Contract

EXHIBIT 10.64February 14, 2005CONFIDENTIAL- ————Mr. Robert TariniChairman & CEOTechnest Holdings, Inc.90 Grove StreetRidgefield, CT 06877 This letter agreement (this “Agreement”) confirms the engagement ofGreenfield Capital Partners, LLC., a Delaware limited liability company(“GREENFIELD”) by Technest Holdings, Inc., (the “COMPANY”) to act as: (i) theCompany’s exclusive placement agent (“PLACEMENT AGENT”) to arrange the issuanceby the Company of debt securities (including, without limitation, senior orsubordinated debt, secured or unsecured debt, or bank debt) (“Debt”), equitysecurities or any securities (including debt securities, preferred stock orwarrants) convertible or exercisable into, or exchangeable for, equitysecurities (collectively, “EQUITY SECURITIES” and, together with Debt,”SECURITIES”), and (ii) the Company’s exclusive financial advisor (“FINANCIALADVISOR”) to perform the following financial advisory and investment bankingservices: (a) assisting the Company in analyzing its business,operations, properties, financial condition and prospects and/or analyzing thebusiness, operations, properties, financial conditions and prospects of a thirdparty entity; (b) assisting the Company in preparation of materials(including a private placement memorandum) describing the Company fordistribution and presentation to parties that might be interested in a Financingor a transaction on behalf of the Company (it being understood that all suchmaterials shall be the responsibility of the Company); (c) advising the Company as to strategy and tactics fornegotiations related to a financing or a transaction and, if requested by theCompany, participating in such negotiations; (d) assisting and advise the Company with respect to the formand structure of a financing or a transaction, including financing alternatives,and with the preparation of letters of intent or term sheets relating to afinancing Or a transaction; and (e) rendering such other financial advisory and investmentbanking services as may from time to time be agreed upon in writing byGreenfield and the Company,The sale of Securities (a “FINANCING” or “FINANCINGS”) may occur through aprivate placement pursuant to one or more exemptions from registration under theSecurities Act of 1933, as amended (the “SECURITIES Act”), and in compliancewith applicable state securities laws (“BLUE SKY LAWS”). 1. RETENTION. (a) Subject to the terms and conditions of thisAgreement, the Company hereby engages Greenfield to act on behalf of theCompany: (i) as its exclusive Placement Agent during the Authorization Period(as defined in Section 2 below) to arrange for the sale of Securities in anamount and on terms and conditions satisfactory to the Company, and (ii) to actas its exclusive Financial Advisor during the Authorization Period with respectto a Transaction (as defined in Section 4(c) below), and Greenfield herebyaccepts such engagement on the terns and conditions hereof. During theAuthorization Period, except for Greenfield; the Company will not retain orconsult with any person or entity to provide such services to the Company or anyof its subsidiaries or affiliates. (b) To the extent Greenfield is requested by the Company toperform any financial advisory or investment banking services which are notwithin the scope of this Agreement as described herein (such as rendering afairness opinion), the payment of any fees to Greenfield in respect of suchservices shall be mutually agreed upon by Greenfield and the Company in writing,IN advance, depending on the level and type of services required, and shall bein addition to the fees and expenses described herein. Except as set forth inthe immediately preceding sentence, if Greenfield is legally required to renderservices directly or indirectly relating to the subject matter of this Agreement(including, but not limited to, producing documents, answering interrogatories,giving depositions, giving expert or otherGreenfield Capital Partners LLCPage 2testimony, and whether by subpoena, court process or order or otherwise), theCompany shall pay Greenfield’s then current hourly rates for the personsinvolved by the time expended in rendering such services, including, but notLimited to, time for meetings, conferences, preparation and travel, and allrelated reasonable out-of-pocket costs and expenses, and the reasonable legalfees and expenses of Greenfield’s legal counsel incurred in connectiontherewith. 