PLACEMENT
AGREEMENT
THIS PLACEMENT
AGREEMENT (this “Agreement”) is
made and entered into effective as of this 15th day of January,
2005, by and between Berthel Fisher & Company Financial
Services, Inc., an Iowa corporation (the “Placement
Agent”), whose address is 701 Tama Street, Building B,
Marion, Iowa 52302, and Guardian Technologies International, Inc.,
a Delaware corporation (the “Company”), whose address
is 21351 Ridgetop Circle, Suite 300, Dulles, Virginia
20166.
WITNESSETH:
WHEREAS
, the Company desires
to engage the Placement Agent on a “best efforts basis”
to introduce the Company to certain accredited investors who are
also institutional investors or that have a net worth of more than
$5 million for the purpose of offering and selling to such
investors up to $15 million in aggregate amount of equity
securities (the “Offered Securities”) upon terms to be
negotiated between the Company and such investors (the
“Offering”); and
WHEREAS
, it is intended that
the offer, offer for sale and sale of the Offered Securities will
be exempt from the federal registration requirements of the
Securities Act of 1933, as amended (the “Securities
Act”), pursuant to Regulation D promulgated under Section
3(b) or Section 4(2), respectively, of the Securities Act and will
qualify for exemption from registration, if necessary, under
applicable state and foreign securities laws and
regulations.
NOW,
THEREFORE ,
in consideration of the foregoing, the premises and representations
contained herein, and the payment of valuable consideration,
receipt of which is hereby acknowledged by each party hereto, it is
agreed as follows:
1.
Engagement of
Placement Agent .
a.
On the basis of the
Placement Agent’s representations, covenants and warranties,
during the term of this Agreement, the Company hereby engages the
Placement Agent on a non-exclusive basis to use its “best
efforts” to offer and sell the Offered Securities to certain
“accredited investors” as such term is defined in Rule
501 of Regulation D promulgated under the Securities Act who also
may be deemed institutional investors or individual investors who
have a net worth in excess of $5 million (“Purhasers”).
The terms of any such Offered Securities shall be negotiated
between the Company and any such Purchaser and shall be reflected
in one or more definitive purchase agreements to be negotiated
between the Company and the Purchasers (the “Definitive
Agreements”). The Placement Agent understands and
agrees that, during the term hereof, the Company may engage one or
more broker-dealers unaffiliated with the Placement Agent to
solicit sales of the Company’s debt or equity securities or
to obtain other financing for the Company in a private placement or
other offering; provided that the Company shall advise the
Placement Agent periodically of the status of any such
offering.
b.
No Offered Securities
shall be considered to have been sold by the Placement Agent unless
the Purchaser is acceptable to the Company and the Company shall
have entered into one or more Definitive Agreements with such
Purchaser for the purchase of the Offered Securities. Moreover, no
compensation will be payable hereunder to the Placement Agent with
respect to the sale and purchase of the Offered Securities until
such time as the Company shall have entered into one or more
Definitive Areements with respect to such sale and purchase and the
Company shall have received the aggregate gross proceeds with
regard to the sale and purchase of the Offered Securities.
Anything in this Agreement to the contrary notwithstanding,
the Company shall not be required to pay any compensation to the
Placement Agent and the Placement Agent shall not be entitled to
any compensation hereunder if to do so would cause the Company to
violate federal or state securities laws, regulations or rules or
any other law applicable to the Offering.
c.
Each closing (the
“Closing”) with regard to the sale and purchase of the
Offered Securities shall be held at the offices of the Company,
21351 Ridgetop Circle, Suite 300, Dulles, Virginia
20166, or at such other location and at such time and date as
the Company and the Purchasers shall mutually agree.
2.
Placement
Agent’s Compensation .
As compensation for all
of the Placement Agent’s services hereunder, the Company
agrees to pay or issue to the Placement Agent the following
compensation:
a.
