TERMINATION AGREEMENT
Exhibit
10.4
THIS
TERMINATION AGREEMENT (“Agreement”)
is effective as of March 24, 2006 by and between Greenfield Capital Partners,
LLC, a Delaware limited liability company (“Greenfield”), and Xxxxxxxx
Technologies Inc., a Florida corporation (“Xxxxxxxx”).
WHEREAS,
Greenfield and Xxxxxxxx have entered into that certain letter agreement dated
December 1, 2004 (“Placement
Agent Agreement”);
and
WHEREAS,
Greenfield and Xxxxxxxx have agreed to terminate the Placement Agent Agreement
under the terms and conditions set forth below.
NOW,
THEREFORE,
in
consideration of the mutual covenants and undertakings contained herein, the
parties hereto hereby agree as follows:
1. Termination
of Agreements.
Greenfield and Xxxxxxxx hereby agree to terminate the Placement Agent Agreement,
including, without limitation, any further obligation by Xxxxxxxx to pay
compensation pursuant to Section 5 the Placement Agent Agreement.
2. Series
E Preferred Stock Issuance.
In lieu
of any compensation owed to Greenfield by Xxxxxxxx under the Placement Agent
Agreement, Xxxxxxxx agrees to issue 166.67 shares of Xxxxxxxx’x Series E
Preferred Stock (the “Series E Preferred Shares”) to Greenfield, convertible
into 500,010 shares (the “Technest Shares”) of common stock of Technest
Holdings, Inc., a Nevada corporation (“Technest”). Simultaneously with the
initial issuance of Series E Preferred Stock to the “Investors” under that
certain Redemption and Securities Purchase Agreement, dated as of the date
hereof, between Xxxxxxxx and such Investors (the “Redemption Agreement”),
Xxxxxxxx shall deliver to Greenfield the Series E Preferred Shares.
3. Release
by Xxxxxxxx.
Xxxxxxxx, on behalf of itself and its affiliates, and their respective
directors, officers, principals, shareholders, owners, affiliates, successors
and assigns (collectively, “Xxxxxxxx Releasors”), hereby fully and
unconditionally waives, releases, acquits, discharges and holds harmless
Greenfield, its affiliates and their respective directors, officers, agents,
representatives, employees, principals, members, owners, successors and assigns
(collectively, “Greenfield Releasees”) of and from any and all claims, actions,
causes of action, suits, debts, demands, damages, judgments, executions, costs,
expenses, liabilities, duties, sums of money, bills, accounts, reckonings,
bonds, securities, rights, indemnities, exonerations, covenants, contracts,
controversies, agreements, promises, doings, omissions, losses, exposures and
obligations of any kind whatsoever, whether known or unknown, whether in law
or
in equity (collectively, “Claims”), which the Xxxxxxxx Releasors have, had or
claim to have had, against the Greenfield Releasees, from the beginning of
the
world through the date hereof; provided,
however,
that
the Xxxxxxxx Releasors are not releasing the Greenfield Releasees from their
obligations pursuant to this Agreement.
4. Release
by Greenfield.
Greenfield, on behalf of itself and its affiliates, and their respective
directors, officers, principals, shareholders, owners, affiliates, successors
and assigns (collectively, “Greenfield Releasors”), hereby fully and
unconditionally waives, releases, acquits, discharges and holds harmless
Xxxxxxxx, its affiliates and their respective directors, officers, agents,
representatives, employees, principals, shareholders, owners, successors and
assigns (collectively, “Xxxxxxxx Releasees), from any and all Claims which the
Greenfield Releasors have, had or claim to have had against the Xxxxxxxx
Releasees, from the beginning of the world through the date hereof; provided,
however,
that
the Greenfield Releasors are not releasing the Xxxxxxxx Releasees from their
obligations under this Agreement.
5. No
Claims.
Each of
the Xxxxxxxx Releasors and Greenfield Releasors hereby represent and covenant
that none of them has instituted, and they will not institute, any complaints,
claims, charges, proceedings or lawsuits, with any governmental agency,
regulatory or self-regulatory body, court or otherwise, against any of the
Greenfield Releasees or Xxxxxxxx Releasees, respectively, by reason of, relating
to or in connection with any Claim, arising at any time up to the date of this
Agreement, presently known or unknown.
