GUARANTY
Exhibit
10.7
BORROWER:
Technest Holdings, Inc.
GUARANTOR:
Genex Technologies Incorporated
To: Shelter
Island Opportunity Fund, LLC
1.
The
Guaranty.
For
valuable consideration, the undersigned ("Guarantor") hereby unconditionally
guarantees and promises to pay on demand to Shelter Island Opportunity Fund,
LLC, its successors and assigns (collectively, "Purchaser"), or order, in lawful
money of the United States, any and all Indebtedness of Technest Holdings,
Inc.,
a Nevada corporation ("Borrower"), to Purchaser when due, whether at stated
maturity, upon acceleration or otherwise, and at all times thereafter. The
liability of Guarantor under this Guaranty includes, without limitation,
liability for all interest, fees, indemnities (including, without limitation,
hazardous waste indemnities), and other costs and expenses relating to or
arising out of the Indebtedness. The liability of Guarantor is continuing and
relates to any Indebtedness, including that arising under successive
transactions which shall either continue the Indebtedness or from time to time
renew it after it has been satisfied.
2.
Definitions.
(a)
"Borrower" shall mean the entity listed above.
(b)
"Guarantor" shall mean the entity signing this Guaranty.
(c)
"Indebtedness" shall mean any and all debts, liabilities, and obligations of
Borrower to Purchaser, now or hereafter existing, including, without limitation,
those arising under the Securities Purchase Agreement, dated the date hereof
(the “Securities Purchase Agreement”), between the Borrower and Purchaser, and
the $1,650,000 Secured Original Issue Discount Debenture issued by Borrower
to
Purchaser thereunder (the “Debenture”), whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined, held or
to
be held by Purchaser for its own account or as agent for another or others,
whether Borrower may be liable individually or jointly with others, whether
recovery upon such debts, liabilities, and obligations may be or hereafter
become barred by any statute of limitations, and whether such debts,
liabilities, and obligations may be or hereafter become otherwise unenforceable,
and includes without limitation, any and all obligations of Borrower to
Purchaser for reasonable attorneys' fees and all other costs and expenses
incurred by Purchaser in the collection or enforcement of any debts,
liabilities, and obligations of Borrower to Purchaser.
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3.
Obligations
Independent.
The
obligations hereunder are independent of the obligations of Borrower or any
other guarantor, and a separate action or actions may be brought and prosecuted
against Guarantor whether an action is brought against Borrower or any other
guarantor or whether Borrower or any other guarantor be joined in any such
action or actions.
4.
Rights
of Purchaser.
Guarantor authorizes Purchaser, without notice or demand and without affecting
its liability hereunder, from time to time in any manner authorized or permitted
by the Transaction Documents (as such term is defined in the Securities Purchase
Agreement) to:
(a)
renew, compromise, extend, accelerate, or otherwise change the time for payment,
or otherwise change the terms, of the Indebtedness or any part thereof,
including increase or decrease of the rate of interest thereon, or otherwise
change the terms of any Transaction Document (as such term is defined in the
Securities Purchase Agreement);
(b)
receive and hold security for the payment of this Guaranty or any Indebtedness
and exchange, enforce, waive, release, fail to perfect, sell, or otherwise
dispose of any such security;
(c)
apply
such security and direct the order or manner of sale thereof as Purchaser in
its
discretion may determine; and
(d)
release or substitute any guarantor or any one or more of any endorsers or
other
guarantor of any of the Indebtedness.
5.
Guaranty
to be Absolute.
Guarantor agrees that Guarantor shall not be released hereunder by or because
of
the Purchaser taking, or failure to take, any action that might in any manner
or
to any extent vary the risks of Guarantor under this Guaranty in any manner
or
to any extent permitted by the Transaction Documents or that, but for this
paragraph, might discharge or otherwise reduce, limit, or modify Guarantor's
obligations under this Guaranty. Guarantor waives and surrenders any defense
to
any liability under this Guaranty based upon any such action, including but
not
limited to any action of Purchaser described in the immediately preceding
paragraph of this Guaranty.
6.
Guarantor's
Waivers of Certain Rights and Certain Defenses.
Guarantor waives:
(a)
any
right to require Purchaser to proceed against Borrower or any other guarantor
of
the Indebtedness, proceed against or exhaust any security for the Indebtedness,
or pursue any other remedy in Purchaser's power whatsoever;
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(b)
any
defense arising by reason of any disability or other defense of Borrower, or
the
cessation from any cause whatsoever of the liability of Borrower;
(c)
any
defense based on any claim that Guarantor’s obligations exceed or are more
burdensome than those of Borrower; and
(d)
the
benefit of any statute of limitations affecting Guarantor's liability hereunder.
No
provision or waiver in this Guaranty shall be construed as limiting the
generality of any other waiver contained in this Guaranty.
