Document:

Unassociated Document

    Exhibit
      10.3

     

    FIRST
      LOAN MODIFICATION AGREEMENT

     

     

    This
      First Loan Modification Agreement (this “Loan Modification Agreement”) is
      entered into as of February 14, 2007, by and among
      (i)
SILICON
      VALLEY BANK,
      a
      California corporation and with a loan production office located at One Newton
      Executive Park, Suite 200, 2221 Washington Street, Newton, Massachusetts 02462
      (“Bank”), and (ii) TECHNEST
      HOLDINGS, INC.,
      a
      Nevada corporation, with offices at 1 McKinley Sq., Fifth Floor, Boston,
      Massachusetts 02109 (“Technest”), E-OIR
      TECHNOLOGIES, INC.,
      a
      Virginia corporation, with offices at 10300 Spotsylvania Ave., Suite 220,
      Fredericksburg, Virginia 22408 (“EOIR”), and GENEX
      TECHNOLOGIES INCORPORATED,
      a
      Maryland corporation, with offices at 10411 Motor City Drive, Suite 650,
      Bethesda, Maryland 20817 (“Genex”) (hereinafter, Technest, EOIR and Genex are
      jointly and severally, individually and collectively, referred to as
“Borrower”).

     

    1.    DESCRIPTION
      OF EXISTING INDEBTEDNESS AND OBLIGATIONS.
      Among
      other indebtedness and obligations which may be owing by Borrower to Bank,
      Borrower is indebted to Bank pursuant to a loan arrangement dated as of August
      4, 2006, evidenced by, among other documents, a certain Loan and Security
      Agreement dated as of August 4, 2006, between Borrower and Bank (as amended,
      the
“Loan Agreement”). Capitalized terms used but not otherwise defined herein shall
      have the same meaning as in the Loan Agreement.

     

    2.    DESCRIPTION
      OF COLLATERAL.
      Repayment
      of the Obligations is secured by the Collateral as described in the Loan
      Agreement and the Intellectual Property Collateral as described in a certain
      Intellectual Property Security Agreement dated August 4, 2006 (the “IP Security
      Agreement”) (together with any other collateral security granted to Bank, the
“Security Documents”).

     

    Hereinafter,
      the Security Documents, together with all other documents evidencing or securing
      the Obligations shall be referred to as the “Existing Loan
      Documents”.

     

    3.    DESCRIPTION
      OF CHANGE IN TERMS.

     

    
      	A.         
                	
              Modifications
                to Loan Agreement.

            

    

     

    
      	1           
                	
              Borrower
                hereby acknowledges and agrees that, notwithstanding the terms of
                the Loan
                Agreement to the contrary, Borrower shall not request, and Bank will
                have
                no obligation to make, any additional Credit Extensions to Borrower
                pursuant to the Loan Agreement, including, without limitation, the
                Second
                Term Advance. 

            

    

     

    
      	2              	
              The
                Loan Agreement shall be amended by inserting the following text appearing
                at the end of Section 7.8 thereof:

            

    

     

    “Notwithstanding
      the terms of this Section 7.8 to the contrary, on and after the 2007 Closing
      Date, Borrower shall not be permitted to make any direct or indirect payment,
      transfer or other distribution to Markland as described in (a) and/or (b) above
      without the prior written consent of Bank (the determination of whether to
      provide such consent shall be in Bank’s sole and absolute discretion in each
      instance).”

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	3           
                	
              The
                Loan Agreement shall be amended by inserting the following definition,
                appearing alphabetically in Section 13
                thereof:

            

    

     

    “ “2007
      Closing Date”
is
      February 14, 2007.”

     

    
      	B.            	
              Waiver.
                Bank hereby waives Borrower’s existing default under the Loan Agreement by
                virtue of Borrower’s failure to comply with the financial covenant set
                forth in Section 6.7(b) (relative to Borrower’s Fixed Charge Coverage
                Ratio) thereof as of the three-month period ending December 31, 2006.
                Bank’s waiver of Borrower’s compliance of said affirmative covenant shall
                apply only to the foregoing specific
                period.

