SEVERANCE AGREEMENT
Exhibit 10.8
TECHNEST
HOLDINGS, INC.
This
Severance Agreement ("Agreement") is entered into as of December 31, 2007, by
and between Technest Holdings, Inc., a Delaware corporation with its principal
offices located at 00000 Xxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000
(the "Company"), and Xxxxxx X. Xxxxxx, an individual residing in Quincy,
Massachusetts (the "Executive").
WHEREAS,
the Executive is currently employed as Chief Executive Officer and President of
the Company;
WHEREAS,
in consideration of the services rendered and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
the Company, the Company is willing to provide, subject to the terms of this
Agreement, certain payments to the Executive upon the Sale (as defined
below);
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, the parties agree as follows:
1. Continuing
Employment. Until the Trigger Date (as defined below), the
Executive shall continue in his role as the Chief Executive Officer and
President of the Company and shall continue as a member of the Board of
Directors of the Company. As the Chief Executive Officer and
President of the Company, the Executive shall continue to devote his full time
during normal business hours to rendering services to the Company hereunder, and
shall exert all reasonable efforts in the rendering of such services, consistent
with his past efforts. In the event that the Executive voluntarily
resigns as Chief Executive Officer and/or President of the Company prior to the
Trigger Date, then the Company shall have no obligations to the Executive, and
you shall have no rights, under this Agreement with respect to Section 3
hereof.
2. Change of
Role on Trigger Date. The Executive
shall automatically resign (without any further action on his part) as Chief
Executive Officer and President of the Company effective as of the Trigger
Date. For these purposes, the “Trigger Date” shall
be the closing date of the sale of all the outstanding capital stock of the
Company’s wholly owned subsidiary E-OIR Technologies, Inc. (the “Sale”) pursuant
to that certain Stock Purchase Agreement dated as of September 10, 2007 by and
among EOIR Holdings LLC, E-OIR Technologies, Inc. and the Company (the “Stock Purchase
Agreement”).
3. Severance
Pay.
(a) Initial Severance
Pay. Subject to the Executive’s continuing compliance
following the Trigger Date, with the provisions of Section 5 (Confidential
Information), Section 7 (Intellectual Property Rights) and Section 9
(Non-Competition) of the Employment Agreement dated as of March 13, 2006 between
the Executive and the Company (the “Employment
Agreement”) and to the Executive’s compliance with Section 8(e)
(Surrender of Records and Property) of the Employment Agreement, the Company
will make an initial severance payment to the Executive in a total gross amount
of $350,000, which amount is the equivalent of the Executive’s annual base
salary for one year (the “Annual Base
Salary”). Such payment will be made in a lump sum and shall be
payable no later than ten (10) business days after the Trigger
Date.
(b) Contingent Severance
Pay. In the
event that the Company is paid the Contingent Purchase Price (as such term is
defined in the Stock Purchase Agreement), then the Executive shall be entitled
to receive a contingent severance payment in a total gross amount that is the
equivalent of the gross amount of the Executive’s Annual Base Salary for the
remainder of the Executive’s term of employment as specified in the Employment
Agreement, which assuming a Trigger Date of December 31, 2007 would total
$785,833. Such payment will be made in a lump sum contemporaneously
with the Company’s receipt of the Contingent Purchase Price. If the
Contingent Purchase Price is not paid, then the Executive shall not receive any
payment pursuant to this Section 3(b).
(c) Withholdings. The Company may
deduct from any and all payments described in this Section 3, such legally
required withholdings, payments and/or deductions as may be
required.
(d) Benefits. As
of the Trigger Date, he Executive agrees that he is forgoing and is no longer
entitled to any benefits or insurance coverage by the Company, if any currently
being provided to the Executive.
(e) Termination of Employment
Agreement. Other than as provided herein, the Employment Agreement shall
terminate as of the Trigger Date.
4. Release. The Executive and
all his successors, assigns and heirs hereby release, forever discharge and
covenant not to xxx the Company, its predecessors, successors, subsidiaries,
affiliates, assigns, agents, and any of their present or former directors,
officers, employees or shareholders, from any and all claims, demands, damages
or liability of any nature whatsoever prior to the date of this Agreement, known
or unknown, which Executive has or may have, including, but not limited to,
claims arising under the Employee Retirement Income Security Act of 1974
(“ERISA”), claims for breach of contract or wrongful termination, claims for
equity awards, claims for severance or termination pay, claims for alleged
discrimination under federal, state or local law, including, but not limited to,
Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et
seq., the Age Discrimination In Employment Act (“ADEA”), 29 U.S.C. § 621 et
seq., the Americans With Disabilities Act, 42 U.S.C. § 12111, et seq., and any
other federal, state, foreign or local laws, statutes, regulations, or
ordinances, as well as rights under any and all common law causes of action.
Consistent with the terms of this Paragraph, Executive further agrees to refrain
from bringing, prosecuting or arbitrating any claim, demand or cause of action,
either at law or in equity, against the Company as the result of any act or
omission by the Company occurring up to and including the date of his execution
of this Agreement.
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5. Indemnification.
