by
      or
      on behalf of the Company with respect to the Collateral is accurate and complete
      in all material respects as of the date furnished.

     

    (o)    Schedule
      A
      attached
      hereto contains a list of all of the subsidiaries of Company.

     

    4.    Defaults.
      The
      following events shall be “Events
      of Default”:

     

    (a)    Any
      representation or warranty of the Company in this Agreement or in the Purchase
      Agreement shall prove to have been incorrect in any material respect when made;
      

     

    
      
        
        

      

      
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    (b)    The
      failure by the Company to observe or perform any of its obligations hereunder
      or
      in the Purchase Agreement for ten (10) days after receipt by the Company of
      notice of such failure from the Secured Party; and

     

    (c)    Any
      breach of, or default under, the Purchase Agreement.

     

    5.    Duty
      To Hold In Trust.
      Upon
      the occurrence of any Event of Default and at any time thereafter, the Company
      shall, upon receipt by it of any shares currently pledged to Silicon Valley
      Bank
      and subject to the Security Interest, hold the same in trust for the Secured
      Party and shall forthwith endorse and transfer any such sums or instruments,
      or
      both, to the Secured Party, for application to the satisfaction of the Company’s
      obligations hereunder.

     

    6.    Rights
      and Remedies Upon Default.
      Upon
      occurrence of any Event of Default and at any time thereafter, the Secured
      Party
      shall have the right to exercise all of the remedies conferred hereunder and
      under any other related agreement, and the Secured Party shall have all the
      rights and remedies of a secured party under the UCC and/or any other applicable
      law (including the Uniform Commercial Code of any jurisdiction in which any
      Collateral is then located) subject only to Silicon Valley Bank’s priority if
      then in effect.

     

    7.    Applications
      of Proceeds.
      The
      proceeds of any sale, lease or other disposition of the Collateral hereunder
      shall be applied first, to the expenses of retaking, holding, storing,
      processing and preparing for sale, selling, and the like (including, without
      limitation, any taxes, fees and other costs incurred in connection therewith)
      of
      the Collateral, to the reasonable attorneys’ fees and expenses incurred by the
      Secured Party in enforcing its rights hereunder and in connection with
      collecting, storing and disposing of the Collateral and to the payment of any
      other amounts required by applicable law, after which the Secured Party shall
      pay to the Company any surplus proceeds. If, upon the sale, license or other
      disposition of the Collateral, the proceeds thereof are insufficient to pay
      all
      amounts to which the Secured Party is legally entitled, the Company will be
      liable for the deficiency, together with interest thereon, at the rate of 15%
      per annum (the “Default
      Rate”),
      and
      the reasonable fees of any attorneys employed by the Secured Party to collect
      such deficiency. To the extent permitted by applicable law, the Company waives
      all claims, damages and demands against the Secured Party arising out of the
      repossession, removal, retention or sale of the Collateral, unless due to the
      gross negligence or willful misconduct of the Secured Party.

     

    8.    Costs
      and Expenses.The
      Company agrees to pay all out-of-pocket fees, costs and expenses incurred in
      connection with any filing required hereunder, including without limitation,
      any
      financing statements, continuation statements, partial releases and/or
      termination statements related thereto or any expenses of any searches
      reasonably required by the Secured Party. The Company shall also pay all other
      claims and charges which in the reasonable opinion of the Secured Party might
      prejudice, imperil or otherwise affect the Collateral or the Security Interest
      therein. The Company will also, upon demand, pay to the Secured Party the amount
      of any and all reasonable expenses, including the reasonable fees and expenses
      of its counsel and of any experts and agents, which the Secured Party may incur
      in connection with (i) the
      enforcement of this Agreement, (ii) the
      custody or preservation of, or the sale of, collection from, or other
      realization upon, any of the Collateral, or (iii) the
      exercise or enforcement of any of the rights of the Secured Party under any
      applicable agreement.

     

    
      
        
        

      

      
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    9.    Responsibility
      for Collateral.
      The
      Company assumes all liabilities and responsibility in connection with all
      Collateral, and the obligations of the Company hereunder or under any other
      agreement, including, without limitation the Purchase Agreement, shall in no
      way
      be affected or diminished by reason of the loss, destruction, damage or theft
      of
      any of the Collateral or its unavailability for any reason.

     

    Immediately
      upon release of the Collateral by Silicon Valley Bank, the Parties agree that
      the Collateral shall immediately be placed with the escrow agent pursuant to
      the
      terms of that certain escrow agreement dated as of the even date hereof.

     

    10.   Security
      Interest Absolute.
      All
      rights of the Secured Party and all obligations of the Company hereunder, shall
      be absolute and unconditional, irrespective of: (a) any
      lack of validity or enforceability of this Agreement, or any agreement entered
      into in connection with the foregoing, or any portion hereof or thereof;
(b) any
      change in the time, manner or place of payment or performance of, or in any
      other term of, all or any of the obligations of the Company under this Agreement
      and the Company’s obligations under the Purchase Agreement as they relate to the
      Secured Party’s Relinquishments, or any other amendment or waiver of or any
      consent to any departure from any agreement entered into in connection with
      the
      foregoing; (c) 
      any exchange, release or nonperfection of any of the Collateral, or any release
      or amendment or waiver of or consent to departure from any other collateral
      for,
      or any guaranty, or any other security, for all or any of the obligations of
      the
      Company under this Agreement and the Company’s obligations under the Purchase
      Agreement as they relate to the Secured Party’s Relinquishments; (d) any
      action by the Secured Party to obtain, adjust, settle and cancel in its sole
      discretion any insurance claims or matters made or arising in connection with
      the Collateral; or (e) any
      other circumstance which might otherwise constitute any legal or equitable
      defense available to the Company, or a discharge of all or any part of the
      Security Interest granted hereby. Until the obligations of the Company under
      this Agreement and the Company’s obligations under the Purchase Agreement as
      they relate to the Secured Party’s Relinquishments shall have been paid and/or
      performed in full, the rights of the Secured Party shall continue even if such
      obligations are barred for any reason, including, without limitation, the
      running of the statute of limitations or bankruptcy. 

