SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of The Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Competitive Technologies, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
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applies:
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applies:
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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):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
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the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
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Notes:
COMPETITIVE TECHNOLOGIES, INC.
1960 Bronson Road
Fairfield, Connecticut 06430
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on December 20, 1996
To the Stockholders of
COMPETITIVE TECHNOLOGIES, INC.
Notice is hereby given that the Annual Meeting of Stockholders
of COMPETITIVE TECHNOLOGIES, INC. (the "Company") will be held at
the Norwalk Inn, 99 East Avenue, Norwalk, Connecticut 06851 on
Friday, December 20, 1996 at 9:00 A.M. local time for the following
purposes:
1. Electing a Board of Directors to serve until
the next annual meeting of stockholders and
until their respective successors have been
elected and qualified;
2. Considering and acting upon a proposal to approve
the 1996 Directors' Stock Participation Plan; and
3. Transacting such other business as may
properly come before the meeting or any
adjournments thereof.
The Board of Directors has fixed the close of business on
November 1, 1996 as the record date for determination of the
stockholders entitled to notice of and to vote at said meeting
and/or adjournments thereof.
If you do not expect to be present personally at the meeting,
please complete, date, sign and return the accompanying proxy
without delay.
By Order of the Board of Directors
Frank R. McPike, Jr.
Secretary
November 20, 1996
PROXY STATEMENT
COMPETITIVE TECHNOLOGIES, INC.
1960 Bronson Road
Fairfield, Connecticut 06430
--------------------------------------
This Proxy Statement is being furnished to stockholders in
connection with the solicitation by the Board of Directors of
Competitive Technologies, Inc., a Delaware corporation (the
"Company"), of proxies in the form enclosed herewith for the
Company's annual meeting of stockholders to be held December 20,
1996. Each proxy received will be voted as directed. If no
direction is indicated, the proxy will be voted FOR the election of
the nominees named below as directors and FOR approval of the 1996
Directors' Stock Participation Plan. Any proxy may be revoked at
any time prior to the voting thereof by notifying the Company,
there being no formal procedure required. The approximate date on
which this Proxy Statement and the form of proxy enclosed herewith
are first to be sent or given to the Company's stockholders is
intended to be November 20, 1996.
Only the holders of record of the Company's 5,905,329
outstanding shares of Common Stock and 2,427 outstanding shares of
Preferred Stock at the close of business on November 1, 1996, will
be entitled to vote at the meeting. Each share of Common Stock and
each share of Preferred Stock is entitled to one vote on each
matter to be voted upon. Abstentions will be treated as shares
present and entitled to vote for purposes of determining the
presence of a quorum but as not voted for purposes of determining
the approval of any matters submitted to the stockholders for a
vote. Abstentions will have the same effect as negative votes. If
a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote
with respect to that matter.
ELECTION OF DIRECTORS
At the meeting a Board of eight directors is to be elected by
plurality vote. Six of the nominees named below are currently
directors of the Company, while Messrs. Bigar and Sabin are newly
nominated. There is no family relationship between any director or
executive officer of the Company or any person nominated by the
Company to become a director or executive officer. In the event
that any of the nominees for director should be unable to serve,
discretionary authority is solicited to vote for the election of
other persons. Each director will hold office until the next
annual meeting of stockholders and until his successor has been
elected and qualified or until his earlier resignation or removal.
The Company has no reason to believe that any of the nominees named
will not be available for election as directors for their
prescribed terms.
The following table sets forth information with respect to each
nominee for director according to the information furnished the Company
by him:
Name, Age and Principal Occupation
Positions Presently During Past Five Director of
Held with Years; Other Public Company
Company Directorships Since
George C.J. Bigar Private Investor. Not currently
39 a Director
Michael G. Bolton Vice President for Advancement September,
53 at Lehigh University. 1994
Bruce E. Langton Retired financial executive; July, 1987
65 prior to August, 1987 Assistant
Treasurer of IBM Corporation
(manufacturer of data process-
ing equipment and systems).
Currently consultant in invest-
ment management and Director of
Institutional Mutual Funds,
Bankers Trust Co.
H.S. Leahey Director, Industrial Contracts March, 1994
47 and Licensing, Washington
University in St. Louis.
Frank R. McPike, Jr. Secretary since August, 1989; July, 1988
47, Vice President, Treasurer since July, 1988;
Finance, Treasurer Vice President, Finance and
and Secretary Chief Financial Officer of the
Company since December, 1983.
John M. Sabin Vice President-Finance and Not currently
41 Assistant Treasurer, Manor a Director
Care, Inc. and Choice Hotels
International, Inc. since
December, 1993; Vice President-
Mergers and Acquisitions,
Choice Hotels International, Inc.
since June, 1995; Vice President-
Corporate Mergers and Acquisitions,
Marriott Corporation, 1988 to
December, 1993.
