EXHIBIT 10.4
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "AGREEMENT") is made this 8th
day of February, 2005, by and between Technest Holdings, Inc. (the "COMPANY"), a
Nevada corporation, and Xxxxx LLC (the "PURCHASER").
WHEREAS, the Purchaser wishes to acquire from the Company, and the
Company wishes to issue to the Purchaser, 99.325 shares of Series A Preferred
Stock, substantially in the form of EXHIBIT A attached hereto, convertible into
shares of Common Stock (the "CONVERSION SHARES") at par value;
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, the parties agree as follows:
SECTION 1 ISSUANCE OF SECURITIES.
1.1. AUTHORIZATION OF ISSUANCE OF THE SECURITIES. Subject to the terms
and conditions of this Agreement, the Company has authorized the issuance to the
Purchaser of ninety nine and three hundred and twenty five one thousandths
(99.325) shares of Series A Preferred Stock (the "SECURITIES").
1.2. AGREEMENT TO ISSUE THE SECURITIES. At the Closing, the Company
will issue to the Purchaser and the Purchaser will acquire from the Company the
Securities upon the terms and conditions hereinafter set forth. Subject to and
in reliance upon all of the representations, warranties, covenants, terms and
conditions of this Agreement, any such closing hereunder shall take place at
such location, date and time as many be agreed upon between the Purchaser and
the Company.
1.3. CLOSING. At the closing of the sale and purchase of the Securities
(the "CLOSING"), the Company shall issue, and the Purchaser shall acquire, the
Securities with a liquidation value of $99,325.00, against payment by the
Purchaser of $25,000 in cash (less $6,500 which has already been funded) and the
surrender of certain outstanding promissory notes issued by the Company, and
currently in default, for retirement pursuant to a separate Exchange Agreement
between the parties of even date.
1.4. [INTENTIONALLY OMITTED]
SECTION 2. REGISTRATION RIGHTS.
2.1. REQUEST FOR REGISTRATION. If the Company proposes to register any
of its securities under the Securities Act of 1933, as amended ("ACT") (except
for registrations on Forms S-8 or S-4 or their equivalent), it will give written
notice by registered mail, at least twenty (20) days prior to the filing of each
such registration statement, to the Purchaser of its intention to do so. If the
Purchaser notifies the Company within ten (10) days after receipt of any such
notice of its desire to include any of the Conversion Shares (the "UNDERLYING
SHARES"), the Company shall afford the Purchaser the opportunity to have any
such Underlying Shares registered under such registration statement at the
Company's sole cost and expense.
2.2. LIMITATIONS ON REGISTRATION.
(a) TERMINATION OF REGISTRATION RIGHTS. These rights may be
exercised at any time on an unlimited number of occasions after the date hereof
until such time when all Underlying Shares may be sold without volume
restrictions pursuant to Rule 144(k) as determined by the counsel to the Company
pursuant to a written opinion letter to such effect, addressed and acceptable to
the Company's transfer agent and the Purchaser.
(b) UNDERWRITTEN OFFERINGS. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required to include any Underlying Shares in such underwriting
unless such Purchaser accepts the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it, and then only in such
quantity as will not, in the reasonable opinion of the underwriters, jeopardize
the success of the offering by the Company. If the underwriters reasonably
believe the total amount of Underlying Shares which the Purchaser requests to be
included in an underwritten offering pursuant to this Section 3, together with
any other shares of Common Stock for which registration has been requested by
holders with similar rights, exceeds the amount of securities that the
underwriters reasonably believe compatible with the success of the offering, the
Company shall only be required to include in the offering so many of the
Underlying Shares and such other shares of Common Stock as the underwriters
reasonably believe will not jeopardize the success of the offering, such shares
so included to be apportioned pro rata among the Purchaser and other holders
based on the number of shares for which registration was initially requested.
SECTION 3. Representations And Warranties Of Purchaser
Purchaser represents and warrants to the Company that:
Section 3.1 INTENT. Purchaser is entering into this Agreement for its own
account and Purchaser has no present arrangement (whether or not
legally binding) at any time to sell the Common Stock to or through any
person or entity; provided, however, Purchaser reserves the right to
dispose of the Common Stock at any time in accordance with federal and
state securities laws applicable to such disposition.
