UNCONDITIONAL GUARANTY
This
continuing Unconditional Guaranty (“Guaranty”) is entered into as of August 4,
2006, by XXXXXXXX
TECHNOLOGIES, INC.,
a
Florida corporation with a principal place of business located at 000 Xxxxx
Xxxxxx Xxxx., Xxxxxxx, Xxxxx Xxxxxx 00000 (“Guarantor”), in favor of Silicon
Valley Bank, California-chartered bank, with its principal place of business
at
0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a loan production
office located at One Xxxxxx Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000 (“Bank”).
Recitals
A. Concurrently
herewith, Bank and Technest Holdings, Inc., a Nevada corporation, with offices
at 0
XxXxxxxx Xx., Xxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
(“Technest”), E-OIR Technologies, Inc., a Virginia corporation, with offices at
00000
Xxxxxxxxxxxx Xxx., Xxxxx 000, Xxxxxxxxxxxxxx, Xxxxxxxx 00000
(“EOIR”), and Genex Technologies Incorporated, a Maryland corporation, with
offices at 00000
Xxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000
(“Genex”) (hereinafter,
Technest, EOIR and Genex are jointly and severally, individually and
collectively, referred to as “Borrower”),
are
entering into (i) a certain Loan and Security Agreement dated as of August
4,
2006 between Borrower and Bank, as amended from time to time (as amended, the
“Term Loan Agreement”), and (ii) a certain Loan and Security Agreement (Working
Capital Line of Credit) dated as of August 4, 2006 between Borrower and Bank,
as
amended from time to time (as amended, the “WCL Loan Agreement”) (hereinafter
the Term Loan Agreement and the WCL Loan Agreement are collectively referred
to
as, the “Loan Agreement”) pursuant to which Bank has agreed to make certain
advances of money and to extend certain financial accommodations to Borrower
(collectively, the “Loans”), subject to the terms and conditions set forth
therein. Capitalized terms used but not otherwise defined herein shall have
the
meanings given them in the Loan Agreement (as applicable).
B. In
consideration of the agreement of Bank to make the Loans to Borrower under
the
Loan Agreement, Guarantor is willing to guaranty a portion of the payment and
performance by Borrower of its obligations thereunder and under the other Loan
Documents, all as further set forth herein.
C. Guarantor
is the majority shareholder of Technest and will obtain substantial direct
and
indirect benefit from the Loans made by Bank to Borrower under the Loan
Agreement.
Now,
Therefore,
to
induce Bank to enter into the Loan Agreement, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound, Guarantor hereby represents, warrants, covenants
and agrees as follows:
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Section
1. Guaranty.
1.1 Unconditional
Guaranty of Payment. In consideration of the foregoing, Guarantor hereby
irrevocably, absolutely and unconditionally guarantees to Bank the prompt and
complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of all Obligations, provided, however, the
maximum liability of Guarantor hereunder shall not exceed at any time the sum
of
(a) $6,000,000.00, plus (b) all amounts owed pursuant to Section 13 of this
Guaranty. Guarantor
agrees that it shall execute such other documents or agreements and take such
action as Bank shall reasonably request to effect the purposes of this Guaranty.
This Guaranty shall terminate on the earlier to occur of (i) the date which
is
two (2) years from the Effective Date of the Loan Agreement (the “Release
Date”), provided no Event of Default has occurred and is continuing thereunder,
and (ii) if an Event of Default has occurred and is continuing on the Release
Date, immediately upon the cure of such Event of Default.
1.2 Separate
Obligations. These
obligations are independent of Borrower’s obligations and separate actions may
be brought against Guarantor (whether action is brought against Borrower or
whether Borrower is joined in the action).
Section
2. Representations
and Warranties.
Guarantor
hereby represents and warrants that:
(a) Guarantor
(i) is a corporation duly
organized, validly existing and in good standing under the laws of the State
of
Florida; (ii) is duly qualified to do business and is in good standing in every
jurisdiction where the nature of its business requires it to be so qualified
(except where the failure to so qualify would not have a material adverse effect
on Guarantor’s condition, financial or otherwise, or on Guarantor’s ability to
pay or perform the obligations hereunder); and (iii) has all requisite power
and
authority to execute and deliver this Guaranty and each Loan Document executed
and delivered by Guarantor pursuant to the Loan Agreement or this Guaranty
and
to perform its obligations thereunder and hereunder.
