(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
x
No
fee
required.
o
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1)
Title
of each class of securities to which transaction
applies:
N/A
2)
Aggregate
number of securities to which transaction applies:
N/A
3)
Per
unit
price or other underlying value of transaction computed pursuant to Exchange
Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state
how it was determined):
N/A
4)
Proposed
maximum aggregate value of transaction:
N/A
5)
Total
fee paid: $______________
o
Fee
paid
previously with preliminary materials: N/A
o
Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration number, or the Form or Schedule
and
the date of its filing.
You
are
cordially invited to attend the Special Meeting in lieu of our 2005 Annual
Meeting of Stockholders of Guardian Technologies International, Inc. on February23, 2006, beginning at 10.00 a.m. local time, at 516 Herndon Parkway, Suite
A,
Herndon, Virginia20170. We look forward to greeting those of you who are able
to attend.
Please
vote on all the matters listed in the enclosed Notice of Special Meeting of
Stockholders. Your board of directors recommends a vote FOR the proposals listed
as items 1 through 4 in the Notice as described in the enclosed proxy
statement.
Whether
or not you plan to attend in person, it is important that your shares be
represented and voted at the Special Meeting. If you choose to vote by
traditional proxy or instruction card, please sign, date and mail the card
in
the envelope enclosed.
We
have
established December 28, 2005, as the record date for the Special Meeting.
Accordingly, all stockholders of record on December 28, 2005, may vote at,
and
are invited to attend, the Special Meeting. No ticket is required for admission.
As a result of heightened security, however, to gain admission to the Special
Meeting, you will be required to present photo identification. Packages and
bags
will be inspected and may have to be checked, among other measures that may
be
employed to enhance the security of those attending the Special Meeting. Please
plan accordingly.
The
Special Meeting in lieu of our 2005 Annual Meeting (Special Meeting) of
Stockholders of Guardian Technologies International, Inc. (Guardian) will be
held:
To
elect two directors for a term of three years and until their successors
are duly elected and qualified;
2.
To
ratify the appointment of the firm of Goodman & Company as independent
registered public accountants of Guardian for 2005;
3.
Approval
of an amendment to the Certificate of Incorporation increasing
the maximum
number of directors that may be elected to the board of directors
to nine
directors, and to provide that one of such directors be designated
a Class
II director and one of such directors be designated a Class III
director;
4.
Approval
of an amendment to the Certificate of Incorporation increasing
the
authorized number of shares of common stock, $.001 par value per
share,
from 200,000,000 shares to 500,000,000 shares; and
5.
To
transact such other business as may properly come before the Special
Meeting or any adjournment thereof.
This
proxy
statement and the enclosed form of proxy are being mailed to stockholders
beginning on or about January 17, 2006.
PROPOSAL
1. ELECTION
OF
TWO DIRECTORS FOR A TERM OF THREE YEARS AND UNTIL THEIR SUCCESSORS
ARE
DULY ELECTED AND QUALIFIED
39
PROPOSAL
2. RATIFY
THE
APPOINTMENT OF GOODMAN & COMPANY AS INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS FOR 2005
40
PROPOSAL
3. APPROVE
AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION INCREASING THE
MAXIMUM
NUMBER OF DIRECTORS THAT MAY BE ELECTED TO THE BOARD OF DIRECTORS
TO NINE
DIRECTORS AND TO PROVIDE THAT ONE OF SUCH DIRECTORS BE DESIGNATED
A CLASS
II DIRECTOR AND ONE OF SUCH DIRECTORS BE DESIGNATED A CLASS III
DIRECTOR
40
PROPOSAL
4. APPROVE
AN
AMENDMENT TO THE CERTIFICATE OF INCORPORATION INCREASING THE AUTHORIZED
SHARES OF COMMON STOCK, $.001 PAR VALUE PER SHARE, FROM 200,000,000
SHARES
TO 500,000,000 SHARES
A proxy is another person that you legally designate to vote your stock. If
you
designate someone as your proxy in a written document, that document also is
called a proxy or a proxy card.
Why
did you send me this proxy statement?
We sent you this proxy statement and the enclosed proxy card because the board
of directors of Guardian Technologies International, Inc., a Delaware
corporation (Guardian), is soliciting your vote at our Special Meeting of
Stockholders in lieu of our 2005 Annual Meeting (Special Meeting). This proxy
statement summarizes the information you need to vote in an informed manner
on
the proposals to be considered at the Special Meeting. However, you do not
need
to attend the Special Meeting to vote your shares. Instead you may simply
complete, date, sign and return the enclosed proxy card.
How
many votes do I have?
We will be sending this proxy statement, the attached Notice of Special Meeting
and the enclosed proxy card on or about January 17, 2006 to all stockholders.
Stockholders who owned Guardian common stock at the close of business on
December 28, 2005 (Record Date) are entitled to one vote for each share of
common stock they held on that date on all matters properly brought before
the
Special Meeting.
On the Record Date, 33,089,712 shares of common stock were issued and
outstanding. Each share of common stock is entitled to one vote. There were
no
other classes of stock issued and outstanding on the Record Date.
What
proposals will be addressed at the Special Meeting?
We
will
address the following proposals at the Special Meeting:
1.
Election
of two directors for a term of three years, and until their successors
are
duly elected and qualified.
2.
Ratification
of the appointment of the firm Goodman & Company as independent
registered public accountants of Guardian for
2005.
Approval
of an amendment to the Certificate of Incorporation increasing the
maximum
number of directors that may be elected to the board of directors
to nine
directors, and to provide that one of such directors be designated
a Class
II director and one of such directors be designated a Class III
director.
4.
Approval
of an amendment to the Certificate of Incorporation increasing the
authorized number of shares of common stock, $.001 par value per
share,
from 200,000,000 shares to 500,000,000
shares.
5.
Transaction
of such other business as may properly come before the Special Meeting
or
any adjournment thereof.
Why
would the Special Meeting be postponed?
The
Special Meeting will be postponed if a quorum is not present on February 23,2006. If shares representing more than 50% of the votes entitled to be cast
at
the Special Meeting are present in person or represented by proxy, a quorum
will
be present and business can be transacted. If a quorum is not present, the
Special Meeting may be postponed to a later date when a quorum is obtained.
Abstentions and broker non-votes are counted for purposes of determining the
presence of a quorum for the transaction of business but are not counted as
an
affirmative vote for purposes of determining whether a proposal has been
approved.
How
do I vote in person?
If
you
plan to attend the Special Meeting on February 23, 2006, or at a later date
if
it is postponed, at 516 Herndon Parkway, Suite A, Herndon, Virginia20170 and
vote in person, we will give you a ballot when you arrive. However, if your
shares are held in “street name,” you must bring a power of attorney executed by
the broker, bank or other nominee that owns the shares of record for your
benefit, authorizing you to vote the shares.
What
is the difference between a stockholder of record and a “street name”
holder?
If
your
shares are registered directly in your name with Signature Stock Transfer,
Inc.,
our stock transfer agent, you are considered the stockholder of record with
respect to those shares.
If
your
shares are held in a stock brokerage account or by a bank or other nominee,
you
are considered the beneficial owner of those shares, and your shares are held
in
“street name.”
How
do I vote by proxy?
If
you
hold your shares of record, whether you plan to attend the Special Meeting
or
not, we urge you to complete, sign and date the enclosed proxy card and return
it promptly in the envelope provided. Returning the proxy card will not affect
your right to attend the Special Meeting and vote in person.
If
you
properly fill in your proxy card and send it to us in time to vote, your "proxy"
(one of the individuals named on your proxy card) will vote your shares as
you
have directed. If you sign the proxy card but do not make specific choices,
your
proxy will vote your shares as recommended by the Board of Directors as follows:
"For"
the
election of two directors for a term of three years and until their successors
are duly elected and qualified.
“For”the
ratification of the appointment of the firm Goodman & Company as independent
registered public accountants of Guardian for 2005.
“For”
the
approval of an amendment to the Certificate of Incorporation increasing the
maximum number of directors that may be elected to the board of directors to
nine directors, and to provide that one of such directors be designated a Class
II director and one of such directors be designated a Class III
director.
“For”
the
approval of an amendment to the Certificate of Incorporation increasing the
authorized number of shares of common stock, $.001 par value per share, from
200,000,000 shares to 500,000,000 shares.
If
any
other matter is presented, your proxy will vote in accordance with his best
judgment. At the time this proxy statement went to printing, we knew of no
matters that needed to be acted on at the Special Meeting other than those
discussed in this proxy statement.
A
vote to
“abstain” on any matter other than the election of directors or ratification of
the independent accountants will have the effect of a vote
“against.”
If
you
hold your shares in “street name,” you must vote your shares in the manner
prescribed by your broker or nominee. Your broker or nominee has enclosed or
provided a voting instruction card for you to use in directing the broker or
nominee how to vote your shares.
May
I revoke my proxy?
If
you give a proxy, you may revoke it at any time before it is exercised. You
may
revoke your proxy in any one of three ways:
·
You
may send in another proxy with a later date.
·
You
may notify Guardian in writing (by you or your attorney authorized
in
writing, or if the stockholder is a corporation, under its corporate
seal,
by an officer or attorney of the corporation) at our principal executive
offices, before the Special Meeting, that you are revoking your proxy.
·
You
may vote in person at the Special Meeting.
Where
are Guardian’s principal executive offices?
Our
principal executive offices are located at 516 Herndon Parkway, Suite A,
Herndon, Virginia20170. Our telephone number is (703) 464-5495.
The
total
number of votes that may be cast by all stockholders is 33,089,712. Our common
stock will vote as a single class on all matters scheduled to be voted on at
the
Special Meeting. There is no cumulative voting.
What
vote is required to approve each proposal?
Proposal
1: Election of Two Directors.
A
plurality of votes cast is required to elect the two director nominees for
a
term of three years. A nominee who receives a “plurality” means he has received
more votes than any other nominee for the same director’s seat. There are two
nominees for the two Class II seats. In the event no other nominations are
received, management’s nominees will be elected upon receiving one or more
votes. So, if you do not vote for the nominees, or you indicate “withhold
authority to vote” for the nominees on your proxy card, your vote will not count
either “for” or “against” the nominees.
Proposal
2: Ratification of Independent Registered Public Accountants.
The
affirmative vote of a majority of the votes cast is required for ratification
of
the engagement of our independent registered public accountants, Goodman &
Company. Therefore, any shares that are not voted, including shares represented
by a proxy who is marked “abstain,” will not count either “for” or “against”
Proposal 2.
Proposal
3: Approval of an amendment to the Certificate of Incorporation increasing
the
maximum number of directors that may be elected to the board of directors to
nine directors, and to designate one of such directors a Class II director
and
one of such directors a Class III director.
The
affirmative vote of the holders of 80% of the shares of common stock outstanding
on the Record Date is required for approval of an amendment to the Certificate
of Incorporation increasing the maximum number of directors that may be elected
to the board of directors to nine directors and to provide that one of such
directors be designated a Class II director and one of such directors be
designated a Class III director. Accordingly, any shares of common stock that
are not voted, including shares represented by a proxy which is marked
“abstain,” will count “against” Proposal 3.
Upon
approval by the required stockholder vote, the amendment will become effective
upon the filing of Articles of Amendment to the Certificate of Incorporation
with the Department of State of the State of Delaware, which filing is
anticipated to occur shortly after the Special Meeting.
Proposal
4: Approval of an amendment to the Certificate of Incorporation increasing
Guardian’s authorized shares of common stock.
The
affirmative vote of a majority of the shares common stock outstanding on the
Record Date is required for approval of an amendment of the Certificate of
Incorporation increasing the authorized number of shares of common stock, $.001
par value per share, from 200,000,000 shares to 500,000,000 shares. Accordingly,
since the affirmative vote of a majority of the shares of common stock
outstanding on the Record Date is required, any shares of common stock that
are
not voted, including shares represented by a proxy which is marked "abstain,"
will count "against" Proposal 4.
Upon
approval by the required stockholder vote, the amendment will become effective
upon the filing of Articles of Amendment to the Certificate of Incorporation
with the Department of State of the State of Delaware, which filing is
anticipated to occur shortly after the Special Meeting. If Proposals 3 and
4 are
approved by stockholders by the required vote, Guardian may file Articles of
Amendment covering both matters.
Are
there any dissenters’ rights of appraisal?
The
Board
of Directors has not proposed any action for which the laws of the State of
Delaware, the Certificate of Incorporation or By-laws of Guardian provide a
right of a stockholder to dissent and obtain payment for shares.
Who
bears the cost of soliciting proxies?
Guardian
will bear the cost of soliciting proxies in the accompanying form and will
reimburse brokerage firms and others for expenses involved in forwarding proxy
materials to beneficial owners or soliciting their execution.
How
can I obtain additional information regarding Guardian?
An
annual report for 2004 and Form 10-QSB/A for the quarter ended September 30,2005, precedes or accompanies this proxy statement. Also, we would be pleased
to
furnish you with a copy of our Annual Report on Form 10-KSB (and amendments
thereto) for the year ended December 31, 2004 and our Quarterly Report on Form
10-QSB (and amendments thereto) for the quarter ended September 30, 2005, free
of charge. A copy of either of such documents may be obtained by calling us
at
(703) 464-5495 or sending us an email at info@guardiantechintl.com.
Guardian is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (Exchange Act), which requires that Guardian file
reports, proxy statements and other information with the Securities and Exchange
Commission (SEC). The SEC maintains a website on the Internet that contains
reports, proxy and information statements and other information regarding
registrants, including Guardian, that file electronically with the SEC. The
SEC’s website address is www.sec.gov. In addition, Guardian’s Exchange Act
filings may be inspected and copied at the public reference facilities of the
SEC located at Room 1580, 100 F Street, N.E., Washington, D.C. 20549; and at
the
SEC’s regional office at: 3 World Financial Center, Room 4300, New York, NY10281. Copies of the material may also be obtained upon request and payment
of
the appropriate fee from the Public Reference Section of the SEC located at
Room
1580, 100 F Street, N.E., Washington, D.C. 20549.
Our
common stock constitutes the only voting securities of Guardian. The following
table shows, as of the Record Date, and to the best of our knowledge, all
persons we know to be “beneficial owners” of more than 5% of our common stock.
On the Record Date, there were 33,089,712 shares of common stock issued and
outstanding.
