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 Section 240.14a-11(c) or
Section 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.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] 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 statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
COMPETITIVE TECHNOLOGIES, INC.
1960 Bronson Road
Fairfield, Connecticut 06430
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on December 19, 1997
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 19, 1997 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 amend the
Company's Restated Certificate of Incorporation to
increase the authorized number of shares of Common Stock
from 7,964,080 to 20,000,000;
3. Considering and acting upon a proposal to amend the
Company's Restated Certificate of Incorporation to
authorize 5,000,000 shares of undesignated Class A
Preferred Stock;
4. Considering and acting upon a proposal to approve the
1997 Employees' Stock Option Plan and reserving 275,000
shares of Common Stock for options under the Plan; and
5. 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
October 31, 1997 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 12, 1997
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 19,
1997. 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; FOR the amendment to the
Company's Restated Certificate of Incorporation to increase the
authorized number of shares of Common Stock; FOR the amendment to
the Company's Restated Certificate of Incorporation to authorize
5,000,000 shares of undesignated Class A Preferred Stock; and FOR
approval of the 1997 Employees' Common Stock Option 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 19, 1997.
Only the holders of record of the Company's 5,956,403
outstanding shares of Common Stock and 2,427 outstanding shares of
Preferred Stock at the close of business on October 31, 1997, 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
("broker non-votes"), those shares will not be considered as
present and entitled to vote with respect to that matter. On each
of the two proposals to amend the Company's Certificate of
Incorporation, such broker non-votes will have the same effect as
negative votes.
ELECTION OF DIRECTORS
At the meeting a Board of eight directors is to be elected by
plurality vote. All of the nominees named below are currently
directors of the Company. 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. December,
40 1996
Michael G. Bolton Managing Director, Safeguard September,
54 Scientifics, Inc. (a company 1994
that strategically invests
in and actively supports
technology driven growth
companies) since September,
1997; prior thereto Vice
President, Lehigh University.
Bruce E. Langton Retired financial executive; July, 1987
66 prior to August, 1987 Assistant
Treasurer of IBM Corporation
(manufacturer of data process-
ing equipment and systems).
Currently consultant in invest-
ment management and Trustee of
Institutional Mutual Funds,
Bankers Trust Co.
H.S. Leahey Manager, Technology Alliances, March, 1994
48 Monsanto Company (a company
involved in agriculture,
nutrition, consumer products
and pharmaceuticals) since
February, 1997; prior thereto
Director, Industrial Contracts
and Licensing, Washington
University in St. Louis.
Frank R. McPike, Jr. Secretary since August, 1989; July, 1988
48, 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 Senior Vice President, Chief December,
42 Financial Officer/Treasurer, 1996
Vistana, Inc. (a developer of
vacation/timeshares) since
February, 1997; Vice President,
Finance, Choice Hotels
International, Inc. October, 1996
to February, 1997; Vice President-
Mergers and Acquisitions,
Choice Hotels International, Inc.
June, 1995 to October, 1996;
Vice President-Finance and
Assistant Treasurer, Manor
Care, Inc. and Choice Hotels
International, Inc. December, 1993
to October, 1996; Vice President-
Corporate Mergers and Acquisitions,
Marriott Corporation, 1988 to
December, 1993.
George M. Stadler President and Chief Executive December,
50, President and Officer of the Company since 1993
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
69 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. Bigar, Bolton, Sabin and Stadler (Chairman), are members
of the executive committee. Messrs. Langton (Chairman), McPike and
Sabin are members of the audit committee. Messrs. Bolton, Leahey
(Chairman), and Stadler are members of the nominating committee.
Messrs. Bigar, 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, 1997.
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 3,794 --
Bruce E. Langton 11,850 --
H.S. Leahey 2,694 --
Frank R. McPike, Jr. 78,827 (C) 1.3%
John M. Sabin 600 --
George M. Stadler 180,006 (D) 2.9%
Harry Van Benschoten 7,500 --
All directors and executive
officers as a group 322,571 (E) 5.2%
Additional 5% Owners
Dimensional Fund Advisors, Inc. 311,800 (F) 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) Consists of 15,285 shares of Common Stock, plus 63,542 stock
options deemed exercised solely for purposes of showing total
shares owned by Mr. McPike. Includes 2,927 shares of Common Stock
held by Webster Trust as Trustee under the Company's Employees'
Common Stock Retirement Plan, as to which Mr. McPike has shared
investment power. Does not include 8,306 shares of Common Stock
allocated to Mr. McPike under said Retirement Plan; Trustee has
sole voting and investment power with regard thereto.
