Document:

Registration Rights Agr - Crystal Research

    Exhibit
      4.16

    

    

    REGISTRATION
      RIGHTS AGREEMENT

    

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of July 17, 2006, among Technest Holdings, Inc., a
      Nevada corporation (the “Company”),
      and
      Crystal Research Associates, LLC (the “Holder”).

    

    The
      Company and the Holder hereby agree as follows:

    

    1.
      Definitions.

    

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

    

    “Common
      Stock”
means
      common stock, par value $.001 per share of the Company.

    

    “Effectiveness
      Period”
shall
      have the meaning set forth in Section
      2.

    

    “Indemnified
      Party”
shall
      have the meaning set forth in Section
      5(c)
      hereof.

    

    “Indemnifying
      Party”
shall
      have the meaning set forth in Section
      5(c)
      hereof.

    

    “Losses”
shall
      have the meaning set forth in Section
      5(a).

     

    “Proceeding”
means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

     

    “Prospectus”
means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by a Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

    

    “Registrable
      Securities”
means
      the Shares and any securities issued or issuable upon any stock split, dividend
      or other distribution recapitalization or similar event.

    

    “Registration
      Statement”
means
      the registration statements required to be filed hereunder, including (in each
      case) the Prospectus, amendments and supplements to such registration statement
      or Prospectus, including pre- and post-effective amendments, all exhibits
      thereto, and all material incorporated by reference or deemed to be incorporated
      by reference in such registration statement.

    
      
        
        

      

      
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    “Rule
      415”
means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same purpose and
      effect as such Rule.

    

    “Rule
      424”
means
      Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same purpose and
      effect as such Rule.

    

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

    

    “Shares”
shall
      mean the shares of Common Stock underlying the Warrant.

    

    “Trading
      Days”
      means
      (i)
      a day on which the Common Stock is traded on a trading market (other than the
      OTC Bulletin Board), or (ii) if the Common Stock is not listed on a trading
      market (other than the OTC Bulletin Board), a day on which the Common Stock
      is
      traded in the over-the-counter market, as reported by the OTC Bulletin Board,
      (iii) if the Common Stock is not quoted on any trading market, a day on which
      the Common Stock is quoted in the over-the-counter market as reported by the
      National Quotation Bureau Incorporated (or any similar organization or agency
      succeeding to its functions of reporting prices), or (iv) in the event that
      the
      Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof,
      a Business Day.

     

    “Warrant”
shall
      mean the warrant to purchase Common Stock issued to the Holder in connection
      with the Letter of Agreement dated July 17, 2006 between the Company and the
      Holder.

     

    2.
      Registration.
      

    

    (a)
      If at
      any time during the Effectiveness Period there is not an effective Registration
      Statement covering the resale of all of the Registrable Securities and the
      Company shall determine to prepare and file with the Commission a Registration
      Statement relating to an offering for its own account or the account of others
      under the Securities Act of any of its equity securities, other than on Form
      S-4
      or Form S-8 (each as promulgated under the Securities Act) or their then
      equivalents relating to equity securities to be issued solely in connection
      with
      any acquisition of any entity or business or equity securities issuable in
      connection with stock option or other employee benefit plans, then the Company
      shall send to the Holder written notice of such determination and, if within
      five business days after receipt of such notice, the Holder shall so request
      in
      writing, the Company shall include in such Registration Statement for resale
      all
      or any part of such Registrable Securities such holder requests to be
      registered; provided, that, the Company shall not be required to register any
      Registrable Securities pursuant to this Section 2(a) that are eligible for
      resale pursuant to Rule 144 promulgated under the Securities Act or that are
      the
      subject of a then effective Registration Statement. Upon the effectiveness
      of a
      Registration Statement covering the Shares, the Company shall use its
      commercially reasonable efforts to keep such Registration Statement continuously
      effective under the Securities Act until the earlier of (a) the date on which
      the Holder no longer owns any of the Registrable Securities, (b) until all
      of
      the Registrable Securities covered by such Registration Statement have been
      sold
      or may be sold without volume restrictions pursuant to Rule 144 as determined
      by
      the counsel to the Company pursuant to a written opinion letter to such effect,
      addressed and acceptable to the Company’s transfer agent and the Holder (the
“Effectiveness
      Period”);
      and
      (c) July 17, 2008. The Company shall promptly notify the Holder via email of
      the
      effectiveness of the Registration Statement.

    
      
        
        

      

      
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    (b)
      Notwithstanding the provisions of Section
      2(a),
      the
      Company shall not be obligated to include the Registrable Securities in a
      registration statement covering (i) those shares of Common Stock comprising
      any
      dividend announced by Markland Technologies, Inc., to its stockholders, or
      (ii)
      shares of Common Stock subject to a firmly underwritten public
      offering.

    

    (c)
      After
      the date on which the Registration Statement is declared effective by the SEC,
      the Company may delay the disclosure of material non-public information
      concerning the Company by suspending the use of the prospectus included in
      the
      Registration Statement for a period of time not to exceed thirty (30)
      consecutive Trading Days (each, a “Blackout
      Period”)
      if the
      Board of Directors of the Company shall have determined in good faith that
      it is
      in the best interest of the Company to suspend such use; provided that the
      Company shall promptly (i) notify the Holder in writing of the existence of
      (but
      in no event, without the prior written consent of the Holder, shall the Company
      disclose to the Holder any facts or circumstances regarding) material non-public
      information giving rise to a Blackout Period, (ii) advise the Holder in writing
      to cease all sales under the Registration Statement until the end of the
      Blackout Period and (iii) use commercially reasonable efforts to terminate
      the
      Blackout Period as promptly as possible. The Company may not declare more than
      three Blackout Periods in any 365-calendar day period. 

    

    3.
      Registration
      Procedures.

    

    In
      connection with the Company's registration obligations hereunder, the Company
      shall:

    

    (a)
      Not
      less than two Trading Days prior to the filing of each Registration Statement
      or
      any related Prospectus or any amendment or supplement thereto (including any
      document that would be incorporated or deemed to be incorporated therein by
      reference), the Company shall permit the Holder to review the Registration
      Statement and all amendments and supplements thereto prior to their filing
      with
      the Commission. 

