GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.2009 STOCK COMPENSATION PLAN

Exhibit 10.1

GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.

 

2009 STOCK COMPENSATION PLAN

 

ARTICLE I

Establishment, Purpose, and Duration

 

1.1

Establishment of the Plan .  Guardian Technologies International, Inc., a Delaware corporation (the "Company"), hereby establishes a stock compensation plan to be known as the "2009 Stock Compensation Plan" (the "Plan"), as set forth in this document. Unless otherwise defined herein, all capitalized terms shall have the meanings set forth in Section 2.1 herein.

 

This Plan was adopted by the Board of Directors of the Company on June 4, 2009 (the "Effective Date").

 

1.2

Purpose of the Plan.   The Plan is intended to foster the success of the Company, its Subsidiaries and Affiliates, by providing incentives to Employees, Directors and consultants to promote the long-term financial success of the Company.  The Plan is designed to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Employees, Directors and consultants upon whose judgment, interest, and special effort the successful conduct of the Company's operation is largely dependent.

 

1.3

Duration of the Plan.   The Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Board of Directors to terminate the Plan at any time pursuant to Article XI herein, until the tenth anniversary of the Effective Date, at which time it shall terminate except with respect to Awards made prior to, and outstanding on, that date, which shall remain valid in accordance with their terms.

 

ARTICLE II

Definitions

 

2.1

Definitions.   Except as otherwise defined in the Plan, the following terms shall have the meanings set forth below:

 

(a)

"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2 under the Exchange Act.

 

(b)

"Agreement" or “Award Agreement” means a written agreement or other communication evidencing the terms or conditions of an Award in the form of an agreement signed by an authorized officer (or other authorized representative) of the Company and by the Participant or a certificate, notice, term sheet or similar communication.

 

(c)

"Award" means, individually or collectively, a grant under this Plan of Options, Restricted Stock Awards, Restricted Stock Units, or Stock Awards.

 

(d)

  "Board" or "Board of Directors" means the Board of Directors of the Company.

 

 

(e)

“Change of Control” shall have the meaning set forth in Article XII.

 

(f)

"Code" means the Internal Revenue Code of 1986, as amended from time to time, and the rulings and regulations thereunder.

 

(g)

"Committee" shall have the meaning set forth in Section 3.1 or the Board of Directors if no such committee has been appointed.

 

(h)

“Common Stock” means the common stock, $.001 par value per share, of the Company.

 

(i)

"Company" means Guardian Technologies International, Inc., a Delaware corporation, including all Subsidiaries and Affiliates, or any successor thereto as provided in Section 13.2 hereof.

 

(j)

“Director” means an individual who both is a director of the Company and is not an employee of the Company or an Affiliate.

 

(k)

“Disability” means (i) in the case of a Participant whose employment or service with the Company or any Subsidiary or Affiliate is subject to the terms of an employment or consulting agreement that includes a definition of “disability” the meaning set forth in such agreement during the period such agreement remains in effect; and (ii) in all other cases, a total and permanent disability defined in the Company’s long-term disability plan, or if the Company has no long-term disability plan in effect at the time of a Participant’s disability, “disability” shall mean a Participant’s present incapacity resulting from an injury or illness (either mental or physical) which, in the reasonable opinion of the Committee based on such medical evidence as it deems necessary, will result in death or can be expected to continue for a period of at least twelve (12) months and will prevent the Participant from performing the normal services required of the Participant by the Company; provided however that such disability did not result, in whole or part from: (i) chronic alcoholism, (ii) from addiction to narcotics, (iii) from a felonious undertaking, or (iv) from an intentional self-inflicted wound.

 

(l)

"Employee" means any officer or other employee (including a director who is also an officer or employee) of the Company or a Subsidi­ary or Affiliate (including any entity that becomes a Subsidiary or Affiliate after the adoption of this Plan), as defined in General Instruction A to the Form S-8 Registration Statement promulgated under the Securities Act of 1933, as amended, or any successor form or statute as determined by the Committee.