George M. Stadler President and Chief Executive December, 1993
49, President and Officer of the Company since
Chief Executive December, 1993; President and
Officer Chief Operating Officer of the
Company since September, 1992;
President, Competitive Techno-
logies of PA, Inc. (a wholly-
owned technology transfer sub-
sidiary of Lehigh University
prior to the sale of 80% of its
stock to the Company in February,
1993) since April, 1991.
Harry Van Benschoten Retired accounting executive; July, 1987
68 Vice President, Accounting of
Newmont Mining Corporation from
1967-1986. Also a Director of
Canada Life Insurance Co. of
New York, and Trustee of Bankers
Trust Company Pyramid and BT Advisor
Fund Series.
Messrs. McPike, Langton and Van Benschoten (Chairman) are members
of the audit committee. Messrs. Bolton (Chairman), Leahey and Stadler
are members of the nominating committee. Messrs. Bolton, Langton
(Chairman), and Van Benschoten are members of the compensation and stock
option committee. The compensation committee also serves as the
incentive compensation committee.
BENEFICIAL OWNERSHIP OF SHARES
The following information is furnished to indicate the beneficial
ownership of the Company's Common Stock by each director and nominee, by
certain executive officers of the Company, and by each person known to
the Company to be the beneficial owner of more than 5% of the Company's
outstanding Common Stock. Such information has been furnished to the
Company by the indicated owners as of October 1, 1996.
Name (and Address if more
than 5%) of Beneficial Amount Beneficially
Owners Owned (A) Percent (B)
Directors and Nominees
George C.J. Bigar 37,300 --
Michael G. Bolton 1,294 (C) --
Bruce E. Langton 10,350 --
H.S. Leahey 1,194 --
Frank R. McPike, Jr. 88,597 (D) 1.5%
John M. Sabin None --
George M. Stadler 160,006 (E) 2.6%
Harry Van Benschoten 7,000 --
All directors and executive
officers as a group 305,741 (F) 5.0%
Additional 5% Owners
Dimensional Fund Advisors, Inc. 312,300 (G) 5.2%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
(A) Except as indicated in the notes which follow, the designated
person or group has sole voting and investment power.
(B) Percentages of less than 1% are not shown.
(C) Does not include 74,302 shares of Common Stock held by Lehigh
University of which Mr. Bolton is a Vice President. Mr. Bolton
disclaims beneficial ownership of all the shares held by Lehigh
University.
(D) Consists of 11,097 shares of Common Stock, plus 77,500 stock
options deemed exercised solely for purposes of showing total
shares owned by Mr. McPike. Includes 1,559 shares of Common Stock
held by Sachem Trust as Trustee under the Company's Employees'
Common Stock Retirement Plan, as to which Mr. McPike has shared
investment power. Does not include 8,362 shares of Common Stock
allocated to Mr. McPike under said Retirement Plan; Trustee has
sole voting and investment power with regard thereto.
(E) Consists of 6 shares of Common Stock plus 160,000 stock options
deemed exercised solely for purposes of showing total shares owned
by Mr. Stadler. Does not include 6,977 shares of Common Stock
allocated to Mr. Stadler under the Company's Employees' Common
Stock Retirement Plan; these shares are held by Sachem Trust as
Trustee and said Trustee has sole voting and investment power with
regard thereto.
(F) Consists of 68,241 shares of Common Stock plus 237,500 stock
options to purchase shares of Common Stock deemed exercised solely
for purposes of showing total shares owned by such group.
(G) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of
312,300 shares of the Company's Common Stock as of June 30, 1996,
all of which shares are held in portfolios of DFA Investment
Dimensions Group Inc., a registered open-end investment company or
in series of The DFA Investment Trust Company, a Delaware business
trust, or the DFA Group Trust and the DFA Participating Group
Trust, investment vehicles for qualified employee benefit plans,
all of which Dimensional Fund Advisors, Inc. serves as investment
manager. Dimensional disclaims beneficial ownership of such
shares.
At October 1, 1996, the stock transfer records maintained by the
Company with respect to its Preferred Stock showed that the largest
holder of Preferred Stock owned 500 shares.
The following table sets forth information with respect to the
common stock, $.001 par value per share, of University Optical Products
Co. ("UOP"), a subsidiary of the Company, beneficially owned by each
director and nominee for director, by certain executive officers of the
Company, and by each person known to the Company to be the beneficial
owner of more than 5% of the Company's outstanding Common Stock at
October 1, 1996.
