Document:

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EXHIBIT 10.8(C)

                         INDEPENDENT DIRECTOR AGREEMENT

         This INDEPENDENT DIRECTOR AGREEMENT ("AGREEMENT") is made and entered
into as of this FIRST day of July, 2006 ("EFFECTIVE DATE"), by and between
American Oriental Bioengineering, Inc., a Nevada corporation whose shares are
publicly traded ("COMPANY"), and EILEEN BRODY, a citizen of AMERICA, with a
permanent residence at ____________________________________________
("INDEPENDENT DIRECTOR").

         WHEREAS, the Company desires to engage the Independent Director, and
the Independent Director desires to serve, as a non-employee director of the
Company, subject to the terms and conditions contained in this Agreement;

         NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the receipt of which is hereby acknowledged, the Company and
Independent Director, intending to be legally bound, hereby agree as follows:

         1. DEFINITIONS.

                  (a) "Corporate Status" describes the capacity of the
Independent Director with respect to the Company and the services performed by
the Independent Director in that capacity.

                  (b) "Entity" shall mean any corporation, partnership, limited
liability company, joint venture, trust, foundation, association, organization
or other legal entity.

                  (c) "Proceeding" shall mean any threatened, pending or
completed claim, action, suit, arbitration, alternate dispute resolution
process, investigation, administrative hearing, appeal, or any other proceeding,
whether civil, criminal, administrative or investigative, whether formal or
informal, including a proceeding initiated by Independent Director pursuant to
Section 12 of this Agreement to enforce Independent Director's rights hereunder.

                  (d) "Expenses" shall mean all reasonable fees, costs and
expenses, approved by the Company in advance and reasonably incurred in
connection with any Proceeding, including, without limitation, attorneys' fees,
disbursements and retainers, fees and disbursements of expert witnesses, private
investigators, professional advisors (including, without limitation, accountants
and investment bankers), court costs, transcript costs, fees of experts, travel
expenses, duplicating, printing and binding costs, telephone and fax
transmission charges, postage, delivery services, secretarial services, and
other disbursements and expenses.

                  (e) "Liabilities" shall mean judgments, damages, liabilities,
losses, penalties, excise taxes, fines and amounts paid in settlement.

                  (f) "Parent" shall mean any corporation or other entity (other
than the Company) in any unbroken chain of corporations or other entities ending
with the Company, if each of the corporations or entities, other than the
Company, owns stock or other interests possessing 50 percent or more of the
economic interest or the total combined voting power of all classes of stock or
other interests in one of the other corporations or entities in the chain.

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                  (g) "Subsidiary" shall mean any corporation or other entity
(other than the Company) in any unbroken chain of corporations or other entities
beginning with the Company, if each of the corporations or entities, other than
the last corporation or entity in the unbroken chain, owns stock or other
interests possessing 50 percent or more of the economic interest or the total
combined voting power of all classes of stock or other interests in one of the
other corporations or entities in the chain.

         2. SERVICES OF INDEPENDENT DIRECTOR. While this Agreement is in effect,
Independent Director shall perform duties as an independent director and/or a
member of board committees of the Company, be compensated for such and be
reimbursed expenses in accordance with the Schedule A attached to this
Agreement, subject to the following.

                  (a) Independent Director will perform services as is
consistent with Independent Director's position with the Company, as required
and authorized by the By-Laws and Articles of Incorporation of the Company, and
in accordance with high professional and ethical standards and all applicable
laws and rules and regulations pertaining the Independent Director's performance
hereunder, including without limitation, laws, rules and regulations relating to
a public company.

                  (b) Independent Director is solely responsible for taxes
arising out of any compensation paid by the Company to the Independent Director
under this Agreement, and the Independent Director understands that he/she will
be issued a U.S. Treasury form 1099 for any compensation paid to him/her by the
Company, and understands and agrees that the Company shall comply with any tax
or withholding obligations as required by applicable law from time to time in
connection with this Agreement.

                  (c) Company may offset any and all monies payable to
Independent Director to the extent of any monies owing to the Company from the
Independent Director.

                  (d) The rules and regulations of the Company notified to the
Independent Director, from time to time, apply to the Independent Director. Such
rules and regulations are subject to change by the Company in its sole
discretion. Notwithstanding the foregoing, in the event of any conflict or
inconsistency between the terms and conditions of this Agreement and rules and
regulations of the Company, the terms of this Agreement control.

         3. REQUIREMENTS OF INDEPENDENT DIRECTOR. During the term of Independent
Director's services to the Company hereunder, Independent Director shall observe
all applicable law and regulations relating to independent director of a public
company as promulgated from to time, and shall not: (1) be an employee of the
Company or any Parent or Subsidiary; (2) accept, directly or indirectly, any
consulting, advisory, or other compensatory fee from the Company other than as a
director and/or a member of board committees of the Company; (3) be an
affiliated person of the Company or any Parent or Subsidiary with "affiliate" as
defined in 17 CFR 240.10A-3(e)(1), other than as a director and/or a member of
board committees of the Company; (4) possess an interest in any transaction with
the Company or any Parent or Subsidiary, for which disclosure would be required
pursuant to 17 CFR 229.404(a), other than as a director and/or a member of board
committees of the Company; (5) be engaged in a business relationship with the
Company or any Parent or Subsidiary, for which disclosure would be required
pursuant to 17 CFR 229.404(b), except that the required beneficial interest
therein shall be modified to be 5% hereby.

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         4. REPORT OBLIGATION. While this Agreement is in effect, the
Independent Director shall immediately report to the Company in the event: (1)
the Independent Director knows or has reason to know or should have known that
any of the requirements specified in Section 3 hereof is not satisfied or is not
going to be satisfied; and (2) the Independent Director simultaneously serves on
an audit committee of any other public company.

