EXHIBIT 10.5
PLACEMENT AGENT'S AGREEMENT
March 11, 2004
VIA TELECOPIER
▇▇▇-▇▇▇-▇▇▇▇
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
DAC Technologies Group International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇▇:
In connection with ▇▇▇▇▇ Securities Co., Inc. (the "Placement Agent" or
"▇▇▇▇▇") acting as the exclusive agent and representative with respect to the
private placement (the "Placement") of certain securities (the "Units") of DAC
Technologies Group International, Inc. (the "Company"), described on the term
sheet ("Term Sheet") attached hereto as Exhibit A, the provisions of which shall
be incorporated herein as if at length set forth, the Company and the Placement
Agent hereby agree as follows:
1. The Company hereby agrees to pay and deliver to the Placement Agent
at the closing(s) the compensation set forth in Exhibit A for the Placement
Agent's services. The foregoing compensation shall be deemed earned and shall be
due and payable only upon consummation of the closing and in no event shall such
compensation (except for reimbursable expenses) be deemed earned nor be payable
if the closing(s) do not occur.
2. The Placement Agent acknowledges that the Units will not have been
registered under the Securities Act of 1933, as amended, (the "Act") or any
state
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securities laws in reliance upon existing exemptions for private offerings and
that neither the Units nor the components thereof can be sold unless they are
registered or an exemption from registration is available.
3. The Company and the Placement Agent each represent to the other that
it has not taken, and the Company and the Placement Agent each agree with the
other that it will not take any action, directly or indirectly, so as to cause
the Placement to fail to be entitled to rely upon the exemption from
registration afforded by Section 4(2) of the Act and Regulation D promulgated
thereunder. In effecting the Placement, the Company and the Placement Agent each
agree to comply in all material respects with all applicable provisions of the
Act and any regulations thereunder and all applicable state laws and
requirements. It is understood by the Company and the Placement Agent that the
investors in the Placement will be "accredited investors" within the meaning of
Regulation D, and that all investors shall be subject to the approval of the
Company and the Placement Agent in all events.
4. The Placement Agent shall use diligent efforts to complete the
Placement as contemplated herein by June 15, 2004. If the minimum Placement
closes by June 15, 2004, the Placement Agent shall have until July 15, 2004 to
complete the maximum Placement. The Company agrees that from the date hereof
through June 15, 2004, it shall not attempt to sell any of its securities except
through the Placement Agent. At the closing, the Company shall deliver
covenants, warranties, representations and opinions as are traditional in
private placements.
5. The Company understands and agrees that ▇▇▇▇▇, in performing its
services hereunder, will use and rely upon the information contained in certain
documents ("Placement Documents") to be prepared by the Company and upon other
information supplied by the Company, and that ▇▇▇▇▇ does not assume
responsibility for independent verification of any information concerning the
Company, including, without limitation, any financial information, forecasts or
projections considered by ▇▇▇▇▇ in connection with the rendering of its
services. Accordingly, ▇▇▇▇▇ shall be entitled to assume and rely upon the
accuracy or completeness of all such information, and is not required to conduct
a physical inspection of any of the properties or assets or to prepare or obtain
any independent evaluation or appraisal of any of the assets or liabilities of
the Company. With respect to any financial forecasts and projections made
available to ▇▇▇▇▇ by the Company and used by ▇▇▇▇▇ in its analysis, ▇▇▇▇▇ shall
be entitled to assume that such forecasts and projections have been prepared on
reasonable bases reflecting the best currently available estimates and judgments
of the management of the Company as to the matters covered thereby. While ▇▇▇▇▇
can rely on such information, it reserves the right to investigate, confirm
and/or request other
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information in conjunction with the Company, or independently, and the Company
will cooperate in providing such information and/or instructing its outside
counsel and auditors to supply such information.
6. The Company authorizes ▇▇▇▇▇, as the Company's exclusive Placement
Agent, to submit the Placement Documents to potential investors and to execute
on behalf of the Company if, as and when necessary a customary confidentiality
agreement to be entered into by such parties. Additionally, the Company
authorizes ▇▇▇▇▇ to take all reasonable actions necessary to perform its
services on behalf of the Company as exclusive Placement Agent as long as such
actions are in accordance with this Agreement.