    
      
        
        

      

      
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    (b)
      (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to the Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep a Registration Statement continuously
      effective as to the Registrable Securities for the Effectiveness Period; (ii)
      cause the related Prospectus to be amended or supplemented by any required
      Prospectus supplement (subject to the terms of this Agreement), and as so
      supplemented or amended to be filed pursuant to Rule 424; (iii) respond promptly
      to any comments received from the Commission with respect to the Registration
      Statement or any amendment thereto and, upon written request of the Holder,
      provide the Holder true and complete copies of all correspondence from and
      to
      the Commission relating to the Registration Statement; and (iv) comply in all
      material respects with the provisions of the Securities Act and the Exchange
      Act
      with respect to the disposition of all Registrable Securities covered by the
      Registration Statement during the applicable period in accordance (subject
      to
      the terms of this Agreement) with the intended methods of disposition by the
      Holder thereof set forth in the Registration Statement as so amended or in
      the
      Prospectus as so supplemented.

    

    (c)
      Notify the Holder of Registrable Securities to be sold (which notice shall,
      pursuant to clauses
      (ii) through (v)
      hereof,
      be accompanied by an instruction to suspend the use of the Prospectus until
      the
      requisite changes have been made) promptly (and, in the case of (i)(A) below,
      not less than two Trading Days prior to such filing) (i)(A) when a Prospectus
      or
      any Prospectus supplement or post-effective amendment to the Registration
      Statement is proposed to be filed; (B) when the Commission notifies the Company
      whether there will be a “review” of the Registration Statement and whenever the
      Commission comments in writing on the Registration Statement; and (C) with
      respect to the Registration Statement or any post-effective amendment, when
      the
      same has become effective; (ii) of any request by the Commission or any other
      Federal or state governmental authority for amendments or supplements to the
      Registration Statement or Prospectus or for additional information; (iii) of
      the
      issuance by the Commission of any stop order suspending the effectiveness of
      a
      Registration Statement covering any or all of the Registrable Securities or
      the
      initiation of any Proceedings for that purpose; (iv) of the receipt by the
      Company of any notification with respect to the suspension of the qualification
      or exemption from qualification of any of the Registrable Securities for sale
      in
      any jurisdiction, or the initiation or threatening of any Proceeding for such
      purpose; and (v) of the occurrence of any event or passage of time that makes
      the financial statements included in the Registration Statement ineligible
      for
      inclusion therein or any statement made in the Registration Statement or
      Prospectus or any document incorporated or deemed to be incorporated therein
      by
      reference untrue in any material respect or that requires any revisions to
      the
      Registration Statement, Prospectus or other documents so that, in the case
      of
      the Registration Statement or the Prospectus, as the case may be, it will not
      contain any untrue statement of a material fact or omit to state any material
      fact required to be stated therein or necessary to make the statements therein,
      in light of the circumstances under which they were made, not misleading.

    
      
        
        

      

      
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    (d)
      Promptly deliver to the Holder, without charge, as many copies of the Prospectus
      or Prospectuses (including each form of prospectus) and each amendment or
      supplement thereto as the Holder may reasonably request. Subject to the terms
      of
      this Agreement, the Company hereby consents to the use of such Prospectus and
      each amendment or supplement thereto by the Holder in connection with the
      offering and sale of the Registrable Securities covered by such Prospectus
      and
      any amendment or supplement thereto.

    

    (e)
      Cooperate with the Holder to facilitate the timely preparation and delivery
      of
      certificates representing Registrable Securities to be delivered to a transferee
      pursuant to a Registration Statement, which certificates shall be free of all
      restrictive legends, and to enable such Registrable Securities to be in such
      denominations and registered in such names as the Holder may
      request.

    

    (f)
      Upon
      the occurrence of any event contemplated by this Section 3, as promptly as
      reasonably possible, prepare a supplement or amendment, including a
      post-effective amendment, to a Registration Statement or a supplement to the
      related Prospectus or any document incorporated or deemed to be incorporated
      therein by reference, and file any other required document so that, as
      thereafter delivered, neither a Registration Statement nor such Prospectus
      will
      contain an untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary to make the statements therein,
      in
      light of the circumstances under which they were made, not
      misleading.
      If the
      Company notifies the Holder in accordance with clauses
      (ii) through (v) of Section 3(c)
      above to
      suspend the use of the Prospectus until the requisite changes to such Prospectus
      have been made, or the Company otherwise notifies the Holder of its election
      to
      suspend the availability of the Registration Statement and Prospectus pursuant
      to Section
      2(c),
      then
      the Holder shall suspend use of such Prospectus. The Company will use its
      commercially reasonable efforts to ensure that the use of the Prospectus may
      be
      resumed as promptly as is practicable.

    

    (g)
      Comply with all applicable rules and regulations of the Commission.

    

    (h)
      Use
      its commercially reasonable efforts to avoid the issuance of, or, if issued,
      obtain the withdrawal of any order suspending the effectiveness of a
      Registration Statement.

    

    (i)
      The
      Company may require, at any time prior to the second Trading Day prior to the
      filing date of the Registration Statement, the Holder to furnish to the Company
      a statement as to the number of shares of Common Stock beneficially owned by
      the
      Holder and, if requested by the Commission, the controlling person thereof,
      within two Trading Days of the Company’s request.

    
      
        
        

      

      
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    4.
      Registration
      Expenses.
      All
      fees and expenses incident to the performance of or compliance with this
      Agreement by the Company shall be borne by the Company whether or not any
      Registrable Securities are sold pursuant to the Registration Statement. The
      fees
      and expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without limitation,
      fees and expenses (A) with respect to filings required to be made with the
      principal market on which the Common Stock is then listed for trading, and
      (B)
      in compliance with applicable state securities or Blue Sky laws reasonably
      agreed to by the Company in writing (including, without limitation, fees and
      disbursements of counsel for the Company in connection with Blue Sky
      qualifications or exemptions of the Registrable Securities and determination
      of
      the eligibility of the Registrable Securities for investment under the laws
      of
      such jurisdictions as requested by the Holder )), (ii) printing expenses
      (including, without limitation, expenses of printing certificates for
      Registrable Securities and of printing prospectuses requested by the Holder),
      (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements
      of
      counsel for the Company, and (v) fees and expenses of all other persons retained
      by the Company in connection with the consummation of the transactions
      contemplated by this Agreement. In addition, the Company shall be responsible
      for all of its internal expenses incurred in connection with the consummation
      of
      the transactions contemplated by this Agreement (including, without limitation,
      all salaries and expenses of its officers and employees performing legal or
      accounting duties), the expense of any annual audit and the fees and expenses
      incurred in connection with the listing of the Registrable Securities on any
      securities exchange as required hereunder. In no event shall the Company be
      responsible for any broker or similar commissions or any legal fees or other
      costs of the Holder.