         5. TERM AND TERMINATION. The term of this Agreement and the Independent
Director's services hereunder shall be one (1) year from the Effective Date,
unless terminated as provided for in this Section 5, This Agreement and the
Independent Director's services hereunder shall terminate upon the earlier of
the following:

                  (a) Expiration of the Independent Director's term as a
director of the Company;

                  (b) Removal of the Independent Director as a director of the
Company, upon proper board action in accordance with the By-Laws and Articles of
Incorporation of the Company and applicable law;

                  (c) Resignation of the Independent Director as a director of
the Company upon written notice to the Board of Directors of the Company; or

                  (d) Termination of this Agreement by the Company, in the event
any of the requirements specified in Section 3 hereof is not satisfied, as
determined by the Company in its sole discretion.

         6. LIMITATION OF LIABILITY. In no event shall the Independent Director
be individually liable to the Company or its shareholders for any damages for
breach of fiduciary duty as an independent director of the Company, unless
Independent Director's act or failure to act involves intentional misconduct,
fraud or a knowing violation of law.

         7. AGREEMENT OF INDEMNITY. The Company agrees to indemnify the
Independent Director as follows:

                  (a) Subject to the exceptions contained in Section 8(a) below,
if the Independent Director was or is a party or is threatened to be made a
party to any Proceeding (other than an action by or in the right of the Company)
by reason of the Independent Director's Corporate Status, the Independent
Director shall be indemnified by the Company against all Expenses and
Liabilities incurred or paid by the Independent Director in connection with such
Proceeding (referred to herein as "INDEMNIFIABLE EXPENSES" and "INDEMNIFIABLE
LIABILITIES," respectively, and collectively as "INDEMNIFIABLE AMOUNTS").

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                 (b) Subject to the exceptions contained in Section 8(b) below,
if the Independent Director was or is a party or is threatened to be made a
party to any Proceeding by or in the right of the Company, to procure a judgment
in its favor by reason of the Independent Director's Corporate Status, the
Independent Director shall be indemnified by the Company against all
Indemnifiable Expenses.

                  (c) For purposes of this Agreement, the Independent Director
shall be deemed to have acted in good faith in conducting the Company's affair
as an independent director of the Company and/or a member of the board
committees of the Company, if the Independent Director: (i) exercised or used
the same degree of diligence, care, and skill as an ordinarily prudent man would
have exercised or used under the circumstances in the conduct of his own
affairs; or (ii) took, or omitted to take, an action in reliance upon advise of
counsels or other professional advisors for the Company, or upon statements made
or information furnished by other directors, officers or employees of the
Company, or upon a financial statement of the Company provided by a person in
charge of its accounts or certified by a public accountant or a firm of public
accountants, which the Independent Director had reasonable grounds to believe to
be true.

        8. EXCEPTIONS TO INDEMNIFICATION. Director shall be entitled to
indemnification under Sections 7(a) and 7(b) above in all circumstances other
than the following:

                  (a) If indemnification is requested under Section 7(a) and it
has been adjudicated finally by a court or arbitral body of competent
jurisdiction that, in connection with the subject of the Proceeding out of which
the claim for indemnification has arisen, (i) the Independent Director failed to
act in good faith and in a manner the Independent Director reasonably believed
to be in or not opposed to the best interests of the Company, (ii) the
Independent Director had reasonable cause to believe that the Independent
Director's conduct was unlawful, or (iii) the Independent Director's conduct
constituted willful misconduct, fraud or knowing violation of law; then the
Independent Director shall not be entitled to payment of Indemnifiable Amounts
hereunder.

                  (b) If indemnification is requested under Section 7(b) and

                           (i) it has been adjudicated finally by a court or
arbitral body of competent jurisdiction that, in connection with the subject of
the Proceeding out of which the claim for indemnification has arisen, the
Independent Director failed to act in good faith and in a manner the Independent
Director reasonably believed to be in or not opposed to the best interests of
the Company, including without limitation, the breach of Section 4 hereof by the
Independent Director, the Independent Director shall not be entitled to payment
of Indemnifiable Expenses hereunder; or

                           (ii) it has been adjudicated finally by a court or
arbitral body of competent jurisdiction that Director is liable to the Company
with respect to any claim, issue or matter involved in the Proceeding out of
which the claim for indemnification has arisen, including, without limitation, a
claim that the Independent Director received an improper benefit or improperly
took advantage of a corporate opportunity, the Independent Director shall not be
entitled to payment of Indemnifiable Expenses hereunder with respect to such
claim, issue or matter.

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        9. WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any other provision of
this Agreement, and without limiting any such provision, to the extent that the
Independent Director is, by reason of the Independent Director's Corporate
Status, a party to and is successful, on the merits or otherwise, in any
Proceeding, the Independent Director shall be indemnified in connection
therewith. If the Independent Director is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding, the Company shall
indemnify the Independent Director against those Expenses reasonably incurred by
the Independent Director or on the Independent Director's behalf in connection
with each successfully resolved claim, issue or matter. For purposes of this
section, the termination of any claim, issue or matter in such a Proceeding by
dismissal, with or without prejudice, shall be deemed to be a successful result
as to such claim, issue or matter.

         10. ADVANCES AND INTERIM EXPENSES. The Company may pay to the
Independent Director all Indemnifiable Expenses incurred by the Independent
Director in connection with any Proceeding, including a Proceeding by or in the
right of the Company, in advance of the final disposition of such Proceeding, if
the Independent Director furnishes the Company with a written undertaking, to
the satisfaction of the Company, to repay the amount of such Indemnifiable
Expenses advanced to the Independent Director in the event it is finally
determined by a court or arbitral body of competent jurisdiction that the
Independent Director is not entitled under this Agreement to indemnification
with respect to such Indemnifiable Expenses.