5.1 In
the event that the Executive is made, or threatened to be made, a party to any
action or proceeding, whether civil or criminal, by reason of the fact that the
Executive was a director, officer, employee, or member of a committee of the
Board or served any other corporation, partnership, joint venture, trust, the
Executive benefit plan or other enterprise in any capacity at the request of the
Company, or resulting from any of the Executive’s actions in any of the
foregoing roles (a “Proceeding”) the Executive shall be indemnified by the
Company and the Company shall advance the Executive’s related expenses to the
fullest extent permitted by law (including without limitation, damages, costs
and reasonable attorney fees), as may otherwise be provided in the Company’s
Articles of Incorporation and Bylaws as incurred and will start prior to any
judicial proceeding. The Company further covenants not to amend or repeal any
provisions of the Articles of Incorporation or Bylaws of the Company in any
manner which would adversely affect the indemnification or exculpatory
provisions contained therein as they pertain to acts. The provisions of this
Section are intended to be for the benefit of, and shall be enforceable by, each
indemnified party and the Executive’s heirs and representatives. If the Company
or any of its successors or assigns (i) shall consolidate with or merge into any
other corporation or entity and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) shall transfer all
or substantially all of its properties and assets to such person, then and in
each such case, proper provisions shall be made so that the successors and
assigns of the Company shall assume all of the obligations set forth in this
Section 5.1.
5.2 If
any Proceeding shall be brought or asserted against the Executive, the Executive
shall promptly notify the Company in writing, and the Company shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Executive and the payment of all fees and expenses incurred in connection
with defense thereof; provided, that the failure of the Executive to give such
notice shall not relieve the Company of its obligations or liabilities pursuant
to this Section 5, except (and only) to the extent that such failure shall have
prejudiced the Company.
The
Executive shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Executive unless: (1) the Company has
agreed in writing to pay such fees and expenses; or (2) the Company shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to the Executive in any such Proceeding; or (3) the
named parties to any such Proceeding (including any impleaded parties) include
both the Executive and the Company, and the Executive shall have been advised by
counsel that a material conflict of interest is likely to exist if the same
counsel were to represent the Executive and the Company (in which case, if the
Executive notifies the Company in writing that it elects to employ separate
counsel at the expense of the Company, the Company shall not have the right to
assume the defense thereof and the reasonable expense of such counsel for the
Executive shall be at the expense of the Company). The Company shall
not be liable for any settlement of any such Proceeding effected without its
written consent, which consent shall not be unreasonably
withheld. The Company shall not, without the prior written consent of
the Executive, effect any settlement of any pending Proceeding in respect of
which any Executive is a party, unless such settlement includes an unconditional
release of the Executive from all liability on claims that are the subject
matter of such Proceeding.
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Subject
to the terms of this Section 5, all fees and expenses of the Executive
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Executive, as incurred,
within thirty days of written notice thereof to the Company (regardless of
whether it is ultimately determined that an Executive is not entitled to
indemnification hereunder; provided, that the Company may require the Executive
to undertake to reimburse all such fees and expenses to the extent it is finally
judicially determined that the Executive is not entitled to indemnification
hereunder).
6. Miscellaneous.
(a) Notices. Any
notice or other communication required or permitted hereunder shall be in
writing and shall be deemed given when delivered personally or sent by facsimile
transmission (with confirmation) or, if sent by regular mail, three days after
the date of deposit in the United States mails to the addresses set forth above
or to such other address as either party may from time to time provide to the
other by notice as provided in this section.
(b) Entire
Agreement. This Agreement constitutes the entire agreement and
understanding between the Company and the Executive, and supersedes all prior
negotiations, agreements, arrangements, and understandings, both written or
oral, between the Company and the Executive with respect to the subject matter
of this Agreement.
(c) Waiver or
Amendment. The waiver by either party of a breach or violation
of any term or provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach or violation of any
provision of this Agreement or of any other right or remedy. No
provision in this Agreement may be amended unless such amendment is set forth in
a writing that specifically refers to this Agreement and is signed by the
Executive and the Company.
(d) Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada without regard to its conflict
of laws rules.
(e) Assignment. This
Agreement shall inure to the benefit of, and shall be binding upon, each of the
Company and the Executive and their respective heirs, personal representatives,
legal representatives, successors and assigns.
(f) Severability. The
invalidity of any one or more of the words, phrases, sentences, clauses or
sections contained in this Agreement shall not affect the enforceability of the
remaining portions of this Agreement or any part hereof. If any part
of this Agreement shall be declared invalid by a court of competent
jurisdiction, this Agreement shall be construed as if such invalid part had not
been inserted.
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(g) Section
Headings. The section and subsection headings contained in
this Agreement are for reference purposes only and shall not affect any way the
meaning, construction or interpretation of any or all of the provisions of this
Agreement.
(h) Counterparts. This
Agreement may be executed in any number of counterparts and by the separate
parties hereto in separate counterparts, each of which shall be deemed to
constitute an original and all of which shall be deemed to be one and the same
instrument.
(i) Authority to
Execute. The undersigned officer represents and warrants that
he or she has full power and authority to enter into this Agreement on behalf of
the Company, and that the execution, delivery and performance of this Agreement
have been authorized by the Board of Directors of the Company. Upon
the Executive's acceptance of this Agreement by signing and returning it to the
Company, this Agreement will become binding upon the Executive and the
Company.
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year
first written above.
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EXECUTIVE
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TECHNEST
HOLDINGS, INC.
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/s/ Xxxxxx X.
Xxxxxx
Xxxxxx
X. Xxxxxx
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By: Xxxx X.
Xxxxxxx
Xxxx
X. Xxxxxxx
Chief
Financial Officer
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