EXHIBIT 10.4
LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT (the "AGREEMENT") is made and entered
into as of the 14th day of February, 2005, between Technest Holdings, Inc., a
Nevada corporation ("TECHNEST"), and the individuals that execute and deliver a
Counterpart Signature Page hereof, and sometimes collectively referred to herein
as the "SHAREHOLDERS" and each, a "SHAREHOLDER." For all purposes of this
Agreement, "Shareholder" includes any "affiliate, controlling person of
Shareholder, agent, representative or other person with whom Shareholder is
acting in concert with.
WHEREAS, Xxxxxxxx Technologies, Inc, a Florida corporation
(the "BUYER"), is acquiring Common Stock of Technest (the "CHANGE IN CONTROL
TRANSACTION"); and
WHEREAS, the Buyer that is participating in the Change in
Control Transaction has identified a potential reorganization, merger or
acquisition for Technest that may or may not be completed or if completed, may
or may not be beneficial to Technest and its stockholders (the "REORGANIZATION
TRANSACTION"); and
WHEREAS, in order to facilitate the consummation of the
transactions contemplated by the Change in Control Transaction and the
Reorganization Transaction and to protect the Company, the Shareholders have
agreed to enter into this Agreement and to restrict the public sale, assignment,
transfer, conveyance, hypothecation or alienation of the Common Stock, all on
the terms set forth below.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants contained herein, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Except as otherwise expressly provided herein, and except
as each Shareholder may be otherwise restricted from selling shares of Common
Stock, each Shareholder agrees (a) not to directly or indirectly, sell, offer,
contract or grant any option to sell (including without limitation any short
sale), pledge, transfer, establish an open "put equivalent position" within the
meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), or enter into any swap, hedge or other arraignment to
transfer any economic consequences of ownership or otherwise dispose of any of
the Common Stock or publicly announce the undersigned's intention to do any the
foregoing, for the period commencing on the execution and delivery of this
Agreement and until the earlier of (i) the seven (7) month period from the
filing of a Form 8-K ("SUCCESSOR ISSUER 8-K") in connection with the Closing of
the Reorganization Transaction and (ii) such time as there shall be an effective
registration statement providing for the sale of the Shareholders' Common Stock
(the "LOCK-UP PERIOD");
2. An appropriate legend describing this Agreement shall be
imprinted on each stock certificate representing Common Stock covered hereby,
and the transfer records of Technest transfer agent shall reflect such
appropriate restrictions.
3. During the Lock-Up Period, Technest shall maintain its
"reporting" status with the Securities and Exchange Commission; file all reports
that are required to be filed by it during such period; and use its best efforts
to ensure that the Common Stock is continually quoted for public trading on a
nationally recognized medium of no less significance than the OTC Electronic
Bulletin Board of the National Association of Securities Dealers, Inc. (the
"NASD"), the NASDAQ Small Cap or a recognized national stock exchange.
4. Each Shareholder signing this Agreement shall have the
right to have any shares of Common Stock subject to this Agreement included in
the next registration statement to be filed by Technest for the sale of its
Common Stock (other than a registration statement on Forms S-8 or S-4).
Notwithstanding anything to the contrary set forth herein, Technest may, in its
sole discretion and in good faith, at any time and from time to time, waive any
of the conditions or restrictions contained herein to increase the liquidity of
the Common Stock or if such waiver would otherwise be in the best interests of
the development of the trading market for the Common Stock. Unless otherwise
agreed by the Shareholders, all such waivers shall be pro rata, as to all of the
Shareholders who executed a Lock-Up Agreement in connection with the Change in
Control Transaction whose Common Stock can, at the time of any such waiver, be
publicly sold in accordance with the Securities Act of 1933, as amended (the
"SECURITIES ACT"), or Rule 144 promulgated thereunder by the Securities and
Exchange Commission or otherwise.