         11. PROCEDURE FOR PAYMENT OF INDEMNIFIABLE AMOUNTS. Independent
Director shall submit to the Company a written request specifying the
Indemnifiable Amounts, for which the Independent Director seeks payment under
Section 7 hereof and the Proceeding of which has been previously notified to the
Company and approved by the Company for indemnification hereunder. At the
request of the Company, the Independent Director shall furnish such
documentation and information as are reasonably available to the Independent
Director and necessary to establish that the Independent Director is entitled to
indemnification hereunder. Company shall pay such Indeminfiable Amounts within
thirty (30) days of receipt of all required documents.

         12. REMEDIES OF INDEPENDENT DIRECTOR.

                  (a) RIGHT TO PETITION COURT. In the event that Director makes
a request for payment of Indemnifiable Amounts under Sections 7, 9-11 above, and
the Company fails to make such payment or advancement in a timely manner
pursuant to the terms of this Agreement, the Independent Director may petition
the appropriate judicial authority to enforce the Company's obligations under
this Agreement.

                  (b) BURDEN OF PROOF. In any judicial proceeding brought under
(a) above, the Company shall have the burden of proving that the Independent
Director is not entitled to payment of Indemnifiable Amounts hereunder.

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                  (c) EXPENSES. The Company agrees to reimburse the Independent
Director in full for any Expenses incurred by the Independent Director in
connection with investigating, preparing for, litigating, defending or settling
any action brought by the Independent Director under (a) above, or in connection
with any claim or counterclaim brought by the Company in connection therewith.

                  (d) VALIDITY OF AGREEMENT. The Company shall be precluded from
asserting in any Proceeding, including, without limitation, an action under (a)
above, that the provisions of this Agreement are not valid, binding and
enforceable or that there is insufficient consideration for this Agreement and
shall stipulate in court that the Company is bound by all the provisions of this
Agreement.

                  (e) FAILURE TO ACT NOT A DEFENSE. The failure of the Company
(including its Board of Directors or any committee thereof, independent legal
counsel, or stockholders) to make a determination concerning the permissibility
of the payment of Indemnifiable Amounts or the advancement of Indemnifiable
Expenses under this Agreement shall not be a defense in any action brought under
(a) above.

         13. PROCEEDINGS AGAINST COMPANY. Except as otherwise provided in this
Agreement, the Independent Director shall not be entitled to payment of
Indemnifiable Amounts or advancement of Indemnifiable Expenses with respect to
any Proceeding brought by the Independent Director against the Company, any
Entity which it controls, any director or officer thereof, or any third party,
unless the Company has consented to the initiation of such Proceeding. This
section shall not apply to counterclaims or affirmative defenses asserted by the
Independent Director in an action brought against the Independent Director.

         14. INSURANCE. Company may, at its discretion, obtain and maintain a
policy or policies of director and officer liability insurance, in an amount not
less than $5,000,000, of which the Independent Director will be named as an
insured, providing the Independent Director with coverage for Indemnifiable
Amounts and/or Indemnifiable Expenses in accordance with said insurance policy
or policies ("D&O INSURANCE"); provided that:

                  (a) Independent Director agrees that, while the Company has a
valid and effective D&O Insurance, and except as provided in (c) of this
section, Sections 7-13 of this Agreement shall not apply, and the Company's
indemnification obligation to the Independent Director under this Agreement
shall be deemed fulfilled by virtue of purchasing and maintaining such insurance
policy or policies, in accordance with the terms and conditions thereof and
subject to exclusions stated thereon. Independent Director agrees that the
Company shall have no obligation to challenge the decisions made by the
insurance carrier(s) ("INSURANCE CARRIER") relating to any claims made under
such insurance policy or policies;

                  (b) Independent Director agrees that the Company's
indemnification obligation to the Independent Director under (a) of this section
shall be deemed discharged and terminated, in the event the Insurance Carrier
refused payment for any Proceedings against the Independent Director due to the
acts or omissions of the Independent Director;

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                  (c) While the D&O Insurance is valid and effective, the
Company agrees that it shall indemnify the Independent Director for the
Indemnifiable Amounts and Indemnifiable Expenses, to the extent that any
Proceedings coverable by D&O Insurance but in excess of the policy amount, in
accordance with Sections 7-13 of this Agreement; and

                  (d) While the D&O Insurance is valid and effective, this
Section 14 states the entire and exclusive remedy of the Independent Director
with respect to the indemnification obligation of the Company to the Independent
Director under this Agreement.

         15. SUBROGATION. In the event of any payment of Indemnifiable Amounts
under this Agreement or the D&O Insurance, the Company or its Insurance Carrier,
as the case may be, shall be subrogated to the extent of such payment to all of
the rights of contribution or recovery of the Independent Director against other
persons, and the Independent Director shall take, at the request of the Company,
all reasonable action necessary to secure such rights, including the execution
of such documents as are necessary to enable the Company to bring suit to
enforce such rights.

         16. AUTHORITY. Each party has all necessary power and authority to
enter into, and be bound by the terms of, this Agreement, and the execution,
delivery and performance of the undertakings contemplated by this Agreement have
been duly authorized by each party hereto:

         17. SUCCESSORS AND ASSIGNMENT. This Agreement shall (a) be binding upon
and inure to the benefit of all successors and assigns of the Company (including
any transferee of all or a substantial portion of the business, stock and/or
assets of the Company and any direct or indirect successor by merger or
consolidation or otherwise by operation of law), and (b) be binding on and shall
inure to the benefit of the heirs, personal representatives, executors and
administrators of Independent Director. Independent Director has not power to
assign this Agreement or any rights and obligations hereunder.

         18. CHANGE IN LAW. To the extent that a change in applicable law
(whether by statute or judicial decision) shall mandate broader or narrower
indemnification than is provided hereunder, Independent Director shall be
subject to such broader or narrower indemnification and this Agreement shall be
deemed to be amended to such extent.