(b) The
execution, delivery and performance by Guarantor of this Guaranty (i) are
within Guarantor’s powers and have been duly authorized by all necessary action;
(ii) do not contravene Guarantor’s charter documents or any law or any
contractual restriction binding on or affecting Guarantor or by which
Guarantor’s property may be affected; (iii) do not require any authorization or
approval or other action by, or any notice to or filing with, any governmental
authority or any other Person under any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which Guarantor is a party or by which
Guarantor or any of its property is bound, except such as have been obtained
or
made; and (iv) do not result in the imposition or creation of any Lien upon
any
property of Guarantor, other than the Lien created pursuant to that certain
Stock Pledge Agreement by and between the Guarantor and Bank executed of even
date herewith.
(c) This
Guaranty is a valid and binding obligation of Guarantor, enforceable against
Guarantor in accordance with its terms, except as the enforceability thereof
may
be subject to or limited by bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the rights of
creditors generally.
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(d) There
is
no action, suit or proceeding affecting Guarantor pending or threatened before
any court, arbitrator, or governmental authority, domestic or foreign, which
may
have a material adverse effect on the ability of Guarantor to perform its
obligations under this Guaranty.
(e) Guarantor’s
obligations hereunder are not subject to any offset or defense against Bank
or
Borrower of any kind.
(f) The
financial statements of Guarantor, dated as of ________________, 20__ (audited)
and ____________, 20__, (unaudited), copies of which have been furnished to
Bank, fairly present the financial position and results of operations for
Guarantor for the dates and periods purported to be covered thereby, all in
accordance with GAAP, and there has been no material adverse change in the
financial position or operations of Guarantor since the date of such financial
statements.
(g) To
ensure
the legality, validity, enforceability or admissibility into evidence of this
Guaranty in each of the jurisdictions in which Guarantor is incorporated or
organized and any jurisdiction in which Guarantor conducts business, it is
not
necessary that (i) this Guaranty be filed or recorded with any court or
other authority in such jurisdiction, (ii) any other filings, notices,
authorizations, approvals be obtained or other actions taken, or (iii) any
stamp or similar tax be paid on or with respect to this Guaranty, or, if any
of
the foregoing actions are necessary, they have been duly taken.
(h)
The
incurrence of Guarantor’s obligations under this Guaranty will not cause
Guarantor to (i) become insolvent; (ii) be left with unreasonably small capital
for any business or transaction in which Guarantor is presently engaged or
plans
to be engaged; or (iii) be unable to pay its debts as such debts mature.
(i)
Guarantor
covenants, warrants, and represents to Bank that all representations and
warranties contained in this Guaranty shall be true at the time of Guarantor’s
execution of this Guaranty, and shall continue to be true so long as this
Guaranty remains in effect. Guarantor expressly agrees that any
misrepresentation or breach of any warranty whatsoever contained in this
Guaranty shall be deemed material.
(j)
Simultaneously
with Guarantor’s filing of same with the Securities and Exchange Commission,
Guarantor agrees that it shall deliver to Bank: (i) a company prepared
consolidated balance sheet and income statement covering Guarantor’s
consolidated operations during the period certified by a Responsible Officer
and
in a form acceptable to Bank; and (ii) audited consolidated financial statements
prepared under GAAP, consistently applied, together with an unqualified opinion
on the financial statements from an independent certified public accounting
firm
reasonably acceptable to Bank. In addition, Guarantor shall deliver to Bank
any
other financial information reasonably requested by Bank.
Section
3. General
Waivers.
Guarantor waives:
(a) Any
right
to require Bank to (i) proceed against Borrower or any other person;
(ii) proceed against or exhaust any security or (iii) pursue any other
remedy. Bank may exercise or not exercise any right or remedy it has against
Borrower or any security it holds (including the right to foreclose by judicial
or nonjudicial sale) without affecting Guarantor’s liability hereunder.
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(b) Any
defenses from disability or other defense of Borrower or from the cessation
of
Borrowers liabilities.
(c) Any
setoff, defense or counterclaim against Bank.
(d) Any
defense from the absence, impairment or loss of any right of reimbursement
or
subrogation or any other rights against Borrower. Until Borrower’s obligations
to Bank have been paid, Guarantor has no right of subrogation or reimbursement
or other rights against Borrower.
(e) Any
right
to enforce any remedy that Bank has against Borrower.
(f) Any
rights to participate in any security held by Bank.