Shares of Common Percent
Name Stock of UOP (A) of Class (B)
George C.J. Bigar None --
Michael G. Bolton None --
Bruce E. Langton None --
H.S. Leahey None --
Frank R. McPike, Jr. 14,000 --
John M. Sabin None --
George M. Stadler None --
Harry Van Benschoten None --
All directors and executive
officers of the Company
as a group 14,000 --
(A) Does not include 1,333,333 shares of UOP class A stock (which have
four votes per share and are convertible into an equal number of
shares of UOP common stock) and 2,757,735 shares of UOP common
stock owned by the Company and 1,927 shares of UOP common stock
owned by Genetic Technology Management, Inc., a wholly-owned
subsidiary of the Company.
(B) Percentages of less than 1% are not shown.
EXECUTIVE COMPENSATION
Summary Compensation
The following table summarizes the total compensation paid by the
Company for services rendered during each of the fiscal years ended July
31, 1996, 1995 and 1994 to the Chief Executive Officer of the Company
and each of the other executive officers of the Company who had annual
compensation for the fiscal year ended July 31, 1996 in excess of
$100,000 (the "Specified Executives"):
SUMMARY COMPENSATION TABLE
Annual Compensation (1)
Long Term
Compensation
Awards
Securities All Other
Name and Principal Fiscal Underlying Compensation
Position Year Salary ($) Bonus ($) Options (#) ($)(2)
George M. Stadler, 1996 $172,923 -- 30,000 $15,874
President and 1995 153,845 -- 52,500 14,799
Chief Executive 1994 133,078 -- 27,500 15,857
Officer (3)
Frank R. McPike, 1996 149,076 -- 15,000 14,977
Jr., Vice Presi- 1995 140,765 -- 20,000 14,136
dent, Finance and 1994 130,000 -- 7,500 15,875
Chief Financial
Officer
(1) The aggregate amount of any perquisites or other personal benefits
was less than 10% of the total of annual salary and bonus and is
not included in the above table.
(2) Consists principally of amounts contributed for the above executive
officers to the Competitive Technologies, Inc. Employees' Common
Stock Retirement Plan. The dollar amounts are converted into
shares of Company Common Stock valued at the mean between the high
and the low price on the American Stock Exchange on the last day of
the fiscal year. Also includes premiums paid for term life
insurance policies (see below).
(3) Mr. Stadler became Chief Executive Officer on December 17, 1993.
Prior thereto he was Chief Operating Officer and continues in that
position.
Option Grants
The following table summarizes the stock options granted by the
Company during the fiscal year ended July 31, 1996 to the Specified
Executives:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individuals Grants
Potential
% of Realizable
Total Value
Number Options at Assumed
of Granted Annual
Securities to Rates of
Underlying Employees Stock Price
Options in Exercise Appreciation
Granted Fiscal Price Expiration for
Name (#)(1) Year ($/Sh) Date Option Term
<S> <C> <C> <C> <C> <C> <C>
5% ($) 10% ($)
George M. Stadler 30,000 34.9% 9.0625 12/15/05 170,981 433,298
Frank R. McPike, 15,000 17.4% $ 9.0625 12/15/05 $ 85,491 $216,650
Jr.
</TABLE>
(1) Options become exercisable six months after date of grant.
Option Exercises and Year End Value
The following table summarizes the stock options exercised during
the fiscal year ended July 31, 1996 and stock options held at the end of
the fiscal year ended July 31, 1996 by the Specified Executives:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options Options at
Shares Value at FY-End (#) FY-End ($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
George M. Stadler -- -- 160,000 /-0- $328,125 / N/A
Frank R. McPike, Jr. 6,500 $32,451 77,500 /-0- 175,625 / N/A
Employment Agreements
On August 1, 1995, the Company entered into an employment contract
with George M. Stadler providing for his employment as President and
Chief Executive Officer of the Company for a term ending on August 1,
1999 and for the payment of compensation to him at a minimum rate of
$160,000 per year. The agreement provides for automatic one-year
renewals beginning in 1999 unless terminated by either party and for a
one-year period of noncompetition following termination by Mr. Stadler.
The agreement contains provisions for termination in the event of death
or disability and gives the Company the right to terminate for cause,
which is defined as any criminal act by Mr. Stadler for which he is
convicted.
On September 15, 1993, the Company entered into an employment
contract with Frank R. McPike, Jr. providing for his employment as Vice
President, Finance and Chief Financial Officer of the Company for a term
ending on September 14, 1996 and for the payment of compensation to him
at a minimum rate of $130,000 per year. The agreement provides for
automatic one-year renewals beginning in 1996 unless terminated by
either party and for a two-year period of noncompetition following
termination by Mr. McPike. The agreement contains provisions for
termination in the event of death or disability and gives the Company
the right to terminate for cause, which is defined as any criminal act
by Mr. McPike.