(D) Consists of 6 shares of Common Stock plus 180,000 stock options
deemed exercised solely for purposes of showing total shares owned
by Mr. Stadler. Does not include 8,289 shares of Common Stock
allocated to Mr. Stadler under the Company's Employees' Common
Stock Retirement Plan; these shares are held by Webster Trust as
Trustee and said Trustee has sole voting and investment power with
regard thereto.
(E) Consists of 79,029 shares of Common Stock plus 243,542 stock
options to purchase shares of Common Stock deemed exercised solely
for purposes of showing total shares owned by such group.
(F) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of
311,800 shares of the Company's Common Stock as of September 30,
1997, 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, 1997, 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, 1997.
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, 1997, 1996 and 1995 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, 1997 in excess of
$100,000 (the "Specified Executives"):
SUMMARY COMPENSATION TABLE
Annual Compensation (1)
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
Securities All Other
Name and Principal Fiscal Underlying Compensation
Position Year Salary ($) Bonus ($) Options (#) ($)(2)
<S> <C> <C> <C> <C> <C>
George M. Stadler, 1997 $197,808 $18,000 20,000 $15,105
President and 1996 172,923 -- 30,000 15,874
Chief Executive 1995 153,845 -- 52,500 14,799
Officer
Frank R. McPike, 1997 167,712 12,000 12,000 14,320
Jr., Vice Presi- 1996 149,076 -- 15,000 14,977
dent, Finance and 1995 140,765 -- 20,000 14,136
Chief Financial
Officer
</TABLE>
(1) The aggregate amount of any perquisites or other personal benefits was
less than 10% of the total of annual salary and bonus and is not
included in the above table.
(2) Consists principally of amounts contributed for the above executive
officers to the Competitive Technologies, Inc. Employees' Common Stock
Retirement Plan. The dollar amounts are converted into shares of
Company Common Stock valued at the mean between the high and the low
price on the American Stock Exchange on the last day of the fiscal year.
Also includes premiums paid for term life insurance policies
(see below).
Option Grants
The following table summarizes the stock options granted by the
Company during the fiscal year ended July 31, 1997 to the Specified
Executives:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individuals Grants
Potential
% of Realizable
Total Value
Number Options at Assumed
of Granted Annual
Securities to Rates of
Underlying Employees Stock Price
Options in Exercise Appreciation
Granted Fiscal Price Expiration for
Name (#)(1) Year ($/Sh) Date Option Term
5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
George M. Stadler 20,000 30% $ 9.625 12/20/06 $121,062 $306,795
Frank R. McPike, 12,000 18% 9.625 12/20/06 72,637 184,077
Jr.
</TABLE>
(1) Options become exercisable six months after date of grant.
Option Exercises and Year End Value
The following table summarizes stock options held at the end of the
fiscal year ended July 31, 1997 by the Specified Executives (none of
such persons exercised any Company stock options during such fiscal
year):
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options Options at
Acquired at FY-End (#) FY-End ($)
on Exercisable/ Exercisable/
Name Exercise (#) Unexercisable Unexercisable
<S> <C> <C> <C>
George M. Stadler None 180,000 /-0- $438,125 / N/A
Frank R. McPike, Jr. None 74,500 /-0- 239,000 / N/A
</TABLE>
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 January 7, 1997, the Company entered into an employment contract
with Frank R. McPike, Jr. providing for his employment as Chief
Financial Officer of the Company for a term ending on January 6, 2000
and for the payment of compensation to him at a minimum rate of $167,000
per year. The agreement provides for automatic one-year renewals
beginning in 2000 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 1997 and 1996 (there was no policy prior to this)
and $460 for Mr. McPike's policy in each of 1995, 1996 and 1997 were
paid by the Company.