     

      THE
      COMPANY EXPRESSLY WAIVES PRESENTMENT, PROTEST, NOTICE OF PROTEST, DEMAND, NOTICE
      OF NONPAYMENT AND DEMAND FOR PERFORMANCE. IN THE EVENT THAT AT ANY TIME ANY
      TRANSFER OF ANY COLLATERAL OR ANY PAYMENT RECEIVED BY THE SECURED PARTY
      HEREUNDER SHALL BE DEEMED BY FINAL ORDER OF A COURT OF COMPETENT JURISDICTION
      TO
      HAVE BEEN A VOIDABLE PREFERENCE OR FRAUDULENT CONVEYANCE UNDER THE BANKRUPTCY
      OR
      INSOLVENCY LAWS OF THE UNITED STATES, OR SHALL BE DEEMED TO BE OTHERWISE DUE
      TO
      ANY PARTY OTHER THAN THE SECURED PARTY, THEN, IN ANY SUCH EVENT, THE COMPANY’S
      OBLIGATIONS HEREUNDER SHALL SURVIVE CANCELLATION OF THIS AGREEMENT, AND SHALL
      NOT BE DISCHARGED OR SATISFIED BY ANY PRIOR PAYMENT THEREOF AND/OR CANCELLATION
      OF THIS AGREEMENT, BUT SHALL REMAIN A VALID AND BINDING OBLIGATION ENFORCEABLE
      IN ACCORDANCE WITH THE TERMS AND PROVISIONS HEREOF. THE COMPANY WAIVES ALL
      RIGHT
      TO REQUIRE THE SECURED PARTY TO PROCEED AGAINST ANY OTHER PERSON OR TO APPLY
      ANY
      COLLATERAL WHICH THE SECURED PARTY MAY HOLD AT ANY TIME, OR TO MARSHAL ASSETS,
      OR TO PURSUE ANY OTHER REMEDY. THE COMPANY WAIVES ANY DEFENSE ARISING BY REASON
      OF THE APPLICATION OF THE STATUTE OF LIMITATIONS TO ANY OBLIGATION SECURED
      HEREBY.

     

    
      
        
        

      

      
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    11.   Term
      of Agreement.
      This
      Agreement and the Security Interest shall terminate on the date on which
      ownership of the underlying stock has been successfully transferred to the
      Secured Party and all other obligations of the Company under this Agreement
      and
      the Company’s obligations under the Purchase Agreement as they relate to the
      Secured Party’s Relinquishments have been paid or discharged. Upon such
      termination, the Secured Party, at the request and at the expense of the
      Company, will join in executing any termination statement with respect to any
      financing statement executed and filed pursuant to this Agreement. 

     

    12.   Power
      of Attorney; Further Assurances.

     

    (a)    The
      Company authorizes the Secured Party, and does hereby make, constitute and
      appoint it, and its respective officers, agents, successors or assigns with
      full
      power of substitution, as the Company’s true and lawful attorney-in-fact, with
      power, in its own name or in the name of the Company, to, after the occurrence
      and during the continuance of an Event of Default, (i) endorse
      any notes, checks, drafts, money orders, or other instruments of payment
      (including payments payable under or in respect of any policy of insurance)
      in
      respect of the Collateral that may come into possession of the Secured Party;
      (ii) to
      sign and endorse any UCC financing statement or assignments, verifications
      and
      notices in connection with accounts, and other documents relating to the
      Collateral; (iii) to
      pay or discharge taxes, liens, security interests or other encumbrances at
      any
      time levied or placed on or threatened against the Collateral; (iv) to
      demand, collect, receipt for, compromise, settle and sue for monies due in
      respect of the Collateral; and (v) generally,
      to do, at the option of the Secured Party, and at the Company’s expense, at any
      time, or from time to time, all acts and things which the Secured Party deems
      necessary to protect, preserve and realize upon the Collateral and the Security
      Interest granted therein in order to effect the intent of this Agreement, all
      as
      fully and effectually as the Company might or could do; and the Company hereby
      ratifies all that said attorney shall lawfully do or cause to be done by virtue
      hereof. This power of attorney is coupled with an interest and shall be
      irrevocable for the term of this Agreement and thereafter as long as any of
      the
      Company’s obligations under this Agreement and the Company’s obligations under
      the Purchase Agreement as they relate to the Secured Party’s Relinquishments
      shall be outstanding.

     

    (b)    On
      a
      continuing basis, the Company will make, execute, acknowledge, deliver, file
      and
      record, as the case may be, in the proper filing and recording places in any
      jurisdiction, including, without limitation, the jurisdictions indicated on
      Schedule
      B,
      attached hereto, all such instruments, and take all such action as may
      reasonably be deemed necessary or advisable, or as reasonably requested by
      the
      Secured Party, to perfect the Security Interest granted hereunder and otherwise
      to carry out the intent and purposes of this Agreement, or for assuring and
      confirming to the Secured Party the grant or perfection of a security interest
      in all the Collateral.

     

    (c)    The
      Company hereby irrevocably appoints the Secured Party as the Company’s
      attorney-in-fact, with full authority in the place and stead of the Company
      and
      in the name of the Company, from time to time in the Secured Party’s discretion,
      to take any action and to execute any instrument which the Secured Party may
      deem necessary or advisable to accomplish the purposes of this Agreement,
      including the filing, in its sole discretion, of one or more financing or
      continuation statements and amendments thereto, relative to any of the
      Collateral without the signature of the Company where permitted by
      law.

     

    
      
        
        

      

      
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    13.    Notices.
      All
      notices, requests, demands and other communications hereunder shall be in
      writing, with copies to all the other parties hereto, and shall be deemed to
      have been duly given when (i) if
      delivered by hand, upon receipt, (ii) if
      sent by facsimile, upon receipt of proof of sending thereof, (iii) if
      sent by nationally recognized overnight delivery service (receipt requested),
      the next business day, (iv) one day after electronically mailed either in the
      text of an email message or attached in a commonly readable format, and the
      sender has received no generated notice that the client email message has not
      been successfully delivered, or (v) if mailed by first-class registered or
      certified mail, return receipt requested, postage prepaid, four days after
      posting in the U.S. mails, in each case if delivered to the following
      addresses:

     

    
      	
              If
                to the Company: 

            	Markland Technologies,
              Inc. 
	 	