 

(m)

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

 

(n)

“Fair Market Value” means on any given date (i) the closing sale price of the shares of the Company’s Common Stock (or any security of the Company issued in substitution, exchange or in lieu thereof), on any established national securities exchange or exchanges on such date as reported in any newspaper of general circulation, (ii) if the Common Stock is not listed and traded upon a national securities exchange and there are reports of stock prices by a recognized quotation service, upon the basis of the mean between the closing bid and asked quotations for such stock on such date as reported by such recognized stock quotation service, (iii) if in (i) or (ii) above, as applicable, there were no sales or bids or quotes, as the case may be, upon such date reported as pro­vided above, the respective prices on the most recent prior day on which sales or bids or quotes, as the case may be, were so reported, or (iv) if fair market value of the Common Stock cannot be established under subparagraphs (i), (ii), or (iii) above, then it shall

 

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be the fair market value as determined in good faith by the Committee.

 

(o)

“Options” mean options to purchase stock of the Company that are not intended to qualify as incentive stock options pursuant to Section 422 of the Code.

 

(p)

"Participant" means an Employee, Director or consultant who has been granted an Award under the Plan.

 

(q)

"Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d).

 

(r)

"Plan" means the “Guardian Technologies International, Inc. 2009 Stock Compensation Plan” as described herein, as hereafter from time to time amended.

 

(s)

“Restricted Stock Award” means Stock granted under Article VII that is subject to restrictions imposed pursuant to said Article.

 

(t)

“Restricted Stock Right” means the grant under Article VIII of the right to receive Stock subject to vesting and such other restrictions imposed pursuant to such Article, together with dividend equivalents with respect to such Stock if and as determined by the Committee.

 

(u)

"Secretary" means the officer designated as the Secretary of the Company.

 

(v)

"Stock" or "Shares" means the Common Stock of the Company.

 

(w)

“Stock Award” means an award of Stock pursuant to Article IX of the Plan.

 

(x)

"Subsidiary" means, with respect to any corporation, a subsidiary of that corpora­tion within the meaning of Code section 424(f).

 

(y)

“Substitute Award” means an Award granted in connection with a transaction in substitution, exchange, conversion, adjustment, assumption or replacement of awards previously granted by an entity acquired by the Company or a Subsidiary or Affiliate or with which the Company or a Subsidiary or an Affiliate merges or otherwise combines.

 

ARTICLE III

Administration

 

3.1

General.   The Plan shall be administered by the Board of Directors of the Company or a Committee designated by the Board consisting of two (2) or more directors appointed from time to time by the Board each of whom shall be a "Non-Employee Director," as defined in Rule 16b-3 under the Exchange Act.  Notwithstanding the foregoing, the Board may, in its discretion, delegate to another committee of the Board any or all of the authority and responsibility of the Committee with respect to Awards to employees who are not subject to Section 16 of the Exchange Act at the time any such delegated authority or responsibility is exercised.  Such other committee may consist of two (2) or more directors who may, but need not, be officers or employees of the Company or of any of its Subsidi­aries or Affiliates.  To the extent that the Board has delegated to such other committee the authority and responsibil­ity of the Committee pursuant to the foregoing, all references to the Committee in the Plan shall be to such other committee.  The Committee may delegate any or all aspects of the day-to-day administration of the Plan to one or more

 

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officers or employees of the Company or any Affiliate, and/or to one or more agents.

 

3.2

Committee Powers.   Subject to the express provisions of this Plan, including, without limitation, Section 13.15, the Committee shall be authorized and empowered to take all actions that it determines to be necessary or appropriate in connection with the administration of this Plan, including, without limitation: (i) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms not otherwise defined herein; (ii) to determine which persons are eligible to be granted Awards under the Plan, to which of such persons, if any, Awards shall be granted hereunder and the timing of any such Awards; (iii) to grant Awards to Participants and determine the terms and conditions of Awards, including the number of Shares subject to Awards, the exercise or purchase price of such Shares, and the circumstances under which Awards become exercisable or vested or are forfeited or expire, which terms may but need not be conditioned upon the passage of time, continued employment, the satisfaction of performance criteria, the occurrence of certain events, or other factors; (iv) to establish any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; (v) to prescribe and amend the terms of Award Agreements or other communications evidencing Awards made under this Plan (which need not be identical) and the terms of or form of any document or notice required to be delivered to the Company by Participants under this Plan; (vi) to determine whether, and the extent to which, adjustments are required pursuant to Section 4.3; (vii) to interpret and construe this Plan and the Award Agreements, any rules and regulations under this Plan, and the terms and conditions of any Award granted hereunder, and to make exceptions to any such provisions in good faith and for the benefit of the Company; (viii) to accelerate the vesting or exercisability of any Award; and (ix) to make all other determinations and to take all other actions deemed necessary or advisable for the administration of this Plan in its sole judgment and discretion.  A majority of the members of the Committee shall constitute a quorum for the transaction of business.  Action approved in writing by a majority of the members of the Committee then serving shall be as effective as if the action had been taken by unanimous vote at a meeting duly called and held.