            

    

     

    4.    FEES.
      Borrower
      shall pay to Bank a modification fee equal to Twelve Thousand Five Hundred
      Dollars ($12,500.00), which fee shall be due on the date hereof and shall be
      deemed fully earned as of the date hereof. Borrower shall also reimburse Bank
      for all legal fees and expenses incurred in connection with this amendment
      to
      the Existing Loan Documents.

     

    5.    RATIFICATION
      OF IP SECURITY AGREEMENT.
      Except
      as set forth on Exhibit
      A
      attached
      hereto, Borrower hereby ratifies, confirms and reaffirms, all and singular,
      the
      terms and conditions of the IP Security Agreement and acknowledges, confirms
      and
      agrees that the IP Security Agreement contains an accurate and complete listing
      of all Intellectual Property Collateral as defined therein.

     

    6.    RATIFICATION
      OF PERFECTION CERTIFICATES.
      Except
      as
      set forth on Exhibit
      A
      attached
      hereto, Technest
      hereby ratifies, confirms and reaffirms, all and singular, the terms and
      disclosures contained in a certain Perfection Certificate dated as of August
      4,
      2006 between Technest and Bank, and acknowledges, confirms and agrees the
      disclosures and information Borrower provided to Bank in the Perfection
      Certificate have not changed, as of the date hereof. Except
      as
      set forth on Exhibit
      A
      attached
      hereto, EOIR
      hereby ratifies, confirms and reaffirms, all and singular, the terms and
      disclosures contained in a certain Perfection Certificate dated as of August
      4,
      2006 between EOIR and Bank, and acknowledges, confirms and agrees the
      disclosures and information EOIR provided to Bank in the Perfection Certificate
      have not changed, as of the date hereof. Except
      as
      set forth on Exhibit
      A
      attached
      hereto, Genex
      hereby ratifies, confirms and reaffirms, all and singular, the terms and
      disclosures contained in a certain Perfection Certificate dated as of August
      4,
      2006 between Genex and Bank, and acknowledges, confirms and agrees the
      disclosures and information Genex provided to Bank in the Perfection Certificate
      have not changed, as of the date hereof.

     

    7.    CONSISTENT
      CHANGES.
      The
      Existing Loan Documents are hereby amended wherever necessary to reflect the
      changes described above.

     

    8.    RATIFICATION
      OF LOAN DOCUMENTS.
      Borrower hereby ratifies, confirms, and reaffirms all terms and conditions
      of
      all security or other collateral granted to the Bank, and confirms that the
      indebtedness secured thereby includes, without limitation, the
      Obligations.

     

    9.    NO
      DEFENSES OF BORROWER.
      Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses,
      claims, or counterclaims against Bank with respect to the Obligations, or
      otherwise, and that if Borrower now has, or ever did have, any offsets,
      defenses, claims, or counterclaims against Bank, whether known or unknown,
      at
      law or in equity, all of them are hereby expressly WAIVED and Borrower hereby
      RELEASES Bank from any liability thereunder.

     

    10.   CONTINUING
      VALIDITY.
      Borrower understands and agrees that in modifying the existing Obligations,
      Bank
      is relying upon Borrower’s representations, warranties, and agreements, as set
      forth in the Existing Loan Documents. Except as expressly modified pursuant
      to
      this Loan Modification Agreement, the terms of the Existing Loan Documents
      remain unchanged and in full force and effect. Bank’s agreement to modifications
      to the existing Obligations pursuant to this Loan Modification Agreement in
      no
      way shall obligate Bank to make any future modifications to the Obligations.
      Nothing in this Loan Modification Agreement shall constitute a satisfaction
      of
      the Obligations. It is the intention of Bank and Borrower to retain as liable
      parties all makers of Existing Loan Documents, unless the party is expressly
      released by Bank in writing. No maker will be released by virtue of this Loan
      Modification Agreement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    11.    JURISDICTION/VENUE.
      Borrower accepts for itself and in connection with its properties,
      unconditionally, the 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
      Loan Modification Agreement; provided, however, that if for any reason Bank
      cannot avail itself of the courts of the Commonwealth of Massachusetts, then
      venue shall lie in Santa Clara County, California. NOTWITHSTANDING THE
      FOREGOING, THE BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
      AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION
      WHICH THE BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE
      COLLATERAL OR TO OTHERWISE ENFORCE THE BANK’S RIGHTS AGAINST THE BORROWER OR ITS
      PROPERTY.