    

    5.
      Indemnification.

    

    (a)
      Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless the Holder, the officers, directors, and employees of the Holder,
      each person who controls the Holder (within the meaning of Section 15 of the
      Securities Act or Section 20 of the Exchange Act) and the officers, directors,
      and employees of each such controlling person, to the fullest extent permitted
      by applicable law, from and against any and all losses, claims, damages,
      liabilities, costs (including, without limitation, costs of preparation and
      reasonable attorneys' fees) and expenses (collectively, “Losses”),
      as
      incurred, arising out of or relating to any untrue or alleged untrue statement
      of a material fact contained in a Registration Statement, any Prospectus or
      any
      form of prospectus or in any amendment or supplement thereto or in any
      preliminary prospectus, or arising out of or relating to any omission or alleged
      omission of a material fact required to be stated therein or necessary to make
      the statements therein (in the case of any Prospectus or form of prospectus
      or
      supplement thereto, in light of the circumstances under which they were made)
      not misleading, except to the extent, but only to the extent, that (1) such
      untrue statements or omissions or alleged untrue statements or omissions are
      based upon information regarding the Holder furnished in writing to the Company
      by the Holder expressly for use therein, or to the extent that such information
      relates to the Holder or the Holder’s proposed method of distribution of
      Registrable Securities and was reviewed and expressly approved in writing by
      the
      Holder expressly for use in a Registration Statement, such Prospectus or such
      form of Prospectus or in any amendment or supplement thereto or (2) in the
      case
      of an occurrence of an event of the type specified in Section
      2(c) or Section 3(c)(ii)-(v),
      the use
      by the Holder of an outdated or defective Prospectus after the Company has
      notified the Holder in writing that the Prospectus is outdated or defective
      and
      prior to the receipt by the Holder of the Advice contemplated in Section
      6(d).
      The
      Company shall notify the Holder promptly of the institution, threat or assertion
      of any Proceeding arising from or in connection with the transactions
      contemplated by this Agreement of which the Company is aware.

    
      
        
        

      

      
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    (b)
      Indemnification
      by Holder.
      The
      Holder shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, and employees, each Person who controls the
      Company (within the meaning of Section 15 of the Securities Act and Section
      20
      of the Exchange Act), and the directors, officers, or employees of such
      controlling Persons, to the fullest extent permitted by applicable law, from
      and
      against all Losses (as determined by a court of competent jurisdiction in a
      final judgment not subject to appeal or review) arising out of or based upon
      any
      untrue statement of a material fact contained in any Registration Statement,
      any
      Prospectus, or any form of prospectus, or in any amendment or supplement
      thereto, or arising solely out of or based solely upon: (i) the Holder’s failure
      to comply with the prospectus delivery requirements of the Securities Act or
      (ii) any omission of a material fact required to be stated therein or necessary
      to make the statements therein not misleading to the extent, but only to the
      extent, such untrue statement or omission is contained in any information so
      furnished in writing by the Holder to the Company specifically for inclusion
      in
      such Registration Statement or such Prospectus or to the extent that (1) such
      untrue statements or omissions are based upon information regarding the Holder
      furnished to the Company by the Holder for use therein, or to the extent such
      information relates to the Holder or the Holder's proposed method of
      distribution of the Registrable Securities and was reviewed and approved by
      the
      Holder for use in the Registration Statement, such Prospectus or such form
      of
      Prospectus or in any amendment or supplement thereto or (2) in the case of
      an
      occurrence of an event of the type specified in Section
      2(c) or Section 3(c)(ii)-(v),
      the use
      by the Holder of an outdated or defective Prospectus after the Company has
      notified the Holder in writing that the Prospectus is outdated or defective
      and
      prior to the receipt by the Holder of the Advice contemplated in Section
      6(d).

    

    (c)
      Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an "Indemnified
      Party"),
      such Indemnified Party shall promptly notify the Person from whom indemnity
      is
      sought (the "Indemnifying
      Party")
      in
      writing, and the Indemnifying Party shall assume the defense thereof, including
      the employment of counsel reasonably satisfactory to the Indemnified Party
      and
      the payment of all fees and expenses incurred in connection with defense
      thereof; provided, that the failure of any Indemnified Party to give such notice
      shall not relieve the Indemnifying Party of its obligations or liabilities
      pursuant to this Agreement, except (and only) to the extent that such failure
      shall have prejudiced the Indemnifying Party.

    

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
      expenses; or (2) the Indemnifying Party shall have failed promptly to assume
      the
      defense of such Proceeding and to employ counsel reasonably satisfactory to
      such
      Indemnified Party in any such Proceeding; or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and such Indemnified Party shall have been advised
      by counsel that a material conflict of interest is likely to exist if the same
      counsel were to represent such Indemnified Party and the Indemnifying Party
      (in
      which case, if such Indemnified Party notifies the Indemnifying Party in writing
      that it elects to employ separate counsel at the expense of the Indemnifying
      Party, the Indemnifying Party shall not have the right to assume the defense
      thereof and the expense of one such counsel for the Holder shall be at the
      expense of the Indemnifying Party). The Indemnifying Party shall not be liable
      for any settlement of any such Proceeding effected without its written consent,
      which consent shall not be unreasonably withheld. No Indemnifying Party shall,
      without the prior written consent of the Indemnified Party, effect any
      settlement of any pending Proceeding in respect of which any Indemnified Party
      is a party, unless such settlement includes an unconditional release of such
      Indemnified Party from all liability on claims that are the subject matter
      of
      such Proceeding.

    
      
        
        

      

      
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    Subject
      to the terms of this Agreement, all fees and expenses of the Indemnified Party
      (including reasonable fees and expenses to the extent incurred in connection
      with investigating or preparing to defend such Proceeding in a manner not
      inconsistent with this Section) shall be paid to the Indemnified Party, as
      incurred, within thirty days of written notice thereof to the Indemnifying
      Party
      (regardless of whether it is ultimately determined that an Indemnified Party
      is
      not entitled to indemnification hereunder; provided, that the Indemnifying
      Party
      may require such Indemnified Party to undertake to reimburse all such fees
      and
      expenses to the extent it is finally judicially determined that such Indemnified
      Party is not entitled to indemnification hereunder).

