Document:

Policy Regarding Compensation of Independent Directors

    Exhibit
      10.1

     

    GUARDIAN
      TECHNOLOGIES INTERNATIONAL, INC.

    

    Policy
      Regarding Compensation of Independent Directors

    

    December
      22, 2005

     

    The
      board
      of directors (the “Board”) of Guardian Technologies International, Inc., a
      Delaware corporation (the “Company”), has adopted the following Policy Regarding
      Compensation of Independent Directors (“Policy”) pursuant to the recommendations
      of the Compensation Committee of the Company. The purpose of the Policy is
      to
      attract and retain qualified independent members of the Board.

    

    1. No
      Remuneration of Officers and Employees.
      Directors who are also officers or employees of the Company or any subsidiary
      of
      the Company shall not be entitled to any compensation for serving as a director
      on the Board.

    

    2. Reimbursement
      of Expenses. Each
      director who is not also an employee or officer of the Company or any subsidiary
      (an “Independent Director”) shall be reimbursed for reasonable, documented out
      of pocket expenses incurred in connection with travel to and attending Board
      meetings and the meetings of any committee of the Board of which he or she
      is a
      member.

    

    3. Annual
      Compensation. As
      compensation for his or her services as an Independent Director, each
      Independent Director shall receive annual compensation for serving as a director
      of the Company as follows: on the second day of each calendar year (or the
      next
      succeeding day, if that day is a holiday), each Independent Director shall
      be
      granted non-qualified stock options to purchase an aggregate of 5,000 shares
      of
      common stock, $.001 par value per share (“Common Stock”), of the Company
      pursuant to the Company’s Amended and Restated 2003 Stock Incentive Plan (“2003
      Stock Incentive Plan”), which options shall vest and become exercisable one (1)
      year after the date of grant, shall be exercisable at a price equal to the
      fair
      market value of the Company’s Common Stock on the date of grant as determined in
      accordance with the terms of the 2003 Stock Incentive Plan, and as authorized
      and approved by the Compensation Committee or such other committee of the Board
      as shall then administer the 2003 Stock Incentive Plan. Following the adoption
      of this Policy, in the event a newly appointed Independent Director commences
      serving as a director on a day subsequent to the second day of a calendar year
      (or the next succeeding day, if that day is a holiday), each such Independent
      Director shall be granted a pro rata portion of the number of non-qualified
      options to be granted pursuant to this Section 3 for the calendar year five
      (5)
      business day following such appointment to the Board, which pro rata portion
      shall be determined on the basis of the number of days until the next option
      grant authorized pursuant to this Section 3.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4. Compensation
      of Newly Appointed Directors. As
      an
      incentive for each newly appointed Independent Director to accept such
      appointment to the Board, each such newly appointed Independent Director
      appointed following the adoption of this Policy shall receive the following
      compensation: on the day immediately following the date of his or her
      appointment (or the next succeeding day, if that day is a holiday), each newly
      appointed Independent Director shall be granted non-qualified stock options
      to
      purchase an aggregate of 10,000 shares of Common Stock pursuant to the 2003
      Stock Incentive Plan, which options shall vest and become exercisable one (1)
      year after the date of grant, shall be exercisable at a price equal to the
      fair
      market value of the Company’s Common Stock on the date of grant as determined in
      accordance with the terms of the 2003 Stock Incentive Plan and as authorized
      and
      approved by the Compensation Committee or such other committee of the Board
      as
      shall then administer the 2003 Stock Incentive Plan.

    

    5. Compensation
      of Current Independent Directors. As
      compensation for his or her continued service on the Board, each Independent
      Director who was an Independent Director of the Company on January 1, 2005,
      and
      who continues to serve as such on the date of the adoption of this Policy,
      shall
      receive the following compensation: within five (5) business days of the
      effective date of this Policy, each such Independent Director shall be granted
      non-qualified stock options to purchase an aggregate of 10,000 shares of Common
      Stock pursuant to the Company’s 2003 Stock Incentive Plan, which options shall
      vest and become exercisable on January 1, 2006, shall be exercisable at a price
      equal to the fair market value of the Company’s Common Stock on the date of
      grant as determined in accordance with the terms of the 2003 Stock Incentive
      Plan and as authorized and approved by the Compensation Committee.