              222
                Metro Center
                Boulevard 

            
	 	Warwick, RI 02886 
	 	Fax: 401-921-5160 
	 	Attention: President 
	 	 
	
              If
                to the Secured Party:

            	c/o Southridge Capital Management
              LLC  
	 	90 Grove Street 
	 	Ridgefield, CT 06877 
	 	Tel. # (203) 431-8300 
	 	Fax # (203) 431-8301 
	 	Attention: Stephen
              Hicks  
	 	 
	
              with
                a copy to: 

            	Gersten Savage LLP 
	 	600 Lexington Avenue 
	 	New York, New York 10022 
	 	Tel. # (212) 752-9700 
	 	Fax # (212) 980-5192 
	 	Attention: David Danovitch,
              Esq. 

    

       

    14.    Other
      Security.
      To the
      extent that the obligations of the Company under this Agreement and the
      Company’s obligations under the Purchase Agreement as they relate to the Secured
      Party’s Relinquishments are now or hereafter secured by property other than the
      Collateral or by the guarantee, endorsement or property of any other person,
      firm, corporation or other entity, then the Secured Party shall have the right,
      in its sole discretion, to pursue, relinquish, subordinate, modify or take
      any
      other action with respect thereto, without in any way modifying or affecting
      any
      of the Secured Party’s rights and remedies hereunder.

     

    
      
        
        

      

      
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    15.   Miscellaneous.

     

    (a)    No
      course
      of dealing between the Company and the Secured Party, nor any failure to
      exercise, nor any delay in exercising, on the part of the Secured Party, any
      right, power or privilege hereunder or under this Agreement or any other related
      agreement shall operate as a waiver thereof; nor shall any single or partial
      exercise of any right, power or privilege hereunder or thereunder preclude
      any
      other or further exercise thereof or the exercise of any other right, power
      or
      privilege.

     

    (b)    All
      of
      the rights and remedies of the Secured Party with respect to the Collateral,
      whether established hereby or by any other agreements, instruments or documents
      or by law shall be cumulative and may be exercised singly or
      concurrently.

     

    (c)    This
      Agreement constitutes the entire agreement of the parties with respect to the
      subject matter hereof and is intended to supersede all prior negotiations,
      understandings and agreements with respect thereto. Except as specifically
      set
      forth in this Agreement, no provision of this Agreement may be modified or
      amended except by a written agreement specifically referring to this Agreement
      and signed by the parties hereto.

     

    (d)    In
      the
      event that any provision of this Agreement is held to be invalid, prohibited
      or
      unenforceable in any jurisdiction for any reason, unless such provision is
      narrowed by judicial construction, this Agreement shall, as to such
      jurisdiction, be construed as if such invalid, prohibited or unenforceable
      provision had been more narrowly drawn so as not to be invalid, prohibited
      or
      unenforceable. If, notwithstanding the foregoing, any provision of this
      Agreement is held to be invalid, prohibited or unenforceable in any
      jurisdiction, such provision, as to such jurisdiction, shall be ineffective
      to
      the extent of such invalidity, prohibition or unenforceability without
      invalidating the remaining portion of such provision or the other provisions
      of
      this Agreement and without affecting the validity or enforceability of such
      provision or the other provisions of this Agreement in any other
      jurisdiction.

     

    (e)    No
      waiver
      of any breach or default or any right under this Agreement shall be considered
      valid unless in writing and signed by the party giving such waiver, and no
      such
      waiver shall be deemed a waiver of any subsequent breach or default or right,
      whether of the same or similar nature or otherwise.

     

    (f)    This
      Agreement shall be binding upon and inure to the benefit of each party hereto
      and its successors and assigns.

     

    (g)    Each
      party shall take such further action and execute and deliver such further
      documents as may be necessary or appropriate in order to carry out the
      provisions and purposes of this Agreement.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

    

    (h)    This
      Agreement shall be construed in accordance with the laws of the State of New
      York, except to the extent the validity, perfection or enforcement of a security
      interest hereunder in respect of any particular Collateral which are governed
      by
      a jurisdiction other than the State of New York in which case such law shall
      govern. Each of the parties hereto irrevocably submit to the exclusive
      jurisdiction of any New York State or United States Federal court sitting in
      Manhattan county over any action or proceeding arising out of or relating to
      this Agreement, and the parties hereto hereby irrevocably agree that all claims
      in respect of such action or proceeding may be heard and determined in such
      New
      York State or Federal court. The parties hereto agree that a final judgment
      in
      any such action or proceeding shall be conclusive and may be enforced in other
      jurisdictions by suit on the judgment or in any other manner provided by law.
      The parties hereto further waive any objection to venue in the State of New
      York
      and any objection to an action or proceeding in the State of New York on the
      basis of forum
      non conveniens.

     

    (i)    EACH
      PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
      ANY
      CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SCOPE
      OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY DISPUTES THAT MAY
      BE
      FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF THIS AGREEMENT,
      INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS
      AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES
      THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A
      BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN
      ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON THIS
      WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
      REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
      SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL
      FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT,
      NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER
      ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
      RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF
      A
      LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
      THE
      COURT. 

     

    (j)    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.

     

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
      be
      duly executed on the day and year first above written.

    
      	 	 	 
	 	COMPANY:
	 	 
	 	MARKLAND TECHNOLOGIES, INC. 
	 