    

    (d)
      Contribution.
      If a
      claim for indemnification under Section
      5(a) or 5(b)
      is
      unavailable to an Indemnified Party (by reason of public policy or otherwise),
      then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
      shall contribute to the amount paid or payable by such Indemnified Party as
      a
      result of such Losses, in such proportion as is appropriate to reflect the
      relative fault of the Indemnifying Party and Indemnified Party in connection
      with the actions, statements or omissions that resulted in such Losses as well
      as any other relevant equitable considerations. The relative fault of such
      Indemnifying Party and Indemnified Party shall be determined by reference to,
      among other things, whether any action in question, including any untrue or
      alleged untrue statement of a material fact or omission or alleged omission
      of a
      material fact, has been taken or made by, or relates to information supplied
      by,
      such Indemnifying Party or Indemnified Party, and the parties' relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      action, statement or omission. The amount paid or payable by a party as a result
      of any Losses shall be deemed to include, subject to the limitations set forth
      in Section
      5(c),
      any
      reasonable attorneys' or other reasonable fees or expenses incurred by such
      party in connection with any Proceeding to the extent such party would have
      been
      indemnified for such fees or expenses if the indemnification provided for in
      this Section was available to such party in accordance with its
      terms.

    

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section
      5(d)
      were
      determined by pro rata allocation or by any other method of allocation that
      does
      not take into account the equitable considerations referred to in the
      immediately preceding paragraph.

    

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties.

    

    6.
      Miscellaneous.

    

    (a)
      Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and the Holder. 

    
      
        
        

      

      
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    (b)
      No
      Inconsistent Agreements.
      Neither
      the Company nor any of its subsidiaries has entered, as of the date hereof,
      nor
      shall the Company or any of its subsidiaries, on or after the date of this
      Agreement, enter into any agreement with respect to its securities, that
      conflicts with the provisions hereof, except for such agreements, the
      conflicting provisions of which have been waived. 

    

    (c)
      Compliance.
      The
      Holder covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it in connection with sales
      of Registrable Securities pursuant to the Registration Statement.

    

    (d)
      Discontinued
      Disposition.
      The
      Holder agrees by its acquisition of such Registrable Securities that, upon
      receipt of a notice from the Company of the occurrence of any event of the
      kind
      described in Section
      2(c) or Sections 3(c)(ii)
      or (v),
      the
      Holder will forthwith discontinue disposition of such Registrable Securities
      under a Registration Statement until the Holder's receipt of the copies of
      the
      supplemented Prospectus and/or amended Registration Statement contemplated
      by
Section
      3(f),
      or
      until it is advised in writing (the "Advice")
      by the
      Company that the use of the applicable Prospectus may be resumed, and, in either
      case, has received copies of any additional or supplemental filings that are
      incorporated or deemed to be incorporated by reference in such Prospectus or
      Registration Statement. The Company may provide appropriate stop orders to
      enforce the provisions of this paragraph.

    

    (e)
      Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be delivered as set forth in the Letter of Agreement
      between the parties. 

    

    (f)
      Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties. The Company may not assign its rights
      or obligations hereunder without the prior written consent of the Holder. The
      Holder may assign their respective rights hereunder in the manner and to
      successors as permitted under the Plan of Distribution, provided however that
      in
      conjunction with any such assignment, the Holder shall obtain from the successor
      and provide to the Company, a written agreement by such successor to be bound
      by
      each of the provisions of this Agreement.

    

    (g)
      Counterparts.
      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.

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    (h)
      Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by and construed and enforced in accordance
      with the internal laws of the Commonwealth of Massachusetts, without regard
      to
      the principles of conflicts of law thereof. Each party hereby irrevocably
      submits to the jurisdiction of the state and federal courts sitting in the
      City
      of Boston, County of Suffolk, for the adjudication of any dispute hereunder
      or
      in connection herewith or with any transaction contemplated hereby or discussed
      herein, and hereby irrevocably waives, and agrees not to assert in any suit,
      action or proceeding, any claim that it is not personally subject to the
      jurisdiction of any such court, that such suit, action or proceeding is
      improper. Each party hereto hereby irrevocably waives, to the fullest extent
      permitted by applicable law, any and all right to trial by jury in any legal
      proceeding arising out of or relating to this Agreement or the transactions
      contemplated hereby.

    

    (i)
      Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any remedies
      provided by law.

    

    (j)
      Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their reasonable efforts to
      find and employ an alternative means to achieve the same or substantially the
      same result as that contemplated by such term, provision, covenant or
      restriction. 

    

    (k)
      Headings.
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

    

    

    ********************

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the parties have executed this Registration Rights
      Agreement as of the date first written above.

    

     

    TECHNEST
      HOLDINGS, INC.

    

    

    By:     
      /s/ Gino
      Pereira                                                                     

    Name:
      Gino
      Pereira                                                                           

    Title:   Chief
      Financial
      Officer                                                     
    

    

     

    CRYSTAL
      RESEARCH ASSOCIATES, LLC

    

    By:
      __/s/__________________________________________

    Name:
      __________________________________________

    Title:
      ___________________________________________

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    Annex
      A

    

    Plan
      of Distribution

    

    Each
      Selling Stockholder (the “Selling
      Stockholders”)
      of the
      common stock (“Common
      Stock”)
      of
      Technest Holdings, Inc., a Nevada corporation (the “Company”)
      and
      any of their pledgees, assignees and successors-in-interest may, from time
      to
      time, sell any or all of their shares of Common Stock on the Over the Counter
      Bulletin Board or any other stock exchange, market or trading facility on which
      the shares are traded or in private transactions. These sales may be at fixed
      or
      negotiated prices. A Selling Stockholder may use any one or more of the
      following methods when selling shares:

     

    
      	 	
              ·

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits the Selling Stockholder;

            

    

     

    
      	 	
              ·

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	 	
              ·

            	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            

    

     

    
      	 	
              ·

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	 	
              ·

            	
              privately
                negotiated transactions;

            

    

     

    
      	 	
              ·

            	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            

    

     

    
      	 	
              ·

            	
              a
                combination of any such methods of sale;
                or

            

    

     

    
      	 	
              ·

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities
      Act”),
      if
      available, rather than under this prospectus. Broker-dealers engaged by the
      Selling Stockholders may arrange for other brokers-dealers to participate in
      sales. Broker-dealers may receive commissions or discounts from the Selling
      Stockholders (or, if any broker-dealer acts as agent for the purchaser of
      shares, from the purchaser) in amounts to be negotiated. Each Selling
      Stockholder does not expect these commissions and discounts relating to its
      sales of shares to exceed what is customary in the types of transactions
      involved.