Other Arrangements
The Company provides term life insurance for certain of its
officers. The policy amount in the event of death is $500,000 for Mr.
Stadler and $250,000 for Mr. McPike. Premiums of $1,245 for Mr.
Stadler's policy in 1996 (there was no policy prior to this) and $460
for Mr. McPike's policy in each of 1994, 1995 and 1996 were paid by the
Company.
The Company maintains a simplified employee pension ("SEP") plan
for employees of the Company pursuant to the Internal Revenue Code.
Under the SEP plan, an eligible employee may elect to make a salary
reduction of up to 15% of his compensation as defined in the plan, with
the Company then contributing that amount to the plan for the employee.
Employee contributions for any calendar year are limited to a specific
dollar amount that is indexed to reflect inflation ($9,500 for 1996).
For fiscal 1996, the Company contributed $9,235 for Mr. Stadler, and
$10,885 for Mr. McPike. The amount contributed for Mr. McPike in fiscal
1996 covered two annual periods and did not exceed the limitation as
prescribed by the Internal Revenue Service.
Effective August 1, 1990, the Company adopted the Competitive
Technologies, Inc. Employees' Common Stock Retirement Plan (the
"Retirement Plan"). The Retirement Plan is a "stock bonus plan" that is
intended to be tax qualified under the Internal Revenue Code. All
employees of the Company are eligible to participate in the Retirement
Plan. Annually, a committee of independent directors determines the
number of shares of the Company's Common Stock, if any, to be
contributed to the Retirement Plan. These shares are allocated among
participants who are employed on the last day of the year and who
performed at least 1,000 hours of service during the year in proportion
to their relative compensation in a manner that is integrated with the
Company's Social Security contribution on behalf of employees; that is,
the contribution made with respect to compensation in excess of the
Social Security wage base will generally be twice as large in
proportionate terms as the contribution made with respect to
compensation below the wage base. The Company's contributions are held
in trust with a separate account established for each participant.
The maximum amount of Company Common Stock that can be contributed
to the Retirement Plan in any year is the number of shares with fair
market value equal to 15% of that year's compensation reduced by the SEP
plan contribution paid to Retirement Plan participants, but in no event
more than 1% of the Company's outstanding shares at the end of the
previous year. There is no minimum or required contribution. The
maximum number of shares that can be allocated to any individual
participant's account in any year is the number of shares with a fair
market value equal to the lesser of $30,000 or 25% of his compensation
for that year reduced by the SEP plan contribution.
Participants become entitled to a distribution of the shares
allocated to their accounts upon disability, death or other termination
of employment. They are entitled to receive their vested account
balance. Participants obtain a 100% vested interest in their accounts
upon completing 5 years of service with the Company. If the Retirement
Plan becomes "top heavy" as defined by the Internal Revenue Code,
participants become 20% vested after 2 years of service, 40% vested
after 3 years of service, 60% vested after 4 years of service, and 100%
vested after 5 years of service.
Company stock that is contributed to the Retirement Plan is held in
the custody of the Retirement Plan's trustee, Sachem Trust National
Association in Westport, Connecticut. The trustee has the power to vote
Company shares that are owned by the Retirement Plan. For the fiscal
year ended July 31, 1996, the Board authorized a contribution of 8,688
shares. Shares allocated to Messrs. Stadler and McPike under the
Retirement Plan for the year ended July 31, 1996, were 1,427 and 1,416,
respectively, and were 2,843 shares for all executive officers as a
group. See also Summary Compensation Table - "All Other Compensation"
for dollar values ascribed to Messrs. Stadler and McPike.
The Company has an incentive compensation plan pursuant to which an
amount not to exceed 10% of the operating income of the Company (defined
and adjusted as provided in said plan) may be credited each year to an
incentive fund, from which cash awards may be made to key employees of
the Company by a committee, none of whose members is eligible to receive
awards. No amounts may be credited to the incentive fund until such
time, if ever, as the Company experiences a fiscal year in which
operating income (as defined in said plan) has been earned. No such
operating income has yet been earned.
The Company has in effect a Key Employees' Stock Option Plan
("Company Option Plan") with respect to its Common Stock, $.01 par
value, which provides for the grant of either incentive stock options
under Section 422 of the Internal Revenue Code or nonqualified options.
(Incentive options must be granted at not less than 100% of fair market
value at time of grant. Nonqualified options may be granted at not less
than 85% of fair market value at time of grant.) Stock appreciation
rights may also be granted under the Company Option Plan. In certain
instances, stock options which are vested or become vested upon the
happening of an event or events specified by the Company's Stock Option
Committee, may continue to be exercisable through up to 10 years after
the date of grant, irrespective of the termination of the optionee's
employment with the Company.