 	 
 	 
 
	 	By:  	/s/ Gino
              Pereira
	 	
              
Name:
              Gino Pereira
	 	Title:
              Chief Financial Officer

    

    
      	 	 	 
	 	 	 
	 	SECURED
              PARTY:
	 	 
	 	SOUTHRIDGE PARTNERS LP 
	 
 	 
 	 
 
	 	By:  	/s/ Henry
              Sargent
	 	
              
Name:
              Henry Sargent
	 	Title:
              Manager of General Partner

    

    
      	 	 	 
	 	 	 
	 	SOUTHSHORE
              CAPITAL
              FUND LTD
	 
 	 
 	 
 
	 	By:  	Illegible
	 	
              
Name:
              Navigator Management, Ltd. 
	 	Title:
              Director
	 	 

    

    
      	 	 	 
	 	ABERDEEN
              AVENUE
              LLC
	 
 	 
 	 
 
	 	By:  	Illegible
	 	
              
Name:
              Navigator Management, Ltd.
	 	Title:
              Director
	 	 

    

    
      	 	 	 
	 	BRITTANY
              CAPITAL
              MANAGEMENT LTD.
	 
 	 
 	 
 
	 	By:  	/s/ Barry
              W.
              Herman
	 	
              
Name:
              Barry W. Herman
	 	Title:
              President

    

        
11Escrow Agreement

    Exhibit
      10.3

     

    ESCROW
      AGREEMENT

     

    ESCROW
      AGREEMENT dated as of this 11th
      day of
      June 2007 (the “Agreement”), by and among MARKLAND TECHNOLOGIES, INC., a Florida
      corporation (the “Company”), GERSTEN SAVAGE LLP, (the “Agent”), SOUTHRIDGE
      PARTNERS LP, a Delaware limited partnership (“Southridge”), SOUTHSHORE CAPITAL
      FUND LTD, a Cayman Islands corporation, ABERDEEN AVENUE LLC, a Cayman Islands
      limited liability company, BRITTANY CAPITAL MANAGEMENT LTD., a Bahamian
      corporation, ROBERT TARINI, GINO PEREIRA and syndicated investors (each such
      investor is an “Investor,” and all such investors are, collectively, the
“Investors”), and STEPHEN HICKS, as representative of the Investors.

     

    W I T N E S S E T H:

     

    WHEREAS,
      pursuant to a certain Litigation Settlement, Securities Purchase, Relinquishment
      and Exchange Agreement dated June 11, 2007 by and between the Company and the
      Investors (the “Purchase Agreement”), the Company is selling and the Investors
      are purchasing, for $1,500,000, three million one hundred fifty-five thousand
      nine hundred forty-nine (3,155,949) shares of common stock of Technest Holdings,
      Inc., a Nevada corporation (“Technest”), par value $.001 per share (the
“Technest Common Stock”), subject to the terms and conditions set forth therein
      (the “Purchased Technest Shares”); and

     

    WHEREAS,
      pursuant to the Purchase Agreement, the Company is offering each
      Investor shares of its newly issued Series G Convertible Preferred Stock,
$0.0001
      par value per share (the “Series G Preferred Stock”),
      in
      exchange for each Investor’s shares of Series
      E
      Convertible Preferred Stock, $0.0001 par value per share, of the Company (the
      “Series E Preferred Stock”); and

     

    WHEREAS,
      in
      accordance with the rights associated with the Series G Preferred Stock, the
      Investors may, at their option, convert their interests thereunder into shares
      of Technest Common Stock, pursuant to the terms and conditions thereunder;
      and

     

    WHEREAS,
      the
      Purchase Agreement provides that (i) the Company shall deposit with the Agent
      four million one hundred fifty-five thousand nine hundred forty-nine (4,155,949)
      shares of Technest Common Stock, which includes the Purchased Technest Shares,
      the Relinquishment Shares (as defined in the Purchase Agreement) and an
      additional 250,000 shares of Technest Common Stock to be used to pay certain
      creditors of Markland, and (ii) the Pledged Shares (as defined in the Purchase
      Agreement) shall be deposited with the Agent by Silicon Valley Bank immediately
      upon its release of its security interest in such Pledged Shares (for purposes
      of this Agreement, the securities listed in (i) - (ii) above being the “Escrow
      Shares”), in order to secure the conversion rights associated with the Series G
      Preferred Stock into Technest Common Stock and to effectuate disbursements
      to
      the Investors and third parties of the Escrow Shares as contemplated by the
      Purchase Agreement; and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    WHEREAS,
      the
      parties have agreed that the $1,500,000 proceeds of the sale and purchase of
      the
      Purchased Technest Shares shall be deposited in a segregated escrow account
      to
      be held by Escrow Agent (the “Escrow Funds”), in order to effectuate
      disbursements to the Company and third parties, as directed by the Company,
      at
      and after the closing held on the date hereof (the “Closing”), as set forth in
      the Purchase Agreement; and

     

    WHEREAS,
      Agent
      has agreed to accept, hold, and disburse the Escrow Funds and Escrow Shares
      deposited with it in accordance with the terms of this Agreement;
      and

     

    WHEREAS,
      in
      order to establish the escrow of funds and shares to effect the provisions
      of
      the Purchase Agreement the parties hereto have entered into this
      Agreement.

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual promises herein contained and intending to be
      legally bound, the parties hereby agree as follows: 

     

    1.    Appointment
      of and Acceptance by Agent.
      

     

    1.1    The
      Company and the Investors hereby appoints the Agent as escrow agent for the
      Escrow Funds in accordance with the terms and conditions set forth herein.
      The
      Agent hereby accepts such appointment and, upon receipt by wire transfer of
      the
      Escrow Funds in accordance with Section 2 below, agrees to hold, invest and
      disburse the Escrow Funds in accordance with this Agreement. 

     

    1.2    The
      Company and the Investors hereby appoint the Agent to serve as the holder of
      the
      Escrow Shares in accordance with the terms and conditions set forth herein.
      The
      Agent hereby accepts such appointment, and upon receipt via physical
      certificates representing the Escrow Shares in accordance with Section 2 below,
      agreed to hold and disburse the Escrow Shares in accordance with this
      Agreement.