Upon each Closing of the
sale of the Offered Securities by the Placement Agent hereunder and
receipt and acceptance by the Company of the aggregate Offering
proceeds with regard to the Offered Securities to be sold at such
Closing, the Company shall pay to the Placement Agent (i) a selling
commission in an amount equal to seven percent (7%) of the
aggregate proceeds of the Offered Securities the subject of such
Closing and sold by the Placement Agent or its authorized agent
(the “Commission”), and (ii) a non-accountable expense
allowance equal to one percent (1%) of the aggregate proceeds of
the Offered Securities the subject of such Closing and sold by the
Placement Agent or its authorized agent (“Non-Accountable
Expense Allowance”). At each Closing of the Offering,
the Company shall pay the Placement Agent its Commission and
Non-Accountable Expense Allowance relating to the sale of the
Offered Securities that are the subject of the Closing provided
that the Company or counsel for the Company has received all
documents, including but not limited to, executed Definitive
Agreements from all Purchasers to be included in such Closing.
No Offered Securities shall be considered to have been sold
by the Placement Agent unless all Purchasers to be included in such
Closing are acceptable to the Company, and no compensation shall be
payable with respect to any agreement for the purchase of Offered
Securities if any Purchaser is not accepted by the Company.
Anything in this Agreement to the contrary notwithstanding,
the Company shall not be required to pay a Commission or
Non-Accountable Expense Allowance to the Placement Agent and the
Placement Agent shall not be entitled to a Commission or
Non-Accountable Expense Allowance, pursuant to this provision or
any other provision, if to do so would cause the Company to violate
federal or state securities laws, regulations or rules or any other
law applicable to the Offering.
b.
Upon each Closing of the
sale of the Offered Securities by the Placement Agent hereunder and
receipt and acceptance by the Company of the aggregate Offering
proceeds with regard to the Offered Securities to be sold at such
Closing, the Company will issue to the Placement Agent at a
purchase price of $.0001 per warrant, warrants to purchase a number
of shares equal to 4% of the shares of common stock, $.001 par
value per share (“Common Stock”), of the Company sold
in the Offering (but excluding any shares of Common Stock
underlying any warrants included in the Offered Securities) (the
“Placement Agent Warrants”). The Placement Agent
Warrants will be exercisable at any time during the five (5) year
period from the date of issue. The exercise price and other
terms of the Placement Agent Warrants shall be identical to the
warrants issued to Purchasers in the Offering; provided that if no
such warrants are issued to Purchasers, the Placement Agent
Warrants shall be exercisable at a price equal to one hundred
thirty percent (130%) of the price of the common stock sold in the
Offering, or in the event the Offered Security is not common stock
of the Company then at a price to be negotiated between the
parties, both parties agreeing to negotiate in good faith.
The Placement Agent’s Warrant shall include customary
provisions including, but not limited to, a cashless exercise
provision, anti-dilution rights, and a one-time piggyback
registration right.
3.
Payment of Expenses
and Fees .
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a.
The Company will pay all
costs and expenses incident to the performance of its obligations
under this Agreement including, without limitation, costs and
expenses incident to the following:
i.
the preparation of any
Definitive Agreements; and
ii.
the qualification or
registration of the Offered Securities under the securities or
“Blue Sky” laws of the states and other jurisdictions
reasonably designated by Placement Agent as those in which the
Placement Agent intends to sell, or offer for sale, the Offered
Securities; and
iii.
services of counsel for
the Company, including disbursements incurred in connection
therewith; and
iv.
the Placement Agent
shall have no liability to the Company with respect to any of the
foregoing.
b.
Except as otherwise
specifically provided in this Agreement, the Placement Agent and
the Company shall each pay their own respective expenses incident
to this Agreement and the transactions contemplated hereby, and no
party to this Agreement shall have any liability for such expenses
incurred by any other party. It is expressly understood that
the Placement Agent shall not be entitled to reimbursement by the
Company of any expenses incurred by it in the performance of
its services hereunder and that its receipt of the Non-Accountable
Expense Allowance at Closing is intended to cover all such
expenses.
4.
Investor Suitability
Standards and Accredited Investor Status .
Every Purchaser
participating in this Offering must:
a.
Be an accredited
investor under Rule 501(a) of Regulation D promulgated pursuant to
the Securities Act; and
b.
Have no need for
liquidity and have adequate means of providing for current needs
and contingencies; and
c.
Be able to accept
limitations on transferability because there is not now any public
market for the Offered Securities, and the transferability of the
Offered Securities is affected by restrictions on resale imposed by
federal securities laws and the laws of certain states;
and
d.