     

    The
      Selling Stockholders may from time to time pledge or grant a security interest
      in some or all of the Shares owned by them and, if they default in the
      performance of their secured obligations, the pledgees or secured parties may
      offer and sell the shares of Common Stock from time to time under this
      prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
      other applicable provision of the Securities Act amending the list of Selling
      Stockholders to include the pledgee, transferee or other successor in interest
      as Selling Stockholders under this prospectus. 

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    The
      Selling Stockholders also may transfer the shares of Common Stock in other
      circumstances, in which case the transferees, pledgees or other successors
      in
      interest will be the selling beneficial owners for purposes of this
      prospectus.

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares. The Company has agreed to indemnify
      the Selling Stockholders against certain losses, claims, damages and
      liabilities, including liabilities under the Securities Act.

     

    

    -13-Indemnification Agr - Markland

    Exhibit
      10.36

     

    

     

    GENERAL
      RELEASE AND INDEMNIFICATION AGREEMENT

     

    THIS
      GENERAL RELEASE
      AND INDEMNIFICATION AGREEMENT
      (“Agreement”) is made and entered into as of this
      1st
      day of September 2006, by and among E-OIR Technologies, Inc., a Virginia
      corporation (“E-OIR”), Technest Holdings, Inc., a Nevada corporation
      (“Technest”), Markland Technologies, Inc., a Nevada corporation (“Markland”),
      and Robert Tarini (“Mr. Tarini”) (collectively, the “Parties”). 

     

    RECITALS

     

    WHEREAS,
      on or about September 14, 2005, Joseph R. Moulton, Sr. (“Mr. Moulton”) filed a
      Bill of Complaint in the Circuit Court of Spotsylvania County styled:
Joseph
      R. Moulton, Sr. v. Markland Technologies, et al.,
      Case
      No.: CH04000835-00 (“Moulton Action”);

     

    WHEREAS,
      Mr. Moulton seeks to amend his Bill of Complaint to add Technest as a defendant
      to the Moulton Action;

     

    WHEREAS,
      with respect to the Moulton Action, any actions taken by or omissions of Mr.
      Tarini occurred during and in his capacity as an director, officer, or employee
      of Markland;

     

    WHEREAS,
      on or about July 11, 2005, Gregory Williams and Mary Williams (“Mr. and Mrs.
      Williams”) filed a Motion for Judgment in the Circuit Court for the City of
      Fredericksburg styled: Gregory
      Williams et al. v. Markland Technologies, Inc. et al.,
      Case
      No. CL05000169-00 (“Williams Action”);

     

    WHEREAS,
      the Moulton Action contains various claims against the Parties and the Williams
      Action contains three claims as follows: Breach of Severance Agreements (Count
      1), Breach of Promissory Notes (Count II), and Breach of the Stock Purchase
      Agreement (Count III); 

     

    WHEREAS,
      on March 2, 2006, Mr. and Mrs. Williams filed a Motion for Partial Summary
      Judgment on Counts I and III of the Motion for Judgment in the Williams Action;
      and

     

    WHEREAS,
      on May 4, 2006, the Court entered an Opinion Order, which granted Mr. and Mrs.
      Williams’ Motion for Partial Summary Judgment on Counts I and III of the Motion
      for Judgment in the Williams Action; and

     

    WHEREAS,
      on July 26, 2006, the parties to the Moulton Action entered into a settlement
      agreement (“Moulton Settlement Agreement”) resolving all of their differences;
      and

     

    WHEREAS,
      on July 27, 2006, EOIR and Technest entered into a Settlement Agreement
      (“Williams Settlement Agreement”), settling certain aspects of Counts I and II
      of the Williams Action.

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    TERMS
      AND CONDITIONS

     

    NOW,
      THEREFORE, in
      consideration of foregoing premises and intending to be legally bound hereby,
      and for other good and valuable consideration the receipt and adequacy of which
      is expressly acknowledged by the Parties, the Parties agree as
      follows:

     

    1.
       E-OIR
      Releases.

     

    E-OIR:

     

    (i).
       fully,
      finally and forever acquits, quitclaims, releases and discharges Markland and
      its officers, directors, employees, agents, representatives, successors and
      assigns, including, without limitation, Robert Tarini, of and from any and
      all
      obligations, claims, liabilities, damages, demands, debts, liens, deficiencies
      or cause or causes of action to, of or for the benefit (whether directly or
      indirectly) of E-OIR, at law or in equity, known or unknown, contingent or
      otherwise, whether asserted or unasserted, whether now known or hereafter
      discovered, whether statutory, in contract or in tort, as well as any other
      kind
      or character of action now held, owned or possessed (whether directly or
      indirectly) by E-OIR on account of, arising out of, related to, or concerning,
      whether directly or indirectly, proximately or remotely, the Moulton Action
      and
      the Williams Action, with the exception of the indemnification provided in
      Paragraph 7.A. herein; 

     

    (ii).
      acknowledges,
      represents, covenants and warrants that the obligations imposed by this release
      shall be forever binding, and that this release may not be modified, amended,
      annulled, rescinded or otherwise changed unless in writing signed by the
      parties, which expressly refers to this release and this Agreement;
      and

     

    (iii). acknowledges,
      represents, covenants and warrants that E-OIR has not made any assignment or
      other transfer of any right, claim, or cause of action covered by this release
      to any individual, corporation, or any other legal entity
      whatsoever.

     

    2.
       Technest
      Releases.

     

    Technest:

     

    (i).
       fully,
      finally and forever acquits, quitclaims, releases and discharges Markland and
      its officers, directors, employees, agents, representatives, successors and
      assigns, including, without limitation, Robert Tarini, of and from any and
      all
      obligations, claims, liabilities, damages, demands, debts, liens, deficiencies
      or cause or causes of action to, of or for the benefit (whether directly or
      indirectly) of Technest, at law or in equity, known or unknown, contingent
      or
      otherwise, whether asserted or unasserted, whether now known or hereafter
      discovered, whether statutory, in contract or in tort, as well as any other
      kind
      or character of action now held, owned or possessed (whether directly or
      indirectly) by Technest on account of, arising out of, related to, or
      concerning, whether directly or indirectly, proximately or remotely, the Moulton
      Action and the Williams Action, with the exception of the indemnification
      provided in Paragraph 7.B. herein. 