     

    1.3    The
      Company hereby acknowledges that the Agent serves as legal counsel to the
      Investors in connection with the transaction contemplated and referenced herein,
      and shall be acting as the escrow agent for the Escrow Funds and Escrow Shares
      in connection with the transaction contemplated and referenced herein. The
      Company agrees that in the event of any dispute arising in connection with
      this
      Agreement or otherwise in connection with any transaction or agreement
      contemplated and referenced herein, the Agent shall be permitted to continue
      to
      represent the Investors and the Company will not seek to disqualify such
      counsel.

     

    2.    Creation
      of Escrow Funds
      Account/Escrow Shares Account.
      

     

    2.1    On
      or
      prior to the date of this Agreement the Agent shall establish an escrow account
      for the deposit of the Escrow Funds, and the Investors will wire funds to the
      account of the Agent as follows (the “Escrow Funds Account”):

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    
      	
              Bank:

               

            	
               

            
	
               

              Routing
                #:

            	
               

               

            
	
               

              Account
                #:

            	
               

               

            
	
               

              Name
                on Account:

               

            	
               

               

            

    

    

    2.2    Deposits
      into the Escrow Funds Account.
      Each
      Investor agrees that it shall promptly deliver all monies for the payment of
      the
      Purchased Technest Shares to the Agent for deposit in the Escrow Funds
      Account.

     

    2.3    Deposits
      into the Escrow Shares Account by the Company.
      The
      Company agrees that it shall promptly deliver, via physical certificate, the
      shares of Technest Common Stock representing the Escrow Shares to the Agent,
      which shall be held by the Agent in its offices until disbursement in accordance
      with this Agreement (the “Escrow Shares Account,” and, together with the Escrow
      Funds Account, the “Escrow Account”).

     

    2.4    Deposits
      into the Escrow Shares Account by Silicon Valley Bank.
      The
      Company agrees that it shall direct Silicon Valley Bank to deliver the Pledged
      Shares to the Agent for deposit in the Escrow Shares Account immediately upon
      the release by Silicon Valley Bank of its security interest in such Pledged
      Shares.

     

    3.    Disbursements
      from the Escrow Account.

     

    3.1    Release
      of Escrow Funds.At
      such
      time as Agent has collected and deposited instruments of payment in the total
      amount of the Escrow Funds, the Agent shall notify the Company and the
      Investors. The Agent will continue to hold such Escrow Funds until Closing,
      at
      which time the Agent shall wire up to $1,250,000 in the aggregate, to the
      accounts of the Company and/or third parties, in the amounts and to the parties
      so instructed by the Company. Up to $250,000 of the remaining Escrow Funds
      not
      distributed at the Closing under this Section 3.1 shall continue to be held
      by
      the Agent in escrow for the payment of costs associated with the settlement
      or
      appeal of a certain legal action, and shall be disbursed by the Agent upon
      notification and instruction by each of the Company and Southridge that an
      event
      has occurred enabling all or part of the $250,000 to be released. In disbursing
      the Escrow Funds, the Agent is authorized to rely upon such written or oral
      direction from the Company and the Investors, and may accept any signatory
      from
      the Company and the Investors listed on the signature page to this Agreement,
      and any signature from the Company and the Investors that the Agent already
      has
      on file. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    3.2    Release
      of Escrow Shares.At
      such
      time as Agent has received the Escrow Shares via physical certificates from
      the
      Company and Silicon Valley Bank, the Agent shall notify the Company and the
      Investors. Within two business days of receipt by the Agent of a Notice of
      Conversion from an Investor with respect to the Series G Preferred Stock, the
      Agent shall release and deliver, or cause to be released and delivered, the
      number of Escrow Shares specified in such Notice of Conversion, via express
      courier or otherwise, to the name and address specified in such Notice of
      Conversion. Within two business days of receipt by the Agent of notification
      and
      instruction from each of the Company and the Investors with respect Escrow
      Shares to be released to a third party, the Agent shall release and deliver,
      or
      cause to be released and delivered, the number of Escrow Shares specified in
      such notice, via express courier or otherwise, to the name and address specified
      in such notice. In releasing such Escrow Shares, the Agent is authorized to
      rely
      upon such written or oral direction from the Company and the Investors, and
      may
      accept any signatory from the Company and the Investors listed on the signature
      page to this Agreement, and any signature from the Company and the Investors
      that the Agent has on file. 

     

    3.3    In
      the
      event the Agent does not receive the amount of the Escrow Funds from the
      Investors or the Escrow Shares from the Company or Silicon Valley Bank, the
      Agent shall notify the Company and the Investors. 

     

    4.    Deposit
      of Funds.
      The
      Agent is hereby authorized to deposit the wire transfer proceeds in the Escrow
      Account. Except as otherwise agreed by the Company, all the Escrow Funds
      received and held by the Agent pursuant to this Agreement shall be held in
      a
      non-interest bearing bank account.

     

    5.    Exculpation
      and Indemnification of Agent

     

    5.1    The
      Agent
      shall have no duties or responsibilities other than those expressly set forth
      herein. The Agent shall have no duty to enforce any obligation of any person
      to
      make any payment or delivery, or to direct or cause any payment or delivery
      to
      be made, or to enforce any obligation of any person to perform any other act.
      The Agent shall have no liability to the other parties hereto or to anyone
      else
      by reason of any failure on the part of any party hereto or any maker,
      guarantor, endorser or other signatory of any document or any other person
      to
      perform such person’s obligations under any such document. Except for amendments
      to this Agreement referred to below, and except for instructions given to the
      Agent by the Company and the Investors relating to the Escrow Funds and the
      Escrow Shares, the Agent shall not be obligated to recognize any agreement
      between any and all of the persons referred to herein, notwithstanding that
      references thereto may be made herein and whether or not it has knowledge
      thereof.