2. AUTHORIZATION PERIOD. Greenfield’s engagement under this Agreementshall become effective on the date of this Agreement and, unless extended by theCompany and Greenfield in writing, shall expire one hundred eighty days (180days) after the date of this Agreement or terminated earlier as provided forherein (“AUTHORIZATION PERIOD”). Greenfield shall be entitled to terminate itsengagement hereunder at any time upon ten (10) days prior written notice to theCompany. The Company agrees that neither it, its controlling equity holders, norits management will initiate any discussions regarding a Financing or aTransaction with any prospective investor in Securities or any Person (asdefined below) during the term of this Agreement; except through Greenfield. Inthe event the Company or the Company’s management receive any inquiry regardinga Financing or a Transaction ON or after the effective date of this agreement,Greenfield will be promptly informed of such inquiry so that they can evaluateinvestor or Person party and its interest in a Financing or a Transaction; andassist the Company in any resulting negotiations. For purposes of thisAgreement, “PERSON” shall mean any natural person, corporation, unincorporatedorganization, partnership, limited liability company, association, joint stockcompany, joint venture, trust or government or any agency or politicalsubdivision of any government or any other entity. 3. COMPENSATION FOR FINANCING. Upon the closing of a Financing THECompany shall pay Greenfield the compensation set forth below: (a) CASH FEE FOR EQUITY FINANCING. The Company shall payGreenfield a cash placement fee equal to ten percent (10.0%) of any grossproceeds received by the Company in connection with the portion of any Financingplaced by Greenfield in which Equity Securities are issued by the Company (an”EQUITY FINANCING”). In addition, the Company shall pay to Greenfield anon-accountable cash allowance of three percent (3.0%) of any gross proceedsreceived by the Company in connection with any Equity Financing. Both the cashplacement fee and cash allowance shall apply to the financing transactioninvolving Genex Technologies, Inc. that was initiated prior to this agreement.The cash placement fee and the non-accountable cash allowance shall be paid bywire transfer on the closing of the financing (and such payment shall be acondition of the closing), except with respect to consideration which iscontingent upon the occurrence of some future event which shall be paid by theCompany to Greenfield upon receipt of such consideration by the Company,Greenfield shall act as solicitation agent on behalf of the Company inconnection with the exercise of warrants (“INVESTOR WARRANTS”) issued to anyinvestors in connection with a Financing and shall pay Greenfield a cash fee ofthirteen percent (13.0%) of the gross proceeds received by the Company inconnection with the exercise of such Investor Warrants. (b) CASH FEES FOR DEBT FINANCING. The Company shall payGreenfield a cash placement fee equal to ten percent (10%) of any gross proceedsreceived by the Company in connection with any debt financing by the Companyincluding the issuance of Debt Securities which are not convertible orexchangeable into equity security (a “DEBT FINANCING”), In addition, the Companyshall pay to Greenfield a non-accountable cash allowance of three percent (3.0%)on any gross proceeds received by the Company in connection with any DebtFinancing. In the case of a committed Debt Financing, the placement fee will becalculated based on the aggregate amount committed to the Company from investorsin the Debt Financing. The cash placement fee shall be paid by wire transfer onthe closing of the Debt Financing (and such payment shall be a condition of theclosing). 4. TAIL PERIOD. The Company shall, and shall cause its affiliates to,pay to Greenfield all compensation described in Section 3 with respect to allSecurities sold to an investor or investors and with respect to any Transactionentered into with any Person at any time prior to the expiration of two (2)years after the expiration of the Authorization Period (the “TAIL PERIOD”) if(i) such investor or investors (or their affiliates) were identified in writingto the Company by Greenfield during the Authorization Period, or (ii) uponwritten request of the Company, Greenfield advised the Company with respect TOsuch investor or investors during the Authorization Period, or (iii) a closingof a Transaction occurs within six (6) months following the expiration of theTail Period. 5. REIMBURSEMENTS. If a sale of Securities to be placed by Greenfield(and otherwise acceptable to the Transaction is not consummated by the Companyduring the Authorization Period due to (i) theGreenfield Capital Partners LLCPage 3occurrence of an event which is reasonably likely to have a material adverseeffect on the business, financial condition, results of operations or futureprospects of the Company, or (ii) Greenfield discovers facts or events which areasonable person engaged in the business of investment banking is likely toconclude that reports or registration statements filed by the Company, or otherpublic disclosure made by the Company contains an untrue statement of materialfact or omits to state material facts which should have been disclosed therein,the Company shall reimburse Greenfield for all of its reasonable out-of-pocketexpenses, not to exceed $50,000, incurred in connection with its engagement,including the fees and disbursements of counsel for Greenfield and the expensesof any travel that may be necessary, upon provision of reasonable documentationof such expenses. If any Financing or Transaction is consummated, thenon-accountable cash allowance set forth in Section 3(a) and Section 4(a) hereofshall constitute payment of all such expenses TO the extent paid by the Companyand no additional obligation with respect to such expenses shall exist. 