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (ii).
      acknowledges,
      represents, covenants and warrants that the obligations imposed by this release
      shall be forever binding, and that this release may not be modified, amended,
      annulled, rescinded or otherwise changed unless in writing signed by the
      parties, which expressly refers to this release and this Agreement;
      and

     

    (iii). acknowledges,
      represents, covenants and warrants that Technest has not made any assignment
      or
      other transfer of any right, claim, or cause of action covered by this release
      to any individual, corporation, or any other legal entity
      whatsoever.

     

    3.
       Markland
      Releases.

     

    A. Markland:

     

    (i).
       fully,
      finally and forever acquits, quitclaims, releases and discharges E-OIR and
      its
      officers, directors, employees, agents, representatives, successors and assigns
      of and from any and all obligations, claims, liabilities, damages, demands,
      debts, liens, deficiencies or cause or causes of action to, of or for the
      benefit (whether directly or indirectly) of Markland, at law or in equity,
      known
      or unknown, contingent or otherwise, whether asserted or unasserted, whether
      now
      known or hereafter discovered, whether statutory, in contract or in tort, as
      well as any other kind or character of action now held, owned or possessed
      (whether directly or indirectly) by Markland on account of, arising out of,
      related to, or concerning, whether directly or indirectly, proximately or
      remotely, the Moulton Action and the Williams Action, with the exception of
      the
      indemnification provided in Paragraph 5.A. herein; 

     

    (ii).
      acknowledges,
      represents, covenants and warrants that the obligations imposed by this release
      shall be forever binding, and that this release may not be modified, amended,
      annulled, rescinded or otherwise changed unless in writing signed by the
      parties, which expressly refers to this release and this Agreement;
      and

     

    (iii). acknowledges,
      represents, covenants and warrants that Markland has not made any assignment
      or
      other transfer of any right, claim, or cause of action covered by this release
      to any individual, corporation, or any other legal entity
      whatsoever.

     

    B.
       Markland:

     

    (i).
       fully,
      finally and forever acquits, quitclaims, releases and discharges Technest and
      its officers, directors, employees, agents, representatives, successors and
      assigns of and from any and all obligations, claims, liabilities, damages,
      demands, debts, liens, deficiencies or cause or causes of action to, of or
      for
      the benefit (whether directly or indirectly) of Markland, at law or in equity,
      known or unknown, contingent or otherwise, whether asserted or unasserted,
      whether now known or hereafter discovered, whether statutory, in contract or
      in
      tort, as well as any other kind or character of action now held, owned or
      possessed (whether directly or indirectly) by Markland on account of, arising
      out of, related to, or concerning, whether directly or indirectly, proximately
      or remotely, the Moulton Action and the Williams Action, with the exception
      of
      the indemnification provided in Paragraph 6.A. herein; 

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    (ii).
      acknowledges,
      represents, covenants and warrants that the obligations imposed by this release
      shall be forever binding, and that this release may not be modified, amended,
      annulled, rescinded or otherwise changed unless in writing signed by the
      parties, which expressly refers to this release and this Agreement;
      and

     

    (iii). acknowledges,
      represents, covenants and warrants that Markland has not made any assignment
      or
      other transfer of any right, claim, or cause of action covered by this release
      to any individual, corporation, or any other legal entity
      whatsoever.

     

    C.
       Markland:

     

    (i).
       fully,
      finally and forever acquits, quitclaims, releases and discharges Mr. Tarini
      and
      his agents, heirs, representatives and assigns of and from any and all
      obligations, claims, liabilities, damages, demands, debts, liens, deficiencies
      or cause or causes of action to, of or for the benefit (whether directly or
      indirectly) of Markland, at law or in equity, known or unknown, contingent
      or
      otherwise, whether asserted or unasserted, whether now known or hereafter
      discovered, whether statutory, in contract or in tort, as well as any other
      kind
      or character of action now held, owned or possessed (whether directly or
      indirectly) by Markland on account of, arising out of, related to, or
      concerning, whether directly or indirectly, proximately or remotely, the Moulton
      Action and the Williams Action; 

     

    (ii).
      acknowledges,
      represents, covenants and warrants that the obligations imposed by this release
      shall be forever binding, and that this release may not be modified, amended,
      annulled, rescinded or otherwise changed unless in writing signed by Mr. Tarini
      and Markland,
      which
      expressly refers to this release and this Agreement; and

     

    (iii). acknowledges,
      represents, covenants and warrants that Markland
      has
      not
      made any assignment or other transfer of any right, claim, or cause of action
      covered by this release to any individual, corporation, or any other legal
      entity whatsoever.

     

    4.
       Mr.
      Tarini Releases.

     

    A.
       Mr.
      Tarini:

     

    (i).
       fully,
      finally and forever acquits, quitclaims, releases and discharges E-OIR and
      its
      officers, directors, employees, agents, representatives, successors and assigns
      of and from any and all obligations, claims, liabilities, damages, demands,
      debts, liens, deficiencies or cause or causes of action to, of or for the
      benefit (whether directly or indirectly) of Mr. Tarini, at law or in equity,
      known or unknown, contingent or otherwise, whether asserted or unasserted,
      whether now known or hereafter discovered, whether statutory, in contract or
      in
      tort, as well as any other kind or character of action now held, owned or
      possessed (whether directly or indirectly) by Mr. Tarini on account of, arising
      out of, related to, or concerning, whether directly or indirectly, proximately
      or remotely, the Moulton Action, with the exception of the indemnification
      provided in Paragraph 5.B. herein; 

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    (ii).
      acknowledges,
      represents, covenants and warrants that the obligations imposed by this release
      shall be forever binding, and that this release may not be modified, amended,
      annulled, rescinded or otherwise changed unless in writing signed by E-OIR
      and
      Mr. Tarini, which expressly refers to this release and this Agreement;
      and

     

    (iii). acknowledges,
      represents, covenants and warrants that Mr. Tarini has not made any assignment
      or other transfer of any right, claim, or cause of action covered by this
      release to any individual, corporation, or any other legal entity
      whatsoever.