 

3.3

Selection of Participants.   The Committee shall have the authority to grant Awards under the Plan, from time to time, to such Employees, Directors or consultants as may be selected by it.  To the extent determined by the Committee, each Award shall be evidenced by an Agreement.

 

3.4

Decisions Binding.   All determinations, decisions and interpretations made by the Committee regarding the provisions of the Plan, the Award Agreement, any rules or regulations under the Plan, and the terms and conditions of any Award granted under the Plan, shall be final, conclusive and binding on all Participants, beneficiaries, heirs, assignees, or other person holding or claiming rights under the Plan or any Award.

 

3.5

Rule 16b-3 Requirements.   Notwithstanding any other provision of the Plan, the Committee may impose such conditions on any Award, and the Board may amend the Plan in any such respects, as it may determine are necessary or desirable to satisfy the provisions of Rule 16b-3, as amended (or any successor or similar rule), under the Exchange Act. Every provision of the Plan shall be administered, interpreted and construed to carry out such intention and any provision that cannot be so administered, interpreted and construed shall to that extent be disregarded.

 

ARTICLE IV

Stock Subject to the Plan

 

4.1

Number of Shares.   Subject to adjustment as provided in Section 4.3 herein, the maximum aggregate number of Shares that may be issued pursuant to Awards made under the Plan shall not exceed

 

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20,000,000 Shares.  The Company shall reserve and set aside for issuance pursuant hereto the maximum aggregate number of Shares provided for in the immediately preceding sentence.  Except as provided in Section 4.2 herein, the issuance of Stock in connection with Awards under the Plan shall reduce the number of Shares available for future Awards under the Plan.

 

4.2

Issuance of Shares.  For purposes of this Article IV, the aggregate number of Shares available for Awards under this Plan at any time shall not be reduced with respect to Shares attributable to Awards that have been canceled, expired, forfeited, or settled in cash. Substitute Awards may be granted under this Plan and such Substitute Awards shall not reduce the aggregate number of Shares available for Awards under this Plan.

 

4.3

Capital Adjustments.

 

(a)

The existence of the Plan and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Board or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, Common Stock, preferred stock or prior preference stock ahead of or affecting the Company’s Common Stock or the rights thereof, the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding.

 

(b)

In the event of any change in the capitalization affecting the Common Stock of the Company, such as a stock dividend, stock split, recapitalization, merger, consolidation, split-up, combination, exchange of shares, other form of reorganization, or any other change affecting the outstanding Common Stock as a class, the Committee, in its discretion, may make proportionate adjustments it deems appropriate to reflect such change with respect to: (i) the maximum number of shares of Common Stock or class of shares reserved for issuance under the Plan, (ii) the maximum number of shares of Common Stock or class of shares which may be sold or awarded to any Participant, (iii) the number of shares of Common Stock or class of shares covered by each outstanding Award, and (iv) the price per share in respect of the outstanding Awards.  Notwithstanding the foregoing, the Board may only increase the aggregate number of shares of Common Stock for which Awards may be granted under the Plan solely to reflect the changes, if any, of the capitalization of the Company or any Subsidiary or Affiliate.  The Company may also make such adjustments in the number of shares covered by, and the price or other value of any outstanding Awards in the event of a spin-off or other distribution (other than normal cash dividends) of Company assets to shareholders.