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. TheCompany represents, warrants, and covenants to Greenfield as follows: (a) Neither the Company nor any person acting on its behalfhas taken, and the Company shall not and shall not permit its affiliates totake, directly or indirectly, any action so as to cause any of the transactionscontemplated by this Agreement to not be exempt from registration orqualification under all applicable securities laws or which constitutes generaladvertising or general solicitation (as those terms are used in Regulation Dunder the Securities Act) with respect to the Securities. (b) The Company shall take and shall cause its affiliates totake such actions as may be required to comply with this Agreement in allrespects. (c) The Company will furnish, or cause to be furnished, toGreenfield such information as Greenfield believes necessary or appropriate toits engagement hereunder (all such information, the “INFORMATION”), and theCompany represents that all such Information will be accurate and complete inall material respects. The Company will promptly notify Greenfield of any changethat may be material to such information. It is understood that Greenfield willbe entitled to rely on and use the Information and other information that ispublicly available without independent verification, and will not be responsiblein any respect for the accuracy, completeness or reasonableness of all suchinformation or to conduct any independent verification or any appraisal orphysical inspection of properties or assets. The Company acknowledges thatGreenfield has not made and is not making any independent evaluation of theCompany or its assets in performing services hereunder as the Company’sPlacement Agent or Financial Advisor. 7. INDEMNIFICATION. The Company agrees to the indemnificationprovisions and other agreements set forth on SCHEDULE A attached hereto and madea part hereof, all of the provisions of which are incorporated herein byreference and made a part of this Agreement as if set forth in full herein. 8. ADVERTISEMENTS. The Company agrees that Greenfield has the right toplace advertisements in financial and other newspapers, journals, websites orotherwise publicize, at its option and expense, describing its services to theCompany hereunder to the extent such services result in a consummated Financingor Transaction, including, without limitation; the reproduction of the Company’slogo and a hyperlink to the Company’s website. The foregoing shall also includeplacement of a tombstone on the corporate website of Greenfield. If requested byGreenfield, the Company shall include a mutually acceptable reference toGreenfield in any press release or other public announcement made by the Companyregarding the matters described in this Agreement. The Company agrees that itshall not use Greenfield’s name, nor the name of any of its employees,representatives or affiliates in any public manner without the prior writtenconsent from Greenfield, which consent shall not be unreasonably withheld. 9, CERTAIN PROVISIONS. Greenfield’s rights to compensation (which termincludes all fees, amounts and Placement Agent Warrants or Debt Placement AgentWarrants due or which may become due) shall remain operative and in full forceand effect regardless of (i) any withdrawal, termination or consummation of or,in the case of the expense, indemnification, reimbursement, advertisements, andcontribution obligations of the Company, failure to initiate or consummate anytransaction described herein or (ii) any termination or the completion orexpiration of this Agreement. 