(g) Any
demands for performance, notices of nonperformance or of new or additional
indebtedness incurred by Borrower to Bank. Guarantor is responsible for being
and keeping itself informed of Borrower’s financial condition.
(h) The
benefit of any act or omission by Bank which directly or indirectly results
in
or aids the discharge of Borrower from any of the Obligations by operation
of
law or otherwise.
Section
4. Waiver
of Defenses.
Guarantor acknowledges that, to the extent Guarantor has or may have rights
of
subrogation or reimbursement against Borrower for claims arising out of this
Guaranty, those rights may be impaired or destroyed if Bank elects to proceed
against any real property security of Borrower by non-judicial foreclosure.
That
impairment or destruction could, under certain judicial cases and based on
equitable principles of estoppel, give rise to a defense by Guarantor against
its obligations under this Guaranty. Guarantor waives that defense and any
others arising from Bank’s election to pursue non-judicial foreclosure.
Guarantor waives the benefits, if any, of any statutory or common law rule
that
may permit a subordinating creditor to assert any defenses of a surety or
guarantor, or that may give the subordinating creditor the right to require
a
senior creditor to marshal assets, and Guarantor agrees that it shall not assert
any such defenses or rights.
Section
5. Reinstatement.
Notwithstanding any provision of the Loan Agreement to the contrary, the
liability of Guarantor hereunder shall be reinstated and revived and the rights
of Bank shall continue if and to the extent that for any reason any payment
by
or on behalf of Guarantor or Borrower is rescinded or must be otherwise restored
by Bank, whether as a result of any proceedings in bankruptcy or reorganization
or otherwise, all as though such amount had not been paid. The determination
as
to whether any such payment must be rescinded or restored shall be made by
Bank
in its sole discretion; provided,
however,
that if
Bank chooses to contest any such matter at the request of Guarantor, Guarantor
agrees to indemnify and hold harmless Bank from all costs and expenses
(including, without limitation, reasonable attorneys’ fees) of such litigation.
To the extent any payment is rescinded or restored, Guarantor’s obligations
hereunder shall be revived in full force and effect without reduction or
discharge for that payment.
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Section
6. Intentionally
omitted.
Section
7. No
Waiver; Amendments.
No
failure on the part of Bank to exercise, no delay in exercising and no course
of
dealing with respect to, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law. This Guaranty may not be amended or modified except by written
agreement between Guarantor and Bank, and no consent or waiver hereunder shall
be valid unless in writing and signed by Bank.
Section
8. Compromise
and Settlement.
Except
to the extent agreed to in writing by Bank, no compromise, settlement, release,
renewal, extension, indulgence, change in, waiver or modification of any of
the
Obligations or the release or discharge of Borrower from the performance of
any
of the Obligations shall release or discharge Guarantor from this Guaranty
or
the performance of the obligations hereunder.
Section
9. Notice.
Any
notice or other communication herein required or permitted to be given shall
be
in writing and may be delivered in person or sent by facsimile transmission,
overnight courier, or by United States mail, registered or certified, return
receipt requested, postage prepaid and addressed as follows:
If
to
Guarantor:
Xxxxxxxx
Technologies, Inc.
000
Xxxxx
Xxxxxx Xxxx.
Xxxxxxx,
Xxxxx Xxxxxx 00000
Attn:
Xx.
Xxxxxx Xxxxxx
Facsimile
No.: (000) 000-0000
Email:
xxxxxxx@xxx.xxx
with
copies
to:
Xxxxxxxxx
Xxxxxxx, LLP
Xxx
Xxxxxxxxxxxxx Xxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attn:
Xxxxxxxx Xxxx, Esquire
Facsimile
No.: (000) 000-0000
Email:
xxxxx@xxxxx.xxx
If
to
Bank:
Silicon
Valley Bank
One
Xxxxxx Executive Park, Suite 200
0000
Xxxxxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attn:
Xx.
Xxxxxxx Xxxxxxx
Facsimile
No.: (000) 000-0000
Email:
xxxxxxxx@xxx.xxx
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with
copies
to:
Xxxxxx
& Xxxxxxxxxx LLP
Xxxxx
Xxxxxx Xxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attn:
Xxxxx X. Xxxxxxx, Esquire
Facsimile
No.: (000) 000-0000
Email:
xxxxxxxx@xxxxxxxxx.xxx
or
at
such other address as may be substituted by notice given as herein provided.