Section 3.2 SOPHISTICATED PURCHASER. Purchaser is a sophisticated Purchaser (as
described in Rule 506(b)(2)(ii) of Regulation D) and an accredited
Purchaser (as defined in Rule 501 of Regulation D), and Purchaser has
such experience in business and financial matters that it is capable of
evaluating the merits and risks of an investment in the Series A
Preferred Stock. Purchaser acknowledges that an investment in the
Series A Preferred Stock is speculative and involves a high degree of
risk.
Section 3.3 AUTHORITY. (a) Purchaser has the requisite power and authority to
enter into and perform its obligations under this Agreement and the
transactions contemplated hereby in accordance with its terms; (b) the
execution and delivery of this Agreement, and the consummation by it of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary action and no further consent or
authorization of Purchaser or its partners is required; and (c) this
Agreement has been duly authorized and validly executed and delivered
by Purchaser and is a valid and binding agreement of Purchaser
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies
or by other equitable principles of general application.
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Section 3.4 NOT AN AFFILIATE. Purchaser is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act)
of the Company.
Section 3.5 ORGANIZATION AND STANDING. Purchaser is a limited liability company
duly organized, validly existing and in good standing under the laws of
the Cayman Islands, and has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now
being conducted. Purchaser is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, other than those in which the failure so to
qualify would not have a material adverse effect on Purchaser.
Section 3.6 ABSENCE OF CONFLICTS. The execution and delivery of this Agreement
and any other document or instrument contemplated hereby, and the
consummation of the transactions contemplated hereby and thereby, and
compliance with the requirements hereof and thereof, will not (a)
violate any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on Purchaser, (b) violate any provision of any
indenture, instrument or agreement to which Purchaser is a party or is
subject, or by which Purchaser or any of its assets is bound, or
conflict with or constitute a material default thereunder, (c) result
in the creation or imposition of any lien pursuant to the terms of any
such indenture, instrument or agreement, or constitute a breach of any
fiduciary duty owed by Purchaser to any third party, or (d) require the
approval of any third-party (that has not been obtained) pursuant to
any material contract, instrument, agreement, relationship or legal
obligation to which Purchaser is subject or to which any of its assets,
operations or management may be subject.
Section 3.7 DISCLOSURE; ACCESS TO INFORMATION. Purchaser has received all
documents, records, books and other information pertaining to
Purchaser's investment in the Company that has been requested by
Purchaser. Purchaser has reviewed or received copies of the SEC
Documents.
Section 3.8 MANNER OF SALE. At no time was Purchaser presented with or
solicited by or through any leaflet, public promotional meeting,
television advertisement or any other form of general solicitation or
advertising.
Section 3.9 FINANCIAL CAPABILITY. Purchaser presently has the financial
capacity and the necessary capital to perform its obligations
hereunder.
SECTION 4. EXPENSES. Each party hereto will pay its own
expenses in connection with the transactions contemplated hereby,
whether or not such transactions shall be consummated.
SECTION 5. NOTICES. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be
delivered by hand, sent via overnight courier, sent by facsimile, or
mailed by first class certified or registered mail, return receipt
requested, postage prepaid:
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if to the Company, to:
Technest Holdings, Inc.
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxx Xxxxx
if to the Purchaser, to:
Xxxxx LLC
x/x Xxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxxxx Drive
PO Box 972
Road Town
Tortola, British Virgin Islands
SECTION 6. SEVERABILITY. In case any provision contained in
this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired thereby.
SECTION 7. GOVERNING LAW. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of New York
for contracts to be wholly performed in such state and without giving
effect to the principles thereof regarding the conflict of laws. Each
of the parties consents to the exclusive jurisdiction of the federal
courts whose districts encompass any part of the County of New York or
the state courts of the State of New York sitting in the County of New
York in connection with any dispute arising under this Agreement or any
of the other Transaction Agreements and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based
on FORUM NON CONVENIENS, to the bringing of any such proceeding in such
jurisdictions. Each of the parties hereto expressly waives its right to
a trial by jury with respect to any adjudication arising between the
parties pursuant to this Agreement.
SECTION 8. ENTIRE AGREEMENT. This Agreement contains the
entire agreement of the parties with respect to the subject matter
hereof and supersedes and is in full substitution for any and all prior
oral or written agreements and understandings between them related to
such subject matter, and neither party hereto shall be liable or bound
to the other party hereto in any manner with respect to such subject
matter by any representations, indemnities, covenants or agreements
except as specifically set forth herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be executed as of the date first above written by their
duly authorized representatives shown below:
TECHNEST HOLDINGS, INC.
By:
Name: ______________________________
Title: ____________________________
XXXXX LLC
By:
Name: ______________________________
Title: ____________________________
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