EXHIBIT 10.26
NOTE AND WARRANT PURCHASE AGREEMENT
This Note and Warrant Purchase Agreement, dated as of December 8, 2003
(the "Agreement"), is entered into by and among Guardian Technologies
International, Inc., a Delaware corporation (the "Company"), and each of the
undersigned purchasers (collectively the "Purchasers" and individually a
"Purchaser") listed on the Schedule of Purchasers attached hereto as Exhibit A.
RECITAL
On the terms and subject to the conditions set forth herein, the
Purchasers are willing to purchase from the Company and the Company is willing
to sell to the Purchasers, Convertible Promissory Notes (individually a "Note",
and collectively, the "Notes") and warrants to purchase common stock
(individually, a "Warrant", and collectively, the "Warrants") to be issued by
the Company in the principal amounts and for the number of shares, respectively,
set forth opposite each Purchaser's name on the Schedule of Purchasers.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the
representations, warranties, and conditions set forth below, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Notes and Warrants.
a. Issuance of Notes and Warrants. In reliance upon the
representations, warranties and covenants of the parties set forth
herein, the Company agrees to issue, sell and deliver to the
Purchasers, and the Purchasers agree to purchase from the Company,
the Notes and Warrants. The purchase price for the Notes and
Warrants shall be payable in immediately available funds.
b. Terms of the Notes and Warrants. The terms and conditions of the
Notes and Warrants are set forth in the forms of Note and Warrant
attached hereto. Capitalized terms not otherwise defined herein
shall have the meaning set forth in Note and Warrant.
c. Delivery. The Company will deliver to each Purchaser a Note and
Warrant to be purchased by such Purchaser against receipt by the
Company of the purchase price for such Note.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser that:
a. Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware and has all requisite corporate power and
authority to carry on its businesses as now conducted and as
proposed to be conducted.
b. Corporate Power. The Company has all requisite corporate power
necessary for the authorization, execution and delivery of this
Agreement, and the Warrants, to sell and issue the Notes hereunder,
to carry out and perform all of its obligations under the terms of
this Agreement, and to carry on its business as presently conducted
and as presently proposed to be conducted, and such other agreements
and instruments. Each of the Agreement, the Notes and the Warrants
is a valid and binding obligation of the Company, enforceable in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, moratorium, and other laws of general
application affecting the enforcement of creditors' rights.
c. Capitalization. As of December 3, 2003, the authorized capital stock
of the Company is Fifteen million (15,000,000) shares of Common
Stock and One million (1,000,000) shares of Preferred Stock, and
there are issued and outstanding (i) 13,498,500 shares of the Common
Stock, (ii) 5,527 shares of Series A Preferred Stock, (iii) 1,303.3
shares of Series B Preferred Stock (iv) 705 shares of Series C
Preferred Stock, (v) warrants to purchase an aggregate of 21,800
shares of Common Stock, and (vi) an aggregate of 7,535,300 shares of
Common Stock reserved for issuance upon conversion of the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock. All such issued and outstanding shares have been duly
authorized and validly issued, are fully paid and non-assessable,
and were issued in compliance with all applicable state and federal
laws concerning the issuance of securities. From the period between
December 3, 2003, and the date hereof, the Company has not issued
any shares of capital stock, nor granted any warrants or options to
purchase shares of Common Stock.
d. Authorization.
i. Corporate Action. All corporate action on the part of the
Company, its officers, directors and stockholders necessary
for the sale and issuance of the Notes and the authorization,
execution and performance of the Company's obligations
hereunder and under the Warrants has been taken.
ii. Valid issuance. The Notes, the Warrants, and any shares of
common or preferred stock issued upon conversion or exercise
of the Notes or Warrants (the "Conversion Securities"), when
issued in compliance with the provisions of this Agreement
will be validly issued, fully paid and non-assessable and will
be free of restrictions on transfer other than restrictions
under the Warrants and under applicable federal and state
securities laws.
e. No Preemptive Rights. No person has any right of first refusal or
any preemptive rights in connection with the issuance of the Notes,
the Warrants or Conversion Securities or any future issuances of
securities by the Company.