7. The Company covenants that for a period of one (1) year from the
closing of the Placement, ▇▇▇▇▇ shall have the right to purchase for ▇▇▇▇▇'▇
account or to sell for the account of the Company any securities (other than
purely debt securities; securities offered as part of a compensation plan for
officers, employees and consultants; and securities offered in exchange for
assets or securities of other corporations) with respect to which the Company
may seek a public offering in the United States pursuant to a registration under
the Act and/or a private offering in the United States of said securities. The
Company will consult ▇▇▇▇▇ with regard to any such offering and will offer ▇▇▇▇▇
exclusively the opportunity to purchase, sell or act as underwriter or placement
agent for the purchase or sale of any such securities on terms not less
favorable to the Company than it can secure elsewhere. If ▇▇▇▇▇ fails to accept
in writing such proposal for financing made by the Company within ten (10)
business days after the receipt of a notice containing such proposal, then ▇▇▇▇▇
shall have no further claim or right with respect to the financing proposal
contained in such notice. If, thereafter, such proposal is modified in any
material respect, the Company shall adopt the same procedure as with respect to
the original proposal. If ▇▇▇▇▇ does not avail itself of such opportunity to act
as underwriter or placement agent, this will not affect its preferential rights
for future financings during the aforesaid one (1) year period. The Company
acknowledges that its violation of the covenants of this Paragraph 7 and/or
violation of ▇▇▇▇▇'▇ rights of first refusal would cause irreparable harm to
▇▇▇▇▇ and agrees that ▇▇▇▇▇ shall be entitled to injunctive relief to prevent
any violation of the provisions of this Paragraph 7. The Company represents and
warrants that no other person or
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entity has any rights to participate in any offer, sale or distribution of
securities with respect to which ▇▇▇▇▇ shall have preferential rights. The
Company also represents and warrants that the terms contemplated herein will not
breach any covenant warranty or condition agreed to by the Company in the equity
and/or debt financings effected by the Company to date. ▇▇▇▇▇ may exercise the
right of first refusal granted pursuant to this Paragraph 7 either on its own
behalf or together with another firm or firms designated by ▇▇▇▇▇ and reasonably
acceptable to the Company, provided, that in each instance ▇▇▇▇▇ shall be fully
qualified to act as underwriter or placement agent in the offering.
8. The Company hereby agrees to indemnify and hold harmless the
Placement Agent and its officers, directors and shareholders, individually and
collectively, ("Indemnified Person(s)") from and against any and all claims,
liabilities, losses, damages and reasonable expenses incurred by any Indemnified
Person (including reasonable fees and disbursements of one law firm) which (a)
are related to or arise out of (i) actions taken or omitted to be taken
(including any untrue statements made or any statements omitted to be made) by
the Company or (ii) actions taken or omitted by an Indemnified Person with the
Company's written consent or in conformity with the Company's prior written
instructions or (b) are otherwise directly related to or arise out of the
Placement, and will reimburse the Indemnified Persons for all reasonable costs
or expenses, including reasonable fees and disbursements of counsel, as they are
incurred, in connection with an investigation, inquiry or other proceeding,
whether or not in connection with pending or threatened litigation, caused by or
arising out of or in connection with the Placement whether or not any liability
results therefrom. The Company will not, however, be responsible for any claims,
liabilities, losses, damages, or expenses which are finally judicially
determined to have resulted primarily from the Placement Agent's bad faith,
gross negligence or willful misconduct.
The Placement Agent hereby agrees to indemnify and hold harmless the
Company and its officers, directors and shareholders, individually and
collectively, ("Indemnified Person(s)") from and against any and all claims,
liabilities, losses, damages and reasonable expenses incurred by any Indemnified
Person (including reasonable fees and disbursements of one law firm) which (a)
are related to or arise out of (i) actions taken or omitted to be taken
(including any untrue statements made or any statements omitted to be made) by
the Placement Agent or (ii) actions taken
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or omitted by an Indemnified Person with the Placement Agent's written consent
or in conformity with the Placement Agent's prior written instructions or (b)
are otherwise directly related to or arise out of the Placement, and will
reimburse the Indemnified Persons for all reasonable costs or expenses,
including reasonable fees and disbursements of counsel, as they are incurred, in
connection with an investigation, inquiry or other proceeding, whether or not in
connection with pending or threatened litigation, caused by or arising out of or
in connection with the Placement whether or not any liability results therefrom.
The Placement Agent will not, however, be responsible for any claims,
liabilities, losses, damages, or expenses which are finally judicially
determined to have resulted primarily from the Company's bad faith, gross
negligence or willful misconduct.