     

    5.2    The
      Agent
      shall not be liable to the Company or to anyone else for any action taken or
      omitted by it, or any action suffered by it to be taken or omitted, in good
      faith and in the exercise of its own best judgment, except for its gross
      negligence or willful misconduct. The Agent may rely conclusively and shall
      be
      protected in acting upon any order, notice, demand, certificate, opinion or
      advice of counsel (including counsel chosen by the Agent), statement,
      instrument, report or other paper or document (not only as to its due execution
      and the validity and effectiveness of its provisions, but also as to the truth
      and acceptability of any information therein contained), which is believed
      by
      the Agent, in good faith, to be genuine and signed or presented by the proper
      person or persons. The Agent shall not be bound by any notice or demand, or
      any
      waiver, modification, termination or rescission of this Agreement or any of
      the
      terms thereof, unless evidenced by a writing delivered to the Agent signed
      by
      the proper party or parties and, if the duties or rights of the Agent are
      affected, unless it shall give its prior written consent thereto.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    5.3    The
      Agent
      shall not be responsible for the sufficiency or accuracy of the form of, or
      the
      execution, validity, value or genuineness of, any document or property received,
      held or delivered by it hereunder, or of any signature or endorsement
      thereon, or for any lack of endorsement thereon, or for any description therein;
      nor shall the Agent be responsible or liable to the other parties hereto or
      to
      anyone else in any respect on account of the identity, authority or rights
      of
      the persons executing or delivering or purporting to execute or deliver any
      document or property or this Agreement. The Agent shall have no responsibility
      with respect to the use or application of any funds or other property paid
      or
      delivered by the Agent pursuant to the provisions hereof, except for its gross
      negligence or willful misconduct. The Agent shall not be liable to the Company
      or to anyone else for any loss that may be incurred by reason of any investment
      of any monies, which it holds hereunder provided the Agent has complied with
      the
      provisions of Section 4 hereunder, except for its gross negligence or willful
      misconduct. 

     

    5.4    The
      Agent
      shall have the right to assume in the absence of written notice to the contrary
      from the proper person or persons that a fact or an event by reason of which
      an
      action would or might be taken by the Agent does not exist or has not occurred,
      without incurring liability to the other parties hereto or to anyone else for
      any action taken or omitted, or any action suffered by it to be taken or
      omitted, in good faith and in the exercise of its own best judgment, in reliance
      upon such assumption.

     

    5.5    To
      the
      extent that the Agent becomes liable for the payment of taxes, including
      withholding taxes, in respect of income derived from the investment of the
      Escrow Funds held hereunder or any payment made hereunder, the Agent may pay
      such taxes. The Agent may withhold from any payment of monies held by it
      hereunder such amount of the income derived from the investment of funds as
      the
      Agent estimates to be sufficient to provide for the payment of such taxes not
      yet paid, and may use the sum withheld only for that purpose. The Agent shall
      be
      indemnified and held harmless against any liability for taxes and for any
      penalties or interest in respect of taxes, on such investment income or payments
      in the manner provided in Section 5.6

     

    5.6    The
      Agent
      will be indemnified and held harmless by the Company from and against any and
      all expenses, including reasonable counsel fees and disbursements, or loss
      suffered by the Agent in connection with any action, suit or other proceeding
      involving any claim, or in connection with any claim or demand, which in any
      way
      arises out of or relates to this Agreement, the services of the Agent hereunder,
      the Escrow Funds or the Escrow Shares held by it hereunder, or any income earned
      from investment of such monies, except for the Agent’s gross negligence or
      willful misconduct. The Agent shall have a lien for the amount of any such
      expenses or loss on the Escrow Funds or Escrow Shares held by it hereunder.
      Promptly after the receipt by the Agent of notice of any demand or claim or
      the
      commencement of any action, suit or proceeding, the Agent shall, if a claim
      in
      respect thereof is to be made against the Company, notify the Company thereof
      in
      writing, but the failure by the Agent to give such notice shall not relieve
      the
      Company from any liability which the Company may have to the Agent hereunder.
      Notwithstanding any obligation to make payments and deliveries hereunder, the
      Agent may retain and hold for such time as it deems necessary such amount of
      monies or Escrow Shares as it shall, from time to time, in its sole discretion,
      deem sufficient to indemnify itself for any such loss or expense and for any
      amounts due it under Section 8. In the event that the Company may be liable
      to
      the Agent pursuant to the foregoing indemnity, the Company will be indemnified
      and held harmless by the Investors from and against any and all expenses,
      including reasonable counsel fees and disbursements, or loss suffered by the
      Company in connection with any action, suit or other proceeding involving any
      claim, or in connection with any claim or demand, to the extent the same is
      caused by the Investors’ gross negligence or misconduct.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    5.7    For
      the
      purposes hereof, the term “expense or loss” shall include all amounts paid or
      payable to satisfy any claim, demand or liability, or in settlement of any
      claim, demand, action, suit or proceeding settled with the express written
      consent of the Company and the Agent, and all costs and expenses, including,
      but
      not limited to, reasonable counsel fees and disbursements, paid or incurred
      in
      investigating or defending against any such claim, demand, action, suit or
      proceeding.

     

    6.    Suspension
      of Performance: Disbursement Into Court.

     

    6.1    Escrow
      Agent.
      If at
      any time, there shall exist any dispute between the Company and the Investors
      with respect to holding or disposition of any portion of the Escrow Funds or
      the
      Escrow Shares or any other obligations of Agent hereunder, or if at any time
      Agent is unable to determine, to the Agent’s sole satisfaction, the proper
      disposition of any portion of the Escrow Funds or Escrow Shares, or the Agent’s
      proper actions with respect to its obligations hereunder, or if the parties
      have
      not within thirty (30) days of the furnishing by Agent of a notice of
      resignation pursuant to Section 7 hereof, appointed a successor Agent to act
      hereunder, then Agent may, in its sole discretion, take either or both of the
      following actions:

     

    (a)    Suspend
      the performance of any of its obligations (including without limitation any
      disbursement obligations) under this Agreement until such dispute or uncertainty
      shall be resolved to the sole satisfaction of the Agent or until a successor
      escrow agent shall be appointed (as the case may be); and/or

     

    (b)    Petition
      (by means of an interpleader action or any other appropriate method) any court
      of competent jurisdiction in any venue convenient to Agent, for instructions
      with respect to such dispute or uncertainty, and to the extent required by
      law,
      pay into such court, for holding and disposition in accordance with the
      instructions of such court, all funds held by it in the Escrow Funds, and all
      Escrow Shares, after deduction and payment to Agent of all fees and expenses
      (including court costs and attorneys’ fees) payable to, incurred by, or expected
      to be incurred by Agent in connection with performance of its duties and the
      exercise of its rights hereunder.