The Company through December 31, 1996 maintained a simplified
employee pension ("SEP") plan for employees of the Company pursuant to
the Internal Revenue Code. Effective January 1, 1997, the Company
established a 401-K plan. Under both the SEP plan and the 401-K 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 1997, the Company contributed $4,622 for Mr. Stadler, and $4,750
for Mr. McPike.
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
and 401-K plan contributions 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 and 401-K plan contributions.
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, Webster Trust 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, 1997,
the Board authorized a contribution of 9,654 shares. Shares allocated
to Messrs. Stadler and McPike under the Retirement Plan for the year
ended July 31, 1997, were 1,260 and 1,260, respectively, and were 2,520
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 equal to 10% of the operating income of the Company (defined and
adjusted as provided in said plan) shall be credited each year to an
incentive fund, from which cash awards are to 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. See "Proposal to Approve the 1997
Employees' Stock Option Plan" below for a description of the proposed
1997 Employees' Stock Option Plan submitted for stockholder approval.
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 for each Board
meeting attended. 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 attendance at such meetings.
Out-of-pocket expenses involved in attendance are also reimbursed.
Commencing January 1, 1997, in addition to meeting fees, outside
directors are being paid an annual cash retainer of $5,000, payable in
quarterly installments.
The Company has a 1996 Director's Stock Participation Plan pursuant
to which, on the first business day of January from January 1997 through
January 2006, the Company issues, to each non-employee 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) $15,000 divided by the per share fair market value of such stock on
the date of issuance, or (ii) 2,500 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. During fiscal 1997, an aggregate of 6,000 shares were
issued under this plan (1,500 shares each to Messrs. Bolton, Leahey,
Langton, and Van Benschoten).
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 10). In addition, the Committee from
time to time may award individual executives bonuses based upon specific
events that enhance the value of the Company. In fiscal 1997 the
Committee awarded Mr. Stadler a bonus of $18,000 in recognition of his
leadership.
The Committee determines the granting of options under the Company
Option Plan. This plan provides additional incentive to maximize
stockholder 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:
Bruce E. Langton, Chairman
George C.J. Bigar*
Harry Van Benschoten
* Mr. Bigar dissents from the foregoing report.
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, 1992 in the Company's Common Stock, the American Stock Exchange
Market Index and a published SIC code index of public companies.
(I N S E R T G R A P H)
Fiscal Year Ending July 31,
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Competitive
Technologies,
Inc. $100.00 $ 78.82 $ 70.59 $ 57.06 $ 96.47 $103.53
Industry Index
6794 100.00 90.20 97.04 185.64 367.76 397.27
Broad Market
AMEX 100.00 109.20 111.91 135.72 138.92 165.10
</TABLE>
CERTAIN TRANSACTIONS
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, KSI earned $28,788 (which exceeded 5% of KSI's
annual revenues) under a subcontract from the Company for services in
producing and delivering a CD-ROM version of a handbook in connection
with a government contract.
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 was entered into between CTI and Lehigh through
September 1997. The renewal terms of this contract are currently being
negotiated. 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Messrs. Bigar and Bolton each failed to file on a timely basis one
report required by Section 16(a) of the Securities Exchange Act of 1934
with regard to one transaction in the Company's securities.
BOARD MEETINGS AND COMMITTEES
During the last full fiscal year five (5) meetings of the Board of
Directors of the Company were held. During the same period the
executive committee met once, 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 Executive Committee is to exercise subject to
the limitations prescribed by Delaware law, the authority of the Board
of Directors between meetings of the Board. 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.)
PROPOSED AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED NUMBER OF COMMON SHARES
The Board of Directors has unanimously adopted a resolution
declaring it advisable to amend Article Fourth of the Company's Restated
Certificate of Incorporation to increase the total number of shares of
Common Stock which the Company shall have authority to issue from
7,964,080 to 20,000,000.
The authorized number of shares of Common Stock would be increased
by 12,035,920 as a result of the proposed amendment. The Company
currently has 5,956,403 shares of Common Stock outstanding, 94,000
shares of Common Stock reserved for issuance under the Directors' Stock
Participation Plan, 9,015 shares reserved for issuance under the
Employees' Common Stock Retirement Plan, 25,346 shares reserved for
issuance under the Company Option Plan, 31,500 shares reserved for
issuance upon exercise of warrants, and 275,000 shares reserved for
issuance (subject to stockholder approval) under the 1997 Option Plan.