         19. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement, or any clause thereof,
shall be determined by a court of competent jurisdiction to be illegal, invalid
or unenforceable, in whole or in part, such provision or clause shall be limited
or modified in its application to the minimum extent necessary to make such
provision or clause valid, legal and enforceable, and the remaining provisions
and clauses of this Agreement shall remain fully enforceable and binding on the
parties.

         20. MODIFICATIONS AND WAIVER. Except as provided in Section 18 hereof
with respect to changes in applicable law which broaden or narrow the right of
Independent Director to be indemnified by the Company, no supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by each of the parties hereto. No delay in exercise or non-exercise by
the Company of any right under this Agreement shall operate as a current or
future waiver by it as to its same or different rights under this Agreement or
otherwise.

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         21. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (a)
when delivered by hand, (b) when transmitted by facsimile and receipt is
acknowledged, or (c) if mailed by certified or registered mail with postage
prepaid, on the third business day after the date en which it is so mailed:

                           (i) If to Independent Director, to: ________________.

                           (ii) If to the Company, to: ________________________.

or to such other address as may have been furnished in the same manner by any
party to the others.

         22. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced under the laws of the State of Nevada.

         23. CONSENT TO JURISDICTION. The parties hereby consent to the
jurisdiction of the courts having jurisdiction over matters arising in New York
County, New York for any proceeding arising out of or relating to this
Agreement. The parties agree that in any such proceeding, each party shall
waive, if applicable, inconvenience of forum and right to a jury.

         24. AGREEMENT GOVERNS. This Agreement is to be deemed consistent
wherever possible with relevant provisions of the By-Laws and Articles of
Incorporation of the Company; however, in the event of a conflict between this
Agreement and such provisions, the provisions of this Agreement shall control.

         25. INDEPENDENT CONTRACTOR. The parties understand, acknowledge and
agree that the Independent Director's relationship with the Company is that of
an independent contractor and nothing in this Agreement is intended to or should
be construed to create a relationship other than that of independent contractor.
Nothing in this Agreement shall be construed as a contract of
employment/engagement between the Independent Director and the Company or as a
commitment on the part of the Company to retain the Independent Director in any
capacity, for any period of time or under any specific terms or conditions, or
to continue Independent Director's service to the Company beyond any period.

         26. ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement or the breach thereof, shall be settled by
arbitration, before one arbitrator in accordance with the rules of the American
Arbitration Association then in effect and judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction. The arbitrator
will be selected, by the parties, from a panel of attorney arbitrators. The
parties agree that any arbitration shall be held in New York, New York. The
language of the arbitration shall be in English. The arbitrator will have no
authority to make any relief, finding or award that does not conform to the
terms and conditions of this Agreement. Each party shall bear its own attorneys'
or expert fees and any and all other party specific costs. Either party, before
or during any arbitration, may apply to a court having jurisdiction for a
restraining order or injunction where such relief is necessary to protect its
interests. Prior to initiation of arbitration, the aggrieved party will give the
other party written notice, in accordance with this Agreement, describing the
claim as to which it intends to initiate arbitration.

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         27. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Company and myself with respect to the subject matter hereof, and
supersedes all prior understandings and agreements with respect to such subject
matter.

         IN WITNESS WHEREOF, the parties hereto have executed this Independent
Director Indemnification Agreement as of the day and year first above written.

AGREED                                               AGREED

American Oriental Bioengineering, Inc.               Independent Director

/S/ YANCHUN LI                                       /S/ EILEEN BRODY
------------------------------------                 --------------------
Name: Li/Yanchun (Lily Li)                           Name: Eileen Brody
Title:   COO & Acting CFO                            SSN or Tax ID:
                                                     Passport No.:

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                                   SCHEDULE A

I. POSITION:

         -----------------------------------.

II. COMPENSATION:

         FEES. For all services rendered by Independent Director pursuant to
this Agreement, both during and outside of normal working hours, including but
not limited to, attending all required meetings of Board of Independent
Directors of the Company or applicable committees thereof, reviewing filing
reports and other corporate documents as requested by the Company, providing
comments and opinions as to business matters as requested by the Company, the
Company agrees to pay to Independent Director as follows: (1) a fee in cash of
$30,000 for the six months ending December 31, 2006; and (2) a fee in cash of
$30,000 per annum for the year subsequent to 2006. The fees in cash shall be
payable to Independent Director monthly in equal installments.

         STOCK. During the term of the Independent Director's service as a
director or member of any board committee of the Company and starting from
January 1, 2007, Independent Director shall be granted common stock of the
Company with an aggregate value of $30,000 per annum, calculated based on the
average closing price per share, as reported by the Bloomberg LP, on the
national exchange where the common share of the Company is publicly traded, for
the five (5) trading days proceeding and including January 1 of such year,
vesting in equal installments over 12 months period during which this Agreement
is performed by Independent Director, and the stock certificates for such shall
be issued by the Company on December 31 of such year. Any such stock grant shall
be in accordance with the stock plans as may be adopted by the Company, from
time to time. Independent Director's rights in respect to any grant shall be
determined solely by the Board of Independent Directors of the Company and are
subject to execution by Independent Director of any applicable agreements as
established and requested by the Company pursuant to the stock plans.

          EXPENSES. During the term of the Independent Director's service as a
 director of the Company, the Company shall promptly reimburse the Independent
 Director for all expenses incurred by him/her in connection with attending the
 annual and quarterly meeting of the Board of Independent Directors of the
 Company or applicable committees thereof, as a director or a member of any
 board committee, which are approved by the Company in advance.

         NO OTHER BENEFITS OR COMPENSATION. Independent Director acknowledges
and agrees that he/she is not granted and is not entitled to any other benefits
or compensation from the Company for the services provided under this Agreement
except expressly provided for in this Schedule A.