Name
of
Beneficial
Owner (1)
Number
of Shares
Beneficially
Owned(1)
%
of Common Stock Beneficially
Owned
Robert
A. Dishaw
5,367,000(2)
16.22%
Michael
W. Trudnak
5,311,000(3)
15.83%
Tobin
Family Trust (4)
2,538,761(4)
7.67%
(1)
Beneficial
ownership is determined in accordance with Rule 13d-3 under the Exchange
Act, and is generally determined by voting powers and/or investment
powers
with respect to securities. Unless otherwise noted, all shares of
common
stock listed above are owned of record by each individual named as
beneficial owner and such individual has sole voting and dispositive
power
with respect to the shares of common stock owned by each of them.
Such
person or entity’s percentage of ownership is determined by assuming that
any options or convertible securities held by such person or entity
which
are exercisable within 60 days from the date hereof have been exercised
or
converted as the case may be. All addresses, except as hereinafter
noted,
are c/o Guardian Technologies International, Inc., 516 Herndon Parkway,
Herndon, Virginia20170.
(2)
Includes
10,000 shares underlying options to purchase shares of common stock
which
are currently exercisable. Accordingly, Mr. Dishaw will be entitled
to
cast an aggregate of 5,357,000 votes on all matters submitted to
stockholders or 16.22% of the total votes that may be cast at the
Special
Meeting.
(3)
Includes
460,000 shares underlying options to purchase shares of common stock
which
are currently exercisable. Accordingly, Mr. Trudnak will be entitled
to
cast an aggregate of 4,851,000 votes on all matters submitted to
stockholders or 14.66% of the total votes that may be cast at the
Special
Meeting.
(4)
Mr.
Morrie Tobin and his wife Gale Tobin are the trustees of the Tobin
Family
Trust and have shared voting and dispositive power with regard to
such
shares. The address for the trust is 40 Bassano Road, Toronto, Ontario,
Canada. The number of shares owned by the trust and the foregoing
information is based solely upon information contained in an amended
Schedule 13G filed by Mr. and Mrs. Tobin and the trust with the SEC
on
January 10, 2005.
How
much stock is owned by directors and executive officers?
The
following table sets forth certain information with respect to the beneficial
ownership of our common stock owned as of the Record Date, by: (i) beneficial
owners of more than 5% of our common stock; (ii) each of our executive officers
and directors; and (iii) all of our executive officers and directors as a
group:
All
executive officers and directors as a group (8 people)
13,805,500(12)
38.37%
* Represents
less than 1%.
(1)
Beneficial
ownership is determined in accordance with Rule 13d-3 under the
Exchange
Act, and is generally determined by voting powers and/or investment
powers
with respect to securities. Unless otherwise noted, all shares
of common
stock listed above are owned of record by each individual named
as
beneficial owner and such individual has sole voting and dispositive
power
with respect to the shares of common stock owned by each of them.
Such
person or entity’s percentage of ownership is determined by assuming that
any options or convertible securities held by such person or entity
which
are exercisable within 60 days from the date hereof have been exercised
or
converted as the case may be. All addresses, except as noted, are
c/o
Guardian Technologies International, Inc., 516 Herndon Parkway,
Herndon,
Virginia20170.
(2)
Includes
460,000 shares underlying options to purchase shares of common
stock which
are currently exercisable. Accordingly, Mr. Trudnak will be entitled
to
cast an aggregate of 4,851,000 votes on all matters submitted to
stockholders or 14.66% of the total votes that may be cast at the
Special
Meeting.
(3)
Represents
shares underlying options to purchase shares of common stock which
are
currently exercisable.
(4)
Includes
10,000 shares underlying options to purchase shares of common stock
which
are currently exercisable. Accordingly, Mr. Dishaw will be entitled
to
cast an aggregate of 5,357,000 votes on all matters submitted to
stockholders or 16.22% of the total votes that may be cast at the
Special
Meeting.
(5)
Includes
25,500 shares underlying options to purchase shares of common stock
which
are currently exercisable. Includes 10,000 shares of common stock
owned by
Mr. Kennedy’s wife with respect to which Mr. Kennedy disclaims beneficial
ownership.
(6)
Represents
shares underlying options to purchase shares of common stock which
are
currently exercisable.
(7)
Includes
18,500 shares underlying options to purchase shares of common stock
which
are currently exercisable.
(8)
Represents
shares underlying options to purchase shares of common stock which
are
currently exercisable.
(9)
Includes
670,000 shares underlying options to purchase shares of common
stock which
are currently exercisable.
Includes
660,000 shares underlying options to purchase shares of common
stock which
are currently exercisable.
(11)
Mr.
Morrie Tobin and his wife Gale Tobin are the trustees of the Tobin
Family
Trust and have shared voting and dispositive power with regard
to such
shares. The address for the trust is 40 Bassano Road, Toronto,
Ontario,
Canada. The number of shares owned by the trust and the foregoing
information is based solely upon information contained in an amended
Schedule 13G filed by Mr. and Mrs. Tobin and the trust with the
SEC on
January 10, 2005.
(12)
Includes
shares underlying options to purchase an aggregate of 10,000, 460,000,
1,010,000, 670,000, 660,000, 25,500, 21,500, 18500, and 12,500
shares of
common stock which are currently exercisable have been granted
to Messrs.
Dishaw, Trudnak, Donovan, Hill, Lancaster, Kennedy, Repko, Nash,
and
Zorko, respectively.
Do
any of the officers or directors have an interest in the matters to be acted
upon?
Sean
W.
Kennedy and Mark A. Zorko have been nominated for election as Class II directors
and, therefore, have an interest in the outcome of Proposal 1.
Except
as
set forth above, to the best of Guardian’s knowledge, no director or officer has
an interest, direct or indirect, in any of the other matters to be acted
upon.
Did
directors, executive officers and greater-than-10% stockholders comply with
Section 16(a) beneficial ownership reporting requirements in 2004?
Section 16(a)
of the Exchange Act requires our officers and directors, and persons who own
more than ten percent of a registered class of our equity securities, to file
reports of ownership and changes in ownership of equity securities of Guardian
with the SEC. Officers, directors, and greater than ten percent stockholders
are
required by the SEC regulation to furnish us with copies of all
Section 16(a) forms that they file.
Based
upon information provided to Guardian from Reporting Persons, during the year
ended December 31, 2004, M.Riley
Repko failed to file a Form 3 and a Form 5 with respect to the year ended
December 31, 2003. Other than the foregoing, Guardian is not aware of any
failure on the part of any Reporting Persons to timely file reports required
pursuant to Section 16(a).
Effective
November 21, 2005, the board of directors adopted a resolution increasing the
size of the board from five to seven members and elected Mr. Mark Zorko to
fill
one of those vacant seats. Under Guardian’s Certificate of Incorporation, the
board of directors is divided into three classes and, if the board consists
of
seven directors, the first class shall consist of three directors to hold office
for a term of one year from the date of the ratification of their election
by
stockholders at the next meeting of stockholders held to consider such matter,
the second class shall consist of two directors to hold office for a term of
two
years from the date of the ratification of his election by stockholders at
the
next meeting of stockholders held to consider such matter, and the third class
shall consist of two directors to hold office for a term of three years from
the
date of the ratification of their election by stockholders at the next meeting
of stockholders held to consider such matter. At each succeeding annual meeting
of stockholders, the successors to the class of directors whose terms shall
then
expire shall be elected to hold office for a term expiring at the third
succeeding annual meeting. Messrs. Nash and Repko have been designated by the
board as Class I directors, Mr. Kennedy and Mr. Zorko have been designated
as
Class II directors, and Messrs. Trudnak and Dishaw have been designated as
Class
III directors. By increasing the board to seven members and appointing Mr.
Zorko
a Class II director, the board has created a vacancy for a Class I director
which the board expects to fill in due course and upon the identification of
a
suitable candidate.
Biographical
information with respect to the present executive officers and directors of
Guardian are set forth below. There are no family relationships between any
present executive officers or directors.
Michael
W. Trudnak, Chairman of the Board, Chief Executive Officer, Secretary, Treasurer
and Director.Mr.
Trudnak was appointed Chairman of the Board, Secretary, and Chief Executive
Officer and became a Class III director in June 2003. From March 2003 and until
the present, Trudnak has been Chairman of the Board, Chief Executive Officer,
Secretary, Treasurer and a director of RJL. From October 2002 to March 2003,
Mr.
Trudnak was a consultant to certain telecommunications services companies.
From
April 2002 to October 2002, Mr. Trudnak was Chief Operating Officer and
subsequently President, Chief Executive Officer and a director of Advanced
Data
Centers, Inc., a privately held telecommunications services company. From July
2001 to March 2002, Mr. Trudnak served as Vice President of Mid-Atlantic Sales
for Equant N.V, a leading provider of global IP and data services to
multinational companies. Prior to Equant's acquisition of Global One, Inc.,
in
July 2001, Mr. Trudnak served as an Executive Director for South East Region
Sales for Global One from June 1998 to July 2001, and from January 1996 to
June
1998, served as Managing Director of Global One's sales and operations in France
and Germany. From November 1989 through December 1995, Mr. Trudnak served as
director of facilities engineering and then Senior Group Manager for Sprint
International, a global telecommunications services provider. Mr. Trudnak has
over twenty-five years of diversified executive management, sales, business
operations, technical and administrative experience in the telecommunications
industry. Mr. Trudnak served in the Marine Corps from April 1972 through January
1976.
William
J. Donovan, President, Chief Operating Officer and Chief Financial
Officer.
Mr.
Donovan has been Chief Financial Officer of Guardian since August18, 2003, and President and Chief Operating Officer since November 21, 2005.
From January 2003 until August 2003, Mr. Donovan was an independent consultant
to an affiliate of American Express Small Business Services. From September
1999
through December 2002, Mr. Donovan was CFO of Streampipe.com, Inc., a privately
held streaming communications media company. From October 1996 to August 1999,
Mr. Donovan was Chief Operating and Financial Officer for TDI, Inc., a privately
held international wireless telecommunications services company. From October
1986 to August 1999, Mr. Donovan was the Chief Operating and Financial Officer
for TDI, Inc., a privately held international wireless telecommunications
services company. From October 1986 to October 1996, Mr. Donovan was Chief
Financial Officer, Secretary, Treasurer and a Director at Riparius Corporation,
a privately held holding company with operating subsidiaries in the areas of
real estate development, property management, general contracting, government
contracting, and telecommunications engineering. From October 1980 to October
1986, Mr. Donovan was the Controller for McCormick Properties, Inc., a publicly
held commercial real estate subsidiary of McCormick & Company. From July
1973 to October 1980, Mr. Donovan was the Controller for AMF Head Sports Wear,
Inc., a privately held international sporting goods manufacturer and a
subsidiary of AMF, Inc., a publicly held company. Mr. Donovan received a
Bachelor of Arts in History in 1973, from the University of Maryland, an MBA
from the Sellinger School of Business, Loyola College, Baltimore, Maryland
in
1982, and a Certificate in Accounting from the University of Maryland in 1978.
Mr. Donovan has been a Certified Public Accountant since 1982. He is also a
Certified Business Valuation & Transfer Agent, Business Brokers Network,
2002. He has been on the Advisory Board for Nogika Corporation, a privately
held
software company, since 2001.
Robert
A. Dishaw, Director. Mr.
Dishaw became a Class III director in June 2003. From November 21, 2005, until
the present, Mr. Dishaw has been a consultant to Guardian. From June 2003 until
his resignation on November 21, 2005, Mr. Dishaw served as President and Chief
Operating Officer. FromOctober
2002 and until November 21, 2005, Mr. Dishaw was President and a director of
RJL. From December 2000 to April 2002, Mr. Dishaw was the Executive Vice
President and General Manager of Diagnos, Inc., a publicly held Canadian
company, which developed and marketed certain knowledge extraction software
technology. From June 1999 to November 2000, Mr. Dishaw was a management
consultant to certain public and private companies in the U.S. and Canada,
providing capital raising, operational, sales and marketing services to such
companies. From April 1997 to January 1999, Mr. Dishaw was President of HDB
Communications, Inc., a private corporation that provided installation services
for Canadian digital satellite providers. Mr. Dishaw served for more than seven
years in the U.S. Air Force and for ten years in the U.S. Diplomatic Service
serving as a Second Secretary for Administration/Political reporting at U.S.
Embassies in Brazil, Guyana, Zaire, Burma and Czechoslovakia.
Sean
W. Kennedy, Director. Mr.
Kennedy became a Class II director in July 2003. From January 2001 to the
present, Mr. Kennedy has been President and Chief Executive Officer of BND
Group, Inc., a privately held software development company. From October 1999
to
December 2000, Mr. Kennedy was divisional Vice President of Votenet Solutions,
a
Web development and consultant for trade associations, political parties and
related organizations. From April 1994 to October 1999, Mr. Kennedy was
President and CEO of Raintree Communications Corporation, a privately held
telecommunications services company, focused on providing technology tools
for
legislative lobbying to Trade Associations and Fortune 500 companies. From
June
1989 to April 1994, Mr. Kennedy was President and CEO of Electronic Funds
Transfer Association, a trade association for the electronic payments systems
industry. Mr. Kennedy is a graduate of Mount Saint Mary’s College in Emmitsburg,
Maryland.
M.
Riley Repko. Mr.
Repko
became a Class I director in October 2003. From June 2001 through April 2003,
Mr. Repko served as Vice President - Sales & Business Development for TRW
Systems, Inc., Global IT Division. From December 1998 through June 2001, Mr.
Repko served as Managing Director, Asia-Pacific Channels for Siebel Systems,
Inc. Since June 1994, Mr. Repko has been a principal of The Repko Group, a
business consulting firm. From June to November 2003, Mr. Repko was Chairman
of
the Board of Directors of IQBiometrix, a publicly held facial composite
technology company. Mr. Repko's academic credentials include attending the
Senior Military School at the National Defense University; an MS from the U.S.
Air Force's Air War College; an M.B.A. (summa cum laude) from St. Mary's
University, Texas in Operations Management; a B.S. in Electrical Engineering
from the Air Force Institute of Technology, Ohio; and a B.S. in Physics/Math
(cum laude) from St. Bonaventure University, New York.
