AGENCY AGREEMENT
THIS AGENCY AGREEMENT
(this "Agreement") is made and entered
into effective as of December 14, 2004, by and between Guardian
Technologies International, Inc., a Delaware corporation (the
"Company"), and The Shemano Group, Inc., a California corporation (
"Shemano"). Shemano and the Company agree as follows :
1.
Engagement of
Shemano : The
Company hereby engages Shemano to act as the Company's non-
exclusive placement agent with respect to sales by the Company in a
private placement (the “Offering”) of up to $20 million
aggregate principal amount of equity, equity-related or debt
securities (the “Securities”) of the Company to certain
accredited, institutional investors during the term of this
Agreement as set forth in Section 6 and Shemano hereby accepts such
engagement.
2 .
Offering Procedures
: Shemano will introduce the
Company to one or more investors who Shemano reasonably believes to
be "accredited investors," as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act of 1933, as
amended (the “ 1933 Act ”), with whom Shemano
has a pre-existing substantive relationship (the
“Offerees”).
Shemano's
Compensation : Upon
each closing of the Offering, in consideration for the services
rendered by Shemano hereunder, the Company shall pay or provide to
Shemano , or cause Shemano to be paid or provided , the following
compensation:
(b)
Cash Compensation:
Within three (3) days of each closing of
the Offering and receipt and acceptance of the Offering proceeds by
the Company, the Company shall pay to Shemano cash compensation
equal to eight percent (8%) of the aggregate gross proceeds
received in the Offering and accepted by the Company at such
closing.
(b)
Warrants: Within three (3) days of each closing of the
Offering and receipt and acceptance of the Offering proceeds by the
Company, the Company will issue to Shemano warrants to purchase a
number of shares of common stock of the Company equal to 15% of the
shares of common stock issued and sold in the Offering or issuable
upon conversion of any convertible securities sold in the Offering
and the subject of such closing (the “Agent’s
Warrants”). The exercise price of the Agent’s
Warrants shall equal the exercise price of the warrants issued in
the Offering to investors; provided that if no such warrants are
issued to investors in the Offering, the exercise price of the
Agent’s Warrants shall equal 130% of the price of any common
stock issued and sold
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in the Offering or the conversion price
of any convertible securities issued and sold in the Offering.
The term, registration rights, and other terms of the
Agent’s Warrants shall be identical to the warrants issued in
the Offering to any Offeree, and if the Offering does not provide
for the issuance of warrants, then the Agent’s Warrants
issued to Shemano shall be on terms customary for the type of
offering, shall have a five-year term, and contain a cashless
exercise provision commencing one (1) year following the issuance
thereof if the underlying shares have not then been registered.
The shares underlying the Agent’s Warrants shall be
subject to equitable adjustment for stock splits, stock dividends
and similar events. The shares underlying the Agent’s
Warrants shall have “piggyback” registration rights for
the term of the Agent’s Warrants .
For purposes of determining
Shemano’s compensation under this Section 3, the aggregate
gross proceeds received in the Offering(s) shall include any
additional amount paid to the Company by investors upon exercise or
conversion of any of the Securities or warrants , including the
value allocated to any securities not issued pursuant to a
“cashless exercise” or similar provision, whenever
actually received by the Company.
3.
Certain Matters Relating to
Shemano’s Duties:
Shemano’s responsibilities shall
include using its best efforts to introduce potential accredited,
institutional investors to the Company. In conducting the Offering,
Shemano shall not use any general solicitation or general
advertising within the meaning of applicable securities laws in
connection with any offering and shall otherwise comply with
applicable federal, state and foreign securities laws in connection
with the offer and sale of the Securities. Shemano shall have no
responsibility to participate or assist in any negotiations between
any potential investor and the Company but may do so at the
reasonable request of the Company. Further, Shemano shall have no
responsibility for fulfilling any SEC reporting or filing
requirements as such requirements relate to the Company; provided,
however, that Shemano agrees to provide the Company with reasonable
assistance related to any registration, qualification or other
requirements under applicable securities laws and other regulatory
requirements, upon request of the Company, including but not
limited to any approval required under applicable NASD rules or
regulations then applicable with regard to any compensation paid
hereunder by the Company to Shemano.
