EMPLOYEE RESTRICTED STOCK GRANT AGREEMENT
EXHIBIT
10.8
This
Restricted Stock Purchase Agreement dated as of August 4, 2006 (this
“Agreement”)
is
made by and between Technest Holdings, Inc., a Nevada corporation (including,
as
context requires, its subsidiaries the “Company”),
and
Xxxxxx X. Xxxxxx (the “Grantee”).
1. Definitions.
As used
in this Agreement, the following terms shall have the following
meanings:
Cause:
The
Executive has (i) willfully or recklessly breached the provisions of the
Employee Proprietary Information and Non-Competition Agreement between Grantee
and the Company, in any material respect; (ii) engaged in willful misconduct
which has resulted in material financial harm to the Company; (iii) committed
fraud or embezzlement in connection with the Company’s business; or (iv) been
convicted or has pleaded nolo contendere to a felony or a crime of moral
turpitude.
Qualified
Sale:
The
sale of all or substantially all of assets or issued and outstanding capital
stock of the Company, or merger or consolidation involving the Company in which
stockholders of the Company immediately before such merger or consolidation
do
not own immediately after such merger or consolidation capital stock or other
equity interests of surviving corporation or entity representing more than
fifty
percent in voting power of capital stock or other equity interests of such
surviving corporation or entity outstanding immediately after such merger or
consolidation.
Service:
Service
as an employee, officer or director of, or a consultant or advisor to, the
Company or its successors.
Shares:
The
shares of Common Stock issued to Grantee hereunder and any other securities
of
the Company which may be issued in exchange for or in respect of such shares
of
Common Stock, whether by way of stock split, stock dividend, combination of
shares, reclassification, recapitalization, reorganization or any other
means.
Unvested
Shares:
Any
Shares that are not Vested Shares.
Vested:
Released from the Company’s Forfeiture Right (as defined in Section
5(a)).
Vested
Shares:
Any
Shares that have vested in accordance with Section 5(b).
2. Grant
of Shares.
The
Company hereby grants to Grantee, and Grantee hereby accepts from the Company,
that number of shares of the Company’s common stock, $0.001 par value per share
(“Common
Stock”),
that
equals $82,500 (which is twenty-five percent of Grantee’s assumed remaining debt
with the Company1 )
divided
by the closing price of the Company’s Common Stock on the closing date of the
Bank Financing (as defined below). After the date hereof, the exact number
of
shares granted pursuant to this Agreement shall be set forth in Schedule A,
which shall be deemed to be part of this Agreement. Grantee and the Company
hereby agree that such shares are granted as consideration for the Grantee
agreeing to subordinate Grantee’s promissory note dated June 29, 2004 in
connection with the Company’s bank financing with Silicon Valley Bank (the
“Bank
Financing”).
3. Representations
of Grantee.
Grantee
understands that the Shares are not registered under the Securities Act of
1933,
as amended (the “Act”),
and
represents to the Company, and agrees that the Company is entitled to rely
on
such representations, as follows:
(a) Grantee
understands that the Shares have not been registered under the Act, or
registered or qualified under the securities or “Blue Sky” laws of any
jurisdiction, and are being sold pursuant to exemptions contained in the Act
and
exemptions contained in other applicable securities or “Blue Sky” laws. Grantee
understands further that the Company’s reliance on these exemptions is based in
part on the representations made by Grantee in the Agreement. In this
connection, Grantee represents and warrants that the offer and sale of the
Shares were made solely in Virginia.
(b) Grantee
is acquiring the Shares for Grantee’s own account for investment, and not for,
with a view to, or in connection with the resale or distribution thereof.
Grantee has no present intention to sell, hypothecate, distribute or otherwise
transfer the Shares or any portion thereof or any interest therein.
(c) Grantee
understands that the Shares will constitute “restricted securities” within the
meaning of Rule 144 promulgated under the Act and that, as such, the Shares
must
be held indefinitely unless they are subsequently registered under the Act
or
unless an exemption from the registration requirements thereof is available.
(d) In
connection with Grantee’s acquisition of the Shares, Grantee accepts the
condition that the Company may maintain “stop transfer” orders with respect to
the Shares and that each certificate or other document evidencing the Shares
will bear conspicuous legends in substantially the form set forth in Section
7
of this Agreement.
(e) Grantee
has obtained all financial or legal advice as Grantee deems necessary with
respect to Grantee’s acquisition of the Shares. Grantee has fully investigated
the Company and its business and financial condition, to include a review of
the
Company’s pubic filings with the Securities and Exchange Commission, and has
knowledge of the Company’s current activities.
1
The
amount of remaining debt with the Company assumes that a June 2006 principal
payment of $305,620.47 was made, when, in fact, it was deferred until July
2007.
2
4. Restrictions
on Transfer.
The
following restrictions on transfer of the Shares shall apply:
(a) Securities
Laws.