Have, alone or with a
purchaser representative(s), such knowledge and experience in
financial matters, and shall be capable of evaluating, either alone
or with his purchaser representative(s), the merits and risks of an
investment in the Offered Securities.
5.
Representations,
Warranties and Covenants of the Company .
The Company represents,
warrants and covenants to and agrees with Placement Agent, as of
the date hereof, and as of each Closing, as follows:
a.
All action required to
be taken by the Company as a condition to the offer and sale of the
Offered Securities to qualified Purchasers have been taken or will
have been taken prior to the Closing and the Offered Securities
have been, or will have been, duly and validly authorized and when
issued, delivered and sold in accordance with this Agreement
and
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the Definitive Agreement
and upon payment of the offering price for the Offered Securities,
will have been duly and validly issued.
b.
The Company is a
corporation duly organized and validly existing and in good
standing under the laws of the jurisdiction of its incorporation as
in effect on the date of this Agreement, with adequate power and
authority to enter into and perform this Agreement and to own its
property and to conduct its business substantially as described in
its filings with the Securities and Exchange Commission; the
execution and delivery of this Agreement by the Company has been
duly and validly authorized and will not result in a breach of its
Certificate of Incorporation or By-laws, as amended; and, when
executed and delivered by both parties hereto, this Agreement will
be a valid and binding obligation of the Company, assuming the due
execution by the Placement Agent, enforceable in accordance with
its terms (except to the extent that enforceability of the
indemnification provisions may be limited under applicable
securities laws and except as enforcement may be limited by
bankruptcy, moratorium or other laws affecting creditors’
rights or general principles of equity); and the execution and
delivery of this Agreement, the consummation of the transactions
herein contemplated and compliance with the terms of this Agreement
by the Company do not and will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a
default under, any agreement or any applicable law, rule,
regulation, judgment, order or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction
over the Company, to which the Company is a party or by which it is
bound;
c.
To the best of its
knowledge and belief, assuming the offer, offer for sale and sale
of the Offered Securities is made in compliance with the terms of
the Definitive Agreements, the applicable filings with the
Securities and Exchange Commission (“SEC”) and with the
Blue Sky states, and subject to the performance of the Placement
Agent’s obligations hereunder, the Company will have complied
in all material respects with the Securities Act and with all state
securities laws and regulations applicable to it in connection with
the offer, offer for sale, and sale of the Offered Securities.
The Company has not taken and will not take any action in
conflict with the Securities Act or applicable state or foreign
securities or Blue Sky laws, or which would make the exemption,
qualification or registration pursuant to applicable federal or
state securities or Blue Sky laws unavailable with respect to the
offer, offer for sale and sale of the Offered Securities. In
offering the Offered Securities, the Company will comply with all
applicable federal, state or foreign securities laws, including the
rules covering exemptions from registration;
d.
The execution and
delivery of this Agreement, the observance and performance hereof,
and the consummation of the transactions contemplated herein, does
not and will not constitute a material breach of, or a material
default under, any instrument or agreement by which the Company is
bound, and does not and will not contravene any existing material
law, decree or order applicable to the Company;
e.
The Company will offer,
offer to sell and sell the Offered Securities only to accredited
investors, as that term is defined in Regulation D;
f.
In making any offer,
offer for sale or sale of the Offered Securities, the Company and
its officers and directors shall comply with the provisions of the
Securities Act, the Exchange Act, and the applicable securities or
“Blue Sky” laws of the jurisdictions in which the
Company makes offers or sales of Offered Securities;
g.
The Company will
exercise reasonable care to assure that the Purchasers to whom it
sells the Offered Securities are not underwriters within the
meaning of Sections 2(a)(11) of the Securities Act. In that
connection the Company will: (i) make reasonable inquiry to
determine that the Purchaser is acquiring the Offered Securities
for his, her or its own account for investment purposes; (ii)
obtain from the Purchaser a signed written
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agreement that the
Offered Securities will not be sold without registration under the
Securities Act, in the absence of an opinion of counsel
satisfactory to counsel for the Company that an exemption from such
registration requirements is then available and the Purchaser shall
acknowledge therein its understanding that the Company