 

(c)

No right to purchase fractional Shares shall result from any adjustment in Awards pursuant to this Section 4.3. In case of any such adjustment, the Shares subject to the Award shall be rounded down to the nearest whole Share. Notice of any adjustment shall be given by the Company to each Participant, which shall have been so adjusted and such adjustment (whether or not notice is given) shall be effective and binding for all purposes of the Plan.

 

(d)

Subject to Section 13.15, the Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events affecting the Company, any Subsidiary or Affiliate, or the financial statements of the Company or any Subsidiary or Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits to be made available under the Plan.

 

 

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ARTICLE V

Eligibility

 

All Employees, Directors and consultants of the Company and its Subsidiaries may participate in the Plan.

 

ARTICLE VI

Non-Qualified Stock Options

 

6.1

Options.  The Committee may grant an Option or provide for the grant of an Option, either from time-to-time in the discretion of the Committee or automatically upon the occurrence of specified events, including, without limitation, the achievement of performance goals. Except to the extent provided herein, no Participant (or his or her legal representative, heir, assignee or beneficiary of a deceased Participant) shall have any rights as a stockholder with respect to any Shares subject to an Option granted hereunder until said Shares have been issued. Options granted pursuant to the Plan need not be identical, but each Option must contain and be subject to the terms and conditions set forth below. All options to be issued under the Plan are intended to be Options that do not qualify as incentive stock options under Section 422 of the Code.

 

(a)

Award Agreement. Each Option shall be evidenced by an Award Agreement. Each Award Agreement shall contain provisions regarding (i) the number of Shares subject to the Award or a formula for determining such number, (ii) the exercise price of the Shares, and the means of payment, (iii) such terms and conditions on the grant, issuance, vesting and exercisability of the Options as may be determined from time to time by the Committee, (iv) restrictions on the transferability of the Award, and (v) such further terms and conditions, in each case not inconsistent with this Plan, as may be determined from time to time by the Committee.

 

(b)

Exercise Price.  The Committee shall determine the exercise price of all Options which price (except for Substitute Awards) shall be no less than the Fair Market Value of a Share on the date of grant; provided, however, that the exercise price per Share with respect to an Option that is granted in connection with a merger or other acquisition as a Substitute Award for options held by optionees of the acquired entity may be less than 100% of the Fair Market Value on the date such Option is granted. The terms and conditions of any Substitute Award shall meet all requirements necessary to prevent such Substitute Awards from being treated as the grant of a new stock right or a change in the form of payment within the meaning of the final regulations under Code §409A. Each Award may be exercised in whole or in part on the terms provided in the Award Agreement.

 

(c)

Vesting and Exercisability . The Committee shall have the right to make the timing of the ability to exercise any Option subject to continued employment, the passage of time and/or such performance requirements as deemed appropriate by the Committee.

 

(d)

Duration of Options.   Each Option shall expire on the earliest of (i) ten (10) years from the date it is granted, (ii) ninety (90) days following the date of the termination of Participant’s employment by reason of death or Disability, (iii) subject to subsection (e)(ii) below, immediately upon the termination of a Participant’s employment other than by reason of death or Disability, or (iv) such date as the Committee shall determine, as set forth in the relevant Award Agreement; provided that the Committee, in its sole discretion, may change, by any agreement approved by the Committee, the post-termination rights of a Participant, including accelerating the dates upon which all or a portion of any outstanding

 

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Options held by a Participant may become vested or be exercised following such termination of employment or service and extend the period during which such Options may be exercised by the Participant.

 

(e)

Termination of Employment or Service.  Unless the Committee (or the terms of a Participant’s employment or service agreement) provides otherwise:

 

 

(i)

Due to Death or Disability. If a Participant ceases to be an Employee, Director or consultant by reason of his or her death or Disability prior to the vesting of an Option, or if a Participant’s death occurs within three (3) months of the termination of his employment or service, any Options not vested as of the date of such death or Disability shall vest and become exercisable in accordance with the terms of the Award Agreement as determined by the Committee.

 

(ii)

Due to Reasons Other Than Death or Disability. Upon any other termination of employment or service prior to the vesting of any Option(s), all Options shall terminate immediately without notice of any kind.

 

(f)

Me