     

    12.    COUNTERSIGNATURE.
      This
      Loan Modification Agreement shall become effective only when it shall have
      been
      executed by Borrower and Bank.

     

     

    [The
      remainder of this page is intentionally left blank]

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    This
      Loan
      Modification Agreement is executed as a sealed instrument under the laws of
      the
      Commonwealth of Massachusetts as of the date first written above.

     

     

    
      	
              BORROWER:

               

              TECHNEST HOLDINGS, INC.

            	
              BANK:

               

              SILICON VALLEY BANK

            
	 	 
	
              By: /s/ Gino
                Pereira                                             

               

              Name: Gino
                Pereira                                              

               

              Title: Chief Financial
                Officer                              

            	
              By: /s/ Gage
                Gilmore                                             

               

              Name: Gage
                Gilmore                                              

               

              Title: Vice
                President                                              

            
	 	 
	 	 
	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                              

            	 

    

     

     

    The
      undersigned, MARKLAND TECHNOLOGIES, INC., ratifies, confirms and reaffirms,
      all
      and singular, the terms and conditions of: (a) a certain Unconditional Guaranty
      dated as of August 4, 2006 (the “Guaranty”), and (b) a certain Stock Pledge
      Agreement dated as of August 4, 2006 (the “Stock Pledge Agreement”) and
      acknowledges, confirms and agrees that the Guaranty and Stock Pledge Agreement
      each shall remain in full force and effect and shall in no way be limited by
      the
      execution of this Loan Modification Agreement, or any other documents,
      instruments and/or agreements executed and/or delivered in connection
      herewith.

     

    

    
      	 	MARKLAND TECHNOLOGIES,
              INC.
	 	 
	 	
              By: /s/ Gino
                Pereira                                             

               

              Name: Gino
                Pereira                                              

               

              Title: Chief Financial
                Officer                              

            

    

     

     

    4Unassociated Document

    Exhibit
      10.4

     

    FIRST
      LOAN MODIFICATION AGREEMENT

     

     

    This
      First Loan Modification Agreement (this “Loan Modification Agreement”) is
      entered into as of February 14, 2007, by and among
      (i)
SILICON
      VALLEY BANK,
      a
      California corporation and with a loan production office located at One Newton
      Executive Park, Suite 200, 2221 Washington Street, Newton, Massachusetts 02462
      (“Bank”), and (ii) TECHNEST
      HOLDINGS, INC.,
      a
      Nevada corporation, with offices at 1 McKinley Sq., Fifth Floor, Boston,
      Massachusetts 02109 (“Technest”), E-OIR
      TECHNOLOGIES, INC.,
      a
      Virginia corporation, with offices at 10300 Spotsylvania Ave., Suite 220,
      Fredericksburg, Virginia 22408 (“EOIR”), and GENEX
      TECHNOLOGIES INCORPORATED,
      a
      Maryland corporation, with offices at 10411 Motor City Drive, Suite 650,
      Bethesda, Maryland 20817 (“Genex”) (hereinafter, Technest, EOIR and Genex are
      jointly and severally, individually and collectively, referred to as
“Borrower”).

     

    1.    DESCRIPTION
      OF EXISTING INDEBTEDNESS AND OBLIGATIONS.
      Among
      other indebtedness and obligations which may be owing by Borrower to Bank,
      Borrower is indebted to Bank pursuant to a loan arrangement dated as of August
      4, 2006, evidenced by, among other documents, a certain Loan and Security
      Agreement (Working Capital Line of Credit) dated as of August 4, 2006, between
      Borrower and Bank (as amended, the “Loan Agreement”). Capitalized terms used but
      not otherwise defined herein shall have the same meaning as in the Loan
      Agreement.