6. Xxxxxxxx
Representations, Warranties and Covenants.
Xxxxxxxx represents, warrants and covenants, as applicable, that:
a. Ownership
of the Shares.
Xxxxxxxx has good and valid title to the Technest Shares free and clear of
all
liens, charges, security interest, claims, agreements or other encumbrances
of
any nature whatsoever (other than restrictions imposed under applicable
securities laws). There are no outstanding or authorized options, warrants,
rights, calls, commitments, conversion rights, rights of exchange or other
agreements of any character, contingent or otherwise, providing for the
purchase, issuance or sale of any of the Technest Shares, or any arrangements
that require or permit any shares of the Technest Shares to be voted by or
at
the discretion of anyone other than Xxxxxxxx, and there are no restrictions
of
any kind on the transfer of any of the Shares other than those restrictions
under applicable state and federal securities laws. The Series E Preferred
Shares, when issued and delivered in accordance with the terms of this Agreement
shall be duly and validly issued, fully paid and nonassessable and will be
free
of restrictions on transfer, other than restrictions on transfer under
applicable state and federal securities laws.
b. Non-Contravention.
The
execution, delivery and performance of this Agreement and the consummation
of
the transactions contemplated hereby by Xxxxxxxx will not result in any material
violation of any instrument, judgment, order, writ, decree or contract, statute,
rule or regulation to which Xxxxxxxx is subject, or constitute, with or without
the passage of time and giving of notice, an event that results in the creation
of any lien, charge or encumbrance upon any of the Technest Shares.
c. Compliance
with Laws.
Assuming the accuracy of the representations made by Greenfield in this
Agreement, no consent, approval, order or authorization of registration,
qualification, designation, declaration or filing with, any federal, state
or
local governmental authority, on the part of Xxxxxxxx, is required in connection
with the consummation of the transactions and actions contemplated by this
Agreement, except for (i) the filing of the Articles of Amendment to Xxxxxxxx’x
Articles of Incorporation creating the Series E Preferred Stock (the “Series E
Articles”) and (ii) federal or state securities law filings which have been made
or will be made in a timely manner.
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x. Xxxxxxxx’x
Acquisition of the Technest Shares.
Xxxxxxxx acquired the Technest Shares directly from Technest on or about August
17, 2005 (“Acquisition Date”), for due consideration paid in full on the
Acquisition Date.
7. Greenfield
Representations, Warranties and Covenants.
a. Investment
Intent.
Greenfield is acquiring shares the Series E Preferred Shares (and the related
Technest Shares (as defined below)) for investment and not for, with a view
to
or in connection with the distribution thereof. The above sentence, however,
shall not to limit Greenfield’s right to sell the Series E Preferred Shares and
the underlying Technest Shares pursuant to applicable state and federal
securities laws.
b. Restricted
Securities.
Greenfield understands that neither the Series E Preferred Shares nor the
Technest Shares issuable upon conversion of the Series E Preferred Shares being
issued to Greenfield hereunder have been registered under the Securities Act,
or
any state securities law, by reason of their issuance in a transaction exempt
from the registration requirements of the Securities Act and such laws, and
that
such shares must be held indefinitely unless they are subsequently registered
under the Securities Act and such laws or a subsequent disposition thereof
is
exempt from registration. The certificates for the Series E Preferred
Shares and the underlying Technest Shares shall bear a legend in substantially
the form set forth below as well as any other legends required by applicable
law, and Greenfield covenants that it shall not transfer Series E Preferred
Shares or any underlying Technest Shares represented by any such certificate
without complying with the restrictions on transfer described in the legends
endorsed on such certificate:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR REGISTERED OR
QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY
NOT
BE TRANSFERRED UNLESS (A) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER APPLICABLE STATE SECURITIES
LAWS OR (B) EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS
ARE
AVAILABLE. AS A CONDITION TO PERMITTING ANY TRANSFER OF THESE SECURITIES, THE
COMPANY MAY REQUIRE THAT IT BE FURNISHED WITH AN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY TO THE EFFECT THAT NO REGISTRATION OR QUALIFICATION IS LEGALLY
REQUIRED FOR SUCH TRANSFER.
c. Rule
144.