     

    B.
       Mr.
      Tarini:

     

    (i).
       fully,
      finally and forever acquits, quitclaims, releases and discharges Technest and
      its officers, directors, employees, agents, representatives, successors and
      assigns of and from any and all obligations, claims, liabilities, damages,
      demands, debts, liens, deficiencies or cause or causes of action to, of or
      for
      the benefit (whether directly or indirectly) of Mr. Tarini, at law or in equity,
      known or unknown, contingent or otherwise, whether asserted or unasserted,
      whether now known or hereafter discovered, whether statutory, in contract or
      in
      tort, as well as any other kind or character of action now held, owned or
      possessed (whether directly or indirectly) by Mr. Tarini on account of, arising
      out of, related to, or concerning, whether directly or indirectly, proximately
      or remotely, the Moulton Action, with the exception of the indemnification
      provided in Paragraph 6.B. herein; 

     

    (ii).
      acknowledges,
      represents, covenants and warrants that the obligations imposed by this release
      shall be forever binding, and that this release may not be modified, amended,
      annulled, rescinded or otherwise changed unless in writing signed by Technest
      and Mr.
      Tarini,
      which
      expressly refers to this release and this Agreement; and

     

    (iii). acknowledges,
      represents, covenants and warrants that Mr.
      Tarini has
      not
      made any assignment or other transfer of any right, claim, or cause of action
      covered by this release to any individual, corporation, or any other legal
      entity whatsoever.

     

    C.
       Mr.
      Tarini:

     

    (i).
       fully,
      finally and forever acquits, quitclaims, releases and discharges Markland and
      its officers, directors, employees, agents, representatives, successors and
      assigns of and from any and all obligations, claims, liabilities, damages,
      demands, debts, liens, deficiencies or cause or causes of action to, of or
      for
      the benefit (whether directly or indirectly) of Mr. Tarini, at law or in equity,
      known or unknown, contingent or otherwise, whether asserted or unasserted,
      whether now known or hereafter discovered, whether statutory, in contract or
      in
      tort, as well as any other kind or character of action now held, owned or
      possessed (whether directly or indirectly) by Mr. Tarini on account of, arising
      out of, related to, or concerning, whether directly or indirectly, proximately
      or remotely, the Moulton Action, with the exception of the indemnification
      provided in Paragraph 7.C. herein; 

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    (ii).
      acknowledges,
      represents, covenants and warrants that the obligations imposed by this release
      shall be forever binding, and that this release may not be modified, amended,
      annulled, rescinded or otherwise changed unless in writing signed by Markland
      and Mr.
      Tarini,
      which
      expressly refers to this release and this Agreement; and

     

    (iii). acknowledges,
      represents, covenants and warrants that Mr.
      Tarini has
      not
      made any assignment or other transfer of any right, claim, or cause of action
      covered by this release to any individual, corporation, or any other legal
      entity whatsoever.

     

    5.
       E-OIR
      Indemnification.

     

    A. E-OIR:

     

    (i).
       expressly
      agrees to indemnify and hold harmless Markland and its officers, directors,
      employees, agents, representatives, successors and assigns, of and from any
      and
      all obligations, losses, claims, damages, liabilities, demands, debts, liens,
      costs and expenses of Markland and/or its officers, directors, employees,
      agents, successors and assigns that may be asserted by, or may arise out of,
      whether directly or indirectly, proximately or remotely, a
      final
      judgment or award of costs or attorneys’ fees by a court of competent
      jurisdiction on
      or any
      settlement mutually agreeable to the Parties of Counts I and II of the Williams
      Action (the Parties agree to bear their own costs and attorneys’ fees incurred
      in defending the Williams Action); and

    

    (ii).
       acknowledges,
      represents, covenants and warrants that the obligations imposed by this
      Agreement shall be forever binding, and that this Agreement may not be modified,
      amended, annulled, rescinded or otherwise changed unless in writing signed
      by
      Markland and E-OIR, which expressly refers to this Agreement. 

    

    B. E-OIR:

     

    (i).
       expressly
      agrees to indemnify and hold harmless Mr. Tarini, his heirs, agents,
      representatives, and assigns, of and from any and all obligations, losses,
      claims, damages, liabilities, demands, debts, liens, costs and expenses of
      Mr.
      Tarini and his agents, successors and assigns that may be asserted by, or may
      arise out of, whether directly or indirectly, proximately or remotely, the
      Moulton Action; provided,
      however,
      that
      E-OIR shall not be required to contribute to any expenses incurred by Mr. Tarini
      prior to the date of the Agreement; and

    

    (ii).
       acknowledges,
      represents, covenants and warrants that the obligations imposed by this
      Agreement shall be forever binding, and that this Agreement may not be modified,
      amended, annulled, rescinded or otherwise changed unless in writing signed
      by
      Mr. Tarini and E-OIR, which expressly refers to this Agreement.

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    6.
       Technest
      Indemnification.

     

    A. Technest:

     

    (i).
       expressly
      agrees to indemnify and hold harmless Markland and its officers, directors,
      employees, agents, representatives, successors and assigns, of and from any
      and
      all obligations, losses, claims, damages, liabilities, demands, debts, liens,
      costs and expenses of Markland and/or its officers, directors, employees,
      agents, successors and assigns resulting from a final judgment or award of
      costs
      or attorney’s fees by a court of competent jurisdiction on or any settlement
      mutually agreeable to the Parties of Counts I and II of the Williams
      Action
      (the
      Parties agree to bear their own costs and attorneys’ fees incurred in defending
      the Williams Action);
      and

     

    (ii).
       acknowledges,
      represents, covenants and warrants that the obligations imposed by this
      Agreement shall be forever binding, and that this Agreement may not be modified,
      amended, annulled, rescinded or otherwise changed unless in writing signed
      by
      Markland and E-OIR, which expressly refers to this Agreement. 

     

    B. Technest:

     

    (i).
       expressly
      agrees to indemnify and hold harmless Mr. Tarini, his heirs, agents,
      representatives, and assigns, of and from any and all obligations, losses,
      claims, damages, liabilities, demands, debts, liens, costs and expenses of
      Mr.
      Tarini and his agents, successors and assigns that may be asserted by, or may
      arise out of, whether directly or indirectly, proximately or remotely, the
      Moulton Action; provided,
      however,
      that
      E-OIR shall not be required to contribute to any expenses incurred by Mr. Tarini
      prior to the date of the Agreement; and

    

    (ii).
       acknowledges,
      represents, covenants and warrants that the obligations imposed by this
      Agreement shall be forever binding, and that this Agreement may not be modified,
      amended, annulled, rescinded or otherwise changed unless in writing signed
      by
      Mr. Tarini and Technest, which expressly refers to this Agreement. 