     

    2.    DESCRIPTION
      OF COLLATERAL.
      Repayment
      of the Obligations is secured by the Collateral as described in the Loan
      Agreement and the Intellectual Property Collateral as described in a certain
      Intellectual Property Security Agreement dated August 4, 2006 (the “IP Security
      Agreement”) (together with any other collateral security granted to Bank, the
“Security Documents”).

     

    Hereinafter,
      the Security Documents, together with all other documents evidencing or securing
      the Obligations shall be referred to as the “Existing Loan
      Documents”.

     

    3.    DESCRIPTION
      OF CHANGE IN TERMS.

     

    	A.          
              	
            Modifications
              to Loan Agreement.

          

     

    	1            
              	
            The
              Loan Agreement shall be amended by deleting the following text, appearing
              in Section 2.2.4 thereof:

          

     

    “Borrower
      will pay to Bank a collateral handling fee equal to 0.10% per month of the
      Financed Receivable Balance for each Financed Receivable outstanding based
      upon
      a 360 day year (the “Collateral Handling Fee”).”

     

    and
      inserting in lieu thereof the following:

     

    “Borrower
      will pay to Bank a collateral handling fee equal to 0.10% (0.25% on and after
      the 2007 Closing Date) per month of the Financed Receivable Balance for each
      Financed Receivable outstanding based upon a 360 day year (the “Collateral
      Handling Fee”).”

     

    	2           
              	
            The
              Loan Agreement shall be amended by inserting the following text appearing
              at the end of Section 7.7 thereof:

          

     

    “Notwithstanding
      the terms of this Section 7.7 to the contrary, on and after the 2007 Closing
      Date, Borrower shall not be permitted to make any direct or indirect payment,
      transfer or other distribution to Markland as described in (a) and/or (b) above
      without the prior written consent of Bank (the determination of whether to
      provide such consent shall be in Bank’s sole and absolute discretion in each
      instance).”

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    	3           
             	
            The
              Loan Agreement shall be amended by inserting the following definition,
              appearing alphabetically in Section 13
              thereof:

          

     

    “ “2007
      Closing Date”
is
      February 14, 2007.”

     

    4.    FEES.
      Borrower
      shall pay to Bank a modification fee equal to Twelve Thousand Five Hundred
      Dollars ($12,500.00), which fee shall be due on the date hereof and shall be
      deemed fully earned as of the date hereof. Borrower shall also reimburse Bank
      for all legal fees and expenses incurred in connection with this amendment
      to
      the Existing Loan Documents.

     

    5.    RATIFICATION
      OF IP SECURITY AGREEMENT.
      Except
      as set forth on Exhibit
      A
      attached
      hereto, Borrower hereby ratifies, confirms and reaffirms, all and singular,
      the
      terms and conditions of the IP Security Agreement and acknowledges, confirms
      and
      agrees that the IP Security Agreement contains an accurate and complete listing
      of all Intellectual Property Collateral as defined therein.

     

    6.    RATIFICATION
      OF PERFECTION CERTIFICATES.
      Except
      as
      set forth on Exhibit
      A
      attached
      hereto, Technest
      hereby ratifies, confirms and reaffirms, all and singular, the terms and
      disclosures contained in a certain Perfection Certificate dated as of August
      4,
      2006 between Technest and Bank, and acknowledges, confirms and agrees the
      disclosures and information Borrower provided to Bank in the Perfection
      Certificate have not changed, as of the date hereof. Except
      as
      set forth on Exhibit
      A
      attached
      hereto, EOIR
      hereby ratifies, confirms and reaffirms, all and singular, the terms and
      disclosures contained in a certain Perfection Certificate dated as of August
      4,
      2006 between EOIR and Bank, and acknowledges, confirms and agrees the
      disclosures and information EOIR provided to Bank in the Perfection Certificate
      have not changed, as of the date hereof. Except
      as
      set forth on Exhibit
      A
      attached
      hereto, Genex
      hereby ratifies, confirms and reaffirms, all and singular, the terms and
      disclosures contained in a certain Perfection Certificate dated as of August
      4,
      2006 between Genex and Bank, and acknowledges, confirms and agrees the
      disclosures and information Genex provided to Bank in the Perfection Certificate
      have not changed, as of the date hereof.