    

    6. Annual
      Compensation of Members of Board Committee.
      Each
      Independent Director who also serves as a member of one or more of the
      committees of the Board (Audit, Compensation or Nominating Committee, and such
      other committee(s) of the Board as shall be established by the Board from time)
      shall receive the following annual compensation for each committee of which
      he
      is a member: on the second day of each calendar year (or the next succeeding
      day, if that day is a holiday), each Independent Director who is then a member
      of a Board committee shall, for each committee on which he then serves, be
      granted non-qualified stock options to purchase an aggregate of 2,500 shares
      of
      Common Stock pursuant to the 2003 Stock Incentive Plan, which options shall
      vest
      and become exercisable one (1) year after the date of grant, shall be
      exercisable at a price equal to the fair market value of the Company’s Common
      Stock on the date of grant as determined in accordance with the terms of the
      2003 Stock Incentive Plan and as authorized and approved by the Compensation
      Committee or such other committee of the Board as shall then administer the
      2003
      Stock Incentive Plan. Following the adoption of this Policy, in the event a
      newly appointed Independent Director commences serving as a committee member
      on
      a day subsequent to the second day of a calendar year (or the next succeeding
      day, if that day is a holiday), each such Independent Director shall be granted
      a pro rata portion of the number of non-qualified options to be granted pursuant
      to this Section 6 for that calendar year five (5) business days following such
      appointment to a committee, which pro rata portion shall be determined on the
      basis of the number of days until the next option grant authorized pursuant
      hereto; provided that such options shall be exercisable at a price equal to
      the
      fair market value of the Company’s Common Stock on the date of grant as
      determined in accordance with the terms of the 2003 Stock Incentive Plan and
      as
      authorized and approved by the Compensation Committee or such other committee
      of
      the Board as shall then administer the 2003 Stock Incentive Plan.

    

    
      
         

      

      
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    7. Other
      Awards and Compensation. The
      Board, in its discretion, may grant additional awards of options, restricted
      stock and/or cash compensation to Independent Directors as it may determine
      from
      time to time.

    

    8. Terms
      of 2003 Stock Incentive Plan Shall Govern.
      In the
      event of any inconsistency between the terms of this Policy and the terms of
      the
      2003 Stock Incentive Plan, or any Non-Qualified Stock Option Award Agreement
      covering any options which are granted pursuant to this Policy, the terms of
      the
      2003 Stock Incentive Plan or Non-Qualified Stock Option Award Agreement shall
      govern.

    

    9. Amendment
      or Termination. This
      Policy may be amended, altered or terminated at the election of the Board in
      its
      absolute discretion, provided that no amendment, alteration or termination
      of
      this Policy shall have a retroactive effect or impair the rights of any
      Independent Director under any stock option grant theretofore granted to any
      such Independent Director.

    

    10. Effective
      Date. This
      Policy was adopted by the Board of Directors, pursuant to the recommendations
      of
      the Compensation Committee, on December 22, 2005, and is effective as of such
      date.

    

     

     

    3Form of Independent Director Non-Qualified Stock Option Award Agreement

    Exhibit
      10.2

     

    GUARDIAN
      TECHNOLOGIES INTERNATIONAL, INC.

    

    FORM
      OF

    

    INDEPENDENT
      DIRECTOR

    NON-QUALIFIED
      STOCK OPTION AWARD AGREEMENT

    AMENDED
      AND RESTATED 2003 STOCK INCENTIVE PLAN

    

    

    THIS
      INDEPENDENT DIRECTOR NON-QUALIFIED STOCK OPTION AWARD
      AGREEMENT
      ("Award
      Agreement") is dated as of this ____ day of ____________, _____, by and between
      Guardian Technologies International, Inc., a Delaware corporation (the
“Company”), and ____________________________ (the “Participant”).

    

    1. Grant
      of Award.
      The
      Company hereby grants to the Participant on the date indicated above (the “Grant
      Date”) a non-qualified stock option (the “Option”) to purchase up to
      _________________ shares (the “Option Shares”) of the Company’s common stock,
      $.001 par value per share (the “Common Stock”), pursuant to the Company’s 2003
      Amended and Restated Stock Incentive Plan (the “Plan”). The specific terms and
      conditions of the Option granted pursuant to this Agreement are set forth in
      the
      Plan, a copy of which is attached to this Agreement, the receipt of all of
      which
      the Participant hereby acknowledges. This Option is intended to be a
      non-qualified stock option that does not receive special tax treatment under
      Section 422 of the Internal Revenue Code of 1986, as amended and regulations
      issued thereunder.