Charles
T. Nash, Director. Mr.
Nash
became a Class I director of Guardian in June 2004. Mr. Nash has approximately
23 years of military experience plus six years of leadership experience in
emerging technology in the private sector. Since October 2000, Mr. Nash has
been
President of Emerging Technologies International, Inc. (“ETII”), a privately
held consulting company. ETII works to get the high level technologies developed
by small commercial companies inserted quickly, efficiently and inexpensively
into applications/tools for immediate military use. The company also works
with
government laboratories and acquisition agencies to facilitate speedy and
effective “lab to fleet” technology interchanges and discussions. From April
1998 to October 2000, Mr. Nash was vice president of Emerging Technology Group
of Santa Barbara Applied Research, Inc., a privately held defense consulting
and
emerging technology marketing company. Prior to that, Mr. Nash served in various
strategic military leadership positions, including: head of Strike/Anti-Surface
Unit Warfare and Air to Air/Strike Support section on the staff of the Chief
of
Naval Operations, overseeing budget planning of approximately $18 billion;
executive assistant to the Deputy Commander in Chief, U.S. Naval Forces Europe;
and executive and commanding officer, Strike Fighter Squadron 137. Mr. Nash
retired from the U.S. Navy in 1998 with the rank of Captain U.S.N. Mr. Nash
is a
frequent guest military and aviation analyst for Fox News Channel, WABC Talk
Radio and several regional radio stations. Mr. Nash earned a BS Aeronautics
degree in 1973 from the Parks College of Aeronautical Technology, Saint Louis
University, Cahokia, Illinois.
Mark
A. Zorko, Director. Mr.
Zorko
became a Class II director on November 21, 2005. Since 2000, Mr. Zorko has
been
a CFO Partner at Tatum CFO Partners, LLP, a professional services firm where
he
has held financial leadership positions with public and private client
companies. From 1996 to 1999, Mr. Zorko was Chief Financial Officer and Chief
Information Officer for Network Services Co., a privately held distribution
company. Mr. Zorko’s prior experience includes Vice President, Chief Financial
Officer and Secretary of Comptronix Corporation, a publicly held electronic
systems manufacturing company, corporate controller for Zenith Data Systems
Corporation, a privately held computer manufacturing and retail electronics
company, and finance manager positions with Honeywell, Inc. Mr. Zorko was a
senior staff consultant with Arthur Andersen & Co. Mr. Zorko served in the
Marine Corps. from 1970 to 1973. Mr. Zorko is a board advisor to Medspeed,
Inc.,
a privately held medical transportation logistics company. Mr. Zorko earned
a BS
degree in Accounting from Ohio State University, an MBA from the University
of
Minnesota, and completed the FEI’s Chief Financial Officer program at Harvard
University. Mr. Zorko is a certified public accountant and a member of the
National Association of Corporate Directors.
Darrell
H. Hill, Vice President, Guardian Health Care Systems.Mr.
Hill
has been a Vice President of Guardian (and prior to that of RJL) since May
2003.
From December 2000 to January 2002 Mr. Hill served as Director of Network
Services for Global One Telecommunications, an international telecommunications
company. From October 1998 until December 2000, Mr. Hill was Head of
Program Management for the United States, Canada and Latin America for Global
One. From 1993 until October 1998, Mr. Hill was Sr. Group Manager of Partnership
Marketing for Sprint International in Reston, Virginia. From 1979 to 1993,
Mr. Hill held various positions within Sprint International, including
management positions within Marketing, Systems Development, Customer Service,
Order Fulfillment and Billing. Mr. Hill has developed a wide breadth of
experience as a business executive responsible for large project management,
operations support and IT development in his 23 years in the telecommunications
industry.
Steven
V. Lancaster, Vice President, Business Development.
Mr. Lancaster
has been a Vice President of Guardian (and prior to that of RJL) since May
2003. From February 2001 to December 2002 Mr. Lancaster
served as Assistant Vice President Global Large Account Sales for
Global One Telecommunications, an international
telecommunications company. From November 1997
until February 2001 Mr. Lancaster was Executive Director
Multinational Sales Management for the US, Asia, Europe and Latin
America regions or Global One. From 1990 until November 1997
Mr. Lancaster was Group Manager, Global Account Management for Sprint
International in Reston, VA. From 1981 to 1990, Mr. Lancaster held
various Engineering, Marketing and Sales positions with GTE, British
Telecom and Sprint International. Mr. Lancaster has developed a wide
breadth of experience as a business executive responsible for international
business development, marketing, large account sales and management in
his 22 years in the telecommunications industry.
Each
officer of Guardian is appointed by the board of directors and holds his office
at the pleasure and direction of the board of directors or until his earlier
resignation, removal or death.
There
are
no material proceedings to which any director, officer or affiliate of Guardian,
any owner of record or beneficially of more than five percent of any class
of
voting securities of Guardian, or any associate of any such director, officer,
affiliate of Guardian or security holder is a party adverse to Guardian or
any
of its subsidiaries or has a material interest adverse to Guardian or any of
its
subsidiaries.
The
Board of Directors
The
Board
oversees the business affairs of Guardian and monitors the performance of
management. During the fiscal year ended December 31, 2004, the Board held
four
meetings and handled certain business through unanimous written consents of
its
board in accordance with its by-laws and applicable Delaware law. Members of
the
board of directors attended all of such meetings. Guardian has a policy of
requesting all directors to attend annual meetings of stockholders. All of
Guardian’s directors attended our 2004 Annual Meeting of Stockholders on
November 23, 2004.
Committees
of the Board of Directors
Prior
to
a reverse acquisition on June 26, 2003, pursuant to the terms of an Amended
and
Restated
Agreement and Plan of Reorganization, dated effective June 12, 2003, by and
among Guardian, RJL Marketing Services Inc., a privately held Delaware
corporation (RJL), and all of the shareholders of RJL, whereby Guardian acquired
all of the outstanding capital stock of RJL (Reverse Acquisition) in exchange
for the issuance of shares of common stock and shares of preferred stock
of
Guardian to the stockholders of RJL, Guardian had an audit committee and
a
compensation committee. Following the Reverse Acquisition, the new board
of
directors did not create an audit committee, nominating committee and
compensation committee until September 14, 2004. Accordingly, for the period
following the Reverse Acquisition in fiscal 2003 and until September 14,2004,
the entire board of directors performed the functions of an audit committee,
nominating committee, and compensation committee.
The
audit
committee functions which were performed by the entire board prior to September14, 2004, and thereafter by the Audit Committee, included
the engagement of and approval of services provided by Guardian’s independent
accountants as well as the review of (i) the professional services provided
by,
independence and qualifications of Guardian’s independent auditors; (ii)
material changes in accounting polices and financial reporting practices and
material developments in financial reporting standards in consultation with
the
independent auditors and management; (iii) the plan and scope of annual external
audit as recommended by the independent auditors; (iv) the adequacy of
Guardian’s internal accounting controls and the results of material internal
audits in consultations with the independent auditors and any internal auditor;
(v) Guardian’s financial statements and the results of each external audit in
consultation with management and the independent auditors; (vi) the auditing
and
accounting principles and practices to be used in the preparation of Guardian’s
financial statements in consultation with Guardian’s independent auditors and
Guardian’s principal financial and accounting officer; (vii) the financial
structure, condition and strategy of Guardian, including making recommendations
with respect thereto and approving such matters that are consistent with general
financial policies and direction from time to time determined by the board
of
directors; and (viii) the compliance by Guardian with legal and regulatory
requirements, including Guardian’s disclosure controls and procedures.
On
September 14, 2004, the board of directors created an Audit Committee, a
Compensation Committee, and a Nominating Committee. Copies of the charters
for
such committees were attached as Appendix A, Appendix B, and Appendix C,
respectively, to our Proxy Statement, dated October 26, 2004, for our 2004
Annual Meeting.
Report
of the Audit Committee
The
following paragraphs constitute information that shall not be deemed to be
"soliciting material," or to be "filed" with the SEC or subject to
Regulation 14A or 14C, or to the liabilities of Section 18 of the
Exchange Act. This information shall also not be deemed to be incorporated
by
reference into any filings by Guardian with the SEC, notwithstanding the
incorporation of this Proxy Statement into any filings.
With
regard to the fiscal year ended December 31, 2004, the Audit Committee
performed the following functions:
·
reviewed
audit services and selection of Guardian's independent registered
public
accountants;
·
reviewed
and discussed the audited financial statements with
management;
discussed
with Guardian's independent registered public accountants the matters
required to be discussed by SAS 61 (Codification of Statements on
Auditing
Standards, AU §380); SAS 61 requires independent registered public
accountants to communicate certain matters related to the conduct
of an
audit to those who have responsibility for oversight of the financial
reporting process, specifically the audit committee. Among the matters
to
be communicated to the audit committee are: (1) methods used to
account for significant unusual transactions; (2) the effect of
significant accounting policies in controversial or emerging areas
for
which there is a lack of authoritative guidance or consensus; (3) the
process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditor's conclusions
regarding
the reasonableness of those estimates; and (4) disagreements with
management over the application of accounting principles, the basis
for
management's accounting estimates, and the disclosures in the financial
statements;
·
received
the written disclosures and the letter from the independent registered
public accountants required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), and discussed
with the independent registered public accountants their independence;
and
·
based
on the review and discussions above, the Audit Committee recommended
to
the board of directors that Guardian’s audited financial statements be
included in Guardian’s Form 10-KSB for the year ended December 31,2004.
The
current Audit Committee was formed in September 2004. It consists of Sean W.
Kennedy, Charles T. Nash, and Mark A. Zorko, each of whom are qualified to
serve
on the Audit Committee under rules of the American Stock Exchange. Mr. Zorko
joined the Audit Committee on December 9, 2005, following his election to the
board of directors. Mr. Kennedy was appointed chairman on September 14, 2004,
and Mr. Zorko replaced Mr. Kennedy as Chairman following his appointment to
the
Audit Committee. The Audit Committee held four meetings during fiscal
2004. Members of the Audit Committee attended all of such meetings. The
board of directors has determined that each member of the Audit Committee is
independent, as independence is defined in Section 121A of the American Stock
Exchange listing standards. The Audit Committee is established in accordance
with Section 3(a)(58)(A) of the Exchange Act.
The
board
of directors has adopted a written charter for the Audit Committee which
provides that the Audit Committee's primary functions are to (a) oversee the
integrity of Guardian’s financial statements and Guardian’s compliance with
legal and regulatory reporting requirements, (b) appoint a firm of certified
public accountants whose duty it is to audit Guardian’s financial records for
the fiscal year for which it is appointed, (c) evaluate the qualifications
and
independence of the independent auditors, (d) oversee the performance of
Guardian’s internal audit function and independent auditors, and (e) determine
the compensation and oversee the work of the independent auditors. It is not
the
duty of the Audit Committee to plan or conduct audits or to determine that
Guardian’s financial statements are complete and accurate and are prepared in
accordance with generally accepted accounting principles in the United States.
Management is responsible for preparing Guardian’s financial statements, and the
independent auditors are responsible for auditing those financial
statements.
The
current Compensation Committee was formed in September 2004 and consists of
Sean
W. Kennedy, M. Riley Repko, and Charles T. Nash. Mr. Kennedy was appointed
chairman on September 14, 2004. The board of directors has adopted a written
charter for the Compensation Committee. The Compensation Committee held three
meetings during fiscal 2004.
Members
of the Compensation Committee attended all of such meetings.
The
Compensation Committee's primary functions are to:
·
evaluate
the performance of the CEO and determine the CEO’s total compensation and
individual elements thereof;
·
determine
the compensation level of the CEO and President and review and approve
corporate goals and objectives relevant to senior executive compensation
(including that of the CEO), evaluate senior management's performance
in
light of those goals and objectives, and determine and approve senior
management's compensation level based on their evaluation;
·
evaluate
the performance of other executive officers and determine their total
compensation and individual elements thereof;
·
make
all grants of restricted stock or other equity based compensation
to
executive officers;
·
administer
Guardian's compensation plans and programs;
·
recommend
to the board for approval equity based plans and incentive compensation
plans;
·
review
management development and succession programs; and
·
review
appropriate structure and amount of compensation for board members.
The
board
of directors has determined that all members of the Compensation
Committee
currently are independent within the meaning set forth in Section
121A
of
the
American Stock Exchange Company Guide.
Nominating
Committee
The
current Nominating Committee was formed in September 2004. The Nominating
Committee consists of three members, Messrs. Kennedy, Repko and Nash. Mr. Nash
was appointed chairman on September 14, 2004. The board has adopted a written
charter for the Nominating Committee. The Nominating Committee held three
meetings during fiscal 2004.
Members
of the Nominating Committee attended all of such meetings.
The
Nominating Committee's primary functions are to:
consider,
recommend and recruit candidates to serve on the board and to recommend
the director nominees selected by the Committee for approval by the
board
and the stockholders of Guardian;
·
recommend
to the board when new members should be added to the
board;
·
recommend
to the board the director nominees for the next annual meeting;
·
when
vacancies occur or otherwise at the direction of board, actively
seek
individuals whom the Committee determines meet the criteria and standards
for recommendation to the board;
·
consider
recommendations of director nominees by stockholders and establish
procedures for shareholders to submit recommendations to the Committee
in
accordance with applicable SEC rules and applicable listing
standards;
·
report,
on a periodic basis, to the board regarding compliance with the
Committee’s Charter, the activities of the Committee and any issues with
respect to the duties and responsibilities of the
Committee;
·
establish
a process for interviewing and considering a director candidate for
nomination to the board;
·
recommend
to the board guidelines and criteria as to the desired qualifications
of
potential board members;
·
provide
comments and suggestions to the board concerning board committee
structure, committee operations, committee member qualifications,
and
committee member appointment;
·
review
and update the Committee’s charter at least annually, or more frequently
as may be necessary or appropriate;
and
·
perform
such other activities and functions related to the selection and
nomination of directors as may be assigned from time to time by the
board
of directors including, but not limited to, preparing or causing
to be
prepared any reports or other disclosure required with respect to
the
Committee by any applicable proxy or other rules of the SEC or as
required
by the rules and regulations of the American Stock Exchange or any
other
exchange or over-the-counter market on which the securities of Guardian
may then be listed or quoted.
The board of directors has determined that all members of the Nominating
Committee currently are independent within the meaning set forth in Section
121A
of the American Stock Exchange Company Guide.
The
board
of directors has adopted charters for its Audit Committee, Compensation
Committee, and Nominating Committee which you may review on our corporate
website at www.guardiantechintl.com.
In
addition, these documents are available in print to any stockholder who requests
a copy from Guardian. Guardian has determined that the “independence” of a
director shall be determined in accordance with the director independence
requirements set forth in the American Stock Exchange Company Guide, Section
121A.
Nomination
Process for Director Candidates
The
Nominating Committee is, among other things, responsible for identifying and
evaluating potential candidates and recommending candidates to the board for
nomination.
The
Committee regularly reviews the composition of the board and whether the
addition of directors with particular experiences, skills, or characteristics
would make the board more effective. When a need arises to fill a vacancy or
it
is determined that a director possessing particular experience, skills, or
characteristics would make the board more effective, the Committee initiates
a
search. As a part of the search process, the Committee may consult with other
directors and members of senior management, and may hire a search firm to assist
in identifying and evaluating potential candidates. To date, the Committee
has
not retained any such consultant but may do so in the future.