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AGREED: American Oriental Bioengineering, Inc.      AGREED: Independent Director

/S/ YANCHUN LI                                      /S/ EILEEN BRODY
------------------------------------                --------------------
Name: Li/Yanchun (Lily Li)                          Name: Eileen Brody
Title:   COO & Acting CFO                           SSN or Tax ID:
                                                    Passport No.:

                                       11Warrant to Purchase Stock

    
      EXHIBIT
        4.1

       

    

     

    EXECUTION
      VERSION

    

    THIS
      WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
      STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT
      BE
      OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
      UNTIL
      REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION
      OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
      SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT
      FROM
      REGISTRATION.

     

    

    WARRANT
      TO PURCHASE STOCK

     

    
      
        
          
            	Company:	Technest
                    Holdings, Inc., a Nevada corporation
	Number
                    of Shares:	75,000
	Class
                    of Stock:	Common
                    Stock, $0.001 par value per share
	Warrant
                    Price: 	$5.85
                    per share
	Issue
                    Date:	August
                    4, 2006
	Expiration
                    Date:	August
                    3, 2013
	
                    Credit
                      Facility:

                  	This
                    Warrant is issued in connection with that certain Loan and Security
                    Agreement of even date herewith between Silicon Valley Bank and
                    the
                    Company.

          
 

      

    

    THIS
      WARRANT CERTIFIES THAT, for good and valuable consideration, SILICON VALLEY
      BANK
      (Silicon Valley Bank, together with any successor or permitted assignee or
      transferee of this Warrant or of any shares issued upon exercise hereof, is
      referred to hereinafter as "Holder") is entitled to purchase the number of
      fully
      paid and nonassessable shares (the "Shares") of the class of securities (the
      “Class”) of the above-named company (the "Company") at the above-stated Warrant
      Price, all as set forth above and as adjusted pursuant to Article 2 of this
      Warrant, subject to the provisions and upon the terms and conditions set forth
      in this Warrant. 

    

    ARTICLE
      1. EXERCISE.

    

    1.1    Method
      of Exercise.
      Holder
      may exercise this Warrant by delivering the original of this Warrant together
      with a duly executed Notice of Exercise in substantially the form attached
      as
      Appendix 1 to the principal office of the Company. Unless Holder is exercising
      the conversion right set forth in Article 1.2, Holder shall also deliver to
      the
      Company a check, wire transfer (to an account designated by the Company), or
      other form of payment acceptable to the Company for the aggregate Warrant Price
      for the Shares being purchased.

    

    1.2    Conversion
      Right.
      In lieu
      of exercising this Warrant as specified in Article 1.1, Holder may from time
      to
      time convert this Warrant, in whole or in part, into a number of Shares
      determined by dividing (a) the aggregate fair market value of the Shares or
      other securities otherwise issuable upon exercise of this Warrant minus the
      aggregate Warrant Price of such Shares by (b) the fair market value of one
      Share. The fair market value of the Shares shall be determined pursuant to
      Article 1.3.

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    1.3    Fair
      Market Value.
      If the
      Company’s common stock is traded in a public market, the fair market value of a
      Share shall be the average closing price of a share of common stock reported
      for
      the five business days immediately before Holder delivers this Warrant together
      with its Notice of Exercise to the Company. If the Company’s common stock is not
      traded in a public market, the Board of Directors of the Company shall determine
      fair market value in its reasonable good faith judgment.

    

    1.4    Delivery
      of Certificate and New Warrant.
      Promptly after Holder exercises or converts this Warrant and, if applicable,
      the
      Company receives payment of the aggregate Warrant Price, the Company shall
      deliver to Holder certificates for the Shares acquired and, if this Warrant
      has
      not been fully exercised or converted and has not expired, a new Warrant
      representing the Shares not so acquired.

    

    1.5    Replacement
      of Warrants.
      On
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction or mutilation of this Warrant and, in the case of loss, theft or
      destruction, on delivery of an indemnity agreement reasonably satisfactory
      in
      form and amount to the Company or, in the case of mutilation, or surrender
      and
      cancellation of this Warrant, the Company shall execute and deliver, in lieu
      of
      this Warrant, a new warrant of like tenor.

    

    1.6    Treatment
      of Warrant Upon Acquisition of Company.

    

     1.6.1    "Acquisition".
      For
      the purpose of this Warrant, "Acquisition" means any sale, license, or other
      disposition of all or substantially all of the assets of the Company, or any
      reorganization, consolidation, merger or sale of outstanding capital stock
      of
      the Company where the holders of the Company's securities before the transaction
      beneficially own less than a majority of the outstanding voting securities
      of
      the surviving entity after the transaction.

     

    
       1.6.2    Treatment
        of Warrant at Acquisition.

    

     

    A)    Upon
      the
      written request of the Company, Holder agrees that, in the event of an
      Acquisition in which the sole consideration is cash, either (a) Holder shall
      exercise its conversion or purchase right under this Warrant and such exercise
      will be deemed effective immediately prior to the consummation of such
      Acquisition or (b) if Holder elects not to exercise the Warrant, this Warrant
      will expire upon the consummation of such Acquisition. The Company shall provide
      the Holder with written notice of its request relating to the foregoing
      (together with such reasonable information as the Holder may request in
      connection with such contemplated Acquisition giving rise to such notice),
      which
      is to be delivered to Holder not less than ten (10) days prior to the closing
      of
      the proposed Acquisition.