DIRECTOR COMPENSATION
The Company pays each director who is not an employee of the
Company or a subsidiary of the Company the sum of $750 (increased from
$500 on March 1, 1996) for each Board meeting attended. The $500 rate
had been in effect since March, 1980. Directors also receive $250 for
attending each committee meeting that coincides with a Board meeting and
$500 for attendance at a committee meeting that does not coincide with
a Board meeting. Directors who participate in telephonic board and/or
committee meetings are paid one half the fee for attendence at such
meetings. Out-of-pocket expenses involved in attendance are also
reimbursed. Commencing January 1, 1997, in addition to meeting fees,
outside directors will be paid an annual cash retainer of $5,000,
payable in quarterly installments.
The Company had a Director's Stock Participation Plan pursuant to
which, on the first business day of January through January 1996, the
Company issued, to each nonemployee director who has been elected by the
stockholders and has served at least one full year, a number of shares
of the Company's Common Stock equal to the lesser of (i) $10,000 divided
by the per share fair market value of such stock on the date of
issuance, or (ii) 2,000 shares. During fiscal 1996, an aggregate of
4,776 shares were issued under this plan (1,194 shares each to Messrs.
Bolton, Leahey, Langton, and Van Benschoten).
See "Proposal to Approve the 1996 Directors' Stock Participation
Plan" below for a description of the proposed 1996 Directors' Stock
Participation Plan submitted for shareholder approval.
The Company has entered into indemnity agreements with each of its
directors indemnifying them against certain possible claims and expenses
and has created an escrow fund in the aggregate sum of $325,000 for the
indemnification of directors, all as authorized by the stockholders at
the 1986 annual meeting. The escrow terminates at July 31, 1997. The
Company recently obtained a policy for directors' and officers'
liability insurance.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
This report of the Compensation and Stock Option Committee (the
"Committee") shall not be deemed incorporated by reference by any
general statement incorporating the Proxy Statement by reference into
any filing under the Securities Act of 1933 or the Securities Exchange
Act of 1934 (the "Acts"), except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
The Committee is responsible for making recommendations to the
Company's Board of Directors concerning the compensation of the
Company's Chief Executive Officer and, based upon recommendations
received from the Company's Chief Executive Officer, the compensation of
the Company's other executive officers, consistent with employment
contracts.
The Company has a compensation program that consists of salary,
performance bonus and stock options. The overall executive compensation
philosophy is based upon the premise that compensation should be aligned
with and support the Company's business strategy and long-term goals.
The Company believes it is essential to maintain an executive
compensation program which provides overall compensation competitive
with that paid executives with comparable qualifications and experience.
This is critical to attract and retain competent executives.
The Company has an incentive compensation plan which is intended to
provide a pool of dollars and is based upon the Company's achieving
specific levels of profitability; however, no amounts have been paid
pursuant to the plan (see page 7). In addition, the Committee from time
to time may award individual executives bonuses based upon specific
events that enhance the value of the Company.
The Committee determines the granting of options under the Company
Option Plan. This plan provides additional incentive to maximize
shareholder value. The plan may also utilize vesting periods to
encourage recipients of options to continue in the employ of the
Company. The Company grants stock options to its executive officers and
to a number of additional key employees.
COMPENSATION AND STOCK OPTION COMMITTEE
Michael G. Bolton
Bruce E. Langton, Chairman
Harry Van Benschoten
PERFORMANCE GRAPH
The performance graph below shall not be deemed incorporated by
reference by any general statement incorporating this Proxy Statement by
reference into any filing under the Acts, except to the extent that the
Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
The graph below compares cumulative total return (assuming
reinvestment of dividends, if any) on the Company's Common Stock for the
five year period shown, compared with the American Stock Exchange Market
Index and a SIC code index made up of all public companies whose four-
digit standard industrial code number (6794) includes patent owners and
lessors and who have been public for the period covered by the graph,
all for the fiscal years ended July 31, assuming $100 invested on August
1, 1991 in the Company's Common Stock, the American Stock Exchange
Market Index and a published SIC code index of public companies.
Fiscal Year Ending July 31,
1991 1992 1993 1994 1995 1996
Competitive
Technologies,
Inc. $100 $180.85 $142.55 $127.66 $103.19 $174.47
Industry Index
6794 100 127.08 114.62 123.32 235.91 467.34
Broad Market
AMEX 100 107.85 117.77 120.70 146.38 149.82
CERTAIN TRANSACTIONS
As of April 1, 1992, the Company entered into an employment
agreement with A. Sidney Alpert (a former CEO of the Company and a
former Director of the Company whose term as a director ended at the
Company's annual meeting held December 15, 1995) providing for his
employment as President and Chief Executive Officer of the Company for
a term ending on March 31, 1996. The agreement provided for a two-year
period of noncompetition following termination by Mr. Alpert. The
agreement also provided that at such time as the Company receives Retin-
A royalties, a bonus of $50,000 payable out of 25% of Retin-A royalties
would be paid to Mr. Alpert, whether or not he is still employed by the
Company. Through October 1, 1996 royalties of $23,204 were paid to Mr.