The
Committee may at its discretion retain an outside director candidate search
consultant. Such a consultant will seek out candidates who have the experiences,
skills, and characteristics that the Committee has determined are necessary
to
serve as a member of Guardian’s board. Such a consultant will research the
background of all candidates, conduct extensive interviews with candidates
and
their references, and then presents the most qualified candidates to the
Committee and Guardian's management.
When
considering a candidate, the Committee reviews the candidate's integrity,
commitment, business judgment, financial literacy, expertise in finance and
accounting, experience, skills, industry knowledge, diversity, and other
criteria and characteristics. The Committee also considers whether a potential
candidate will otherwise qualify for membership on the board, and whether the
potential candidate would likely satisfy the independence requirements
established by the board and any exchange or other market on which Guardian’s
stock is then listed or traded.
Candidates
are selected on the basis of outstanding achievement in their professional
careers, broad experience, wisdom, personal and professional integrity, ability
to make independent, analytical inquiries, and their experience with and
understanding of the business environment. With respect to the minimum
experiences, skills, or characteristics necessary to serve on the board, the
Committee will only consider candidates who:
a.
have
the experience, skills, and characteristics necessary to gain a
basic
understanding of the:
(i)
principal operational and financial objectives and plans of
Guardian;
(ii)
results of operations and financial condition of Guardian and of
any
significant subsidiaries or business segments; and
(iii)
relative standing of Guardian and its business segments in relation
to its
competitors;
b.
have
a perspective that will enhance the board's strategic discussions;
and
c.
are
capable of and committed to devoting adequate time to board duties,
and
are available to attend Guardian’s regularly-scheduled board and committee
meetings.
All
potential
candidates are interviewed by the CEO, the Chairman of the Board, and the Chair
of the Committee, and may be interviewed by other directors and members of
senior management as desired and as schedules permit. The Committee then meets
to consider and approve the final candidates, and either makes its
recommendation to the board to fill a vacancy, add an additional member or
recommend a slate of candidates to the board for nomination for election to
the
Board. The selection process for candidates is intended to be flexible, and
the
Committee, in the exercise of its discretion, may deviate from the selection
process when particular circumstances warrant a different approach.
Sean
W.
Kennedy was appointed to the Board in July 2003 as a Class II director. Mr.
Kennedy was elected to the board by stockholders at Guardian’s Special Meeting
of Stockholders on February 13, 2004, and is being nominated for election for
a
term of three years at the Special Meeting. Mr. Zorko was elected to the board
of directors on November 21, 2005, following the board’s adoption of resolutions
increasing the size of the board from five to seven members. Mr. Zorko was
recommended to Guardian by Michael W. Trudnak, Chief Executive Officer of
Guardian. Mr. Zorko’s election to the board was approved by the Nominating
Committee and recommended to the board of directors.
Each
of
Michael W. Trudnak and Robert A. Dishaw are beneficial owners of more than
five
percent of the outstanding shares of Guardian. Any participation by them in
the
nomination process was considered to be in their capacities as directors of
Guardian, and not as recommendations from security holders that beneficially
own
more than five percent of the outstanding shares of Guardian.
Stockholder
Recommendations of Candidates
Stockholders
may recommend candidates by writing to the Secretary of Guardian Technologies
International, Inc., 516 Herndon Parkway, Herndon, Virginia20170. The
recommendation must include the following information:
a.
The
candidate's name and business
address;
b.
A
resume describing the candidate's qualifications, and which clearly
indicates that he or she has the minimum experiences, skills, and
qualifications that the Committee has determined are necessary to
serve as
a director;
c
A
statement as to whether or not, during the past ten years, the candidate
has been convicted in a criminal proceeding (excluding traffic violations)
and, if so, the dates, the nature of the conviction, the name or
other
disposition of the case, and whether the individual has been involved
in
any other legal proceeding during the past five
years;
d.
A
statement from the candidate that he or she consents to serve on
the board
if elected; and
e.
A
statement from the person submitting the candidate that he or she
is
the registered holder of shares, or if the shareholder is not the
registered holder, a written statement from the "record holder" of
the
shares (usually a broker or bank) verifying that at the time the
shareholder submitted the candidate that he or she was a beneficial
owner
of shares.
All
candidates
nominated by a stockholder pursuant to the requirements above will be submitted
to the Committee for its review, which may include an analysis of the candidate
from Guardian’s management.
The
board
of directors has determined that Mr. Mark A. Zorko, who was elected to the
board
on November 21, 2005, and became Chairman of the Audit Committee on December9,2005, is an "audit committee financial expert" as that term is defined in
applicable rules adopted by the SEC.
Audit
Committee Pre-Approval Policy with Regard to Independent Auditor and Audit
and
Other Services
To
ensure
the independence of Guardian’s independent auditor and to comply with applicable
securities laws, the Audit Committee is responsible for reviewing, deliberating
and, if appropriate, pre-approving all audit, audit-related, and non-audit
services to be performed by Guardian’s independent registered public
accountants. For that purpose, the Audit Committee has established a policy
and
related procedures regarding the pre-approval of all audits, audit-related,
and
non-audit services to be performed by Guardian’s independent accountants (the
"Policy"). The board fulfilled such responsibilities during the period following
the Reverse Acquisition and until the formation of the new Audit Committee
in
September 2004, and the Audit Committee has fulfilled such responsibilities
since its formation.
The
Policy provides that Guardian’s independent accountant may not perform any
audit, audit-related, or non-audit service for Guardian, subject to those
exceptions that may be permitted by applicable law, unless (1) the service
has
been pre-approved by the Audit Committee, or (2) Guardian engaged the
independent registered public accountant to perform the service pursuant to
the
pre-approval provisions of the Policy. In addition, the Policy prohibits the
Audit Committee from pre-approving certain non-audit services that are
prohibited from being performed by Guardian’s independent accountant by
applicable securities laws. The Policy also provides that the Chief Financial
Officer will periodically update the Audit Committee as to services provided
by
the independent auditor. With respect to each such service, the independent
registered public accountant provides detailed back-up documentation to the
board and the Chief Financial Officer.
Pursuant
to its Policy, the Audit Committee has pre-approved certain categories of
services to be performed by the independent registered public accountant and
a
maximum amount of fees for each category. The Board annually re-assesses these
service categories and the associated fees. Individual projects within the
approved service categories have been pre-approved only to the extent that
the
fees for each individual project do not exceed a specified dollar limit, which
amount is re-assessed annually. Projects within a pre-approved service category
with fees in excess of the specified fee limit for individual projects may
not
proceed without the specific prior approval of the Audit Committee. In addition,
no project within a pre-approved service category will be considered to have
been pre-approved by the Board if the project causes the maximum amount of
fees
for the service category to be exceeded, and the project may only proceed with
the prior approval of the Audit Committee to increase the aggregate amount
of
fees for the service category.
Code
of Ethics for the Chief Executive Officer and Other Executive
Officers
Guardian
has adopted a Code of Ethics for its Chief Executive Officer, Chief Financial
Officer, principal accounting officer or controller, and any person performing
similar functions. A copy of the Code of Ethics is available on our website
at
www.guardiantechintl.com,
click
on Corporate Governance, and then click on “Code of Ethics for CEO/Senior
Financial Officers.”
The
Board
of Directors welcomes communications from its stockholders and other interested
parties and has adopted a procedure for receiving and addressing those
communications. Stockholders and other interested parties may communicate any
concerns they may have about Guardian directly to either the full board of
directors, the Chairman of our Audit Committee, or any other non-employee
director by mailing their communications to Guardian at the following address:
Guardian Technologies International, Inc., 516 Herndon Parkway, Herndon,
Virginia20170, Attention: Corporate Secretary (Board Matters). The Secretary
promptly will forward all stockholder communications and other communications
from interested parties unopened as directed by the stockholder. All concerns
regarding audit or accounting matters will be forwarded to the Audit Committee.
All reported concerns will simultaneously be reviewed and addressed by
Guardian’s Chief Executive Officer or his designee (unless he is alleged to be
involved in the matter at issue). The status of all outstanding concerns will
be
reported to the board or Audit Committee (as applicable) on a quarterly
basis.
The
following table sets
forth the aggregate cash compensation paid for services rendered during fiscal
years 2002, 2003, and 2004 by each person serving as our President and Chief
Executive Officer during the 2004 fiscal year and our other most highly
compensated executive officers serving as such at the end of the year ended
December 31, 2004 whose compensation was in excess of $100,000 (Named
Executive Officers). The information below is provided with regard to Messrs.
Trudnak, Donovan, Hill, and Lancaster, and Mr. Dishaw, who resigned as President
and Chief Operating Officer on November 21, 2005, and Mr. J. Andrew Moorer,
who
resigned as President, CEO and a director effective upon the closing of the
Reverse Acquisition.
Mr.
Moorer compensation reflects cash compensation paid towards his
base
salary, as well as, other compensation which reflects stock grants
in lieu
of salary and bonuses. Mr. Moorer accepted a reduction in his base
salary in exchange for stock grants.
(2)
Mr.
Trudnak became the Chief Executive Officer of RJL on January1, 2003.
Mr. Trudnak earned $44,352.60 of salary during 2004, which is
accrued and unpaid as of December 31,2004.
Mr.
Dishaw, the founder of RJL Marketing Services Inc. earned $44,352.60
of
salary during 2004, which is accrued and unpaid as of December31, 2004.
Mr. Dishaw resigned as President and Chief Operating Officer
effective
November 21, 2005.
(4)
Mr.
Donovan became an executive officer on August 18, 2003, and was
appointed
President and Chief Operating Officer effective November 21,2005.
(5)
Mr.
Hill became an executive officer on May 19, 2003.
(6)
Mr.
Lancaster became an executive officer on May 19, 2003.
(7)
Represents
automobile allowance
payments.
OPTION
GRANTS IN THE 2004 FISCAL YEAR
Individual
Grants
Appreciation
for Option Term (3)
Name
Number
of Securities Underlying Options Granted (1)(2)
(#)
%
of Total Options Granted to Employees In Fiscal
Year
Includes
10,000 qualified options granted to Messrs. Donovan, Hill and Lancaster
and 10,000 non-qualified options granted to Messrs. Trudnak and Dishaw.
These options vested immediately and are exercisable for ten years.
(2)
Non-qualified,
ten-year exercisable options were granted to each individual:
Trudnak (50,000), Dishaw (200,000), Donovan (600,000), Hill
(600,000), and Lancaster (600,000). The options granted to Messrs.
Trudnak and Dishaw vested immediately upon grant. The options
granted to Messrs. Donovan, Hill and Lancaster vest on their two
year
anniversary of employment.
(3)
Potential
realizable values are based on the fair market value per share on
the date
of the grant and represent the hypothetical gains that could be achieved
for the respective options if exercised and sold at the end of the
option
term for the appreciated price. The dollar amounts set forth in
these columns are the result of calculations at the five percent
and ten
percent rates of appreciation set by the SEC, and are not intended
to
forecast possible future appreciation, if any, of Guardian’s Common Stock
price. There can be no assurance that such potential realizable
values will not be more or less than indicated in the table
above.
AGGREGATED
OPTION EXERCISES IN THE 2004 FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The number of unexercised options held by each of the Named Executive Officers
who held options as of December 31, 2004 and the value of unexercised
in-the-money options as of December 31, 2004, are indicated in the table
below.
Number
of Securities Underlying Unexercised Options at Fiscal Year
End
Value
of Unexercised In-The-Money Options at Fiscal Year
End (1)
Name
Shares
Acquired on Exercise
Value
Realized
Exercisable
Unexercisable
Exercisable
Unexercisable
Michael
W. Trudnak
-
-
460,000
-
$
1,940,500
$
-
Robert
A. Dishaw
-
-
210,000
-
$
868,000
$
-
William
J. Donovan
-
-
210,000
600,000
$
871,500
$ 2,490,000
Darrell
E. Hill
70,000
$
227,500
140,000
600,000
$
581,000
$ 2,490,000
Steven
V. Lancaster
40,000
$
134,000
170,000
600,000
$
705,000
$ 2,490,000
(1) Calculated
on the basis of the fair market value of $4.65 of the Common Stock on December31, 2004, minus the per share exercise price.
The
following table gives information about Guardian’s common stock issued upon
exercise of options, warrants and rights under all of Guardian’s equity
compensation plans as of December 31, 2004. Information is included for equity
compensation plans approved by Guardian's stockholders and equity compensation
plans not approved by Guardian's stockholders.
Number
of securities
to be issued
upon exercise
of outstanding
options, warrants and rights (a)
Weighted
average
exercise price of outstanding options, warrants and
rights
(b)
Number
of securities remaining available for future issuances under
equity compensation plans (excluding securities reflected in
column (a))
(c)
Equity
compensation plans approved by security
holders
4,470,000(1)
$0.82
25,530,000(2)
Equity
compensation plans not approved by security
holders
--
--
--
Total
4,470,000
$0.82
25,530,000
(1)
Includes
options to purchase shares outstanding under the Guardian 2003 Amended
and
Restated Stock Incentive Plan.
(2)
Includes
shares available, as of December 31, 2004, for future issuance under
the
Guardian 2003 Amended and Restated Stock Incentive Plan; excludes
securities reflected in column (a). Subject to the terms and provisions
of
the Plan, options may be granted to eligible employees and nonqualified
stock options may be granted to directors, employees or consultants
of
Guardian and its subsidiaries at any time.
Director
Compensation
Pursuant
to Guardian’s “Policy Regarding Compensation of Independent Directors,” adopted
effective December 22, 2005 (Policy), Guardian furnishes the following
compensation to its independent directors for serving in such capacity. At
the
beginning of each calendar year, each independent director receives annual
compensation in the form of non-qualified options to purchase 5,000 shares
of
common stock and 2,500 non-qualified options for each board committee of which
he or she is a member (which options vest and become exercisable one year after
the date of grant), or a pro rata portion of such number if a director is
elected after the beginning of the year. Each newly appointed director receives
a one-time grant of
10,000
non-qualified stock options, which options
vest and become exercisable one year after the date of grant. Each director
who
was a director on January 1, 2005, also received a one-time grant of 10,000
non-qualified stock options that vest and become exercisable on January 1,2006.
Effective December 31, 2005, the vesting of options issued to our current
directors was accelerated and such options became immediately exercisable.