f. Compliance with Other Instruments. The execution, delivery and
performance of and compliance with this Agreement, the Notes or the
Warrants by the Company, and the issuance and sale of the Conversion
Securities, will not result in any violation of the Certificate of
Incorporation or Bylaws of the Company or in any violation of or
default in any material respect under the terms of any mortgage,
indenture, contract, agreement, instrument, judgment or decree.
g. Offering. In reliance on the representations and warranties of the
Purchaser in Section 3 hereof, the offer, sale and issuance of the
Notes and the Warrants in conformity with the terms of this
Agreement, the Notes and the Warrants will not result in a violation
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of the Securities Act of 1933, as amended (the "Securities Act"), or
any state securities laws, including the qualification or
registration requirements of applicable blue sky laws.
h. Company Reports; Disclosure.
i. Company Reports. For the purposes of this Agreement, the term
"Company Reports" shall mean, collectively, each registration
statement, report, proxy statement or information statement
filed with the Securities and Exchange Commission (the "SEC")
since June 26, 2003 (date of the reverse acquisition), in the
form (including exhibits, annexes and any amendments thereto)
filed with the SEC. As of their respective dates, the Company
Reports complied in all material respects with the
requirements of the Securities Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and did not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Nothing
has occurred since November 14, 2003 (the date of filing of
the Company's Form 10-Q reporting the nine month period ending
September 30, 2003) which would require the filing of any
additional report or of any amendment to any of the Company
Reports with the SEC, or which would cause any of the Company
Reports to contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading.
ii. Disclosure. No representation or warranty by the Company in
this Agreement, or in any document or certificate furnished or
to be furnished to the Purchaser pursuant hereto or in
connection with the transactions contemplated hereby, when
taken together, contains or will contain any untrue statement
of a material fact or omits or will omit to state a material
fact necessary to make the statements made herein and therein,
in the light of the circumstances under which they were made
herein and therein, in the light of the circumstances under
which they were made, not misleading. The Company has either
filed with the SEC or fully provided the Purchaser with all
the information necessary for the Purchaser to decide whether
to purchase the Note.
3. Representations and Warranties by the Purchaser. The Purchaser represents
and warrants to the Company as of the time of issuance of the Notes and
Warrants as follows:
a. Investment Intent: Authority. This Agreement is made with the
Purchaser in reliance upon such Purchaser's representation to the
Company, evidenced by Purchaser's execution of this Agreement, that
Purchaser is acquiring the Note and Warrant, including the
Conversion Securities, for investment for such Purchaser's own
account, not as nominee or agent, for investment and not with a view
to, or for resale in connection with, any distribution or public
offering thereof within the meaning of the Securities Act. Purchaser
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has the full right, power, authority and capacity to enter into and
perform this Agreement and this Agreement will constitute a valid
and binding obligation upon Purchaser, except as the same may be
limited by bankruptcy, insolvency, moratorium, and other laws of
general application affecting the enforcement of creditors' rights.
b. Securities Not Registered. The Purchaser understands and
acknowledges that the offering of the Notes, the Warrants and the
Conversion Securities pursuant to this Agreement will not be
registered under the Securities Act or qualified under applicable
blue sky laws on the grounds that the offering and sale of
securities contemplated by this Agreement are exempt from
registration under the Securities Act and exempt from qualifications
available under applicable blue sky laws, and that the Company's
reliance upon such exemptions is predicated upon the Purchaser's
representations set forth in this Agreement. The Purchaser
acknowledges and understands that the Note, the Warrant and the
Conversion Securities must be held for at least 12 months after
Closing and thereafter indefinitely unless they are registered under
the Securities Act and qualified under applicable blue sky laws or
an exemption from such registration and such qualification is
available.
c. No Transfer. Purchaser covenants that in no event will it transfer
the Note, the Warrant or the Conversion Securities other than (i) in
conjunction with an effective registration statement for the
Securities under the Securities Act or pursuant to an exemption
therefrom, or in compliance with Rule 144 promulgated under the
Securities Act, or (ii) to a partner, former partner, limited
partner, member, former member, stockholder or other entity
affiliated with Purchaser or, in the case of a Purchaser who is an
individual, to a spouse, lineal descendant or ancestor, or any trust
for any of the foregoing, by transfer by gift, will or intestate
succession; provided that in each of the foregoing cases the
transferee agrees in writing to be subject to the terms of this
Agreement to the same extent as if the transferee were the original
Purchaser hereunder.