9. In the event of a closing of the Placement, ▇▇▇▇▇ shall have the
right to disclose its participation therein, including, without limitation, the
placement of "tombstone" advertisements in financial and other newspapers and
journals as an accountable expense (maximum $7,500) provided for in Exhibit A,
subject to the prior review of and approval by counsel to the Company.
10. The Company recognizes that ▇▇▇▇▇ has been engaged by the Company
only and that the Company's engagement of ▇▇▇▇▇ is not deemed to be on behalf of
and is not intended to confer rights upon any shareholder, partner or other
owner of the Company or any other person not a party hereto as against ▇▇▇▇▇ or
its directors, officers, agents, employees or representatives. Unless otherwise
expressly agreed, no one other than the Company is authorized to rely upon the
Company's engagement of ▇▇▇▇▇ or any statements, advice, opinions or conduct by
▇▇▇▇▇. Without limiting the foregoing, any opinions or advice rendered by ▇▇▇▇▇
to the Company's Board of Directors or management in the course of the Company's
engagement of ▇▇▇▇▇ are for the purpose of assisting the Board or management, as
the case may be, in connection with the Placement and do not constitute a
recommendation to any shareholder of the Company, concerning action that such
shareholder might or should take in connection with the Placement. ▇▇▇▇▇'▇ role
herein is that of an independent contractor, nothing herein is intended to
create or shall be construed as creating a fiduciary relationship between the
Company and ▇▇▇▇▇.
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11. All notices, requests or instructions hereunder shall be in writing
and delivered personally, sent by telecopier or sent by registered or certified
mail, postage prepaid, as follows:
(1) If to the Company:
DAC Technologies Group International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Att: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
(2) If to the Placement Agent:
▇▇▇▇▇ Securities Co., Inc.
▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Att: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, ▇▇.,
Senior Vice President
Telecopier: 212-509-6613
Any of the above addresses may be changed at any time by notice given as
set forth above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered or delivered by telecopier and two (2) business days after the
date of mailing, if mailed.
12. Except as expressly set forth herein, this Agreement, Exhibit A and
the Agent's Warrants contain the entire agreement among the parties hereto with
respect to the transaction contemplated hereby and shall supersede all previous
agreements of the parties with respect to the subject matter thereof.
13. This Agreement shall not be assignable by either party hereto except
pursuant to a writing executed by all of the parties hereto. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
14. If any provision of this Agreement, or the application of any such
provision to any person or circumstance, shall be held invalid by a court of
competent jurisdiction, the remainder of this Agreement, or the application of
such
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provision to persons or circumstances other than those as to which it is held
invalid, shall not be affected thereby.
15. In addition to the covenants and agreements herein above provided,
each of the parties hereto shall use such party's diligent efforts to take such
actions as may be reasonably necessary or reasonably requested by the other
party hereto to carry out and consummate the transactions contemplated by this
Agreement.
16. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which taken together shall constitute one and
the same instrument.
17. No modification or amendment of this Agreement shall be effective
unless in writing and signed by the party against which it is sought to be
enforced.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
Very truly yours,
▇▇▇▇▇ Securities Co., Inc.
By:/s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, ▇▇.
Title: Senior Vice President
Agreed:
DAC Technologies Group International, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
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EXHIBIT A
TO: DAC Technologies Group International, Inc. (the "Company")
FROM: ▇▇▇▇▇ Securities Co., Inc. ("Placement Agent" or "▇▇▇▇▇")
RE: THE PLACEMENT
TERM SHEET
PRINCIPAL AMOUNT - $1.7 million with a minimum of $500,000 and a minimum
investment of $25,000 per investor (unless waived by the Company and the
Placement Agent.)
THE UNITS: a) Up to Sixty eight (68) Units priced at $25,000 per Unit with each
Unit to consist of:
- An undetermined number of shares of the Company's common stock par
value $ _____ per share (the "Common Stock") as equals $25,000 divided by the
Closing Price of the Common Stock as hereinafter defined.
- The number of Common Stock purchase warrants (the "Unit Warrants")
as will produce a 50% warrant coverage. By way of example, assuming
the Closing Price of Common Stock is pegged at $2.00 per share, each
$25,000 Unit will consist of 12,500 shares of Common Stock and 6,250
Unit Warrants.
b) Each Unit Warrant shall entitle the holder to purchase one (1)
share of Common Stock for the greater of $2.40 or 150% of the Closing
Price of the Common Stock (as hereinafter defined) per share for a period
of five (5) years from the date of issue. Each Unit Warrant shall contain
customary anti-dilution provisions. By way of example, assuming the
Closing Price of the Common Stock is pegged at $2.00 per share, each Unit
Warrant will be exercisable at $3.00 per share.