    

    7.
       Markland
      Indemnification.

     

    A. Markland:

     

    (i).
       expressly
      agrees to indemnify and hold harmless E-OIR and its officers, directors,
      employees, agents, representatives, successors and assigns, of and from any
      and
      all obligations, losses, claims, damages, liabilities, demands, debts, liens,
      costs and expenses of E-OIR and/or its officers, directors, employees, agents,
      successors and assigns that may be asserted by, or may arise out of, whether
      directly or indirectly, proximately or remotely, a final judgment or award
      of
      costs or attorney’s fees by a court of competent jurisdiction on or any
      settlement mutually agreeable to the Parties of Count III of the Williams Action
      (the Parties agree to bear their own costs and attorneys’ fees incurred in
      defending the Williams Action); and

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (ii).
       acknowledges,
      represents, covenants and warrants that the obligations imposed by this
      Agreement shall be forever binding, and that this Agreement may not be modified,
      amended, annulled, rescinded or otherwise changed unless in writing signed
      by
      Markland and E-OIR, which expressly refers to this Agreement. 

     

    B. Markland:

     

    (i).
       expressly
      agrees to indemnify and hold harmless Technest and its officers, directors,
      employees, agents, representatives, successors and assigns, of and from any
      and
      all obligations, losses, claims, damages, liabilities, demands, debts, liens,
      costs and expenses of Technest and/or its officers, directors, employees,
      agents, successors and assigns that may be asserted by, or may arise out of,
      whether directly or indirectly, proximately or remotely, a final judgment or
      award of costs or attorney’s fees by a court of competent jurisdiction on or any
      settlement mutually agreeable to the Parties of Count III of the Williams Action
      (the Parties agree to bear their own costs and attorneys’ fees incurred in
      defending the Williams Action); and

    

    (ii).
       acknowledges,
      represents, covenants and warrants that the obligations imposed by this
      Agreement shall be forever binding, and that this Agreement may not be modified,
      amended, annulled, rescinded or otherwise changed unless in writing signed
      by
      Markland and Technest, which expressly refers to this Agreement. 

     

    C. Markland:

     

    (i).
       expressly
      agrees to indemnify and hold harmless Mr. Tarini and his agents, heirs,
      representatives, and assigns, of and from any and all obligations, losses,
      claims, damages, liabilities, demands, debts, liens, costs and expenses of
      Mr.
      Tarini and his agents, heirs, representatives, and assigns that may be asserted
      by, or may arise out of, whether directly or indirectly, proximately or
      remotely, in connection with the Moulton Action and Williams Action;
      and

     

    (ii).
       acknowledges,
      represents, covenants and warrants that the obligations imposed by this
      Agreement shall be forever binding, and that this Agreement may not be modified,
      amended, annulled, rescinded or otherwise changed unless in writing signed
      by
      Markland and Mr. Tarini, which expressly refers to this Agreement. 

     

    8.
       Construction.

     

    This
      Agreement is the entire understanding and agreement among the Parties and
      incorporates and merges herein all prior discussions, understandings, and
      agreements, express or implied, oral or written, among the Parties. This
      Agreement is intended to be a fully integrated document. The Parties each
      acknowledge that they have not executed this Agreement in reliance on any
      representation, inducement, promise, agreement or warranty that is not contained
      or referenced in this Agreement and that they have made such independent
      investigation of the facts pertaining to the Moulton Action and Williams Action
      and of all matters pertaining to the actions, as they deemed necessary, and
      that
      they are relying solely upon their own investigation of the facts and are not
      relying in any way (and acknowledges that it would be unreasonable to so rely)
      upon any statement, silence, act or omission of any other Party in entering
      into
      this Agreement other than those representations specifically set forth in
      writing herein.

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    9.
       Choice
      of Law.

     

    This
      Agreement and the performance of the Parties hereunder shall be construed and
      interpreted in accordance with the laws of the Commonwealth of Massachusetts.
      

     

    10.
       Negotiated
      Document.

     

    The
      Parties agree that this Agreement is a negotiated document and that, in any
      action arising out of the construction, interpretation, validity, or performance
      of this Agreement, it shall not be construed against the drafter.

     

    11.
       Authority.

     

    Each
      of
      the signatories hereto represents and warrants to be duly authorized to fully
      and completely resolve the disputes described in this Agreement, make the
      releases and indemnities contained in this Agreement, and to bind the Party
      on
      whose behalf the signatory has agreed to act to the terms and conditions
      contained in this Agreement.

     

    12.
       Counterparts
      and Electronic Signatures.

     

    This
      Agreement may be executed in counterparts, each such counterpart being deemed
      to
      be an original instrument, and all such counterparts together shall constitute
      the same Agreement. The Parties expressly acknowledge the applicability of
      Massachusetts General Laws, Chapter 110G, the Uniform Electronic Signatures
      Act
      to the execution of this Agreement. 

     

    13.
       Miscellaneous.

     

    A. This
      Agreement is binding upon and shall inure to the benefit of the Parties hereto,
      their respective agents, employees, representatives, attorneys, assigns, and
      successors in interest;

     

    B. Each
      obligation of each party under this Agreement is material;

     

    C. The
      Parties expressly incorporate by reference and make part of this Agreement
      all
      Recitals set forth above;

     

    D. Should
      any portion, term or provision of this Agreement be declared or determined
      by
      any court to be illegal, invalid or unenforceable, the validity of the remaining
      portions, terms and provisions shall not be affected thereby and this Agreement
      will remain valid and fully enforceable, and the illegal, invalid or
      unenforceable portion, term or provision shall be deemed not to be part of
      this
      Agreement; and

     

    E. Any
      notice hereunder shall be mailed to the undersigned at their current place
      of
      business by certified mail.

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Parties set their hands and seals, as of the date(s) set
      forth below.

     

    
      	 	
              /s/
                Robert Tarini

            	 	
              /s/
                Joseph P. Mackin

            
	 	
              Markland
                Technologies, Inc.

            	 	
              E-OIR
                Technologies, Inc.

            
	 	
              By:
                Robert Tarini

            	 	
              By:
                Joseph P. Mackin

            
	 	
              Title:
                CEO

            	 	
              Title:
                CEO/President

            
	 	 	 	 
	 	
              Dated:
                August 31, 2006

            	 	
              Dated:
                September 1, 2006

            
	 	 	 	 
	 	
              /s/
                Joseph P. Mackin

            	 	
              /s/
                Robert Tarini

            
	 	
              Technest
                Holdings, Inc.

            	 	
              Robert
                Tarini

            
	 	
              By:
                Joseph P. Mackin

            	 	 
	 	
              Title:
                CEO

            	 	
              Dated:
                August 31, 2006

            
	 	 	 	 
	 	
              Dated:
                September 1, 2006

            	 	 

    

    
 

    -10-

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