5. Other than the contemplated Reorganization Transaction or
any merger with a subsidiary, in the event of: (a) a completed tender offer to
purchase all or substantially all of Technest' issued and outstanding
securities; or (b) a merger, consolidation or other reorganization of Technest
with or into an unaffiliated entity, then this Agreement shall terminate as of
the closing of such event and the Common Stock restricted pursuant hereto shall
be released from such restrictions.
6. Except as otherwise provided in this Agreement or any other
agreements between the parties, the Shareholders shall be entitled to their
respective beneficial rights of ownership of the Common Stock, including the
right to vote the Common Stock for any and all purposes.
7. This Agreement may be executed in any number of
counterparts with the same force and effect as if all parties had executed the
same document.
8. All notices, instructions or other communications required
or permitted to be given pursuant to this Agreement shall be given in writing
and delivered by certified mail, return receipt requested, overnight delivery or
hand-delivered to all parties to this Agreement, to Technest, at 00 Xxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000; or, subsequent to the Closing of the
Change in Control Transaction and the Reorganization Transaction, to 0 Xxxxxxx
Xxxx, Xxxxxx, Xxxxxxxxxxxxx 00000; and to the Shareholders, at the addresses in
their Counterpart Signature Pages. All notices shall be deemed to be given on
the same day if delivered by hand or on the following business day if sent by
overnight delivery or the second business day following the date of mailing.
9. The resale restrictions on the Common Stock set forth in
this Agreement shall be in addition to all other restrictions on transfer
imposed by applicable United States and state securities laws, rules and
regulations.
10. Technest or each Shareholder who fails to fully adhere to
the terms and conditions of this Agreement shall be liable to every other party
for any damages suffered by any party by reason of any such breach of the terms
and conditions hereof. Each Shareholder agrees that in the event of a breach of
any of the terms and conditions of this Agreement by any such Shareholder, that
in addition to all other remedies that may be available in law or in equity to
the non-defaulting parties, a preliminary and permanent injunction, without bond
or surety, and an order of a court requiring such defaulting Shareholder to
cease and desist from violating the terms and conditions of this Agreement and
specifically requiring such Shareholder to perform his/her/its obligations
hereunder is fair and reasonable by reason of the inability of the parties to
this Agreement to presently determine the type, extent or amount of damages that
Technest or the non-defaulting Shareholders may suffer as a result of any breach
or continuation thereof.
11. This Agreement sets forth the entire understanding of the
parties hereto with respect to the subject matter hereof, and may not be amended
except by a written instrument executed by the parties hereto.
12. This Agreement shall be terminated automatically if the
Reorganization Transaction is not closed on or before February 18, 2005.
13. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
entered into and to be performed wholly within said State; and Technest and the
Shareholders agree that any action based upon this Agreement may be brought in
the United States and state courts of New York only, and each submits
himself/herself/itself to the jurisdiction of such courts for all purposes
hereunder.
IN WITNESS WHEREOF, the undersigned have duly executed and
delivered this Agreement as of the day and year first above written.
TECHNEST HOLDINGS, INC.
Date: _________________________ By __________________________________
Its _________________________________
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LOCK-UP AGREEMENT
COUNTERPART SIGNATURE PAGE
This Counterpart Signature Page for that certain Lock-Up
Agreement (the "AGREEMENT") dated as of the 11th day of February, 2005, among
Technest Holdings, Inc., a Nevada corporation ("TECHNEST"); and certain persons
who are "Shareholders" of Technest, by which the undersigned, through execution
and delivery of this Counterpart Signature Page, intends to be legally bound by
the terms of the Agreement, as a Shareholder, of the number of shares of
Technest set forth below or hereafter acquired during the Lock-Up Period as
defined in the Agreement.
_______________________________________________________
(Entity Name, if Applicable)
_______________________________________________________
(Printed Name)
_______________________________________________________
(Signature)
_______________________________________________________
(Street Address)
_______________________________________________________
(City and State)
_______________________________________________________
(Number of Shares Owned or Underlying Other Securities)
_______________________________________________________
(Date)
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