     

    Agent
      shall have no liability to the Company, the Investors, or any person with
      respect to any such suspension of performance or disbursement into court,
      specifically including any liability or claimed liability that may arise, or
      be
      alleged to have arisen, out of or as a result of any delay in the disbursement
      of funds held in the Escrow Funds or of the shares held in the Escrow Shares,
      or
      any delay with respect to any other action required or requested of the
      Agent.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    7.    Termination
      of Agreement and Resignation of Agent

     

    7.1    This
      Agreement shall terminated on the final disposition of the Escrow Funds and
      the
      Escrow Shares held in escrow hereunder; provided that
      the
      rights of the Agent and the obligations of the other parties hereto under
      Sections 5 and 8 shall survive the termination hereof.

     

    7.2    The
      Agent
      may resign at any time and be discharged from its duties as Agent hereunder
      by
      giving the Company and the Investors at least thirty (30) days’ notice thereof.
      As soon as practicable after its resignation, the Agent shall turn over to
      a
      successor escrow agent appointed by the Company all Escrow Funds and Escrow
      Shares held hereunder (less such amount as the Agent is entitled to retain
      pursuant to Section 8) upon presentation of the document appointing the new
      escrow agent and its acceptance thereof. 

     

    8.    Compensation
      of Agent.
      For
      services rendered, the Agent shall receive as compensation $2,500. The Agent
      shall also be entitled to reimbursement from the Company for all reasonable
      expenses paid or incurred by it in the administration of its duties hereunder,
      including, but not limited to, all reasonable counsel, advisors’ and Agents’
fees and disbursements and all reasonable taxes or other governmental charges.
      It is anticipated that such disbursements shall not exceed $500 barring any
      unforeseen circumstances.

     

    9.    Warranties.

     

    9.1    The
      Investors make the following representations and warranties to the
      Agent:

     

    (a)    The
      Investors have full power and authority to execute and deliver this Agreement
      and to perform its obligations hereunder.

     

    (b)    This
      Agreement has been duly approved by all necessary action of the Investors,
      including any necessary approval of the limited partner of the Investors, has
      been executed by duly authorized officers of the Investors, enforceable in
      accordance with its terms.

     

    (c)    The
      execution, delivery, and performance of the Investors of this Agreement will
      not
      violate, conflict with, or cause a default under the agreement of limited
      partnership of the Investors, any applicable law or regulation, any court order
      or administrative ruling or degree to which any Investor is a party or any
      of
      its property is subject, or any agreement, contract, indenture, or other binding
      arrangement.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

    (d)    Except
      for Silicon Valley Bank with respect to the Pledged Shares, no party other
      than
      the parties hereto has, or shall have, any lien, claim or security interest
      in
      the Escrow Funds or Escrow Shares or any part thereof. No financing statement
      under the Uniform Commercial Code is on file in any jurisdiction claiming a
      security interest in or describing (whether specifically or generally) the
      Escrow Funds or Escrow Shares or any part thereof.

     

    (e)    All
      of
      the representations and warranties of the Investors contained herein are true
      and complete as of the date hereof and will be true and complete at the time
      of
      any disbursement from the Escrow Funds and Escrow Shares.

    

    9.2    The
      Company makes the following representations and warranties to Agent and the
      Investors:

     

    (a)    The
      Company is a corporation duly organized, validly existing, and in good standing
      under the laws of the State of Florida, and has full power and authority to
      execute and deliver this Agreement and to perform its obligations
      hereunder.

     

    (b)    This
      Agreement has been duly approved by all necessary corporate action of the
      Company, including any necessary shareholder approval, has been executed by
      duly
      authorized officers of the Company, enforceable in accordance with its
      terms.

     

    (c)    The
      execution, delivery, and performance by the Company of this Agreement in
      accordance with the Purchase Agreement will not violate, conflict with, or
      cause
      a default under the articles of incorporation or bylaws of the Company, any
      applicable law or regulation, any court order or administrative ruling or decree
      to which the Company is a party or any of its property is subject, or any
      agreement, contract, indenture, or other binding arrangement.

     

    (d)    Except
      for Silicon Valley Bank with respect to the Pledged Shares, no party other
      than
      the parties hereto has or shall have any lien, claim or security interest in
      the
      Escrow Funds or Escrow Shares or any part thereof. No financing statement under
      the Uniform Commercial Code is on file in any jurisdiction claiming a security
      interest in or describing (whether specifically or generally) the Escrow Funds
      or Escrow Shares or any part thereof.

     

    (e)    All
      of
      the representations and warranties of the Company contained herein are true
      and
      complete as of the date hereof and will be true and complete at the time of
      any
      disbursement from the Escrow Funds and Escrow Shares.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    10.   Notices.
      All
      notices, requests, demands and other communications provided for herein shall
      be
      in writing, shall be delivered by hand or by first-class mail, shall be deemed
      given when received and shall be addressed to the parties hereto at their
      respective addresses listed below, or to such other persons or addresses as
      the
      relevant party shall designate as to itself from time to time in writing
      delivered in like manner.

     

    
      	
              If
                to the Company:

            	Markland Technologies,
              Inc. 
	 	222 Metro Center Boulevard 
	 	Warwick, RI 02886 
	 	Fax: 401-921-5160 
	 	Attention: President 
	 	 
	
              If
                to the Agent: 

            	Gersten Savage LLP 
	 	600 Lexington Avenue 
	 	New York, New York 10022 
	 	Tel. # (212) 752-9700 
	 	Fax # (212) 980-5192 
	 	Attention: David Danovitch,
              Esq. 
	 	 