10.0 NOTICES. All notices, demands, consents, requests, instructionsand other communications to be given or delivered or permitted under or byreason of the provisions of this Agreement or in connection with thetransactions contemplated hereby shall be in writing and shall be deemed to bedelivered and received by theGreenfield Capital Partners LLCPage 4intended recipient as follows: (a) if personally delivered, on the business dayof such delivery (as evidenced by the receipt of the personal delivery service),(b) if mailed certified or registered mail return receipt requested, four (4)business days after being mailed, (c) if delivered by overnight courier (withall charges having been prepaid), on the business day of such delivery (asevidenced by the receipt of the overnight courier service of recognizedstanding), or (d) if delivered by facsimile transmission, on the business day ofsuch delivery if sent by 6:00 p.m. in the time zone of the recipient, or if sentafter that time, on the next succeeding business day (as evidenced by theprinted confirmation of delivery generated by the sending party’s facsimilemachine). If any notice, demand, consent, request, instruction or othercommunication cannot be delivered because of a changed address of which nonotice was given (in accordance with this section, or the refusal to acceptsame, the notice, demand, consent, request, instruction or other communicationshall be deemed received on the second business day the notice is sent (asevidenced by a sworn affidavit of the sender). All such notices, demands,consents, requests, instructions and other communications will be sent to thefollowing addresses or facsimile numbers as applicable:If to the Company, to: Technest Holdings, Inc. 90 Grove street Ridgefield, CT 06877 Facsimile No: Attn.: Robert TariniIf to Greenfield, to: Greenfield Capital Partners LLC 90 Grove Street Ridgefield, CT 06877 Facsimile No.: 203-431-8309 Attn,: Michael Bylor to such other address as any party may specify by notice given to the otherparty in accordance with this section, 11. CONFIDENTIALITY. No financial advice rendered by Greenfieldpursuant to or in connection with this Agreement may be disclosed publicly inany manner without Greenfield’s prior written consent, except as may be requiredby applicable law, regulation or court order but subject to the limitationbelow. If the Company is required or reasonably expects to be so required todisclose any such advice, the Company shall provide Greenfield with promptnotice thereof so that Greenfield may seek a protective order or otherappropriate remedy and take reasonable efforts to assure that all of such advicedisclosed will be covered by such order or other remedy, and the Company willcooperate with Greenfield in obtaining such protective order or otherappropriate remedy. Whether or not such a protective order or other remedy isobtained, the Company will and will cause its affiliates to disclose only thatportion of such advice which the Company is so required to disclose. 12. INDEPENDENT CONTRACTOR. Greenfield shall be an independentcontractor in providing its Placement Agent and Financial Advisor serviceshereunder. Nothing contained in this Agreement shall be deemed or construed tocreate a partnership or joint venture, to create the relationships ofprincipal/agent, employer/employee, or otherwise create any fiduciary duty orany liability whatsoever of either party with respect to the indebtedness,liabilities, obligations or actions of the other party or any of their employeesor agents, or any other person or entity, Greenfield shall not have any right tolegally bind or otherwise obligate the Company in any manner whatsoever- 13. MISCELLANEOUS. (a) ATTORNEYS’ FEES. If any party to this Agreement brings anaction directly or indirectly based upon this Agreement or the matterscontemplated hereby against another party, the prevailing party shall beentitled toGreenfield Capital Partners LLCPage 5recover, in addition to any other appropriate amounts, its reasonable costs andexpenses in connection with such proceeding, including, but not limited to,reasonable attorneys’ fees and expenses and court costs. (b) AMENDMENT. This Agreement may not be modified, amended,altered or supplemented, except by a written agreement executed by each of theparties hereto. (c) ENTIRE AGREEMENT. This Agreement contains the entireunderstanding and agreement of the parties relating to the subject matter hereofand supersedes all prior and/or contemporaneous understandings and agreements ofany kind and nature (whether written or oral) among the parties with respect tosuch subject matter, all of which are merged herein. (d) WAIVER. Any waiver by a party hereto of any breach of orfailure to comply with any provision or condition of this Agreement by any otherparty hereto shall not be construed as, or constitute, a continuing waiver ofsuch provision or condition, or a waiver of any other breach of, or failure tocomply with, any other provision or condition of this Agreement, any such waiverto be limited to the specific matter and instance for which it is given. Nowaiver of any such breach or failure or of any provision or condition of thisAgreement shall be effective unless in a written instrument signed by the partygranting the waiver and delivered to the other party hereto in the mannerprovided for in the Notice section hereof. No failure or delay by any party toenforce or exercise its rights hereunder