All
of such options have been or are issued pursuant to Guardian’s Amended and
Restated 2003 Stock Incentive Plan and are subject to the terms thereof, are
exercisable for a period of ten years and are exercisable at a price equal
to
the fair market value of Guardian’s common stock on the date of grant. In
addition, independent directors shall be reimbursed for out of pocket expenses
in connection with travel to and attending board and committee meetings. The
board, at its discretion, may grant additional awards of options, restricted
stock and/or cash compensation to its independent directors as it may determine
from time to time. This Policy may be amended, altered or terminated at the
election of the board, provided no amendment, alteration or terminations shall
have a retroactive effect or impair the rights of an independent director under
any option grant theretofore granted.
Directors
who are officers of or employed or engaged as consultants by Guardian or any
of
its subsidiaries are not additionally compensated for their board
activities.
Employment
Contracts and Termination of Employment and Change-in-Control Arrangements
We
entered into an employment agreement with Mr. Trudnak, our CEO, which commenced
on January 1, 2003. We amended his agreement effective December 10, 2004.
The amended agreement is for a three year term commencing June 26, 2003, and
is
renewable for one year terms. The employment agreement provides for annual
compensation to Mr. Trudnak of $275,000. The agreement provides for
incentive compensation and/or bonuses as determined by Guardian, participation
in Guardian’s stock option plan, and participation in any Guardian employee
benefit policies or plans. The employment agreement may be terminated upon
the death or disability of the employee or for cause, in which event Guardian’s
obligation to pay compensation shall terminate immediately. In the event
the agreement is terminated by us other than by reason of the death or
disability of the employee or for cause, the employee is entitled to payment
of
his base salary for one year following termination. The employee may
terminate the agreement on 30 days’ prior notice to Guardian. The employee has
entered into an employee proprietary information, invention assignment and
non-competition agreement, pursuant to which the employee agrees not to disclose
confidential information regarding Guardian, agrees that inventions conceived
during his employment become the property of Guardian, agrees not to compete
with the business of Guardian for a period of one year following termination
of
employment, and agrees not to solicit employees or customers of Guardian
following termination of employment.
Upon
the
resignation of Mr. Dishaw and effective as of November 21, 2005, we appointed
Mr. Donovan as President and Chief Operating Officer of Guardian. Mr. Donovan
will also continue as Chief Financial Officer until a replacement is found
for
him. Effective as of the date of his new appointment, Mr. Donovan entered into
a
new employment agreement with Guardian, which agreement supersedes his
employment agreement with Guardian, dated effective August 18, 2003. The new
employment agreement is for a term of three (3) years unless earlier terminated,
and is automatically renewable for one (1) year terms. The employment agreement
provides for an annual salary of $265,000. The agreement provides for annual
performance bonuses based on goals established by Guardian and agreed to by
Mr.
Donovan, a monthly automobile allowance of $500, participation in Guardian’s
stock option and other award plans (which options or awards shall immediately
vest upon a “change in control”), and participation in any Guardian benefit
policies or plans adopted by Guardian on the same basis as other employees
at Mr. Donovan’s level. The employment agreement may be
terminated by Mr. Donovan on 30 days’ prior written notice. The employment
agreement may be terminated by Guardian by reason of death, disability or for
cause. In the event the agreement is terminated for death or disability of
the
employee, Guardian’s obligation to pay compensation to the employee shall
terminate immediately; provided that if Guardian does not maintain disability
insurance for the employee, employee shall be entitled to be paid his base
salary for one year following his disability. In the event the employee is
terminated other than by reason of his death, disability, for cause, or change
in control, the employee is entitled to payment of his base salary for one
year
following termination. Further if Mr. Donovan terminates his employment be
reason of the following material reasons (each a “material reason”): written
demand by Guardian to change the principal workplace of the employee to a
location outside of a 50-mile radius from the current principal address of
Guardian; a material reduction in the number or seniority of personnel reporting
to employee or a material reduction in the frequency or in nature of matters
with respect to which such personnel are to report to employee, other than
as
part of a Company wide reduction in staff; an adverse change in employee’s
title; a material decrease in employee’s responsibilities; or a material
demotion of employee, Mr. Donovan is entitled to be paid the greater of the
base
salary remaining under the employment agreement or twelve months base salary.
Also, in the event of a “change in control” of Guardian and, within 12 months of
such change of control, employee’s employment is terminated or one of the events
in the immediately preceding sentence occurs, Mr. Donovan is entitled to be
paid
his base salary for 18 months following such termination or event. A “change in
control” would include the occurrence of one of the following
events:
·
the
approval of the stockholders for a complete liquidation or dissolution
of
Guardian;
·
the
acquisition of 20% or more of the outstanding common stock of Guardian
or
of voting power by any person, except for purchases directly from
Guardian, any acquisition by Guardian, any acquisition by a Guardian
employee benefit plan, or a permitted business combination;
·
if
two-thirds of the incumbent board members as of the date of the agreement
cease to be board members, unless the nomination of any such additional
board member was approved by three-quarters of the incumbent board
members;
·
upon
the consummation of a reorganization, merger, consolidation, or sale
or
other disposition of all or substantially all of the assets of Guardian,
except if (i) all of the beneficial owners of Guardian’s outstanding
common stock or voting securities who were beneficial owners before
such
transaction own more than 50% of the outstanding common stock or
voting
power entitled to vote in the election of directors resulting from
such
transaction in substantially the same proportions, (ii) no person
owns
more than 20% of the outstanding common stock of Guardian or the
combined
voting power of voting securities except to the extent it existed
before
such transaction, and (iii) at least a majority of the members of
the
board before such transaction were members of the board at the time
the
employment agreement was executed or the action providing for the
transaction.
Also,
Mr.
Donovan has entered into a proprietary information, invention assignment and
non-competition agreement (“non-competition agreement”), pursuant to which he
has agreed not to disclose confidential information regarding Guardian, agrees
that inventions conceived during his employment become the property of Guardian,
agrees not to compete with the business of Guardian for a period of one year
following termination or expiration of his employment, and agrees not to
solicit employees or customers of Guardian following termination of his
employment. The employment agreement provides for arbitration in the event
of
any dispute arising out of the agreement or his employment, other than disputes
arising under the non-competition agreement.
We
have
also entered into employment agreements with Mr. Darrell E. Hill, Vice
President, Program Management, and Mr. Steve Lancaster, Vice President, Business
Development which we amended December 10, 2004. The amended agreements are
essentially the same as the agreements with Mr. Trudnak, except that the
agreements provide for base salaries of $125,000 per annum.
Effective
as of December 19, 2003, we entered into employment agreements with Walter
Ludwig, who was then a director of Guardian, and Victor T. Hamilton in
connection with the acquisition of certain assets of Difference Engines
Corporation by Guardian. The employment agreements are essentially similar
to the employment agreements with Mr. Trudnak, except that they provide for
an
annual base salary of $120,000 for Mr. Ludwig and $90,000 for Mr. Hamilton.
The
agreements also include a change in control provision similar to that contained
in Mr. Donovan’s employment agreement, except that Guardian is obligated to pay
the annual base salary for twelve (12) months following a change in control
termination. Mr. Ludwig resigned as a director, officer and employee of
Guardian on May 18, 2004 and his employment agreement terminated as of such
date.
Each
of
the foregoing agreements provides that the employee shall be entitled to
participate in any stock option plan that we subsequently adopt, including
the
2003 Stock Incentive Plan. Mr. Trudnak’s original employment agreement provided
for the grant of an aggregate of 400,000 shares of our restricted stock.
However, effective June 21 2004, Mr. Trudnak agreed to accept in lieu of the
issuance of such shares, ten year nonqualified options to purchase an aggregate
of 400,000 shares of common stock at an exercise price of $.50 per share. Also,
each of Messrs. Hill’s and Lancaster’s original employment agreements provided
for the grant of 200,000 shares of our restricted stock. However, effective
June
21 2004, each of Messrs. Hill and Lancaster agreed to accept in lieu of the
issuance of such shares, ten year nonqualified options to purchase an aggregate
of 200,000 shares of common stock at an exercise price of $.50 per
share.
Consulting
Agreement with Mr. Dishaw and Change-in-Control
Arrangement
Effective
November 21, 2005, Mr. Robert A Dishaw resigned as President and Chief Operating
Officer of Guardian and Guardian and Mr. Dishaw mutually agreed to terminate
his
employment agreement, dated December 10, 2004. However, Mr. Dishaw will remain
a
director of Guardian and will continue to provide certain consulting services
to
Guardian pursuant to the terms of a consulting services agreement, dated
effective November 21, 2005.
The
consulting services agreement provides that Mr. Dishaw will perform services
with regard to the distribution of Guardian’s products through EGC
International, Inc., and that he shall be the primary intermediary with EGC.
The
agreement is for a term of three (3) years unless earlier terminated. The
agreement provides for a consulting fee of $180,000 during year one, $130,000
during year two, and $80,000 during year three. Mr. Dishaw will also be entitled
to be paid a sales override commission of 3% of gross revenues from sales of
Guardian products to EGC or its resellers and 3% of gross revenues from sales
of
Guardian products to certain approved clients. Mr. Dishaw shall continue to
participate in benefit policies and plans of Guardian, and shall be entitled
to
receive reimbursement of reasonable expenses. The agreement may be terminated
by
Mr. Dishaw upon thirty (30) days, prior written notice. The agreement
may also be terminated by reason of his death, disability,
for
cause, or by reason of a “change in control” of Guardian. In the event of
termination by reason of death or cause, consultant shall not be entitled to
any
further compensation. In the event of termination by reason of disability,
employee is entitled to receive a lump sum of $50,000 within 30 days of
termination, subject to Guardian’s right to have the agreement reinstated in the
event consultant is able to resume his duties under the agreement. Upon the
occurrence of a change in control, consultant shall be entitled to receive
a
discounted lump sum equal to the remaining compensation due under the agreement.
The term “change in control” means:
·
Acquisition
by any person or group of securities of Guardian representing 50%
or more
of Guardian’s common stock and/or combined voting power of its outstanding
securities;
·
Substantially
all of the assets of Guardian or assets that constitute a substantial
or
material business segment are sold, exchanged, transferred or otherwise
disposed of;
·
Guardian’s
shareholders approve a merger, consolidation, share exchange, division
or
other reorganization or transaction of Guardian with another person,
other
than a transaction that would result in the voting securities of
Guardian
outstanding immediately before the transaction continuing to represent
at
least two-thirds of the combined voting power immediately after such
transaction of (i) Guardian’s outstanding securities, (ii) the surviving
entity’s securities, or (iii) in the case of a division, the outstanding
securities of each entity resulting from the division, in each case
that
have the right under ordinary circumstances to elect a majority of
such
entity’s board of directors or other governing
body;
·
During
any period of twenty-four months, individuals who at the beginning
of such
period constituted the board of directors of Guardian cease for any
reason
to constitute at least a majority of the board of directors of
Guardian.
The consulting services agreement provides for mutual releases of all claims,
including claims arising out of Mr. Dishaw’s employment by Guardian and for
mutual indemnification. The agreement also provides that if certain disputes
are
not resolved within 30 days by the parties, such disputes may be referred to
binding arbitration. Also, Mr. Dishaw has entered into a proprietary
information, invention assignment and non-competition agreement, pursuant to
which he has agreed not to disclose confidential information regarding Guardian,
agrees that inventions conceived during his employment/engagement become the
property of Guardian, agrees not to compete with the business of Guardian for
a
period of one year following termination or expiration of his engagement, and
agrees not to solicit employees or customers of Guardian following
termination of his engagement.
Amended
and Restated 2003 Stock Incentive Plan
On
August29, 2003, our board of directors adopted our 2003 Stock Incentive Plan and
amended and restated the plan on December 2, 2003 (Plan). The Plan was approved
by stockholders at the special meeting of our stockholders that was held on
February 13, 2004.
The
Plan
is intended to foster the success of Guardian and its subsidiaries by providing
incentives to eligible employees, directors and consultants to promote the
long-term financial success of Guardian. The Plan is designed to provide
flexibility to Guardian in our ability to motivate, attract, and retain the
services of eligible employees, directors and consultants upon whose judgment,
interest, and special effort the successful conduct of our operation is largely
dependent. As
of
November 30, 2005, the market value of the 30,000,000 shares underlying the
options issuable under the Plan was $96,000,000.
The
Plan
is administered by the board of directors of Guardian or a committee designated
by the board consisting of two or more directors appointed by the board
(Committee), each of whom is a non-employee director and an outside director
within the meaning of Section 162(m) of the Code. The Plan is currently
administered by the Compensation Committee and awards are made by the Committee.
The Committee has all powers necessary or desirable to administer the Plan.
The
Committee has the power to determine the terms and conditions upon which awards
may be made, interpret the Plan, accelerate the exercisability of any award,
establish, amend or waive rules or regulations for the Plan’s administration,
and make all other determinations and take all other actions necessary or
advisable for the administration of the Plan in its sole judgment and
discretion. The Committee has the authority to grant awards to employees,
directors and consultants selected by it, which awards are to be evidenced
by an
agreement. All determinations and decisions made by the Committee shall be
final, conclusive and binding.
Under
the
Plan, Guardian may issue options which will result in the issuance of up to
an
aggregate of 30,000,000 shares of Guardian common stock, $.001 par value per
share. This aggregate number of shares and the number of shares in an award
(as
well as the option price) may be adjusted if the outstanding shares of Guardian
are increased, decreased or exchanged through merger or other stock transaction.
The Plan provides for options which qualify as incentive stock options
(Incentive Options or ISOs) under Section 422 of the Internal Revenue Code
of
1986, as well as the issuance of non-qualified options (Non-Qualified Options)
which do not so qualify. The shares issued by Guardian under the Plan may be
either treasury shares or authorized but unissued shares as Guardian’s board of
directors or the Committee may determine from time to time.
Pursuant
to the terms of the Plan, Guardian may grant Non-Qualified Options to
directors or consultants of Guardian and its subsidiaries at any time and from
time to time as shall be determined by the
Committee. The Plan also provides for the issuance of Incentive Options to
any
officer or other employee of Guardian or its subsidi-aries as
selected by the Committee.
Options
granted under the Plan must be evidenced by a stock option agreement in a form
consistent with the provisions of the Plan. Each
option shall expire on the earliest of (a) ten years from the date it is
granted, (b) sixty days after the optionee dies or becomes disabled, (c)
immediately upon the optionee's termination of employment or service or
cessation of board service, whichever is applicable, or (d) such date as the
board of directors or Committee shall determine, as set forth in the relevant
option agreement; provided, however, that no ISO which is granted to an optionee
who, at the time such option is granted, owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of Guardian
or any of its subsidiaries, shall be exercisable after the expiration of five
years from the date such option is granted.