Alpert. The agreement provided for conversion into a consulting
agreement at Alpert's election. Effective December 17, 1993, Mr. Alpert
exercised the conversion. The term of the consulting agreement is three
years during which the Company pays Mr. Alpert $80,000 per year and Mr.
Alpert devotes up to 100 consulting hours per quarter. The agreement
contains provisions for termination in the event of death or disability
and gives the Company the right to terminate for cause, which is defined
as any criminal felony act by Mr. Alpert for which he is convicted. An
individual long-term disability policy has been provided to Mr. Alpert
pursuant to his consulting agreement providing payment of $7,000 per
month in the event of Mr. Alpert's disability. In addition the Company
provides Mr. Alpert with term life insurance which provides $400,000 in
the event of his death. The premium for this policy was $1,506 in 1996,
1995 and 1994.
Knowledge Solutions, Inc. ("KSI"), a development stage company, was
formed in June, 1994 to develop and deliver interactive multimedia
training using a process model developed at Lehigh University. The
Company has a 33.7% voting interest in KSI. Messrs. Stadler and McPike
are two of KSI's directors. Mr. Stadler is serving on a part-time
interim basis as the chief executive officer of KSI and Mr. McPike is
serving on a similar basis as the chief financial officer of KSI while
a full-time management team is being sought for KSI. During KSI's most
recent fiscal year, the Company entered into a $30,000 contract (which
exceeded 5% of KSI's annual revenues) for the delivery of a CD-ROM
version of a handbook which was produced in connection with a government
contract.
The Company's premises at 1465 Post Road East, Westport, CT were
leased from a partnership in which Mr. Alpert, L.W. Miles, Robert I.
Siegel, and David N. Koffsky (former executive officers of the Company)
each owns a 25% interest. Monthly lease rental payments by the Company
consisted of basic minimum annual rent in an amount equal to the monthly
payment of principal and interest due under a mortgage note of the
landlord in the amount of $1,890,000, with principal and interest based
upon a twenty-year amortization schedule. In addition, the Company paid
additional rent of $78,000 per year, subject to annual consumer price
index adjustments, and all taxes which may be levied against the
premises. The lease expired on August 8, 1996. The Company presently
leases these premises from the partnership on a month to month tenancy
at $3,844 per month.
Arthur M. Lieberman, an attorney, was a director of The Company
whose term as a director ended at the Company's Annual meeting on
December 15, 1995. When the Company has believed it prudent to limit
its liability for legal fees and expenses in connection with litigation,
it has entered into contingent fee arrangements with Mr. Lieberman's law
firm. Such an arrangement was entered into in October, 1991 in
connection with the Retin-A litigation. During fiscal 1992, fees of
approximately $67,000 were incurred by Mr. Lieberman's firm and are
payable only out of proceeds from the settlement of this litigation.
The Company has agreed to pay one half of the proceeds, if any, up to a
limit of three times the contingent fees incurred, or approximately
$202,000. During fiscal 1996 the Company paid $8,078 to Mr. Lieberman's
firm pursuant to this arrangement and an additional $155,369 remains
payable.
In February, 1993, the Company acquired 80% of the stock of
Competitive Technologies of PA, Inc. ("CTI-PA") from Lehigh University
("Lehigh") in exchange for unregistered shares of Common Stock of the
Company. The exchange involved $750,000 worth of the Company's stock,
priced in relation to average market value. An exclusive technology
management contract has been entered into between CTI and Lehigh through
September 1997. In addition, Lehigh will provide spouses and children
of certain employees of CTI-PA, including Mr. Stadler, with full Lehigh
tuition waivers at no cost to CTI-PA.
BOARD MEETINGS AND COMMITTEES
During the last full fiscal year four (4) meetings of the Board of
Directors of the Company were held. During the same period the
compensation and stock option committee met twice, the audit committee
met twice, and the nominating committee met once. No incumbent director
attended fewer than 75% of the aggregate number of meetings of the Board
and committees of which he was a member.