     

    B)    Upon
      the
      written request of the Company, Holder agrees that, in the event of an
      Acquisition that is an “arms length” sale of all or substantially all of the
      Company’s assets (and only its assets) to a third party that is not an Affiliate
      (as defined below) of the Company (a “True Asset Sale”), either (a) Holder shall
      exercise its conversion or purchase right under this Warrant and such exercise
      will be deemed effective immediately prior to the consummation of such
      Acquisition or (b) if Holder elects not to exercise the Warrant, this Warrant
      will continue until the Expiration Date if the Company continues as a going
      concern following the closing of any such True Asset Sale. The Company shall
      provide the Holder with written notice of its request relating to the foregoing
      (together with such reasonable information as the Holder may request in
      connection with such contemplated Acquisition giving rise to such notice),
      which
      is to be delivered to Holder not less than ten (10) days prior to the closing
      of
      the proposed Acquisition.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    C)    Upon
      the
      closing of any Acquisition other than those particularly described in
      subsections (A) and (B) above, the successor entity shall assume the obligations
      of this Warrant, and this Warrant shall be exercisable for the same securities,
      cash, and property as would be payable for the Shares issuable upon exercise
      of
      the unexercised portion of this Warrant as if such Shares were outstanding
      on
      the record date for the Acquisition and subsequent closing. The Warrant Price
      and/or number of Shares shall be adjusted accordingly.

     

    As
      used
      herein “Affiliate”
shall
      mean any person or entity that owns or controls directly or indirectly ten
      percent (10%) or more of the stock of Company, any person or entity that
      controls or is controlled by or is under common control with such persons or
      entities, and each of such person’s or entity’s officers, directors, joint
      venturers or partners, as applicable.

     

    ARTICLE
      2. ADJUSTMENTS
      TO THE SHARES.

    

    2.1    Stock
      Dividends, Splits, Etc.
      If the
      Company declares or pays a dividend on the outstanding shares of the Class
      payable in common stock or other securities, then upon exercise of this Warrant,
      for each Share acquired, Holder shall receive, without cost to Holder, the
      total
      number and kind of securities to which Holder would have been entitled had
      Holder owned the Shares of record as of the date the dividend occurred. If
      the
      Company subdivides the outstanding shares of the Class by reclassification
      or
      otherwise into a greater number of shares or takes any other action which
      increase the amount of common stock into which the one share of the Class is
      convertible, the number of Shares purchasable hereunder shall be proportionately
      increased and the Warrant Price shall be proportionately decreased. If the
      outstanding shares of the Class are combined or consolidated, by
      reclassification or otherwise, into a lesser number of shares, the Warrant
      Price
      shall be proportionately increased and the number of Shares shall be
      proportionately decreased.

    

    2.2    Reclassification,
      Exchange, Combinations or Substitution.
      Upon
      any reclassification, exchange, substitution, or other event that results in
      a
      change of the number and/or class of the securities issuable upon exercise
      or
      conversion of this Warrant, Holder shall be entitled to receive, upon exercise
      or conversion of this Warrant, the number and kind of securities and property
      that Holder would have received for the Shares if this Warrant had been
      exercised immediately before such reclassification, exchange, substitution,
      or
      other event. The Company or its successor shall promptly issue to Holder an
      amendment to this Warrant setting forth the number and kind of such new
      securities or other property issuable upon exercise or conversion of this
      Warrant as a result of such reclassification, exchange, substitution or other
      event that results in a change of the number and/or class of securities issuable
      upon exercise or conversion of this Warrant. The amendment to this Warrant
      shall
      provide for adjustments which shall be as nearly equivalent as may be
      practicable to the adjustments provided for in this Article 2 including, without
      limitation, adjustments to the Warrant Price and to the number of securities
      or
      property issuable upon exercise of the new Warrant. The provisions of this
      Article 2.2 shall similarly apply to successive reclassifications, exchanges,
      substitutions, or other events. 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    2.3    No
      Impairment.
      The
      Company shall not, by amendment of its Articles or Certificate (as applicable)
      of Incorporation or through a reorganization, transfer of assets, consolidation,
      merger, dissolution, issue, or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms to
      be
      observed or performed under this Warrant by the Company, but shall at all times
      in good faith assist in carrying out of all the provisions of this Article
      2 and
      in taking all such action as may be necessary or appropriate to protect Holder's
      rights under this Article against impairment. 

    

    2.4    Fractional
      Shares.
      No
      fractional Shares shall be issuable upon exercise or conversion of the Warrant
      and the number of Shares to be issued shall be rounded down to the nearest
      whole
      Share. If a fractional share interest arises upon any exercise or conversion
      of
      the Warrant, the Company shall eliminate such fractional share interest by
      paying Holder the amount computed by multiplying the fractional interest by
      the
      fair market value of a full Share.

    

    2.5    Certificate
      as to Adjustments.
      Upon
      each adjustment of the Warrant Price, the Company shall promptly notify Holder
      in writing, and, at the Company’s expense, promptly compute such adjustment, and
      furnish Holder with a certificate of its Chief Financial Officer setting forth
      such adjustment and the facts upon which such adjustment is based. The Company
      shall, upon written request, furnish Holder a certificate setting forth the
      Warrant Price in effect upon the date thereof and the series of adjustments
      leading to such Warrant Price.

    

    ARTICLE
      3. REPRESENTATIONS
      AND COVENANTS OF THE COMPANY.

    

    3.1    Representations
      and Warranties.
      The
      Company represents and warrants to, and agrees with, the Holder as
      follows:

    

     (a)    All
      Shares which may be issued upon the exercise of the purchase right represented
      by this Warrant, and all securities, if any, issuable upon conversion of the
      Shares, shall, upon issuance, be duly authorized, validly issued, fully paid
      and
      nonassessable, and free of any liens and encumbrances except for restrictions
      on
      transfer provided for herein or under applicable federal and state securities
      laws.

    

     (b)    The
      Company’s capitalization table attached hereto as Schedule
      1
      is true
      and complete as of the Issue Date.