The price at which shares of common stock covered by the option can be purchased
is determined by the Committee. In
the
case of an Incentive Option, the exercise price shall not be less than the
fair
market value of Guardian’s common stock on the date the option was granted or in
the case of any optionee who, at the time such incentive stock option is
granted, owns stock possess-ing more than ten percent of the total combined
voting power of all classes of stock of Guardian or a subsidiary, not less
than
one hundred ten percent of the fair market value of such stock on the date
the
Incentive Option is granted.
To
the
extent that an Incentive Option or Non-Qualified Option is not exercised within
the period in which it may be exercised in accordance with the terms and
provisions of the Plan described above, the Incentive Option or Non-Qualified
Option will expire as to any then unexercised portion. To exercise an option,
the Plan participant must provide written notice of the exercise setting forth
the number of shares with respect to which the option being exercised to
Guardian and tender an amount equal to the total option exercise price of the
underlying shares in accordance with the relevant option agreement. The right
to
purchase shares is cumulative so that once the right to purchase any shares
has
vested, those shares or any portion of those shares may be purchased at any
time
thereafter until the expiration or termination of the option.
Except
as
specifically provided in an option agreement, options granted under the Plan
may
not be sold, pledged, transferred or assigned in any way, except by will or
by
the laws of descent and distribution, and during the lifetime of a participant
to whom and Incentive Option is granted, the Incentive Option may be exercised
only by the participant.
The
Plan
may be modified or terminated at any time. Any such amendment or termination
will not affect outstanding options without consent of the
optionee.
Awards
may be made to approximately thirty-eight employees and former employees of
Guardian, our four non-employee directors, and to consultants to Guardian.
Because awards under the Plan are determined by the Committee, we cannot
determine the benefits or amounts of awards that will be received or granted
in
the future under the Plan. As of the date of this Proxy Statement, 5,274,300
options have been granted under the Plan. The Plan is the only plan pursuant
to
which options and shares may be granted or issued.
The
following is a brief summary of the principal income tax consequences of awards
under the Plan. This summary is based on current federal income tax laws and
interpretations thereof, all of which are subject to change at any time,
possibly with retroactive effect. This summary is not intended to be
exhaustive.
Non-Qualified
Options.
A
participant who receives Non-Qualified Options does not recognize taxable income
upon the grant of an option, and Guardian is not entitled to a tax deduction.
The participant will recognize ordinary income upon the exercise of the option
in an amount equal to the excess of the fair market value of the option shares
on the exercise date over the option price. Such income will be treated as
compensation to the participant subject to applicable withholding tax
requirements. Guardian is generally entitled to tax a deduction in an amount
equal to the amount taxable to the participant as ordinary income in the year
the income is taxable to the participant. Any appreciation in value after the
time of exercise will be taxable to the participant as capital gain (assuming
it
is a capital asset) and will not result in a deduction by Guardian.
Incentive
Options.
A
participant who receives an Incentive Option does not recognize taxable income
upon the grant or exercise of the option, and Guardian is not entitled to a
tax
deduction. The difference between the option price and the fair market value
of
the option shares on the date of exercise, however, will be treated as an item
of adjustment for purposes of determining the alternative minimum tax liability,
if any, of the participant in the year of exercise.
A
participant will recognize gain or loss upon the disposition of shares acquired
from the exercise of ISOs. The nature of the gain or loss depends on how long
the option shares were held. If the option shares are not disposed of pursuant
to a “disqualifying disposition” (i.e., no
disposition
occurs within two years from the date the
option was granted or one year from the date of exercise), the participant
will
recognize long-term capital gain or capital loss depending on the selling price
of the shares. If the option shares are sold or disposed of as part of a
disqualifying disposition, the participant must recognize ordinary income in
an
amount equal to the lesser of the amount of gain recognized on the sale or
the
difference between the fair market value of the option shares on the date of
exercise and the option price. Any additional gain will be taxable to the
participant as a long-term or short term capital gain, depending on how long
the
option shares were held. Guardian is generally entitled to a deduction in
computing its federal income taxes for the year of disposition in an amount
equal to any amount taxable to the participant as ordinary income.
Compensation
Committee Interlocks and Insider Participation
From January 1, 2004, through September 14, 2005, the functions of the
Compensation Committee were fulfilled by the board of directors. On September14, 2004, the board of directors formed a Compensation Committee consisting
of
Messrs. Kennedy, Nash and Repko. Messrs. Kennedy, Nash and Repko are
non-employee directors of Guardian. Mr. Trudnak is employed by Guardian and
Mr. Dishaw was employed until November 21, 2005 as President and Chief Operating
Officer. On November 21, 2005, Mr. Dishaw resigned as President and COO and
was
engaged as a consultant to Guardian. See “Information About Directors and
Executive Officers” and “Compensation of Executive Officers and Directors” as
well as “Information About Guardian Stock Ownership,” above.
The
following disclosures are based upon information furnished to us by management
of Guardian prior to the date of the Reverse Acquisition:
·
During
2002, Mr. Moorer exercised 2,700 options to purchase common stock
at $5.00
per share.
·
At
December 31, 2002, Mr. Moorer had outstanding advances from Guardian
of
approximately $23,500.
·
During
the fiscal years ended December 31, 2002 and 2001, Mr. Moorer received
a
cash salary of $75,000 per year, rather than his $120,000 per year
entitlement under his employment agreement. Mr. Moorer was granted
shares
of common stock totaling 270,000 shares for fiscal 2002 and 83,299
shares
for fiscal 2001, such shares having a fair market value on the date
of
issuance of $45,000 in each instance, representing the difference
between
Mr. Moorer’s entitlement under his employment agreement and the cash
salary actually paid.
·
In
May 2003, we made an exchange offer to all of the investors who purchased
units in our prior January 2000 private offering described above.
Pursuant
to the exchange offer, all investors who purchased units were given
the
right to exchange all of the warrants received as part of those units
for
shares of our common stock. The exchange offer consisted of one share
of
common stock for each unit purchased in the private offering conducted
in
January 2000. Messrs. Houtz and Stevens, two of our former directors,
purchased 10,000 units and 2,000 units, respectively, in the offering
and
those persons accepted the exchange
offer.
The following disclosures relate to transactions to which RJL (and Guardian
Technologies International, Inc. post Reverse Acquisition) and its directors,
executive officers, nominees for election as a director, or any five percent
beneficial owner is or was a party.
·
On
October 3, 2002, Mr. Dishaw acquired 1,500 shares of common stock
of RJL
for nominal cash consideration.
·
On
March 21, 2003, RJL entered into a consulting agreement, as amended,
with
ten brokers in connection with services to be provided in connection
with
locating and negotiating the proposed Reverse Acquisition between
RJL, its
stockholders and Guardian. RJL agreed to issue, at closing of the
acquisition, an aggregate of 2,000,000 shares of Guardian for such
services. Such shares were issued by Guardian during July
2003.
·
On
April 3, 2003, as part of the initial capitalization of Guardian,
Mr.
Dishaw and Mr. Trudnak acquired 3,326 and 4,279 shares of common
stock of
RJL, respectively, for nominal cash
consideration.
·
On
May 19, 2003, RJL entered into a consulting agreement with Mr. Max
Tobin
pursuant to which Mr. Tobin agreed to provide consulting services
in
connection with strategic selling related to our business, marketing
and
market development in the bio-medical industry in North America and
Europe, business continuity, finance and accounting. The consulting
agreement was for a term that ended on May 1, 2005, and could be
terminated by Guardian in the event a material misrepresentation
by Mr.
Tobin or the commencement of any action by the SEC against Mr. Tobin
or
any entity owned or controlled by Mr. Tobin; or by either party on
not
less than 30 days prior written notice. Mr. Tobin died in November
2004,
and the agreement terminated upon his death. As compensation for
his
services under the agreement, Mr. Tobin was entitled to receive an
aggregate of 1,820,000 shares of common stock, 1,430 shares of Series
A
Convertible Preferred Stock, and 480 shares of Series B Convertible
Preferred Stock of Guardian. The shares of Series B Convertible Preferred
Stock were issued to Mr. Tobin during August 2003 and the shares
of Common
Stock and Series B Convertible Preferred Stock were issued on November19,2003. On February 13, 2004, the stockholders of Guardian voted in
the affirmative to increase the authorized common stock from 15,000,000
to
200,000,000 shares. Upon such increase, Mr. Tobin’s shares of Series
B Convertible Preferred Stock were converted into 460,000 shares
of our
common stock. Mr. Tobin’s shares of Series A Convertible Preferred
Stock automatically converted into 1,430,000 shares of common stock
effective November 30, 2004.
·
Upon
the closing of the Reverse Acquisition and effective June 26, 2003,
we
issued to Mr. Dishaw 2,945,500 shares of our common stock and 2,212
shares
of our Series A Convertible Preferred Stock and we issued to Mr.
Trudnak
2,566,000 shares of our common stock and 1,885 shares of our Series
A
Convertible Preferred Stock, in exchange for all of their stock in
RJL.
Also effective as of June 26, 2003, Mr. Trudnak purchased 400,000
shares of our common stock for cash consideration of $200,000 in
a private
placement conducted by us.
·
On
July 30, 2003, Guardian entered into a consulting agreement with
Mr.
Moorer, the former President and Chief Financial Officer of Guardian
to
provide consulting services in connection with, among other things,
business continuity, finance and accounting, strategic planning,
market
development, and related services. The agreement terminated on July1, 2004. As compensation for such services, Guardian issued to Mr.
Moorer 150,000 shares of common
stock.
On
August 4, 2003, Guardian entered into an employment agreement with
Ruth
Taylor pursuant to which Mrs. Taylor is employed as an accountant.
Mrs.
Taylor is the adult daughter of Mr. Robert A. Dishaw, a director
and
principal stockholder of Guardian. The employment agreement provides
for
an annual base salary of $60,000 per annum. The agreement is for
a term of
one year and is automatically renewed for one year terms unless earlier
terminated. The agreement provides for an annual performance bonus
as
determined by Guardian, participation in Guardian’s stock option plan, and
participation in Guardian’s benefit policies and plans. The agreement
provides for the issuance pursuant to Guardian’s stock option plan of
100,000 non-qualified stock options vesting immediately and exercisable
at
a price of $.50 per share, and 100,000 non-qualified stock options
vesting
one year from the anniversary date of employee’s employment and
exercisable at a price of $.50 per share. The agreement may be terminated
upon the death or disability of employee or for cause. If the employee
is
terminated by reason of death, disability (except as noted below)
or for
cause, no further compensation is payable to employee. If employee
is
terminated other than by reason of death, disability or cause, or
if no
disability insurance is provided and employee becomes disabled, employee
is entitled to be paid her base salary for six months. Employee may
terminate her employment agreement on 30 days’ prior written notice. We
have also entered into a non-competition, confidentiality, proprietary
rights and non-solicitation agreement (proprietary information agreement)
with Mrs. Taylor, pursuant to which employee has agreed not to disclose
confidential information regarding Guardian, agreed that proprietary
rights conceived during her employment are the property of Guardian,
and
agreed not to solicit Guardian’s customers or attempt to hire our
employees for twelve months following termination of her employment.
The
employment agreement provides for arbitration in the event of any
dispute
arising out of the employment agreement or employee’s employment, other
than disputes under the proprietary information agreement. During
2004,
Guardian granted to Mrs. Taylor 10,000 incentive stock options at
an
exercise price of $3.60, and on October 4, 2005, granted to Mrs.
Taylor
15,000 options at an exercise price of $3.00 per
share.
·
On
October 23, 2003, Guardian entered into an agreement with Difference
Engines Corporation, a Maryland corporation, pursuant to which Guardian
agreed to purchase certain intellectual property owned by Difference
Engines, including certain compression software technology. The
transaction closed on December 19, 2003. Mr. Ludwig, who was then
a
director of Guardian, is also the president, a director and a principal
stockholder of Difference Engines. Guardian issued 587,000 shares
of its
common stock as consideration for the purchase of the intellectual
property and cancelled a convertible note that Difference Engines
had
issued to Guardian in the amount of approximately $25,000 representing
advances Guardian made to Difference Engines. The 587,000 shares of
common stock are subject to a two (2) year lock up. Guardian granted
Difference Engines piggy-back registration rights for a period of
three
(3) years commencing on the date of the expiration of the lock up
period
with regard to the shares to be issued in the transaction. Upon
expiration of the two (2) year lock up period, in the event that
the
shares are not eligible for resale under Rule 144 and have not been
registered under the Securities Act, the holder of the shares may
demand
redemption of the shares. The redemption price is to be calculated
on the basis of the average of the closing bid and asked prices of
Guardian’s common stock for the 20 consecutive business days ending on the
day prior to the date of the exercise of the holder’s right of redemption.
The founders of Difference Engines, including Messrs. Ludwig and
Hamilton, provided certain releases to Guardian related to their
contribution of the technology to Difference Engines. The closing of
the acquisition of the software was subject to certain conditions,
including a requirement that Difference Engines obtain approval of
its
stockholders for the transaction and that Messrs Ludwig and Hamilton
enter
into two (2) year and one (1) year employment agreements, respectively,
with Guardian at base salaries of $120,000 and $90,000 per annum,
respectively. Other material terms of the employment agreements are
described under “Compensation of Executive Officers and Directors -
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements,” above.
On
November 23, 2004, our stockholders approved an amendment to the
Certificate of Designations, Preferences and Rights of our Series
A
Convertible Preferred Stock pursuant to which each outstanding share
of
Series A Convertible Preferred Stock automatically converted into
1,000
shares of common stock. Effective November 30, 2004, and without
further action of the board or such stockholders, Mr. Dishaw received,
upon conversion of all of the shares of Series A Convertible Preferred
Stock owned beneficially and of record by him as of that date, an
aggregate of 2,212,000 shares of common stock of Guardian, and Mr.
Trudnak
received, upon conversion of all of the shares of Series A Convertible
Preferred Stock owned beneficially and of record by him as of that
date,
an aggregate of 1,885,000 shares of common stock of
Guardian.
·
Effective
November 21, 2005, Mr. Dishaw, a director and a principal stockholder
of
Guardian, resigned as President and Chief Operating Officer. Effective
as
of such date, Guardian and Mr. Dishaw mutually agreed to terminate
his
employment agreement with Guardian and we entered into a three year
consulting services agreement with Mr. Dishaw pursuant to which he
will
perform services with regard to the distribution of Guardian’s products
through EGC International, Inc., and shall be the primary intermediary
with EGC. The agreement is for a term of three (3) years unless earlier
terminated. The agreement provides for a consulting fee of $180,000
during
year one, $130,000 during year two, and $80,000 during year three.