	
              If
                to the Investors: 

            	c/o Southridge Capital Management
              LLC 
	 	90 Grove Street 
	 	Ridgefield, CT 06877 
	 	Tel. # (203)
              431-8300  
	 	Fax # (203) 431-8301 
	 	Attention: Stephen
              Hicks  

    

       

    11.   Further
      Assurances.
      From
      time to time on or after the date hereof, the Company shall deliver or cause
      to
      be delivered to the Agent such further documents and instruments and shall
      do
      and cause to be done such further acts as the Agent shall reasonably request
      (it
      being understood that the Agent shall have no obligation to make any such
      request) to carry out more effectively the provisions and purposes of this
      Agreement, to evidence compliance herewith or to assure itself that it is
      protected in acting hereunder.

     

    12.   Consent
      to Service of Process.
      Each of
      the Company and the Investors hereby irrevocably consents to the jurisdiction
      of
      the courts of the State of New York and of any federal court located in such
      State in connection with any action, suit or other proceeding arising out of
      or
      relating to this Agreement or any action taken or omitted hereunder, and waives
      personal service of any summons, complaint or other process and agrees that
      the
      service thereof may be made by certified or registered mail directed to each
      of
      the Company and the Investors at its address for purposes of notices
      hereunder.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

    

    13.   Miscellaneous

     

    13.1    If
      for
      any reason the Escrow Funds or Escrow Shares are not received by the Agent
      as
      contemplated herein, the Company shall reimburse the Agent for all reasonable
      expenses, including reasonable counsel fees and disbursements, paid or incurred
      by it in making preparations for providing the services contemplated
      hereby.

     

    13.2    This
      Agreement shall be construed without regard to any presumption or other rule
      requiring construction against the party causing such instrument to be drafted.
      The terms “hereby,” “hereof,” “hereto,” “hereunder” and any similar terms, as
      used in this Agreement, refer to the Agreement in its entirety and not only
      to
      the particular portion of this Agreement where the term is used. The word
“person” shall mean any natural person, partnership, company, government and any
      other form of business or legal entity. All words or terms used in this
      Agreement, regardless of the number or gender, in which they are used, shall
      be
      deemed to include any other number and any other gender as the context may
      require. This Agreement shall not be admissible in evidence to construe the
      provision of any prior agreement.

     

    13.3    This
      Agreement and the rights and obligations hereunder of the Company may be
      assigned by the Company only to a successor to the Company’s entire business.
      This Agreement and the rights and obligations hereunder of the Agent may be
      assigned by the Agent only to a successor to its entire business. This Agreement
      and the rights and obligations hereunder of the Investors may be assigned by
      each respective Investor only to a successor to its entire business. This
      Agreement shall be binding upon and inure to the benefit of each party’s
      respective successors, heirs and permitted assigns. No other person shall
      acquire or have any rights under or by virtue of this Agreement. This Agreement
      may not be changed orally or modified, amended or supplemented without an
      express written agreement executed by the Agent, the Company and the Investors.
      This Agreement is intended to be for the sole benefit of the parties hereto,
      and
      (subject to the provisions of this Section 13.3) their respective successors,
      heirs and assigns, and none of the provisions of this Agreement are intended
      to
      be, nor shall they be construed to be, for the benefit of any third
      person.

     

    13.4    This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York. The representations and warranties contained
      in
      this Agreement shall survive the execution and delivery hereof and any
      investigations made by any party. The headings in this Agreement are for
      purposes of reference only and shall not limit or otherwise affect any of the
      terms hereof.

     

    14.   Execution
      in Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed to be an original as against any party whose signature appears thereon,
      and all of which shall together constitute one and the same instrument. This
      Agreement shall become binding when one or more counterparts hereof,
      individually or taken together, shall bear the signature of all of the parties
      reflected hereon as the signatures.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF, the parties have executed and delivered this Escrow Agreement
      on the day and year first above written.

    
      
        	 	 	 
	 	AGENT:
	 	 
	 	GERSTEN SAVAGE LLP
	 
 	 
 	 
 
	 	By:  	/s/ David
                E.
                Danovitch
	 	
                
Name:
                David E. Danovitch
	 	Title:
                Partner

      

      
        	 	 	 
	 	 	 
	 	COMPANY:
	 	 
	 	MARKLAND TECHNOLOGIES, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Gino
                Pereira
	 	
                
Name:
                Gino Pereira
	 	Title:
                Chief Financial Officer

      

      
        	 	 	 
	 	 	 
	 	INVESTORS:
	 	 
	 	SOUTHRIDGE PARTNERS LP 
	 
 	 
 	 
 
	 	By:  	/s/ Henry Sargent
	 	
                
Name:
                Henry Sargent
	 	Title:
                Manager of General Partner
	 	 

      

      
        	 	 	 
	 	SOUTHSHORE
                CAPITAL
                FUND LTD
	 
 	 
 	 
 
	 	By:  	Illegible
	 	
                
Name:
                Navigator Management, Ltd.
	 	Title:
                Director
	 	 

      

      
        	 	 	 
	 	ABERDEEN
                AVENUE
                LLC
	 
 	 
 	 
 
	 	By:  	Illegible
	 	
                
Name:
                Navigator Management, Ltd.
	 	Title:
                Director

      

          

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	BRITTANY
              CAPITAL MANAGEMENT LTD.
	 
 	 
 	 
 
	 	By:  	/s/ Barry
              W. Herman
	 	
              
Name:
              Barry W. Herman
	 	Title:
              President

    

     

    
      	 	ROBERT TARINI 
	 	 
	
            	
              /s/ Robert
                Tarini

              
                

              

            

    

     

    
      
        	 	GINO PEREIRA
	 	 
	
              	
                /s/
                  Gino Pereira

                
                  

                

              

      

       

    

    
      
        
          
            	 	STEPHEN HICKS
	 	 
	
                  	
                    /s/
                      Stephen Hicks

                    
                      

                    

                  

          
 
12

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