(c)
Shemano agrees to introduce the Company
to Offerees which are accredited, institutional investors only in
states in which Shemano has been advised by the Company that offers
and sales of Securities can be legally made by the
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Company and in which Shemano is
authorized to offer such securities.
(e)
Shemano shall perform its duties under
this Agreement in a manner consistent with the instructions of the
Company. Such performance shall include, but not be limited to, the
delivery to each Offeree of a current copy of a private placement
memorandum or similar offering document, subscription agreement and
any offering questionnaire and/or similar documents provided to
Shemano by the Company, as such documents may be amended from time
to time by the Company and delivered to Shemano (the
“Offering Documents”). Shemano shall consecutively
number each copy of the Offering Documents (which will include the
first letter of Shemano’s name or other identifying mark
sufficient to designate an Offeree introduced by Shemano); keep a
log of when and to whom each copy of any Offering Document is
given, with the Offering Document numbers; maintain a copy of any
written information Shemano obtains regarding the suitability of
each Offeree; and only use the Offering Documents in introducing
Offerees to the Company. Shemano shall provide this log and all
such written information to the Company at any time and promptly
upon request of the Company at the termination of this Agreement.
The Company shall, promptly following execution of this Agreement,
provide Shemano with a written list of prospective Offerees which
the Company does not want Shemano to contact. Shemano agrees to not
contact any person on such list, and Shemano shall not be entitled
to any compensation set forth in Section 3 or otherwise with
respect to any investment made by such person in the
Company’s Securities.
Shemano is and will hereafter act as an
independent contractor and not as an employee of the Company
and nothing in this Agreement shall be interpreted or construed to
create any employment, partnership, joint venture, or other
relationship between Shemano and the Company . Shemano will not
hold itself out as having, and will not state to any person that
Shemano has, any relationship with the Company other than as an
independent contractor. Shemano shall have no right or power to
find or create any liability or obligation for or in the name of
the Company or to sign any documents on behalf of the
Company.
(a)
Shemano understands that the Company is
subject to certain obligations in connection with the disclosure of
material nonpublic information to certain persons outside the
Company, including broker-dealers, investment advisers,
institutional investment managers (and their associated persons),
investment companies, and holders of the Company’s securities
(collectively, the “Enumerated Persons”). In
order to help assure the Company’s compliance with provisions
of Regulation FD promulgated by the Securities and Exchange
Commission, except as set forth herein, Shemano will not disclose
to any third party any information that has been furnished to
Shemano by the Company without the Company’s prior written
consent; and, further, in the event of any proposed disclosure of
such information to any Enumerated
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Person by Shemano, Shemano shall assure
that each such Enumerated Person agrees to keep such disclosed
information in confidence by executing an appropriate
confidentiality or similar agreement with Company or otherwise
agreeing to maintain the confidentiality of such disclosed
information.
4.
Right of First
Refusal . In
consideration for Shemano acting as agent in connection with the
proposed Offering and provided Shemano shall have raised not less
than $10 million (excluding any offering proceeds raised by Berthel
Fisher) in the Offering, the Company hereby grants Shemano a right
of first refusal to serve as the Company’s exclusive
financial advisor and investment banker in connection with any
subsequent private placement of debt or equity securities (other
than any such issuance in connection with any merger, acquisition,
purchase of assets or similar transaction by the Company) for a
period of six (6) months from the initial closing of the Offering.
In the event the Company advises Shemano that it desires to
effect any subsequent private placement of debt or equity
securities, the Company and Shemano will negotiate in good faith
the terms of Shemano’s engagement in a separate agreement
which would set forth, among other matters, compensation for
Shemano based upon customary fees for the services provided;
provided that if the parties are unable to agree to such terms
within ____(__) days of the Company’s initial notice to
Shemano, this right of first refusal shall automatically terminate.
6.
Termination of
Agreement . This Agreement
shall commence on the date of the execution hereof and shall remain
in full force and effect for a period of ________; provided that
this Agreement shall terminate immediately upon the completion or
termination of the Offering. The Company may terminate this
Agreement and the Offering at any time upon written notice to
Shemano. In addition, either party may terminate this
Agreement by notifying the other party in writing upon a material
breach