Every notice, demand, request, consent, approval, declaration or other
communication hereunder shall be deemed to have been duly given or served on
the
date on which personally delivered or sent by facsimile transmission or three
(3) Business Days after the same shall have been deposited in the United States
mail. If
sent
by overnight courier service, the date of delivery shall be deemed to be the
next Business Day after deposited with such service.
Section
10. Entire
Agreement.
This
Guaranty constitutes and contains the entire agreement of the parties and
supersedes any and all prior and contemporaneous agreements, negotiations,
correspondence, understandings and communications between Guarantor and Bank,
whether written or oral, respecting the subject matter hereof.
Section
11. Severability.
If any
provision of this Guaranty is held to be unenforceable under applicable law
for
any reason, it shall be adjusted, if possible, rather than voided in order
to
achieve the intent of Guarantor and Bank to the extent possible. In any event,
all other provisions of this Guaranty shall be deemed valid and enforceable
to
the full extent possible under applicable law.
Section
12. Subordination
of Indebtedness.
Any
indebtedness or other obligation of Borrower now or hereafter held by or owing
to Guarantor is hereby subordinated in time and right of payment to all
obligations of Borrower to Bank until payment in full of Obligations and
termination of the Loan Agreement and this Guaranty, except as such indebtedness
or other obligation is expressly permitted to be paid under the Credit
Agreement; and such indebtedness of Borrower to Guarantor is assigned to Bank
as
security for this Guaranty, and if Bank so requests shall be collected, enforced
and received by Guarantor in trust for Bank and to be paid over to Bank on
account of the Obligations of Borrower to Bank, but without reducing or
affecting in any manner the liability of Guarantor under the other provisions
of
this Guaranty. Any notes now or hereafter evidencing such indebtedness of
Borrower to Guarantor shall be marked with a legend that the same are subject
to
this Guaranty and shall be delivered to Bank.
Section
13. Payment
of Expenses.
Guarantor shall pay,
promptly
on demand,
all
Expenses incurred by Bank in defending and/or enforcing this Guaranty. For
purposes hereof, “Expenses” shall mean costs and expenses (including reasonable
fees and disbursements of any law firm or other external counsel and the
allocated cost of internal legal services and all disbursements of internal
counsel) for defending and/or enforcing this Guaranty (including those incurred
in connection with appeals or proceedings by or against any Guarantor under
the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief).
6
Section
14. Assignment; Governing
Law.
This
Guaranty shall be binding upon and inure to the benefit of Guarantor and Bank
and their respective successors and assigns, except that Guarantor shall not
have the right to assign its rights hereunder or any interest herein without
the
prior written consent of Bank, which may be granted or withheld in Bank’s sole
discretion. Any such purported assignment by Guarantor without Bank’s written
consent shall be void. This Guaranty shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts without regard
to
principles thereof regarding conflict of laws.
Section
15. JURISDICTION. Guarantor
hereby irrevocably agrees that any legal action or proceeding with respect
to
this Guaranty or any of the agreements, documents or instruments delivered
in
connection herewith may be brought in the STATE AND FEDERAL courts LOCATED
IN
the Commonwealth of Massachusetts as BANK may elect (PROVIDED THAT GUARANTOR
ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF THE STATE OF MASSACHUSETTS), and, by execution and delivery
hereof, Guarantor accepts and consents to, generally and unconditionally, the
jurisdiction of the aforesaid courts and agrees that such jurisdiction shall
be
exclusive, unless waived by BANK in writing, with respect to any action or
proceeding brought by Guarantor against BANK. If for any reason Bank cannot
avail itself of such courts in the Commonwealth of Massachusetts, Guarantor
hereby irrevocably agrees to and accepts jurisdiction of the courts and venue
in
Santa Xxxxx County, California. Nothing herein shall limit the right of BANK
to
bring proceedings against Guarantor in the courts of any other jurisdiction.
Guarantor hereby waives, to the full extent permitted by law, any right to
stay
or to dismiss any action or proceeding brought before said courts on the basis
of forum non conveniens.
Section
16. WAIVER
OF JURY TRIAL.
EACH OF
BANK
AND
GUARANTOR HEREBY WAIVES, TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY
OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY. EACH
PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED
TO ENTER INTO THIS GUARANTY AND ANY RELATED INSTRUMENTS, AS APPLICABLE, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
16.
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| GUARANTOR | |
| XXXXXXXX TECHNOLOGIES, INC. | |
| By: Xxxx Xxxxxxx | |
| Name: Xxxx Xxxxxxx | |
| Title: Chief Financial Officer |
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