d. Knowledge and Experience. Purchaser (i) has such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of Purchaser's prospective
investment in the Note, the Warrant and the Conversion Securities;
(ii) has the ability to bear the economic risks of Purchaser's
prospective investment; (iii) has had access to such information as
Purchaser has considered necessary to make a determination to
purchase the Note, the Warrant and the Conversion Securities
together with such additional information as is necessary to verify
the accuracy of the information supplied; and (iv) has not been
offered the Note, the Warrant or the Conversion Securities by any
form of advertisement, article, notice or other communication
published in any newspaper, magazine, or similar media or broadcast
over television or radio, or any seminar or meeting whose attendees
have been invited by any such media.
e. Accredited Investor. Purchaser is an "accredited investor" as that
term is defined in Rule 501(a) under the Securities Act.
f. Legends. Each certificate representing the Notes, the Warrants and
the Conversion Securities may be endorsed with the following
legends:
i. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144
PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD OR
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OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT (i) IN
CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SHARES UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR
(iii) PURSUANT TO AN OPINION OF COUNSEL, THAT SUCH
REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SAID SALE,
OFFER OR DISTRIBUTION.
ii. Other Legends. Any other legends required by applicable state
blue sky laws. The Company need not register a transfer of any
legended Note, Warrant or Conversion Securities, and may also
instruct its transfer agent not to register the transfer of
the Notes, Warrants or Conversion Securities, unless the
conditions specified in each of the foregoing legends are
satisfied.
g. Removal of Legend and Transfer Restrictions. Any legend endorsed on
a certificate pursuant to subsection 3(f) and the stop transfer
instructions with respect to such legend shall be removed, and the
Company shall issue a certificate without such legend to the holder
of such Note, Warrant or Conversion Securities if such Note, Warrant
or Conversion Securities are registered under the Securities Act and
a prospectus meeting the requirements of Section 10 of the
Securities Act is available or if such holder satisfies the
requirements of Rule 144(k).
4. Miscellaneous.
a. Waivers and Amendments. Any provision of this Agreement other than
the principal amount of the Notes and the number of shares subject
to the Warrants may be amended, waived or modified upon the written
consent of the Company and the Purchasers providing a majority of
the aggregate principal amounts provided pursuant to this Agreement.
b. Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Delaware. c. Entire Agreement. This
Agreement together with the Notes and Warrants constitutes the full
and entire understanding and agreement between the parties with
regard to the subjects hereof and thereof.
d. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be duly given upon
receipt if personally delivered or mailed by registered or certified
mail, postage prepaid, or by recognized overnight courier or
personal delivery, addressed (i) if to a Purchaser, at the address
or facsimile number of such Purchaser set forth below such party's
name on Exhibit A, or at such other address or number as such
Purchaser shall have furnished to the Company in writing, or (ii) if
to Company, at 00000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000,
Attention: Chief Financial Officer or at such other address as
Company shall furnish to the Purchaser in writing.
e. Validity. If any provision of this Agreement, the Notes or the
Warrants shall be judicially determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
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f. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which
together shall be deemed to constitute one instrument.
THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
date and year first written above.
COMPANY: GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman & Chief Executive Officer
PURCHASER:
By:
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Printed Name:
Address: ------------------------------------
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EXHIBIT A
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SCHEDULE OF PURCHASERS
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BW-1 Xxxx Xxxxxxxx $100,000.00
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BW-2 Xxxxxx X. Xxxxxxxxxxx $100,000.00
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BW-3 Xxxx X. Xxxxxxx $ 50,000.00
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BW-4 Xxxxxxx X. Xxxx $100,000.00
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BW-5 Xxxxx Xxxxxx $50,000.00
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BW-6 Xxx Xxxxxxxx $100,000.00
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BW-7 Xxxxxx X. Xxxxxxxxxxx $200,000.00
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