Mr.
Dishaw will also be entitled to be paid a sales override commission
of 3%
of gross revenues from sales of Guardian products to EGC or its resellers
and 3% of gross revenues from sales of Guardian products to certain
approved clients. Mr. Dishaw shall continue to participate in benefit
policies and plans of the Guardian, and shall be entitled to receive
reimbursement of reasonable expenses. The consulting services agreement
provides for mutual releases of all claims, including claims arising
out
of Mr. Dishaw’s employment by Guardian and for mutual indemnification. The
agreement also provides that if certain disputes are not resolved
within
30 days by the parties, such disputes may be referred to binding
arbitration. Also, Mr. Dishaw has entered into a proprietary information,
invention assignment and non-competition agreement, pursuant to which
the
he has agreed not to disclose confidential information regarding
Guardian,
agrees that inventions conceived during his employment/engagement
become
the property of Guardian, agrees not to compete with the business
of
Guardian for a period of one year following termination or expiration
of
his engagement, and agrees not to solicit employees or customers of
Guardian following termination of his engagement. Other material
terms of
Mr. Dishaw’s consulting services agreement are described under
Compensation of Executive Officers and Directors - Consulting Services
Agreement with Mr. Dishaw and Change-in-Control Arrangements,”
above.
Aronson & Company acted as Guardian’s independent accountants for 2003 and
2004. The board has selected Goodman & Company as the independent
accountants of Guardian for the fiscal year ending December 31, 2005. A
representative of Aronson & Company is not expected to be present at the
Special Meeting. A representative of Goodman & Company is expected to be
present at the Special Meeting. He or she will have an opportunity, if he or
she
so desires, to make a statement and respond to appropriate questions from the
stockholders. The board of directors has considered the compatibility of
non-audit services provided to us by Goodman & Company in relationship to
maintaining the auditor's independence.
Audit
Fees
During
the fiscal years ended December 31, 2004 and 2003, respectively, the aggregate
fees billed by Aronson & Company for professional services rendered for the
audit of the Guardian’s annual financial statements and for the reviews of the
financial statements included in our Forms 10-QSB were approximately $72,480
and
$41,516, respectively.
Audit-Related
Fees
"Audit-related"
fees include assurance and related services reasonably related to the
performance of the audit or review of Guardian's financial statements, such
as
reports on internal control, review of SEC filings, merger and acquisition
due
diligence and related services. The aggregate fees billed by Aronson &
Company for services related to the performance of their audit and review of
financial statements that are not included in "audit fees" above were
approximately $14,859 and $14,599 for the fiscal years ended December 31, 2004
and 2003, respectively.
During
the fiscal year ended December 31, 2003, we paid audit related fees of $700
to
Schumacher & Associates.
Tax
Fees
Tax
fees
include tax-related services, such as tax return review, preparation and
compliance, as well as strategic tax planning services, and structuring of
acquisitions. The aggregate fees billed by Aronson & Company for these
services were approximately $3,224 and $2,436 for the fiscal years ended
December 31, 2004 and 2003, respectively.
All
Other Fees
During
the fiscal years ended December 31, 2004 and 2003, there were no other fees
paid
to Aronson & Company for other products or services, not listed
above.
None
of
such services were approved pursuant to the de minimis exception provided in
Rule 1-01(7)(i)(C) of Regulation S-X.
Effective
July 9, 2003, Guardian dismissed its principal independent accountants,
Schumacher & Associates, Inc. Schumacher & Associates, Inc., had been
engaged by Guardian as the principal independent accountants to audit the
financial statements of Guardian for the fiscal year ended December 31, 2002.
Schumacher & Associates, Inc.’s reports on the financial statements of
Guardian filed with the Securities and Exchange Commission with regard to the
fiscal year ended December 31, 2002, contained no adverse or disclaimer of
opinion; however, its report did contain a going concern explanatory
paragraph.
The
action to dismiss Schumacher & Associates, Inc., as Guardian’s principal
independent accountants has been taken primarily as a result of the change
of
control of Guardian arising from the reverse acquisition of Guardian by RJL
Marketing Services Inc. (RJL), on June 26, 2003. As a condition of the
acquisition, the previous executive officers and members of the board of
directors of Guardian resigned effective as of the closing of the acquisition
and were replaced by officers and directors designated by RJL. The new board
of
directors of Guardian has decided to engage the independent public accountants
of RJL to audit the financial statements of Guardian for the fiscal year ended
December 31, 2003.
The
decision to change accountants was recommended and approved by the board of
directors of Guardian.
In
connection with the audit of Guardian's financial statements for the fiscal
year
ended December 31, 2002, and in connection with the subsequent interim period
up
to the date of dismissal, there were no disagreements with Schumacher &
Associates, Inc., on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which, if not resolved
to
the satisfaction of Schumacher & Associates, Inc., would have caused
Schumacher & Associates, Inc., to make reference to the subject matter of
the disagreements in its report.
Effective
July 10, 2003, Guardian's board of director's approved the engagement of Aronson
& Company to serve as Guardian's independent public accountants and to be
the principal accountants to conduct the audit of Guardian's financial
statements for the fiscal year ending December 31, 2003, replacing the firm
of
Schumacher & Associates, Inc.
During Guardian's two most recent fiscal years ended December 31, 2002 and
2003,
Guardian did not consult with Aronson & Company regarding any of the matters
or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-B. However,
Aronson & Company were engaged by RJL to audit RJL’s financial statements
for the period ended December 31, 2002.
There
were no disagreements with our accountants on accounting and financial
disclosure in 2003.
Fiscal
Year 2005
Effective
July 19, 2005, Guardian dismissed its principal registered public accountant,
Aronson & Company. Aronson & Company had been engaged by Guardian
as the principal registered accountant to audit the financial statements of
Guardian for the fiscal years ended December 31, 2003 and 2004. Aronson
& Company’s reports on the financial statements of Guardian filed with the
Securities and Exchange Commission with regard to the fiscal years ended
December 31, 2003 and 2004, contained no adverse or disclaimer of opinion;
however, each of its reports did contain a going concern explanatory
paragraph.
The
decision to change accountants was recommended by Guardian’s Audit Committee and
approved by the board of directors of Guardian.
In
connection with the audit of Guardian’s financial statements for the fiscal
years ended December 31, 2003 and 2004, and in connection with the subsequent
interim period up to the date of dismissal, there were no disagreements with
Aronson & Company on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which, if not
resolved to the satisfaction of Aronson & Company, would have caused Aronson
& Company to make reference to the subject matter of the disagreements in
connection with its reports.
Effective
July 19, 2005, upon the recommendation of Guardian’s Audit Committee, Guardian's
board of directors approved the engagement of Goodman & Company to serve as
Guardian's registered public accountants and to be the principal registered
public accountants to conduct the audit of Guardian's financial statements
for
the fiscal year ending December 31, 2005, replacing the firm of Aronson &
Company.
During Guardian's two most recent fiscal years ended December 31,2003 and 2004, Guardian did not consult with Goodman & Company
regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii)
of Regulation S-B.
ELECTION
OF TWO DIRECTORS FOR A TERM OF THREE YEARS AND
UNTIL
THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED
The
board
of directors seeks the election by stockholders of the following directors:
Sean
W. Kennedy and Mark A. Zorko, Class II directors. As Class II directors, Mr.
Kennedy and Mr. Zorko will be elected to hold office for a term expiring at
the
third succeeding annual meeting following the Special Meeting. Biographical
information concerning Mr. Kennedy and Mr. Zorko can be found under “Information
About Directors and Executive Officers.”
Unless
otherwise instructed or unless authority to vote is withheld, the enclosed
proxy
will be voted FOR the election of Mr. Kennedy and Mr. Zorko. Although the
board of directors of Guardian does not contemplate that either of these
individuals will be unable to serve, if such a situation arises prior to the
Special Meeting, the person named in the enclosed proxy will vote for the
election of any other person the board may choose as a substitute
nominee.
Vote
Required for Approval
Mr.
Kennedy and Mr. Zorko must receive a plurality of the votes cast in order to
be
elected. The board of directors unanimously recommends a vote FOR
the
election of Mr. Sean W. Kennedy and Mr. Mark A. Zorko.
RATIFY
THE APPOINTMENT OF GOODMAN & COMPANY AS INDEPENDENT
REGISTERED
PUBLIC ACCOUNTANTS FOR 2005
The
board
has concluded that the appointment of Goodman & Company as Guardian’s
independent registered public accountants is in the best interests of Guardian.
A representative of Goodman & Company will be present at the Special Meeting
and will have the opportunity to make a statement if he or she desires to do
so.
Such representative is expected to be available to respond to appropriate
questions.
Vote
Required for Approval
Proposal
2 must be approved by the affirmative vote of a majority of the votes cast
for
ratification of the engagement of our independent registered public accountants,
Goodman & Company. The board of directors unanimously recommends a vote
FOR
the
ratification of its selection of Goodman & Company as the independent
registered public accountants for Guardian.
INCREASING
THE MAXIMUM NUMBER OF DIRECTORS THAT MAY BE ELECTED
TO
THE BOARD OF DIRECTORS TO NINE DIRECTORS AND TO PROVIDE THAT
ONE
OF SUCH DIRECTORS BE DESIGNATED A CLASS II DIRECTOR AND ONE OF
SUCH
DIRECTORS BE DESIGNATED A CLASS III DIRECTOR
The
board
of directors recommends amending Guardian’s Certificate of Incorporation to
increase the maximum number of directors that may be elected to the board of
directors to nine directors and to provide that one of such directors be
designated a Class II director and one of such directors be designated a Class
III director. Specifically, the board of directors recommends amending Article
Ninth of the Certificate of Incorporation by deleting subparagraph (a) thereof
in its entirety and substituting the following language:
“(a)
The
Board of Directors of the Corporation (“the Board”) shall be divided into
three (3) classes and shall consist of either five (5), seven (7),
or nine
(9) Directors, as determined from time to time by resolution adopted
by
the affirmative vote of a majority of the Board of Directors then
in
office. If the Board consists of five (5) Directors, then the first
class
shall consist of two (2) Directors, the second class shall consist
of one
(1) Director, and the third class shall consist of two (2) Directors.
If
the Board consists of seven (7) Directors, then the first class shall
consist of three (3) Directors, the second class shall consist of
two (2)
Directors, and the third class shall consist of two (2) Directors.
If the
Board consists of nine (9) Directors, then the first class shall
consist
of three (3) Directors, the second class shall consist of three (3)
Directors, and the third class shall consist of three (3) Directors.
At
the first meeting of stockholders, Directors of the first class shall
be
elected to hold office for a term expiring at the next succeeding
annual
meeting, Directors of the second class shall be elected to hold office
for
a term expiring at the second succeeding annual meeting and Directors
of
the third class shall be elected to hold office for a term expiring
at the
third succeeding annual meeting. The Directors shall be elected in
such
manner as may be provided for in the By-laws. No election of Directors
need be by written ballot. Subject to the foregoing, at each succeeding
annual meeting of stockholders, the successors to the class of Directors
whose term shall then expire shall be elected to hold office for
a term
expiring at the third succeeding annual meeting. No decrease in the
number
of directors shall shorten the term of any incumbent
director.”
Currently,
Article Ninth of Guardian’s Certificate of Incorporation provides that the board
of directors shall be divided into three classes and shall consist of either
five or seven directors as determined from time to time by resolution adopted
by
the affirmative vote of a majority of the board of directors then in office.
If
the board consists of five directors, the Certificate of Incorporation provides
that the first class shall consist of two directors, the second class shall
consist of one director, and the third class shall consist of two directors.
If
the board consists of seven directors, the Certificate of Incorporation provides
that the first class shall consist of three directors, the second class shall
consist of two directors, and the third class shall consist of two directors.
The directors hold office for staggered three year terms.
Articles
of Amendment to Guardian's Certificate of Incorporation including the foregoing
amendments to Article Ninth will be filed with the Secretary of State of the
State of Delaware if this Proposal 3 is approved. We reserve the right to modify
the form of the proposed amendment to the extent that it may be necessary to
do
so in order to comply with applicable law.
Reasons
For and Effect of Increase in Number of Directors
The
board
of directors has determined that it is advisable and in the best interests
of
Guardian and its stockholders that Article Ninth of the Certificate of
Incorporation be amended to increase the maximum number of directors that may
be
elected to the board to nine directors and that one of such directors be
designated a Class II director and one of such directors be designated a Class
III director.
The
purpose of the increase in the maximum number of directors to nine is to provide
the board of directors with the flexibility to add directors to the board whose
skills and experience will benefit Guardian and the conduct of the operations
of
the board of directors, including retaining certain additional directors who
may
be “independent” within the meaning of the rules of the American Stock Exchange
or the rules and regulations of any stock exchange or over the counter market
on
which Guardian’s securities may be subsequently traded or quoted.
As
is the
case under our current Certificate of Incorporation, any vacancy on the board
of
directors that results from an increase in the number of directors may be filled
by a majority of the members of the board of directors then in office, even
if
less than a quorum, or by a sole remaining director and any director for any
class elected to fill a vacancy resulting from an increase in such class shall
hold office for a term that shall coincide with the remaining term of the other
directors of that class. Currently, if the two Class II directors who have
been
submitted to stockholders for election at the Special Meeting are duly elected
by stockholders, the terms of our Class II directors will expire in 2008. The
terms of our Class I directors will expire in 2007 and the terms of our Class
III directors will expire in 2006. Accordingly, if stockholders approve the
proposal to amend the Certificate of Incorporation to increase the maximum
number of directors to nine, the existing board of directors could adopt a
resolution increasing the board size from seven to nine directors and appoint
up
to three new directors to the board without further stockholder approval, one
each from Classes I, II and III, and for terms expiring in 2007, 2008, and
2006,
respectively.
The
board
of directors has unanimously adopted, and recommends that stockholder approve
an
amendment to the Certificate of Incorporation increasing the maximum number
of
directors to nine and to provide that one of such directors be designated a
Class II director and one of such directors be designated a Class III
director.
Vote
Required for Approval
The
affirmative vote of the holders of not less than 80% of the outstanding shares
of common stock entitled to vote thereon is required to approve the amendment
to
the Certificate of Incorporation increasing the maximum number of directors
from
seven to nine. The board of directors unanimously recommends a vote FOR
approval
of an amendment to Guardian’s Certificate of Incorporation increasing the
maximum number of directors that may be elected to the board of directors to
nine directors and to provide that one of such directors be designated a Class
II director and one of such directors be designated a Class III
director.