Thus, there remains a balance of only 1,572,816 shares of Common Stock
available for all other corporate purposes. If the proposed amendment
is approved, there will be 13,608,736 shares of Common Stock available
for such purposes.
Approval of the proposed amendment will enable the Board of
Directors of the Company, without the necessity of stockholder approval
unless otherwise required under applicable law, regulation or exchange
listing agreement, to issue additional shares of Common Stock when
needed for the raising of capital, acquisitions, stock splits and
dividends, stock options and other corporate purposes. At the present
time there are no negotiations or commitments which would involve the
issuance of any shares of Common Stock except those already reserved for
issuance as described above.
The authorization of additional shares of Common Stock will not, by
itself, have any effect on the rights of the holders of Common Stock.
Nonetheless, any issuance of additional shares of Common Stock could,
among other things, have a dilutive effect on earnings per share of
Common Stock, on the voting rights of present stockholders, and on the
equity of present holders of Common Stock. In addition, depending on
the circumstances, the issuance of Common Stock could have the effect of
delaying, preventing or influencing a change in control of the Company
and could make more difficult the removal of the present management.
The issuance of additional shares of Common Stock could, depending on
the circumstances, have the effect of blocking a take-over of the
Company and thereby depriving the present stockholders of a premium
price for their shares.
Vote Required for Approval; Board Recommendation:
The vote required for approval of the amendment to the Restated
Certificate of Incorporation to increase the authorized shares of Common
Stock is the affirmative vote of a majority of the outstanding shares of
the Company's Common and Preferred Stock entitled to vote thereon,
voting together as one class, and a majority of the outstanding shares
of Common Stock (as a separate class) entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE PROPOSED AMENDMENT.
PROPOSED AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION TO
AUTHORIZE 5,000,000 SHARES
OF UNDESIGNATED CLASS A PREFERRED STOCK
Article Fourth of the Company's Restated Certificate of
Incorporation currently authorizes the Company to issue 7,964,080 shares
of Common Stock and 35,920 shares of Preferred Stock (which Preferred
Stock is referred to in this section of the Proxy Statement as the
"Existing Preferred Stock"). The terms of the Existing Preferred Stock,
of which 2,427 shares are currently outstanding, are set forth in the
Restated Certificate of Incorporation and may not be changed except by
formal amendment of the Restated Certificate of Incorporation. The
Company does not presently intend to issue any additional shares of
Existing Preferred Stock.
The Board of Directors of the Company has unanimously adopted a
resolution declaring it advisable to amend Article Fourth of the
Company's Restated Certificate of Incorporation to authorized the
issuance of 5,000,000 shares of a new class of "undesignated" or "blank
check" preferred stock (the "Class A Preferred Stock"). The text of the
proposed amendment to the Restated Certificate of Incorporation is
attached as Exhibit B to this Proxy Statement, and attention is directed
to said Exhibit for a more complete understanding.
The Board believes it advisable to authorize such shares of Class
A Preferred Stock to have them available, among other things, for
issuance in connection with financing alternatives, acquisitions and
general corporate purposes, including public or private offerings of
shares for cash. The Board has made no determination with respect to
the issuance of any shares of Class A Preferred Stock and has no present
commitment, arrangement or plan which would require the issuance of such
shares of Class A Preferred Stock in connection with an equity offering,
merger, acquisition or otherwise.
The terms "undesignated preferred stock" or "blank check preferred
stock" refer to stock for which the board of directors of a corporation
may fix or change the terms, including without limitation: (i) the
division of such shares into series; (ii) the dividend or distribution
rate; (iii) the dates of payment of dividends or distributions and the
dates from which they are cumulative; (iv) liquidation price; (v)
redemption rights and price; (vi) sinking fund requirements; (vii)
conversion rights; (viii) restrictions on the issuance of additional
shares of any class or series; (ix) preferences; (x) voting rights; and
(xi) other relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof.