    

    3.2    Notice
      of Certain Events.
      If the
      Company proposes at any time (a) to declare any dividend or distribution upon
      the outstanding shares of the same class and series as the Shares, whether
      in
      cash, property, stock, or other securities and whether or not a regular cash
      dividend; (b) to offer for subscription or sale pro rata to the holders of
      the
      outstanding shares of the same class and series as the Shares any additional
      shares of any class or series of the Company's stock; (c) to effect any
      reclassification, reorganization or recapitalization of any of its stock; or
      (d)
      to effect an Acquisition or to liquidate, dissolve or wind up; then, in
      connection with each such event, the Company shall give Holder: (1) at least
      10
      days prior written notice of the date on which a record will be taken for such
      dividend, distribution, or subscription rights (and specifying the date on
      which
      the holders of shares of the same class and series as the Shares will be
      entitled thereto) or for determining rights to vote, if any, in respect of
      the
      matters referred to in (c) and (d) above; and (2) in the case of the matters
      referred to in (c) and (d) above at least 10 days prior written notice of the
      date when the same will take place (and specifying the date on which the holders
      of shares of the same class and series as the Shares will be entitled to
      exchange their shares for the securities or other property deliverable upon
      the
      occurrence of such event).

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    3.3    Registration
      Under Securities Act of 1933, as amended.
      The
      Company agrees that the Shares shall have certain incidental, or “Piggyback,”
and S-3 registration rights pursuant to and as set forth in the Registration
      Rights Agreement between the Company and Holder.

    

    3.4    No
      Shareholder Rights.
      Except
      as provided in this Warrant, Holder will not have any rights as a shareholder
      of
      the Company until the exercise of this Warrant.

    

    3.5    Certain
      Information.
      The
      Company agrees to provide Holder at any time and from time to time with such
      information as Holder may reasonably request for purposes of Holder’s compliance
      with regulatory, accounting and reporting requirements applicable to
      Holder.

    

    ARTICLE
      4. REPRESENTATIONS,
      WARRANTIES OF THE HOLDER.
      The
      Holder represents and warrants to the Company as follows:

    

    4.1    Purchase
      for Own Account.
      This
      Warrant and the securities to be acquired upon exercise of this Warrant by
      Holder will be acquired for investment for Holder’s account, not as a nominee or
      agent, and not with a view to the public resale or distribution within the
      meaning of the Act. Holder also represents that it has not been formed for
      the
      specific purpose of acquiring this Warrant or the Shares.

    

    4.2    Disclosure
      of Information.
      Holder
      has received or has had full access to all the information it considers
      necessary or appropriate to make an informed investment decision with respect
      to
      the acquisition of this Warrant and its underlying securities. Holder further
      has had an opportunity to ask questions and receive answers from the Company
      regarding the terms and conditions of the offering of this Warrant and its
      underlying securities and to obtain additional information (to the extent the
      Company possessed such information or could acquire it without unreasonable
      effort or expense) necessary to verify any information furnished to Holder
      or to
      which Holder has access.

    

    4.3    Investment
      Experience.
      Holder
      understands that the purchase of this Warrant and its underlying securities
      involves substantial risk. Holder has experience as an investor in securities
      of
      companies in the development stage and acknowledges that Holder can bear the
      economic risk of such Holder’s investment in this Warrant and its underlying
      securities and has such knowledge and experience in financial or business
      matters that Holder is capable of evaluating the merits and risks of its
      investment in this Warrant and its underlying securities and/or has a
      preexisting personal or business relationship with the Company and certain
      of
      its officers, directors or controlling persons of a nature and duration that
      enables Holder to be aware of the character, business acumen and financial
      circumstances of such persons.

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    4.4    Accredited
      Investor Status.
      Holder
      is an “accredited investor” within the meaning of Regulation D promulgated under
      the Act.

    

    4.5    The
      Act.
      Holder
      understands that this Warrant and the Shares issuable upon exercise or
      conversion hereof have not been registered under the Act in reliance upon a
      specific exemption therefrom, which exemption depends upon, among other things,
      the bona fide nature of the Holder’s investment intent as expressed herein.
      Holder understands that this Warrant and the Shares issued upon any exercise
      or
      conversion hereof must be held indefinitely unless subsequently registered
      under
      the 1933 Act and qualified under applicable state securities laws, or unless
      exemption from such registration and qualification are otherwise available.
      

    

    ARTICLE
      5. MISCELLANEOUS.

    

    5.1    Term.
      This
      Warrant is exercisable in whole or in part at any time and from time to time
      on
      or before the Expiration Date.

    

    5.2    Legends. This
      Warrant and the Shares (and the securities issuable, directly or indirectly,
      upon conversion of the Shares, if any) shall be imprinted with a legend in
      substantially the following form:

    

    THIS
      WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
      ACT, OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AND PURSUANT TO THE
      PROVISIONS OF ARTICLE 5 OF THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY
      THE
      COMPANY TO SILICON VALLEY BANK DATED AS OF AUGUST 4, 2006 MAY NOT BE OFFERED,
      SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
      REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION
      OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
      SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT
      FROM
      REGISTRATION.

    

    5.3    Compliance
      with Securities Laws on Transfer.
      This
      Warrant and the Shares issuable upon exercise of this Warrant (and the
      securities issuable, directly or indirectly, upon conversion of the Shares,
      if
      any) may not be transferred or assigned in whole or in part without compliance
      with applicable federal and state securities laws by the transferor and the
      transferee (including, without limitation, the delivery of investment
      representation letters and legal opinions reasonably satisfactory to the
      Company, as reasonably requested by the Company). The Company shall not require
      Holder to provide an opinion of counsel if the transfer is to SVB Financial
      Group (Holder's parent company) or any other affiliate of Holder, provided
      that
      any such transferee is an “accredited investor” as defined in Regulation D
      promulgated under the Act. 

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    5.4    Transfer
      Procedure.
      After
      receipt by Silicon Valley Bank (“Bank”) of the executed Warrant, Bank will
      transfer all of this Warrant to SVB Financial Group, Holder's parent company,
      by
      execution of an Assignment substantially in the form of Appendix 2. Subject
      to
      the provisions of Article 5.3 and upon providing the Company with written
      notice, SVB Financial Group and any subsequent Holder may transfer all or part
      of this Warrant or the Shares issuable upon exercise of this Warrant (or the
      Shares issuable directly or indirectly, upon conversion of the Shares, if any)
      to any transferee, provided, however, in connection with any such transfer,
      SVB
      Financial Group or any subsequent Holder will give the Company notice of the
      portion of the Warrant being transferred with the name, address and taxpayer
      identification number of the transferee and Holder will surrender this Warrant
      to the Company for reissuance to the transferee(s) (and Holder if applicable).
      The Company may refuse to transfer this Warrant or the Shares to any person
      who
      directly competes with the Company.