The function of the audit committee is to review with the Company's
auditors the scope and adequacy of the audit and the accounting
practices, procedures and policies of the Company and to advise the
management of the Company concerning the purchase, sale and retention of
interest-bearing securities. The function of the compensation and stock
option committee is to make recommendations to the Board of Directors
with respect to compensation of officers and other employees of the
Company and to exercise all of the powers of the incentive compensation
committee as well as to grant options under and administer the Company
Option Plan and to determine the number of shares of the Company's
Common Stock to be contributed to the Company's Retirement Plan. The
function of the nominating committee is to make recommendations to the
Board with respect to candidates for director of the Company. (The
nominating committee will consider nominees recommended by stockholders;
no special procedures need to be followed in submitting such
recommendations.)
PROPOSAL TO APPROVE THE
1996 DIRECTORS' STOCK PARTICIPATION PLAN
The Board of Directors has adopted, subject to stockholder
approval, the 1996 Directors' Stock Participation Plan (the "1996
Participation Plan") which would provide for issuance of shares of the
Company's Common Stock to non-employee directors of the Company
(currently four in number). An aggregate of 100,000 shares will be
reserved for issuance under the 1996 Participation Plan and the Company
expects to register these shares under the Securities Act of 1933 if the
1996 Participation Plan is approved by shareholders. This 1996
Participation Plan replaces a prior plan (described above at page 7)
which expired on January 2, 1996.
Under the 1996 Participation Plan on the first business day of
January of each year for a period of ten years commencing in 1997, the
Company will issue to each non-employee director who has been elected by
the stockholders and has served continuously as such a director for a
period of at least one full year prior to the date of issuance, a number
of shares of the Company's Common Stock (rounded to the nearest whole
share) equal to the lesser of (i) $15,000 divided by the per share fair
market value of such stock on the date of issuance or (ii) 2,500 shares.
These provisions are increases from the prior plan, in effect since
December 1986 which provided for the lesser of $10,000 in stock or 2,000
shares.
If a non-employee director were to leave the Board after serving at
least one full year but prior to the January issuance date, the annual
stock compensation described above shall be payable in shares on a pro-
rata basis up to the time of termination. This is a change from the
prior plan, under which no shares were issued to a director who ceased
to be a director prior to the January issuance date.
Provision is made in the 1996 Participation Plan for adjustments
for such matters as stock dividends and stock splits to prevent dilution
or enlargement of rights. Any amendment to the 1996 Participation Plan
which would increase the number of shares reserved for issuance, change
the eligibility provisions or the formula for determining the number of
shares to be issued, or extend the term of the 1996 Participation Plan
would require stockholder approval.
A complete copy of the 1996 Participation Plan is attached to this
Proxy Statement as Exhibit A and attention is directed to said Exhibit
for a more complete understanding. The 1996 Participation Plan will be
in addition to cash fees paid to non-employee directors for attendance
at board and committee meetings as described above under "Director
Compensation."
Had the 1996 Participation Plan been in effect on January 2, 1996,
the first business day of January, 1996, on which day the fair market
value of the Company's Common Stock was $8.375 per share, the following
shares would have been issued under the 1996 Participation Plan:
Number of Dollar
Name and Position Shares Value
Specified Executives 0 $ 0
Specified Executives as a Group 0 0
Non-Executive Directors and Former
Directors as a Group 12,224 (1) $102,376
Non-Executive Officers and Employees
as a Group 0 0
(1) Comprised of an aggregate of 7,164 shares (1,791 shares each) to
four persons who were eligible directors on January 2, 1996, plus
an aggregate of 5,060 shares on a pro-rata basis to three persons
who left the Board prior to January 2, 1996, but had served at
least one full year prior to leaving the Board.
The Board of Directors believes that it is desirable to approve the
1996 Participation Plan to enable the Company to attract and retain
qualified non-employee directors. The increase will also serve to give
non-employee directors a greater proprietary interest in and closer
identity with the Company through increased stock ownership. The vote
required for approval of this proposal is the affirmative votes of the
holders of a majority of the Common and Preferred Stock (voting as a
single class) present, or represented, and entitled to vote at a meeting
at which a quorum (the holders of a majority of the Company's
outstanding shares of Common and Preferred Stock) is present in person
or by proxy.
The Board of Directors recommends a vote FOR approval of the
proposed 1996 Participation Plan.
INFORMATION REGARDING INDEPENDENT PUBLIC
ACCOUNTANTS
Coopers & Lybrand L.L.P. served as independent public accountants
for the fiscal year ended July 31, 1996 and has been selected by the
Board of Directors to serve for the current year. It is expected that
a representative of said firm will be present at the annual meeting with
the opportunity to make a statement if he desires to do so and that such
representative will be available to respond to appropriate questions.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the next
annual meeting must be received by the Company for inclusion in the
Company's proxy statement and form of proxy relating to that meeting not
later than July 23, 1997.