7.
Waiver
of Subrogation.
Until
the Indebtedness has been paid in full, Guarantor waives to the extent permitted
by applicable law any right of subrogation, reimbursement, indemnification,
and
contribution (contractual, statutory, or otherwise) including, without
limitation, any claim or right of subrogation under the Bankruptcy Code (Title
11, United States Code) or any successor statute, arising from the existence
or
performance of this Guaranty, and Guarantor waives to the extent permitted
by
applicable law any
right
to enforce any remedy that Purchaser now has or may hereafter have against
Borrower, and waives any benefit of, and any right to participate in, any
security now or hereafter held by Purchaser.
8.
Waiver
of Notices.
Guarantor waives all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices
of
intent to accelerate, notices of acceleration, notices of any suit or any other
action against Borrower or any other person, any other notices to any party
liable on any Transaction Document (including Guarantor), notices of acceptance
of this Guaranty, notices of the existence, creation, or incurring of new or
additional Indebtedness to which this Guaranty applies or any other indebtedness
of Borrower to Purchaser, and
notices of any fact that might increase Guarantor’s risk.
9.
Subordination.
Any
obligations of Borrower to Guarantor, now or hereafter existing, including
but
not limited to any obligations to Guarantor as subrogee of Purchaser or
resulting from Guarantor’s performance under this Guaranty, are hereby
subordinated to the Indebtedness (other than reasonable obligations of the
Borrower to Guarantor for the payment of (i) services actually rendered or
goods
actually delivered by Guarantor and (ii) expenses paid by Guarantor on behalf
of
Borrower in the ordinary course of business related to Borrower’s reporting
obligations as a public company). In addition to Guarantor's waiver of any
right
of subrogation as set forth in this Guaranty with respect to any obligations
of
Borrower to Guarantor as subrogee of Purchaser, Guarantor agrees that, if
Purchaser so requests, Guarantor shall not demand, take, or receive from
Borrower, by setoff or in any other manner, payment of any other obligations
of
Borrower to Guarantor (other than reasonable obligations of the Company to
Guarantor for the payment of (i) services actually rendered or goods actually
delivered by Guarantor and (ii) expenses paid by Guarantor on behalf of Borrower
in the ordinary course of business related to Borrower’s reporting obligations
as a public company) until the Indebtedness has been paid in full. If any
payments are received by Guarantor in violation of such waiver or agreement,
such payments shall be received by Guarantor as trustee for Purchaser and shall
be paid over to Purchaser on account of the Indebtedness, but without reducing
or affecting in any manner the liability of Guarantor under the other provisions
of this Guaranty. Any security interest, lien, or other encumbrance that
Guarantor may now or hereafter have on any property of Borrower is hereby
subordinated to any security interest, lien, or other encumbrance that Purchaser
may have on any such property.
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10.
Stay
of Acceleration.
In the
event that acceleration of the time for payment of any of the Indebtedness
is
stayed upon the insolvency, bankruptcy, or reorganization of Borrower or
otherwise, all such Indebtedness guaranteed by Guarantor shall nonetheless
be
payable by Guarantor immediately if requested by Purchaser if such payment
by
Guarantor is not stayed as a result of such insolvency, bankruptcy or
reorganization.
11.
Information
Relating to Borrower.
Guarantor acknowledges and agrees that it shall have the sole responsibility
for, and have adequate means of, obtaining from Borrower such information
concerning Borrower's financial condition or business operations as Guarantor
may require, and that Purchaser has no duty, and Guarantor is not relying on
Purchaser, at any time to disclose to Guarantor any information relating to
the
business operations or financial condition of Borrower.
12.
Remedies.
If
Guarantor fails to fulfill its duty to pay all Indebtedness guaranteed
hereunder, Purchaser shall have all of the remedies of a creditor and, to the
extent applicable, of a secured party, under all applicable law. Without
limiting the foregoing, Purchaser may, at its option and without notice or
demand:
(a)
declare any Indebtedness due and payable at once;
(b)
take
possession of any collateral pledged by Borrower, wherever located, and sell,
resell, assign, transfer, and deliver all or any part of the collateral at
any
public or private sale or otherwise dispose of any or all of the collateral
in
its then condition, for cash or on credit or for future delivery, and in
connection therewith Purchaser may impose reasonable conditions upon any such
sale. Further, Purchaser, unless prohibited by law the provisions of which
cannot be waived, may purchase all or any part of the collateral to be sold,
free from and discharged of all trusts, claims, rights of redemption and
equities of Borrower or Guarantor whatsoever. Guarantor acknowledges and agrees
that the sale of any collateral through any nationally recognized broker-dealer,
investment bank, or any other method common in the securities industry shall
be
deemed a commercially reasonable sale under the Uniform Commercial Code or
any
other equivalent statute or federal law, and expressly waive notice thereof
except as provided herein; and
(c)
set
off against any or all liabilities of Guarantor all money owed by Purchaser
or
any of its agents or affiliates in any capacity to Guarantor, whether or not
due, and also set off against all other liabilities of Guarantor to Purchaser
all money owed by Purchaser in any capacity to Guarantor. If exercised by
Purchaser, Purchaser shall be deemed to have exercised such right of setoff
and
to have made a charge against any such money immediately upon the occurrence
of
such default although made or entered on the books subsequent thereto.