shall be deemed a waiver hereof, norshall any single or partial exercise of any such right or any abandonment ordiscontinuance of steps to enforce such rights, preclude any other or furtherexercise thereof or the exercise of any other right. (e) GOVERNING LAW; JURISDICTION. This Agreement shall begoverned by and construed IN accordance with the laws of the State of New Forkapplicable to agreements made and to be performed in that state, without regardto any of its principles of conflicts of laws or other laws that would result inthe application of the laws of another jurisdiction. The parties shall makereasonable efforts to resolve any dispute concerning this Agreement, itsconstruction or its alleged breach by face-to-face negotiations. Each of theparties unconditionally and irrevocably consents to the exclusive jurisdictionof the courts of the State of New York and the federal district court for theSouthern District of New York with respect to any suit, action or proceedingarising out of or relating to this Agreement, and each of the parties herebyunconditionally and irrevocably waives any objection to venue in any such courtor to assert that any such court is an inconvenient forum, and agrees thatservice of any summons, complaint, notice or other process relating to suchsuit, action or other proceeding may be effected in the manner provided in dieNotice section hereof. Each of the parties hereby unconditionally andirrevocably waives the right to a trial by jury in any such action, suit orother proceeding. (f) BINDING EFFECT, NO ASSIGNMENT, This Agreement shall bebinding upon and shall inure to the benefit of the parties hereto and theirrespective successors and permitted assigns. Neither this Agreement nor anyright, interest or obligation hereunder may be assigned by the Company withoutthe prior written consent of Greenfield, and any attempt to do so shall be voidand of no force and effect. The Company acknowledges and agrees that (1) a saleof substantially all of the assets of the Company; (2) a merger or consolidationin which the shareholders of the Company immediately before such merger orconsolidation hold, immediately after the merger or consolidation, less than of50% of the voting power of the surviving entity; or (3) any transaction orseries of related transactions in which in excess of 50% of the Company’s votingpower is transferred, shall be deemed to constitute an assignment hereunder. (g) HEADINGS. The section headings contained in this Agreementare inserted for reference purposes only and shall not affect in any way themeaning, construction or interpretation of this Agreement. Any reference to themasculine, feminine, or neuter gender shall be a reference to such other genderas is appropriate. References to the singular shall include the plural and viceversa. (h) DRAFTING HISTORY. This Agreement shall be construed andinterpreted without regard to any presumption against the party causing thisAgreement to be drafted. The parties acknowledge that this Agreement wasnegotiated and drafted with each Party being represented by competent counsel ofits choice and with each Party having an equal opportunity to participate in thedrafting of the provisions hereof and shall therefore be construed as if draftedjointly by the Parties.CounterpartsGreenfield Capital Partners LLCPage 6 (i) COUNTERPARTS. This Agreement may be executed in two (2) ormore counterparts (including by facsimile signature, which shall constitute alegal and valid signature), and by the different Parties hereto in separatecounterparts, each of which when executed shall be deemed to be an original, andall of which, when taken together, shall constitute one and the same document.This Agreement shall become effective when one or more counterparts, takentogether, shall have been executed and delivered by all of the Parties, [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]Greenfield Capital Partners LLCPage 7Greenfield is delighted to accept this engagement and looks forward to workingwith you as your Placement Agent and Financial Advisor. Please confirm that theforegoing correctly sets forth our agreement by signing and returning toGreenfield the enclosed duplicate copy of this Agreement Very truly yours, GREENFIELD CAPITAL PARTNERS LLC By: /s/ Michael Byl ——————————– Name: Michael Byl Title: PresidentACCEPTED AND AGREED TOthis 14th day of Feb 2005TECHNEST HOLDINGS, INC.By: /s/ Robert Tarini —————————– Name: Robert Tarini Title: CEO SCHEDULE A ———- INDEMNIFICATION PROVISIONSTO: Greenfield Capital Partners LLC 90 Grove Street Ridgefield, CT 06877 In connection with your engagement pursuant to our letter agreement ofeven date herewith (the “engagement”), the Company agrees to indemnify and holdharmless Greenfield Capital Partners LLC (“Greenfield” or “you”) and itsaffiliates, the respective directors, officers, partners, agents