Except
for the forfeiture of Unvested Shares to the Company as contemplated by Section
5, no Shares, nor any interest therein, may be sold, assigned, pledged or
otherwise transferred at any time or under any circumstances unless the Shares
proposed to be transferred have been registered under the Act and qualified
under applicable state securities laws, or (ii) the Company has received, or
agreed to waive, an opinion of counsel acceptable to the Company to the effect
that such transfer may be effected without registration under the Act or
qualification under the securities laws of relevant states and the proposed
transferee has made such representations and agreements as the Company shall
require to assure compliance with the Act and such laws.
(b) Unvested
Shares.
Except
for forfeitures of Unvested Shares to the Company as contemplated by Section
5,
no Shares, nor any interest therein, may be sold, assigned, pledged or otherwise
transferred until such Shares shall have Vested as defined in Section
5.
(c) Remedies.
No
sale, assignment, pledge or other transfer of Shares shall be effective or
given
effect on the books of the Company unless all of the applicable provisions
of
this Section 4 have been duly complied with. In addition to any other legal
or
equitable remedies which it may have, the Company may enforce its rights by
actions for specific performance (to the extent permitted by law) and may refuse
to recognize any transferee as one of its stockholders for any purpose,
including, without limitation, for purposes of dividend and voting rights,
until
all applicable provisions hereof have been complied with.
5. Forfeiture
of Unvested Shares.
(a) Forfeiture
upon Termination.
In the
event of the termination of Grantee’s Service by Grantee voluntarily (other than
through a planned retirement which the Company has been already notified of)
or
the termination of Grantee’s Service by the Company for Cause, upon the date of
such termination (the “Termination
Date”)
all
the Unvested Shares shall be forfeited to the Company. As a result of any
forfeiture of Unvested Shares pursuant to this Section 5(a), the Company shall
become the legal and beneficial owner of the Unvested Shares being forfeited
and
shall have all rights and interest therein or related thereto, and the Company
shall have the right to transfer to its own name the number of Unvested Shares
being forfeited to the Company, without further action by Grantee.
(b) Vesting.
(i) The
Shares will become vested on the 18-month anniversary of the closing date of
the
Bank Financing, provided,
however, that the vesting of Shares on any such vesting date shall be
conditioned upon Grantee’s continuing Service with the Company from the date
hereof through such vesting date in accordance with Section 5 (a).
(ii) Notwithstanding
Section 5(b)(i), all Shares shall be deemed to have vested immediately prior
to
the consummation of a Qualified Sale.
3
6. Custody
of Certificates.
In
order to facilitate the exercise of Section 5(a), the Company or its counsel
shall hold all certificates representing Unvested Shares, together with an
adequate number of undated and otherwise blank stock powers executed by Grantee.
The Company shall have the right to cause transfers of Unvested Shares to be
effected pursuant to Section 5. After any Shares become Vested Shares, the
Company shall, upon request of Grantee, deliver to Grantee a certificate or
certificates representing such Vested Shares.
7. Legends.
Each
certificate representing Shares shall prominently bear legends in substantially
the following forms, to the extent applicable:
These
securities have not been registered under the Securities Act of 1933. They
may
not be sold, offered for sale, pledged or hypothecated in the absence of a
registration statement in effect with respect to the securities under such
Act
or an opinion of counsel satisfactory to the Company that such registration
is
not required.
The
Company is authorized to issue more than one class or series of stock. The
powers, designations, preferences and relative participating, optional or other
special rights, and the qualifications, limitations or restrictions of such
preferences and/or rights of each class of stock or series of any class set
forth in the Articles of Incorporation of the Company. The Company will furnish
a copy of the Certificate of Incorporation of the Company to the holder of
this
certificate without charge upon request.
The
securities represented by this certificate are subject to restrictions on
transfer and forfeiture rights pursuant to the terms of a Restricted Stock
Grant
Agreement, as amended from time to time, between the owner of this certificate
and the Company. The Company will furnish a copy of this agreement to the holder
hereof without charge upon written request.
8. Miscellaneous.
(a) Entire
Agreement.
This
Agreement in conjunction with the Employment Agreement constitute the entire
agreement between the parties with respect to the subject matter hereof, and
supersedes all prior agreements, negotiations, representations and proposals,
written or oral, relating to such subject matter.
(b) Amendments.
Neither
this Agreement nor any provision hereof may be changed or modified except by
an
agreement in writing executed by Grantee and on behalf of the
Company.
(c) Binding
Effect of the Agreement.
This
Agreement shall inure to the benefit of, and be binding upon, the Company,
Grantee and their respective estates, heirs, executors, transferees, successors,
assigns and legal representatives.
4
(d) Provisions
Severable.
In the
event that any provision of this Agreement shall be determined to be invalid,
illegal or otherwise unenforceable by any court of competent jurisdiction,
the
validity, legality and enforceability of the other provisions of this Agreement
shall not be affected thereby. Any invalid, illegal or unenforceable provision
of this Agreement shall be severed, and after any such severance, all other
provisions hereof shall remain in full force and effect.
(e) Notices.