PAR
VALUE $.001 PER SHARE, FROM 200,000,000 TO 500,000,000
SHARES
The
board
of directors recommends increasing Guardian's authorized number of shares of
common stock, par value $.001 per share, from 200,000,000 to 500,000,000 shares.
Specifically, the board of directors recommends amending Article Fourth of
the
Certificate of Incorporation by deleting the first full paragraph thereof in
its
entirety and substituting the following language:
“The
total number of shares of all classes of capital stock which the Corporation
shall have authority to issue is 501,000,000 divided into classes as
follows:
500,000,000
shares shall be common stock, par value $0.001 per share (“Common
Stock”)
1,000,000
shares shall be preferred stock, par value $0.20 per share (“Preferred
Stock”).
Shares
of any class of stock of the Corporation may be issued for such consideration
and for such corporate purposes as the Board of Directors may from time to
time
determine.”
Articles
of Amendment to Guardian's Certificate of Incorporation including the foregoing
amendments to Article Fourth will be filed with the Secretary of State of the
State of Delaware if this Proposal 4 is approved. We reserve the right to modify
the form of the proposed amendment to the extent that it may be necessary to
do
so in order to comply with applicable law.
Reasons
For and Effect of Increase in Authorized Number of Shares
Presently,
Guardian's Certificate of Incorporation authorizes the issuance of up to
200,000,000 shares of common stock, of which 33,089,712 shares were issued
and
outstanding at the close of business on the Record Date. The authorized number
of shares of preferred stock is and will remain 1,000,000 shares.
We
have
reserved an aggregate of 30,000,000 shares of our common stock for issuance
upon
exercise of options under our Amended and Restated 2003 Stock Incentive Plan
and
an aggregate of 1,852,924 shares of our common stock for issuance upon exercise
of outstanding warrants that have been issued in connection with certain
financings that Guardian has conducted, to certain consultants and investment
banking firms, and in connection with certain settlements.
The
purpose of the additional authorized shares of common stock is to benefit
Guardian by providing flexibility to the board of directors, without requiring
further action or authorization by the stockholders (except as may be required
by applicable law), to issue additional shares of common stock from time to
time
to respond to business needs and opportunities as they arise, or for other
proper corporate purposes. These needs, opportunities and purposes may include,
among other things, obtaining additional financing through public and private
offerings of shares of common stock, warrants or other securities exercisable
or
convertible into shares of common stock and using shares of common stock in
connection with possible acquisitions of businesses and assets, and strategic
alliances.
Also,
the
board of directors, in its discretion, may in the future declare stock splits
or
stock dividends or, subject to stockholder approval required under applicable
law, increase, establish or extend stock option or stock award plans. Guardian
may evaluate potential acquisitions from time to time but, as of the date
hereof, has no plans to effect any acquisition or strategic alliance.
Furthermore, except as set forth below, no stock splits, stock dividends or
other actions requiring the availability of additional authorized shares of
common stock have been approved by the board of directors as of the date
hereof.
On
April28, 2005, we entered into a letter agreement with an investment banking firm
to
assist Guardian in a private placement of our equity or equity-linked
securities. The securities will not be registered under the Securities Act
and
may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements. The agreement is for a
term
of 12 months but may be terminated be either party upon 30 days’ prior written
notice. We have agreed to pay the investment banking firm a financing completion
fee in cash of 7% of the gross proceeds of any financing, warrants to purchase
a
number of shares equal to 2% of aggregate number of shares issued to investors
in any financing, and reimburse the investment banking firm for certain
out-of-pocket expenses. Also, we have granted the investment banking firm with
a
first right of refusal for one year from the closing of any financing to serve
as lead managing underwriter of any public financing or as lead placement agent
on any private financing. As of the date of this Proxy Statement, the board
of
directors has not approved the terms of any financing through such investment
bank, although it reserves the right to do so at any time in the future upon
terms to be negotiated by management and approved by the board of directors.
There can be no assurance that any private placement will commence, be
conducted, or that we will raise any financing as a result thereof.
Based
upon the number of shares that we may issue under our Amended and Restated
2003
Stock Incentive Plan, under future stock option or award plans, upon exercise
of
warrants, upon conversion of convertible securities, in connection with
acquisitions, and other commitments of Guardian, the board of directors believes
it necessary to authorize additional shares of Guardian's common stock for
possible future issuance.
To
the
extent that the board determines to issue additional shares in the future,
such
issuances could dilute the voting power of existing stockholders, including
a
person seeking control of Guardian and, thus, deter or render more difficult
a
merger, tender offer, proxy contest or an extraordinary corporate transaction.
Presently, we are not aware of any efforts of any persons to accumulate
Guardian's common stock or to obtain control of Guardian, and the proposed
increase in authorized shares of common stock is not intended to be an
anti-takeover device. The board may use the additional shares to resist or
frustrate a third-party transaction providing an above-market premium that
is
favored by a majority of the independent shareholders of Guardian.
The proposed amendment will authorize additional future issuances of up to
300,000,000 additional shares of common stock, thus increasing the total
authorized common stock to 500,000,000 shares. The authorized number of shares
of preferred stock will remain at 1,000,000 shares. Therefore, as a result
of
the proposed amendment, Guardian's total authorized capital stock will increase
from 201,000,000 to 501,000,000 shares. The proposed amendment will not take
effect until we file Articles of Amendment to our Certificate of Incorporation
with the Secretary of State of the State of Delaware.
There can be no assurances, nor can the board of Guardian predict what effect,
if any, this proposed amendment will have on the market price of Guardian's
common stock.
Our
Certificate of Incorporation, provisions of our bylaws and Delaware law could
discourage takeover attempts and prevent stockholders from changing our
management.
Our
Certificate of Incorporation authorizes the issuance of up to 1,000,000 shares
of preferred stock, of which none are issued and outstanding of which 6,000
shares have been designated as Series A Convertible Preferred Stock, 6,000
shares have been designated as Series B Convertible Preferred Stock and 6,000
have been designated as Series C Convertible Preferred Stock, none of which
share are currently issued and outstanding. The board of directors, without
further action by the stockholders, is authorized to issue the shares of
preferred stock in one or more series and to fix and determine as to any series,
any and all of the relative rights and preferences of shares in each series,
including without limitation, preferences, limitations or relative rights with
respect to redemption rights, conversion rights, voting rights, dividend rights
and preferences on liquidation. The issuance of additional shares of preferred
stock with voting and conversion rights could materially adversely affect the
voting power of the holders of common stock and may have the effect of delaying,
deferring or preventing a change in control of Guardian.
We
are
subject to Section 203 of the Delaware General Corporation Law, an anti-takeover
law. In general, Section 203 prohibits a publicly held Delaware corporation
from
engaging in a "business combination" with an "interested stockholder" for a
period of three years following the date the person became an interested
stockholder, unless (with certain exceptions) the "business combination" or
the
transaction in which the person became an "interested stockholder" is approved
in a prescribed manner. Generally, a "business combination" includes a merger,
asset or stock sale, or other transaction resulting in a financial benefit
to
the interested stockholder. Generally, an "interested stockholder" is a person
who, together with affiliates and associates, owns (or within three years prior
to the determination of interested stockholder status, did own) 15% or more
of
the corporation's voting stock. The existence of this provision would be
expected to have an anti-takeover effect with respect to transactions not
approved in advance by the board of directors, including discouraging takeover
attempts that might result in a premium over the market price for the shares
of
common stock held by stockholders.
We
also
have a staggered board of directors and vacancies resulting from an increase
in
the size of our board may be filled by a majority of our directors then in
office.
The
affirmative vote of two-thirds of our issued and outstanding shares of common
stock is required to call a special meeting of our stockholders.
Guardian's
board of directors and stockholders have concurrent power to make, alter, amend,
change, add to or repeal our bylaws, provided that any such change must be
authorized by a majority of our authorized directors or receive the affirmative
vote of not less than 80% of our voting stock.
No
action
required or permitted to be taken at a meeting of our stockholders may be taken
by written consent without a meeting.
We
have
no plans or proposal to adopt any other provision or enter into any arrangements
that may have a material anti-takeover consequence.
Vote
Required for Approval
The affirmative vote of a majority of the shares of issued and outstanding
common stock is required for approval of an amendment to the Certificate of
Incorporation increasing the authorized number of shares of common stock from
200,000,000 to 500,000,000 shares. The board of directors unanimously recommends
a vote FOR
increasing the authorized number of shares of common stock from 200,000,000
shares to 500,000,000 shares.
The
board
of directors does not intend to bring any other matters before the Special
Meeting, nor does the board of directors know of any matters that other persons
intend to bring before the Special Meeting. If, however, other matters not
mentioned in this Proxy Statement properly come before the Special Meeting,
the
persons named in the accompanying form of proxy will vote thereon in accordance
with the recommendation of the board of directors.
You
should be aware that Guardian's By-laws provide that no proposals or nominations
of directors by stockholders shall be presented for vote at an annual meeting
of
stockholders unless notice complying with the requirements in the By-laws is
provided to the board of directors or Guardian's Secretary not less than 60
days
nor more than 90 days prior to the meeting; provided, however, that in the
event
of less than 70 days’ notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be received not later than the close of business on the 10th
day
following the day on which notice of the annual meeting is mailed or public
disclosure made, which ever first occurs.
Pursuant
to Rule 14a-8 under the Exchange Act, stockholders may present proper proposals
for inclusion in Guardian’s proxy statement and for consideration at the next
annual meeting of its stockholders by submitting their proposals to Guardian
in
a timely manner. In order to be so included for the 2006 Annual Meeting,
stockholder proposals must be received by Guardian a reasonable time before
we
begin the printing and mailing of our proxy material for the 2006 Annual
Meeting, and must otherwise comply with the requirements of Rule 14a-8. We
will
provide
notification to stockholders of the date of
our 2006 Annual Meeting in a Form 10-Q or as otherwise permitted under Rule
14a-5(e). In addition, Guardian’s By-laws establish an advance notice procedure
with regard to certain matters, including stockholder proposals not included
in
Guardian’s proxy statement, to be brought before an annual meeting of
stockholders. In general, notice must be received by the Secretary of Guardian
not less than 60 days or more than 90 days prior to meeting and must contain
specified information concerning the matters to be presented at Guardian’s 2006
Annual Meeting. However, in the event that less than 10 days’ notice or prior
public disclosure of the date of the annual meeting is given or made to
stockholders, notice by the stockholder to be timely must be received no later
than the close of business on the 10th
day
following the day on which notice of the date of the annual meeting was mailed
or such public disclosure was made, whichever is earlier.
All notices of proposals by stockholders, whether or not to be included in
Guardian’s proxy materials, should be sent to the attention of the Secretary of
Guardian at 516 Herndon Parkway, Herndon, Virginia20170.
Guardian
incorporates herein by reference the following information from its Form 10-KSB
for the year ended December 31, 2004:
·
Item
7 - Consolidated Financial Statements (Audited) as of December 31,2004,
for Guardian Technologies International, Inc. and
Subsidiaries.
·
Item
6 - Management’s Discussion and Analysis or Plan of
Operations.
Guardian
incorporates herein by reference the following information from its Form 10-Q
for the period ended September 30, 2005:
·
Item
1 - Consolidated Financial Statements (Unaudited) as of September30,2005, for Guardian Technologies International, Inc. and
Subsidiaries.
·
Item
2 - Management’s Discussion and Analysis of Financial Conditions and
Results of Operations.
·
Item
3 - Quantitative and Qualitative Disclosures About Market
Risk
WHETHER
OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY PROMPTLY USING THE ENVELOPE PROVIDED. YOUR VOTE IS IMPORTANT.
IF
YOU ARE A STOCKHOLDER OF RECORD AND ATTEND THE MEETING AND WISH TO VOTE IN
PERSON, YOU MAY WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO THE
VOTE.
This
Proxy is Solicited on Behalf of the Board of Directors
The
undersigned hereby appoints Michael W. Trudnak and William J. Donovan, and
each
or any of them proxies, with power of substitution, to vote all shares of the
undersigned at the Special Meeting of Stockholders to be held on February 23,2006, at 10.00 a.m. at 516 Herndon Parkway, Suite A, Herndon, Virginia, or
at
any adjournment thereof, upon the matters set forth in the Proxy Statement
for
such meeting, and in their discretion, on such other business as may properly
come before the meeting.
1.
ELECT
TWO DIRECTORS FOR A TERM OF THREE YEARS
AND UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
o
FOR
THE NOMINEES LISTED BELOW
o
WITHHOLD
AUTHORITY
to
vote for the nominees listed
below
(INSTRUCTION:
To withhold authority to vote for a nominee strike a line through the nominee’s
name below.)
Class
II
SEAN
W.
KENNEDY
MARK
A.
ZORKO
2.
RATIFY
THE APPOINTMENT OF GOODMAN & COMPANY AS THE INDEPENDENT REGISTEED
PUBLIC ACCOUNTANTS FOR
2005.
o
FOR o
AGAINST o
ABSTAIN
3.
APPROVE
AN AMENDMENT TO THE CERTIFICATE OF INCORPORATIONINCREASING
THE MAXIMUM NUMBER OF DIRECTORS THAT MAY BE ELECTED TO THE BOARD
OF
DIRECTORS TO NINE DIRECTORS AND TO PROVIDE THAT ONE OF SUCH DIRECTORS
BE
DESIGNATED A CLASS II DIRECTOR AND ONE OF SUCH DIRECTORS BE DESIGNATED
A
CLASS III DIRECTOR.
o
FOR o
AGAINST o
ABSTAIN
4.
APPROVE
AN
AMENDMENT TO THE CERTIFICATE OF INCORPORATION INCREASING THE AUTHORIZED
NUMBER OF SHARES OF COMMON STOCK, $.001 PAR VALUE PER SHARE, FROM
200,000,000 SHARES TO 500,000,000
SHARES.
o
FOR o
AGAINST o
ABSTAIN
TRANSACT
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE SPECIAL MEETING
OR ANY
ADJOURMENT THEREOF.
When
shares are held by joint tenants, both should sign. Persons signing
as
Executor, Administrator, Trustee, etc. should so indicate. Please
sign
exactly as the name appears on the
proxy.
IF
NO CONTRARY SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED
FOR
PROPOSALS 1, 2, 3, and 4.
PLEASE
MARK, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
48
Dates Referenced Herein and Documents Incorporated by Reference