     

    7.    CONSISTENT
      CHANGES.
      The
      Existing Loan Documents are hereby amended wherever necessary to reflect the
      changes described above.

     

    8.    RATIFICATION
      OF LOAN DOCUMENTS.
      Borrower hereby ratifies, confirms, and reaffirms all terms and conditions
      of
      all security or other collateral granted to the Bank, and confirms that the
      indebtedness secured thereby includes, without limitation, the
      Obligations.

     

    9.    NO
      DEFENSES OF BORROWER.
      Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses,
      claims, or counterclaims against Bank with respect to the Obligations, or
      otherwise, and that if Borrower now has, or ever did have, any offsets,
      defenses, claims, or counterclaims against Bank, whether known or unknown,
      at
      law or in equity, all of them are hereby expressly WAIVED and Borrower hereby
      RELEASES Bank from any liability thereunder.

     

    10.   CONTINUING
      VALIDITY.
      Borrower understands and agrees that in modifying the existing Obligations,
      Bank
      is relying upon Borrower’s representations, warranties, and agreements, as set
      forth in the Existing Loan Documents. Except as expressly modified pursuant
      to
      this Loan Modification Agreement, the terms of the Existing Loan Documents
      remain unchanged and in full force and effect. Bank’s agreement to modifications
      to the existing Obligations pursuant to this Loan Modification Agreement in
      no
      way shall obligate Bank to make any future modifications to the Obligations.
      Nothing in this Loan Modification Agreement shall constitute a satisfaction
      of
      the Obligations. It is the intention of Bank and Borrower to retain as liable
      parties all makers of Existing Loan Documents, unless the party is expressly
      released by Bank in writing. No maker will be released by virtue of this Loan
      Modification Agreement.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    11.    JURISDICTION/VENUE.
      Borrower accepts for itself and in connection with its properties,
      unconditionally, the 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
      Loan Modification Agreement; provided, however, that if for any reason Bank
      cannot avail itself of the courts of the Commonwealth of Massachusetts, then
      venue shall lie in Santa Clara County, California. NOTWITHSTANDING THE
      FOREGOING, THE BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
      AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION
      WHICH THE BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE
      COLLATERAL OR TO OTHERWISE ENFORCE THE BANK’S RIGHTS AGAINST THE BORROWER OR ITS
      PROPERTY.

     

    12.    OUNTERSIGNATURE.
      This
      Loan Modification Agreement shall become effective only when it shall have
      been
      executed by Borrower and Bank.

     

     

    [The
      remainder of this page is intentionally left blank]

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    This
      Loan
      Modification Agreement is executed as a sealed instrument under the laws of
      the
      Commonwealth of Massachusetts as of the date first written above.

     

     

    
      	BORROWER:	BANK:
	 	 
	TECHNEST HOLDINGS,
              INC.	SILICON VALLEY
              BANK
	 	 
	By: /s/ Gino
              Pereira                                            	By: /s/ Gage
              Gilmore                                     
	 	 
	Name: Gino
              Pereira                                             	Name: Gage
              Gilmore                                     
	 	 
	Title: Chief Financial
              Officer                             	Title: Vice
              President                                     
	 	 
	 	 
	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                             	 

    

          

     

    The
      undersigned, MARKLAND TECHNOLOGIES, INC., ratifies, confirms and reaffirms,
      all
      and singular, the terms and conditions of: (a) a certain Unconditional Guaranty
      dated as of August 4, 2006 (the “Guaranty”), and (b) a certain Stock Pledge
      Agreement dated as of August 4, 2006 (the “Stock Pledge Agreement”) and
      acknowledges, confirms and agrees that the Guaranty and Stock Pledge Agreement
      each shall remain in full force and effect and shall in no way be limited by
      the
      execution of this Loan Modification Agreement, or any other documents,
      instruments and/or agreements executed and/or delivered in connection
      herewith.

     

    

    
      	 	
              MARKLAND TECHNOLOGIES,
                INC.

               

              By: /s/ Gino
                Pereira                                            

               

              Name: Gino
                Pereira                                             

               

              Title: Chief Financial
                Officer                             

            

    

     

     

    4

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