    

    5.5    Notices.
      All
      notices and other communications from the Company to the Holder, or vice versa,
      shall be deemed delivered and effective when given personally or mailed by
      first-class registered or certified mail, postage prepaid, at such address
      as
      may have been furnished to the Company or Holder, as the case may (or on the
      first business day after transmission by facsimile) be, in writing by the
      Company or such holder from time to time. All notices to Holder shall be
      addressed as follows until the Company receives notice of a change of address
      in
      connection with a transfer or otherwise:

    

     SVB
      Financial Group

     Attn:
      Treasury Department

     3003
      Tasman Drive, HA 200

     Santa
      Clara, CA 95054

     Telephone:
      408-654-7400

     Facsimile:
      408-496-2405

    

    Notice
      to
      the Company shall be addressed as follows until Holder receives notice of a
      change in address:

     

     
        Technest
      Holdings, Inc.

    Chief
      Financial Officer

       
      One
      McKinley Square, 5th
      Floor

    Boston,
      Massachusetts 02109

    Telephone:
      (617) 722-9800

    Facsimile:
      (617) 722-9809

    

    5.6    Waiver.
      This
      Warrant and any term hereof may be changed, waived, discharged or terminated
      only by an instrument in writing signed by the party against which enforcement
      of such change, waiver, discharge or termination is sought.

    

    5.7    Attorney’s
      Fees.
      In the
      event of any dispute between the parties concerning the terms and provisions
      of
      this Warrant, the party prevailing in such dispute shall be entitled to collect
      from the other party all costs incurred in such dispute, including reasonable
      attorneys’ fees.

    

    5.8    Automatic
      Conversion upon Expiration.
      In the
      event that, upon the Expiration Date, the fair market value of one Share (or
      other security issuable upon the exercise hereof) as determined in accordance
      with Article 1.3 above is greater than the Warrant Price in effect on such
      date,
      then this Warrant shall automatically be deemed on and as of such date to be
      converted pursuant to Article 1.2 above as to all Shares (or such other
      securities) for which it shall not previously have been exercised or converted,
      and the Company shall promptly deliver a certificate representing the Shares
      (or
      such other securities) issued upon such conversion to Holder. 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    5.9    
Counterparts.
      This
      Warrant may be executed in counterparts, all of which together shall constitute
      one and the same agreement.

     

    5.10   Governing
      Law.
      This
      Warrant shall be governed by and construed in accordance with the laws of the
      Commonwealth of Massachusetts, without giving effect to its principles regarding
      conflicts of law.

    

    

    
      	
              “COMPANY”

               

              TECHNEST
                HOLDINGS, INC.

               

               

              By:
                /s/
                Gino
                Pereira                             

              Name:
                Gino
                Pereira                              

              Title:
                Chief
                Financial
                Officer             
                  

               

            	 

    

    

    
      	
              “HOLDER”

               

              SILICON
                VALLEY BANK

               

               

              By:
                /s/
                Michael
                Tramack                   

              Name:
                Michael
                Tramack                    

              Title:
                Senior
                Vice
                President               

               

            	 

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    APPENDIX
      1

    

    

    NOTICE
      OF EXERCISE

    

    

    1.    
Holder
      elects to purchase ___________ shares of the Common/Series ______ Preferred
      [strike one] Stock of __________________ pursuant to the terms of the attached
      Warrant, and tenders payment of the purchase price of the shares in
      full.

    

    [or]

     

    1.    
Holder
      elects to convert the attached Warrant into Shares/cash [strike one] in the
      manner specified in the Warrant. This conversion is exercised for
      _____________________ of the Shares covered by the Warrant.

     

    [Strike
      paragraph that does not apply.]

     

    2.    
Please
      issue a certificate or certificates representing the shares in the name
      specified below:

    

    ___________________________________________

    Holders
      Name

    

    

    ___________________________________________

    

    ___________________________________________

    (Address)

    

    3.    
By
      its
      execution below and for the benefit of the Company, Holder hereby restates
      each
      of the representations and warranties in Article 4 of the Warrant as the date
      hereof.

    

    HOLDER:

    
 

    ______________________________   
      

    

    

    By:____________________________

    

    Name:__________________________

    

    Title:___________________________

    

    (Date):__________________________

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    APPENDIX
      2

    
 

    ASSIGNMENT

     

    For
      value received, Silicon Valley Bank hereby sells, assigns and transfers
      unto

     

    
      	 	Name:	SVB Financial
              Group
	 	Address:	3003 Tasman Drive
              (HA-200)
	 	Tax
              ID:	
              Santa Clara, CA 95054

               

              91-1962278

            

    

     

    that
      certain Warrant to Purchase Stock issued
      by Technest Holdings, Inc. (the “Company”), on ______________________ (the
“Warrant”) together with all rights, title and interest
      therein.

    

    SILICON
      VALLEY BANK

    

    

    By:___________________________________

    Name:_________________________________

    Title:__________________________________

    

    Date:
      ________________________________

    

     

    By
      its
      execution below, and for the benefit of the Company, SVB Financial Group makes
      each of the representations and warranties set forth in Article 4 of the Warrant
      as of the date hereof and agrees to be bound by all of the terms and conditions
      set forth in the Warrant as the “Holder” thereof.

     

    SVB
      FINANCIAL GROUP

    

    By:___________________________________

    Name:
      Paulette Mehas

    Title: Treasurer

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