As a result, the Board of Directors of the Company will, in the
event of the approval of this proposal by the stockholders, be entitled
to authorize the creation and issuance of up to 5,000,000 shares of
Class A Preferred Stock in one or more series with such terms,
limitations and restrictions as may be determined in the Board's sole
discretion, with no further authorization by the Company's stockholders
(except as may be required by applicable laws, regulatory authorities or
the rules of any stock exchange on which the Company's securities are
then listed).
The holders of shares of Class A Preferred Stock will have only
such voting rights as are granted by law and authorized by the Board of
Directors with respect to any series thereof; provided, however, that
the shares, if not convertible into Common Stock, will not have more
than one vote per share, except as otherwise required by law, and if
convertible into Common Stock will not have more votes per share than
they would have if they were so converted, except as otherwise required
by law. The Board of the Company will have the right to establish the
relative rights of the Class A Preferred Stock in respect of dividends
and other distributions and in the event of the voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company as
compared with such rights applicable to the Common Stock, the Existing
Preferred Stock and any other series of Class A Preferred Stock.
Article Fourth of the Company's Restated Certificate of
Incorporation will continue to provide that no holder of any class of
stock of the Company shall have any preemptive rights to acquire any
shares of any class of stock or other securities of the Company.
It is not possible to state the effect of the authorization of the
Class A Preferred Stock upon the rights of holders of Common Stock or
the Existing Preferred Stock until the Board determines the terms
relating to one or more series of Class A Preferred Stock. However,
such effects might include without limitation: (i) the reduction of
amounts otherwise available for payment of dividends on Common Stock or
the Existing Preferred Stock, to the extent dividends are payable on any
issued shares of Class A Preferred Stock, (ii) restrictions on dividends
on Common Stock or the Existing Preferred Stock if dividends on Class A
Preferred Stock are in arrears, (iii) dilution of the voting power of
the Common Stock and the Existing Preferred Stock and dilution of net
income and net tangible book value per share of Common Stock as a result
of any such issuance, depending on the number of shares issued and the
purpose, terms and conditions of the issuance, and (iv) the holders of
Common Stock and the Existing Preferred Stock not being entitled to
share in the Company's assets upon liquidation until satisfaction of any
liquidation preference granted to shares of Class A Preferred Stock.
Although the Company has no present commitment, arrangement or plan
for the issuance of the Class A Preferred Stock, the authorized but
unissued shares of such Class A Preferred Stock could be used to make a
takeover or change in control in the Company more difficult. Under
certain circumstances, rights granted upon issuance of shares of the
Class A Preferred Stock could be used to create voting impediments or to
discourage third parties seeking to effect a takeover or otherwise gain
control of the Company. The issuance of Class A Preferred Stock could
have the effect of delaying, preventing or influencing a change in
control of the Company and could make more difficult the removal of the
present management. The issuance of Class A Preferred Stock, depending
on the terms of such stock and the circumstances surrounding its
issuance, could have the effect of blocking a take-over of the Company
and thereby depriving the present stockholders of a premium price for
their shares.
Vote Required for Approval; Board Recommendation:
The vote required for approval of the amendment to the Restated
Certificate of Incorporation to authorize the issuance of undesignated
Class A Preferred Stock is the affirmative vote of a majority of a
outstanding shares of the Company's Common Stock and Existing Preferred
Stock entitled to vote thereon, voting together as one class.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE PROPOSED AMENDMENT.
PROPOSAL TO APPROVE THE 1997 EMPLOYEES' STOCK OPTION PLAN
The Board of Directors has adopted, subject to stockholder
approval, a proposal to establish the 1997 Employees' Stock Option Plan
(the "1997 Option Plan"). A complete copy of the 1997 Option Plan is
attached to this Proxy Statement as Exhibit A and attention is directed
to said Exhibit for a more complete understanding.
On November 12, 1997, the last reported sale price of the Company's
Common Stock on the American Stock Exchange, on which the Company's
Common Stock is listed, was $8.875 per share.
Approximately 30 Company employees (including all executive
officers of the Company) and employees of subsidiaries of the Company
would be eligible to receive options if the 1997 Option Plan is approved
by the stockholders.