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13.
Notices.
All
notices required under this Guaranty shall be personally delivered or sent
by
first class mail, postage prepaid, or by overnight courier, to the addresses
on
the signature page of this Guaranty, or sent by facsimile to the fax numbers
listed on the signature page, or to such other addresses as Purchaser and
Guarantor may specify from time to time in writing. Notices sent by (a) first
class mail shall be deemed delivered on the earlier of actual receipt or on
the
fourth business day after deposit in the U.S. mail, postage prepaid,
(b) overnight courier shall be deemed delivered on the next business day,
and (c) telecopy shall be deemed delivered when transmitted.
14.
Successors
and Assigns.
This
Guaranty (a) binds Guarantor and Guarantor's successors, and assigns, provided
that Guarantor may not assign its rights or obligations under this Guaranty
without the prior written consent of Purchaser, and (b) inures to the benefit
of
Purchaser and Purchaser's successors, and assigns. Purchaser may, without notice
to Guarantor and without affecting Guarantor' s obligations hereunder, sell,
assign, grant participations in, or otherwise transfer to any other person,
firm, or corporation the Indebtedness and this Guaranty, in whole or in part.
Guarantor agrees that Purchaser may disclose to any assignee or purchaser,
or
any prospective assignee or purchaser, of all or part of the Indebtedness any
and all information in Purchaser's possession concerning Guarantor, this
Guaranty, and any security for this Guaranty.
15.
Amendments,
Waivers, and Severability.
No
provision of this Guaranty may be amended or waived except in writing. No
failure by Purchaser to exercise, and no delay in exercising, any of its rights,
remedies, or powers shall operate as a waiver thereof, and no single or partial
exercise of any such right, remedy, or power shall preclude any other or further
exercise thereof or the exercise of any other right, remedy, or power. The
unenforceability or invalidity of any provision of this Guaranty shall not
affect the enforceability or validity of any other provision of this
Guaranty.
16.
Costs
and Expenses.
Guarantor agrees to pay all reasonable attorneys' fees, and all other costs
and
expenses that may be incurred by Purchaser (a) in the enforcement of this
Guaranty or (b) in the preservation, protection, or enforcement of any rights
of
Purchaser in any case commenced by or against Guarantor or Borrower under the
Bankruptcy Code (Title 11, United States Code) or any similar or successor
statute.
17.
Governing
Law and Jurisdiction.
This
Guaranty shall be governed by and construed and enforced in accordance with
federal law and the law of the State of New York. Jurisdiction
and venue for any action or proceeding to enforce this Guaranty shall be the
forum appropriate for such action or proceeding against Borrower, to which
jurisdiction Guarantor irrevocably submit and to which venue Guarantor waives
to
the fullest extent permitted by law any defense asserting an inconvenient forum
in connection therewith. Service of process by Purchaser in connection with
such
action or proceeding shall be binding on Guarantor if sent to Guarantor by
registered or certified mail at its address specified below.
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18.
FINAL
AGREEMENT.
BY
SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THIS DOCUMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN PARTIES WITH RESPECT TO THE SUBJECT
MATTER HEREOF, (B) THIS DOCUMENT SUPERSEDES ANY COMMITMENT LETTER, TERM SHEET,
OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS RELATING TO THE SUBJECT MATTER
HEREOF, UNLESS SUCH COMMITMENT LETTER, TERM SHEET, OR OTHER WRITTEN OUTLINE
OF
TERMS AND CONDITIONS EXPRESSLY PROVIDES TO THE CONTRARY, (C) THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (D) THIS DOCUMENT MAY NOT
BE
CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.
Executed
this May 31, 2007
Guarantor:
GENEX
TECHNOLOGIES INCORPORATED
By:
/s/ Xxxx X. Xxxxxxx
Name:
Xxxx X. Xxxxxxx
Title:
Chief Financial Officer
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Address
for notices to Purchaser:
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Address
for notices to Guarantor:
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Xxx
Xxxx 00xx
Xxxxxx, Xxx Xxxx, XX 00000
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00000
Xxxxx Xxxx Xxxxx, Xxxxx 000,
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Xxxxxxxx,
Xxxxxxxx 00000
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