Greenfield understands that the exemption from registration afforded by
Rule 144 promulgated under the Securities Act depends upon the satisfaction
of
various conditions and that, if applicable, Rule 144 affords the basis for
sales
only in limited amounts.
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d. Experience
and Knowledge.
Greenfield: (a) has sufficient knowledge and experience in business
and financial matters and with respect to investment in restricted securities
so
as to enable it to analyze and evaluate the merits and risks of the investment
contemplated hereby; (b) is able to bear the economic risk of such
investment; and (c) is an “accredited investor” as defined in Rule 501(a)
of Regulation D under the Securities Act. Such Investor is aware of
Xxxxxxxx’x business affairs and condition and Technest’s business affairs and
condition and has acquired sufficient information about Xxxxxxxx and Technest
to
reach an informed and knowledgeable decision to acquire the Series E Preferred
Shares and underlying Technest Shares. Greenfield acknowledges that it has
read
and understands the relative rights and preferences and other terms of the
Series E Preferred Stock as set forth in the Series E Articles.
8. Registration
Rights.
Xxxxxxxx shall have Technest register the Technest Shares together with those
shares of Technest common stock registered on behalf of the Investors pursuant
to the Redemption Agreement. Xxxxxxxx shall have Technest promptly do, make,
execute or deliver, or cause to be done, made, executed or delivered, all
further acts, documents and things as the may reasonably be required from time
to time for the purpose of giving effect to this Section.
9. Restrictions
on Resale.
a. Subject
to Section 9(b) hereof, for a period commencing on the date of the issuance
of
the Series E Preferred Shares and ending on the earlier of (i) twenty-four
(24)
months following the date of such issuance and (ii) the date on which the
Investors and/or their Affiliates have sold at least 67% of the Technest
Conversion Shares underlying the shares of Series E Preferred Stock issued
under
the Redemption Agreement (determined on an as-converted basis) either in
transactions registered under the Securities Act of 1933, as amended (the
“Securities Act”), or pursuant to Rule 144 under the Securities Act (such
period, the “Restriction Period”), Greenfield agrees that it will not sell,
assign, hypothecate or otherwise transfer: (a) any shares of Technest Common
Stock, (b) any securities convertible into or exercisable or exchangeable
for Technest Common Stock or (c) any options, warrants or rights carrying
any rights to purchase Technest Common Stock, in each case without the prior
written consent of a Majority Interest. Capitalized terms used in this Section
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shall have the meanings ascribed to such terms in the Redemption
Agreement.
b. Notwithstanding
the foregoing, the restrictions imposed in Section 9(a) shall be inapplicable
with respect to transfers of shares of Technest Common Stock into the open
market in sales registered under the Securities Act or sales pursuant to Rule
144 under the Securities Act, which sales shall not exceed 1% of Technest’s
outstanding shares of common stock during any 90 day period; provided
that
subject
to Section 9(c) immediately below, any sales made pursuant this Section 9(b)
shall be limited to 2,500 shares per day (based upon 20 trading days per month)
(as appropriately adjusted for any stock split, combination, reorganization,
recapitalization, reclassification, stock distribution, stock dividend or
similar event).
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x. Xxxxxxxxxx
agrees that (i) it will not convert more than 16.67 Series E Preferred Shares
during any calendar month and (ii) it will not sell more than 10% of the
Technest Shares (calculated on an as-converted basis) underlying its Series
E
Preferred Shares into the open market in sales registered under the Securities
Act or sales pursuant to Rule 144 under the Securities Act during any calendar
month; provided, however, that (A) if at any time during such calendar month,
the average closing price of shares of Technest Common Stock over a period
of
five (5) consecutive trading days is equal to or greater than $10.00 (as
appropriately adjusted for any stock split, combination, reorganization,
recapitalization, reclassification, stock distribution, stock dividend or
similar event), such limits shall be increased to 25% of the Technest Shares
for
such month and (B) if at any time during such calendar month, the average
closing price of shares of Technest Common Stock over a period of five (5)
consecutive trading days is equal to or less than $4.65 (as appropriately
adjusted for any stock split, combination, reorganization, recapitalization,
reclassification, stock distribution, stock dividend or similar event), such
limits shall be decreased to 5% of the Technest Shares for such month.