    

    2. Option
      Price Per Share.
      The
      exercise price of the Option shall be $___________ per Option Share.
NOTICE:
      THE
      EXERCISE PRICE REFLECT 100% OF THE FAIR MARKET VALUE OF THE STOCK. THE
      PARTICIPANT IS SOLELY RESPONSIBLE FOR SATISFYING ALL TAX OBLIGATIONS CREATED
      BY
      THE GRANT OF THIS OPTION, THE EXERCISE OF THE OPTION, AND THE SUBSEQUENT
      DISPOSITION OF THE OPTION SHARES.

    

    3. Vesting;
      Term of the Option.
      The
      Participant shall vest in and have the right to exercise the Option with respect
      to the Option Shares in accordance with the vesting schedule attached hereto
      as
Exhibit
      A
      and
      incorporated herein by reference thereto.

    

    The
      Option (to the extent not earlier exercised) will expire in its entirety at
      11:59 p.m. on the tenth annual anniversary of the Grant Date (the “Option
      Termination Date”), unless sooner terminated pursuant to the provisions of the
      Plan, including, but not limited to, Section 6.4 of the Plan. 

    

    4. Exercise
      of Option.
      Upon
      the grant of an Option and subject to vesting and other terms and conditions
      hereof, the Participant may exercise the Option on one or more occasions by
      delivering to the Treasurer of the Company (i) a written notice (as attached
      hereto as Exhibit
      B)
      that
      sets forth the number of Option Shares that the Participant desires to purchase,
      and (ii) an amount equal to the full payment of the exercise price for those
      shares in cash (including check, bank draft or money order). The exercise of
      the
      Option in whole or in part is conditioned upon the acceptance by the Participant
      of the terms of this Agreement. If Participant's Board service with the Company
      terminates or ceases for any reason or upon the death or Disability of
      Participant, the Option shall expire on the date of such termination or
      cessation of service or sixty (60) days after the occurrence of such death
      or
      Disability; provided that the Board in its sole discretion, by written notice
      given to Participant, may permit Participant to exercise the Option during
      a
      period ending on the earlier of 90 days after such termination of employment
      and
      the date the Option expires in accordance with its terms. 

    

    
      
        
        

      

      
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    5. Restrictions
      Upon Resale.
      The
      Option may not be exercised if the issuance of Option Shares upon such exercise
      would constitute a violation of applicable Federal or state securities laws
      or
      other law or valid regulation. If the Option Shares to be issued upon exercise
      of the Option are not registered under the Securities Act of 1933, as amended
      (the "Securities Act"), the Participant, as a condition to his exercise of
      the
      Option, shall represent to the Company that the Option Shares or other
      securities which he acquires upon exercise of the Option are being acquired
      by
      him for his own account as an investment and not with a present view to
      distribution or resale (unless counsel for the Company is then of the opinion
      that such representation is not required under the Securities Act or applicable
      law, regulation or rule of any governmental agency) and the certificates
      representing such Option Shares shall bear a legend to such effect. Participant
      agrees as a condition precedent to exercise of any portion of the Option, that
      he shall furnish whatever documentation may be reasonably requested by the
      Company to ensure compliance with applicable law and the terms and conditions
      of
      this Award Agreement and the Plan. The Participant understands and acknowledges
      that the Company shall have no obligation to register the Option Shares issuable
      hereunder under the Securities Act and applicable state securities
      laws.

    

    6. Lock-up.
      The
      Participant agrees that, in connection with any underwritten public offering
      of
      equity securities pursuant to a registration statement filed under the
      Securities Act, not to sell, make any short sale of, loan, hypothecate, pledge,
      grant any option for the purchase of or otherwise dispose of any shares of
      Common Stock or other securities purchased hereunder without the prior written
      consent of the Company or its underwriters, for such period of time from the
      effective date of such registration statement as may be requested by the Company
      or its underwriters.

    

    7. No
      Rights as Shareholder Until Option Exercised.
      Neither
      the Participant nor Participant’s heirs, legal representative or guardians shall
      be, or shall have any of the rights and privileges of, a shareholder of the
      Company with respect to any Option Shares, in whole or in part, before the
      date
      that the Participant exercises the Option and the certificates for the shares
      are mailed to the Participant.