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c) The term Closing Price of the Common Stock shall mean the average
of the daily closing prices (or closing bid price if there is no closing
price) of the Common Stock for a period of ten (10) trading days ending
two (2) trading days prior to the closing date but in no event less than
$1.60.
d) The Unit Warrants shall be non-redeemable for a period of two (2)
years from the date of the closing of the Placement. Unit Warrants shall
be redeemable, in whole and not in part, at the option of the Company,
upon thirty (30) days prior written notice at a redemption price of $.05
per Warrant from and after that time when the Closing Price of the Common
Stock (as defined) for each of ten (10) consecutive trading days ending
not less than five (5) days before the date of the aforesaid redemption
notice exceeds 200% of the Closing Price of the Common Stock.
PLACEMENT AGENT'S FEE - 8% of the aggregate proceeds from all sales of the Units
achieved through the efforts of the Company, ▇▇▇▇▇ and/or any third party, paid
at closing(s).
- 5,000 warrants, identical to the Unit Warrants, issued to ▇▇▇▇▇
and/or its designees for each Unit sold (at a cost of $.001 per
warrant) (the "Agent's Warrants").
- Accountable, reimbursable expenses, including legal fees, not to
exceed $30,000 with a non-refundable advance of $5,000.
ADDITIONAL TERMS AND CONDITIONS:
a) Placement Documents to be satisfactory in form and content:
1. A detailed statement of the intended use of net proceeds and
detailed two (2) year projections with a statement of
assumptions.
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2. A Subscription Agreement containing standard covenants,
representations, warranties and conventional anti-dilution
protections.
3. A Registration Rights Agreement providing for 1) immediate
registration of the Common Stock underlying the Units and Unit
Warrants on Form S-3 if the Company is eligible to use such
Form or 2) registration of said Common Stock as soon as the
Company becomes eligible to use Form S-3, and also providing
for evergreen piggyback rights in the event the Company is not
eligible to use Form S-3; all at the expense of the Company.
4. Form 10k for the year ended December 31, 2003.
5. An Accredited Investor Questionnaire apart from or as a part
of the Subscription Agreement.
6. A list of directors, officers and 5% or greater shareholders
by name, residence address, social security number and
relationship with the Company.
7. ALL material written agreements.
8. The latest filed U.S. tax return.
b) For a three (3) year period from the first closing, the Company
shall ▇▇▇▇▇ ▇▇▇▇▇ the right to appoint a designee as an observer
having the right to attend all meetings of the Company's Board of
Directors and Committees but not having the right to vote. The
observer will be reimbursed for his out-of-pocket expenses in
connection with attending such meetings.
c) If the Company closes a sale(s) of any of its securities within
twenty four (24) months after the first closing of the Placement
with any of the investors introduced by ▇▇▇▇▇ to the Company in
writing, ▇▇▇▇▇ shall be entitled to the cash portion of Placement
Agent's Fee and Agent's Warrants set forth above. This provision
shall not be deemed to alter the one (1) year preferential rights
period provided for in Section 7 of this Agreement.
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d) Escrow Agreement: The Placement Agent will promptly deposit funds
received from investors in an escrow account or other account (the
"Account") permitted by Rule 15c2-4 promulgated under the Securities
and Exchange Act of 1934, as amended, formed by the Placement Agent
with a qualified institution (the "Bank") and hold funds in
accordance with the terms of this Agreement for the benefit of the
investors and Company. The Bank shall release funds from the Account
to the Company and/or its designees only upon receipt of
instructions executed by each of the Placement Agent and the
Company. If the Placement does not close on or before May 15, 2004,
the Placement Agent will instruct the Bank to return the funds to
the investors without any deduction therefrom or interest thereon.
The Company shall bear the costs of the escrow account.
e) Conditions to closing: No closing of this Placement shall take place
unless, prior to June 15, 2004, the Company shall have caused its
counsel to issue an opinion in form and content reasonably
satisfactory to ▇▇▇▇▇; it being understood that said opinion must
set forth a Rule 10b-5 statement.
f) Closing: The closing(s) of the Placement shall take place at the
offices of the Company or the Placement Agent at times and dates
agreed upon by the Placement Agent and the Company upon the receipt
of Subscription Agreements and related documents in form and
substance satisfactory to the Company and the Placement Agent which
are equal to or are in excess of the Placement. At each closing,
payment for the Units shall be made against delivery of certificates
representing the Units sold.
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