All
notices under this Agreement shall be effective (i) upon personal or facsimile
delivery, (ii) two business days after deposit in the United States mail as
registered or certified mail postage fully prepaid, or (iii) one business day
after pickup by any overnight commercial courier service, in each case sent
or
addressed to the Company at its principal office and to Grantee at his record
address as carried in the stock records of the Company or at such other address
as he may from time to time designate in writing to the Company.
(f) Construction.
A
reference to a Section shall mean a Section of this Agreement unless otherwise
expressly stated. The titles and headings herein are for reference purposes
only
and shall not in any manner limit the construction of this Agreement which
shall
be considered as a whole. The words “include,” “includes” and “including” when
used herein shall be deemed in each case to be followed by the words “without
limitation.” Whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of names and pronouns shall include the plural and vice-versa.
(g) No
Employment Agreement.
This
Agreement shall not be construed as an agreement by the Company to employ
Grantee, nor is the Company obligated to employ Grantee by reason of this
Agreement or the issuance of the Shares to Grantee.
(h) Section
83(b) Election.
Grantee
will furnish to the Company a copy of any election made by Grantee under Section
83(b) of the Internal Revenue Code of 1986, as amended, with respect to his
acquisition of the Shares.
(i) Applicable
Law.
This
Agreement shall be construed and enforced in accordance with the laws of The
Commonwealth of Virginia, without regard to its principles of conflicts of
laws.
Grantee consents to jurisdiction and venue in any state or federal court in
The
Commonwealth of Virginia for the purposes of any action relating to or arising
out of this Agreement or any breach or alleged breach hereof, and to service
of
process in any such action by certified or registered mail, return receipt
requested.
(j) Disposition
of Shares; Purchase by Nominee or Designee.
Any
Shares that the Company elects to purchase hereunder may be disposed of by
it in
such manner as it deems appropriate with or without restrictions on the transfer
thereof, and the Company may require their transfer to a nominee or designee
as
part of any purchase of the Shares from Grantee.
5
(k) Withholding
Taxes.
Grantee
acknowledges and agrees that the Company has the right to deduct from payments
of any kind otherwise due to Grantee any federal, state or local taxes of any
kind required by law to be withheld with respect to the granting and vesting
of
the Shares to Grantee. Grantee agrees that he shall, no later than the date
as
of which the value of any portion of the Shares first becomes includable in
the
gross income of the Grantee for Federal income tax purposes, pay to the Company,
or make arrangements satisfactory to the Company regarding payment of any
Federal, state, local and/or payroll taxes of any kind required by law to be
withheld with respect such income. The Company and its affiliates shall, to
the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant.
(l) Arbitration.
Any
dispute or controversy arising in connection with this Agreement shall be
determined and settled by arbitration in Boston, Massachusetts by a panel of
three members who shall be selected, and such arbitration shall be conducted,
in
accordance with the commercial arbitration rules of the American Arbitration
Association. Any award rendered therein shall be final and binding upon the
parties hereto and their legal representatives and judgment upon any such award
may be entered in any court having jurisdiction thereof. Each party shall bear
its own expenses, including fees and disbursements of its attorneys,
accountants, and financial experts, and the parties shall each pay 50% of all
arbitration fees and expenses of the arbitrators.
(j) Pursuant
to Plan.
This
grant of Restricted Stock shall be subject in every respect to the provisions
of
the Company’s 2006 Stock Award Plan (the “Plan”),
as
amended from time to time, which is incorporated herein by reference and made
a
part hereof. The Grantee hereby accepts this grant of Restricted Stock subject
to all the terms and provisions of the Plan and agrees that (i) in the event
of
any conflict between the terms hereof and those of the Plan, the latter shall
prevail, and (ii) all decisions under and interpretations of the Plan by the
Board of Directors of the Company or the Committee, as defined in the Plan,
shall be final, binding and conclusive upon the Grantee and his heirs and legal
representatives.
6
IN
WITNESS WHEREOF, the parties hereto have executed this Restricted Stock Grant
Agreement as of the date first above written.
Technest
Holdings, Inc.
By:
/s/
Xxxx
Xxxxxxx
Name:
Xxxx
Xxxxxxx
Title:
Chief
Financial
Officer
GRANTEE:
/s/
Xxxxxx X.
Xxxxxx
Xxxxxx
X.
Xxxxxx
7
STOCK
POWER
([____________])
FOR
VALUE
RECEIVED, [____________] hereby sells, assigns and transfers to Technest
Holdings, Inc., a Nevada corporation (the “Company”), a total of ______________
shares of the Common Stock of the Company standing in his name on the books
of
the Company represented by stock certificate number ___ to be delivered
herewith, and does hereby irrevocably constitute and appoint
______________________ as attorney to transfer said shares on the books of
the
Company with full power of substitution in the premises.
Dated:
___________________
______________________________
[____________]
In
the
Presence of:
_______________________________
Name:
8
SCHEDULE
A
Number
of
Shares of Common Stock: 23,913
9