    

    8. Transferability
      of Option.
      Pursuant to Section 6.7 of the Plan, the Option shall not be assignable or
      transferable by the Participant including by will or by the laws of descent
      and
      distribution. During the life of the Participant, the Option shall be
      exercisable only by the Participant or by such Participant’s guardian or legal
      representative.

     

    9. Service
      Not Affected.
      Nothing
      in the Plan or this Award Agreement shall confer upon the Participant the right
      to continue as a director of the Company or affect any right which the Company
      may have to terminate the Participant. Notwithstanding any provision to the
      contrary in this Agreement, upon the termination of the Participant’s service
      with the Company, Section 6.4 of the Plan shall govern the Participant’s rights
      in the Option Shares.

    

    
      
        
        

      

      
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    10. Notice.
      Any
      notice that must be given to the Company pursuant to this Award Agreement shall
      be addressed to the Company's Board of Directors, at the Company's principal
      place of business. Any notice to the Participant shall be addressed to the
      Participant at the current address shown on the records of the Company. Any
      notice shall be deemed to be duly given if and when properly addressed and
      posted by registered or certified mail, postage prepaid.

    

    11. Incorporation
      of Plan by Reference.
      The
      Option is granted pursuant to the terms of the Plan, the terms of which are
      incorporated herein by reference, and the Option shall in all respects be
      interpreted in accordance with the Plan. The Committee shall interpret and
      construe the Plan and this document, and its interpretations and determinations
      shall be conclusive and binding on the Participant and the Company and any
      other
      person claiming an interest in the Option, with respect to any issue concerning
      the Option. The Participant hereby acknowledges receipt of the enclosed copy
      of
      the Plan and agrees to be bound by all the terms and conditions thereof as
      the
      same may from time to time be amended, and by all determinations of the
      Committee thereunder.

    

    12. Changes
      in Capital Structure.
      In the
      event of changes in capital stock structure of the Company, appropriate
      adjustments in the number of shares for which the Option shall be exercisable,
      or the exercise price, or both, shall be made, and appropriate adjustments
      in
      the required values of Company Stock shall be made, as provided in Section
      4.4
      of the Plan. The grant of this Option pursuant to the Plan shall not affect
      in
      any way the right or power of the Company to make adjustments,
      reclassifications, reorganizations or changes of its capital or business
      structure or to merge or to consolidate or to dissolve, liquidate or sell,
      or
      transfer all or any part of its business or assets.

    

    13. Governing
      Law.
      To the
      extent that federal laws do not otherwise control, this Agreement shall be
      governed by and construed in accordance with the laws of the State of Delaware.
      

    

    

    [THE
      REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK.]

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF,
      this
      Agreement has been executed in duplicate on behalf of the Company by its duly
      authorized officer, and by the Participant in acceptance of the above-mentioned
      Option, subject to the terms and conditions of the Plan and of this
      Agreement.

     

     

    
      	 	
              GUARDIAN
                TECHNOLOGIES

              INTERNATIONAL,
                INC.

            
	 	 	 
	 Date: _________________ 	By:	 
	 	 	
              

            
	 	 	
              Name:

              Title:

            

    

     

    
       

      
        	 	
                PARTICIPANT:

              
	 	 	 
	
              	 	 
	 	
                

              
	 	
                Print
                  Name:

                Residential Address:

              

      

    

    

    
      
        
        

      

      
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    EXHIBIT
      A

    

    VESTING
      SCHEDULE

    

    The
      Option shall vest and become exercisable in accordance with the following
      schedule:

    

    
      	
              Date

              Exercisable

            	
              Percentage
                Exercisable

            
	 	 
	
              Earlier
                of (i) one (1) year from date of grant of Options, 

              or
                (ii) January 2 of the calendar year following date of
                issuance.

            	
              100%

            

    

     

    
 

    
      
        
        

      

      
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    EXHIBIT
      B

    

    GUARDIAN
      TECHNOLOGIES INTERNATIONAL, INC.

    

    SUBSCRIPTION
      FORM

    TO
      BE EXECUTED BY PARTICIPANT

    TO
      EXERCISE THIS OPTION

    

    The
      undersigned hereby exercises the right to purchase ________ Option Shares
      covered by this Option according to the conditions thereof and herewith makes
      payment of $__________, the aggregate Option Exercise Price of such Option
      Shares, in full.

    

    

    

    
      	Date: ______________________,
              _________	___________________________________________ 
	 	Signature
	 	 
	 	___________________________________________ 
	 	Name: 

    

           

     

     

    6

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