Greenfield shall provide that any transferees of shares of Technest Common
Stock
that received such shares in private transactions shall be bound by the same
restrictions based on the number of shares of Technest Common Stock such
transferees receive in their respective transactions.
10. Redemption
Agreement.
Greenfield acknowledges that, other than the rights to have the Technest Shares
registered together with the Technest common stock issuable to the Investors,
it
has none of the rights of an Investor under the Redemption
Agreement.
11. No
Derogation; Confidentiality.
Xxxxxxxx and Xxxxxxxxxx each agree not to make any critical, derogatory, or
untruthful statement about the other party, its affiliates or their respective
directors, officers, principals, shareholders, owners, successors and assigns
or
to any of the other party’s past, present or future clients, customers,
investors, competitors, markets, employees, or any other persons (including,
but
not limited to, the press or other media). Recognizing the confidentiality
of
the information contained herein, it is understood and agreed by the parties
that the parties will agree to keep any matters relating to this Agreement
confidential and agree not to disclose them to any other person after the
execution of this Agreement by all parties, except as may be required (i) by
the
order of a court of competent jurisdiction, (ii) by any governmental, regulatory
agency or self-regulatory organization requiring such disclosure or (iii) to
comply with any applicable law requiring such disclosure, in all cases after
providing the other parties with ten (10) days prior written notice and, if
requested, proof of the applicability of such requirement.
12. Further
Acts.
Each
party hereto shall each promptly do, make, execute or deliver, or cause to
be
done, made, executed or delivered, all further acts, documents and things as
may
reasonably be required from time to time for the purpose of giving effect to
this Agreement.
13. Authority.
Each
party hereto represents and warrants that it has the full right, authority
and
power to enter into this Agreement and to carry out its provisions. The
execution, delivery and performance by such party of this Agreement has been
duly authorized by all necessary action and no other action is required in
connection therewith.
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14. Binding
Effect.
Each
party hereto represents and warrants that this Agreement has been duly executed
and delivered by such respective party and constitutes its legal, valid and
binding obligation enforceable against it in accordance with its terms.
15. Severability
and Governing Law.
If any
provision (or portion thereof) of this Agreement is declared void or
unenforceable by a court of competent jurisdiction, all other provisions or
other portions thereof shall nonetheless remain in full force and effect. This
Agreement shall be governed by, and construed and enforced in accordance with
the laws of the State of New York, without giving effect to conflict of law
principles.
16. Waiver.
The
waiver by any party of a breach of any provision or portion thereof of this
Agreement shall not be construed as a waiver of any subsequent breach. The
failure of a party to insist upon strict adherence to any provision or portion
thereof of this Agreement on one or more occasions shall not be considered
a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that provision or any other provision of this Agreement. Any waiver
must be in writing.
17. Assignment.
This
Agreement may not be transferred or assigned by any party without the other
parties’ written consent, and shall be binding upon, and shall inure to, the
benefit of the parties and their successors and assigns.
18. Entire
Agreement; All Prior Agreements Superceded; Counterparts.
This
Agreement constitutes the entire agreement between the parties with regard
to
the subject matter contained herein. This Agreement supercedes all prior
agreements, written or oral, relating to the subject matter of this Agreement.
This Agreement may be signed in one or more counterparts, each of which is
an
original and all of which together form one and the same
instrument.
THE
REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
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IN
WITNESS WHEREOF, the parties have executed this Termination Agreement effective
as of the date first set forth above.
| Greenfield Capital Partners, LLC | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxx | |
| Xxxxxxx Xxx, President | ||
| Xxxxxxxx Technologies, Inc. | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxx | |
| Xxxxxx Xxxxxx, Chief Executive Officer | ||
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