GENERAL
The Company will bear the cost of solicitation of proxies. In
addition to being solicited by mail, proxies may be solicited personally
or by telephone or telegraph. The Company will reimburse brokerage
houses and other custodians, nominees and fiduciaries for forwarding
proxy materials to principals in obtaining their proxies.
The Company will provide without charge (except for exhibits) to
any record or beneficial owner of its securities, on written request, a
copy of the Company's annual report on Form 10-K filed with the
Securities and Exchange Commission for the fiscal year ended July 31,
1996, including the financial statements and schedules thereto.
Exhibits to said report will be provided upon payment of fees limited to
the Company's reasonable expenses in furnishing such exhibits. Written
requests should be directed to Frank R. McPike, Jr., Secretary of the
Company, at 1960 Bronson Road, Post Office Box 340, Fairfield,
Connecticut 06430.
The Board of Directors is not aware of any matter which is to be
presented for action at the meeting other than the matters set forth
herein. Should any other matters requiring a vote of the stockholders
arise, the proxies in the enclosed form confer upon the person or
persons entitled to vote the shares represented by such proxies
discretionary authority to vote the same in respect of any such other
matters in accordance with their best judgment in the interest of the
Company.
Frank R. McPike, Jr.
Secretary
Dated: November 20, 1996
EXHIBIT A
COMPETITIVE TECHNOLOGIES, INC.
1996 DIRECTORS' STOCK PARTICIPATION PLAN
1. Definitions.
(a) "Plan" means this 1996 Directors' Stock Participation
Plan.
(b) "Company" means Competitive Technologies, Inc.
(c) "Director" means a person who is a director of the
Company and is not an employee of the Company or any subsidiary of
the Company.
2. Purpose.
The purpose of the Plan is to attract and retain qualified
Directors and to promote the best interests of the Company by
giving them a proprietary interest in and closer identity with the
Company through increased stock ownership.
3. Stock Subject to Plan.
An aggregate of 100,000 shares of the Company's Common Stock
shall be reserved for issuance under the Plan. Adjustment in the
shares subject to the Plan shall be made as provided in Paragraph
6.
4. Issuance of Stock.
On the first business day in January of each year for a period
of ten years commencing in 1997 and ending in 2006, the Company
shall issue to each Director who has been elected by the
stockholders of the Company and who has served as a Director for a
period of at least one year in consideration of the services
rendered to the Company by such Director, an annual number of
shares of the Company's Common Stock (rounded to the nearest whole
share) equal to the lesser of (i) $15,000 divided by the per share
fair market value of such Common Stock on the date of issuance, or
(ii) 2,500 shares.
In situations where a Director leaves the Board after
completing a full year of service but before the January 1st
issuance date, the annual stock compensation as described above
shall be payable on a pro-rata basis up to the time of termination.
Shares issued under the Plan may be either authorized but
unissued shares or treasury shares. The Company shall in every
case have a reasonable time to cause certificates for shares to be
prepared and delivered.
5. Agreement of Director.
As a condition to issuance and receipt of shares, if the
Company in its sole discretion determines that such agreement is
necessary in order to comply with Federal or State securities laws
or other applicable laws, such Director shall agree that he takes
the shares issued to him under the Plan for investment and not with
any present intention to resell or distribute the same, and he
shall sign and deliver to the Company a certificate to such effect
at the time of such issuance. In such event the certificates
evidencing such shares shall be appropriately legended and stop
transfer instructions shall be placed with the Transfer Agent for
the Company's Common Stock. The Company shall have no liability
for failure to issue shares pending the meeting of any requirements
which the Company is advised by counsel must be met under Federal
or State securities laws or other applicable laws before such
shares may be issued under the Plan.
6. Change in Shares.
If any change is made in the Company's outstanding shares of
Common Stock by reason of stock dividend in excess of 3% in the
aggregate during any fiscal year of the Company, change in par
value, stock split-up, recapitalization, reclassification or
combination of shares, appropriate adjustment, disregarding
fractional shares, shall be made to the kind and number of shares
issuable under the Plan.
7. Effective Date; Term of Plan.
The Plan shall become effective when approved by the
stockholders of the Company and shall terminate following the close
of business on the first business day of January, 2006.
8. Amendments.
No amendment to the Plan shall be made, except upon approval
of the stockholders of the Company, which will increase the number
of shares reserved for issuance under the Plan, change the
eligibility provisions or the formula for determining the number of
shares to be issued as provided in Paragraph 4, or extend the term
of the Plan; and no amendment to Plan provisions specifying the
eligibility provisions or the formula for determining the amount,
price and timing of shares to be issued shall be made more than
once every six months, other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security Act,
or the rules thereunder.