and employeesof Greenfield and its affiliates, and each other person, if any, controllingGreenfield or any of its affiliates (collectively, “INDEMNIFIED PERSONS”), fromand against, and we agree that no Indemnified Person shall have any liability tous or our owners, parents, affiliates, security holders or creditors for, anylosses, claims, damages or liabilities (including actions or proceedings inrespect thereof) (collectively “LOSSES”) (A) related to or arising out of (i)our actions or failures to act (including statements or omissions made, orinformation provided in writing, by us or our agents) or (ii) actions orfailures to act by an Indemnified Person with our consent or in reliance on ouractions or failures to act, or (B) otherwise related to or arising out of theEngagement or your performance thereof, except that this clause (B) shall notapply to any Losses that are finally judicially determined to have resultedprimarily from your bad faith or gross negligence or breach of the letteragreement. If such indemnification is for any reason not available orinsufficient to hold you harmless, we agree to contribute to the Losses involvedin such proportion as is appropriate to reflect the relative benefits received(or anticipated to be received) by us and by you with respect to the Engagementor, if such allocation is judicially determined unavailable, in such proportionas is appropriate to reflect other equitable considerations such as the relativefault of us on the one hand and of you on the other hand; PROVIDED, HOWEVER,that, in no event shall the amount to be contributed by you exceed the feesactually received by you under the Engagement. We will reimburse each Indemnified Person for all expenses (includingreasonable fees and disbursements of counsel) as they are incurred by suchIndemnified Person in connection with investigating, preparing for or defendingany action, claim, investigation, inquiry, arbitration or other proceeding(“ACTION”) referred to above (or enforcing this agreement or any relatedengagement agreement), whether or not in connection with pending or threatenedlitigation in which any Indemnified Person is a party, and whether or not suchAction is initiated or brought by you. We further agree that we will not settleor compromise or consent to the entry of any judgment in any pending orthreatened Action in respect of which indemnification may be sought hereunder(whether or not an Indemnified Person is a party therein) unless we have givenyou reasonable prior written notice thereof and used all reasonable efforts,after consultation with you, to obtain an unconditional release of eachIndemnified Person from all liability arising therefrom. In the event we areconsidering entering into one or a series of transactions involving a merger orother business combination or a dissolution or liquidation of all or asignificant portion of our assets, we shall promptly notify you in writing, Ifrequested by Greenfield, we shall then establish alternative means of providingfor our obligations set forth herein on terms and conditions reasonablysatisfactory to Greenfield. If multiple claims are brought against you in any Action with respectto at least one of which indemnification is permitted under applicable law andprovided for under this agreement, we agree that any judgment, arbitration awardor other monetary award shall be conclusively deemed to be based on claims as towhich indemnification is permitted and provided for. In the event that you arecalled or subpoenaed to give testimony in a court of law, we agree to pay yourexpenses related thereto. Our obligations hereunder shall be in addition to anyrights that any Indemnified Person may have at common law or otherwise. Solelyfor the purpose of enforcing this agreement, we hereby consent to personaljurisdiction and to service and venue in any court in which any claim which issubject to this agreement is brought by or against any Indemnified Person. Weacknowledge that in connection with the Engagement you are acting as anindependent contractor with duties owing solely to us. YOU HEREBY AGREE, AND WEHEREBY AGREE ON OUR OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW,ON BEHALF OF OUR SECURITY HOLDERS, TO WAIVE ANY RIGHT TO TRIAL BY JURY WITHRESPECT TO ANY CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF THE, ENGAGEMENT,YOUR PERFORMANCE THEREOF OR THIS AGREEMENT. The provisions of this agreement shall apply to the Engagement(including related activities prior to the date hereof) and any modificationthereof and shall remain in full force and effect regardless of the completionor termination of the Engagement. This agreement and any other agreementsrelating to the Engagement shall be governed by and construed in accordance withthe laws of the state of New York, without regard to conflicts of law principlesthereof.