Description of Proposed 1997 Option Plan
The 1997 Option Plan will provide for the grant of either incentive
stock options under Section 422 of the Internal Revenue Code or
nonstatutory options.
The committee which will administer the 1997 Option Plan (the
"Committee") will consist of not less than two directors, none of whom
is eligible to receive an option. Committee members will be non-
employee directors as defined by applicable SEC rules and outside
directors as defined by Internal Revenue Code regulations. Subject to
any limitations imposed by the Board of Directors of the Company and the
terms of the 1997 Option Plan, the Committee periodically will determine
which employees of the Company or its subsidiaries will receive options
under the 1997 Option Plan, the type of option, the number of shares
covered by the option, the per share purchase price and the terms of the
option, which may include limited transferability of nonstatutory
options to certain family members. Options shall not otherwise be
transferable other than by will or the laws of descent and distribution.
The proposed 1997 Option Plan provides that payment in full for
shares purchased under an option shall be made in cash (including check)
at the time the option is exercised or, with the consent of the
Committee, (i) by tendering shares of the Company's Common Stock owned
at least six months and valued at the fair market value of such shares
on the date the option is exercised, or (ii) by requesting the Company
to withhold from issuance that number of shares having a fair market
value of such shares on the date of exercise equal to the exercise
price.
The number of shares with respect to which options may be granted
under the 1997 Option Plan will be 275,000 shares, subject to adjustment
in certain events. Any shares covered by options which, for any reason,
expire or are terminated may be re-optioned under the 1997 Option Plan.
The 1997 Option Plan provides that the option price of incentive
and nonstatutory stock options shall be not less than 100% of the fair
market value of the stock at the time of grant. The maximum term of any
option under the 1997 Option Plan is ten years from date of grant, and
the 1997 Option Plan contains provisions with respect to earlier
termination upon termination of employment. In certain instances, stock
options which are vested or become vested upon the happening of an event
or events specified by the Committee may continue to be exercisable
through up to ten years after the date of grant, irrespective of the
termination of the optionee's employment with the Company.
In the case of specified executive officers of the Company, the
number of option shares granted in a fiscal year to any such officer
shall not exceed 100,000 shares. In the case of incentive options, the
aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive options are
exercisable for the first time by any optionee during any calendar year
shall not exceed $100,000.
Members of the Committee are appointed by the Company's Board of
Directors and serve at the pleasure of the Board. The Board may at any
time amend or discontinue the 1997 Option Plan, provided that no Board
action may increase the number of shares available for option (except to
adjust for stock splits, etc.), reduce the option price below 100% of
fair market value at date of grant, or change the requirements for
eligibility to participate in the 1997 Option Plan. No options may be
granted under the 1997 Option Plan after September 30, 2007.
Federal Income Tax Consequences
On exercise of nonstatutory options, the difference between the
option price and the fair market value of the stock on the measuring
date (normally the date on which the option is exercised), will be
taxable as ordinary income to the optionee and will be deductible by the
Company as compensation on such date. Gain or loss on the subsequent
sale of such stock will be eligible for capital gain or loss treatment
by the optionee and will have no federal income tax consequences to the
Company.
An exchange of Common Stock in payment of the option price in the
case of nonqualified options is considered a tax-free exchange by the
optionee to the extent of a like number of new shares, with the new
shares retaining the basis and holding period of the old shares. The
fair market value of any additional shares transferred to the optionee
(representing the excess of the fair market value of all of the new
shares over the fair market value of all of the old shares) will
constitute ordinary income to the optionee and be deductible by the
Company. This amount then becomes the optionee's basis in such shares.
With respect to incentive stock options, if the optionee does not
make a disqualifying disposition of stock acquired on exercise of such
option, no income for federal income tax purposes will result to the
optionee upon the granting or exercise of the option (except that the
amount by which the fair market value of the stock at time of exercise
exceeds the option price may be subject to alternative minimum tax), and
in the event of any sale thereafter any amount realized in excess of his
cost will be taxed as long-term capital gain and any loss sustained will
be long-term capital loss. In such case, the Company will not be
entitled to a deduction for federal income purposes in connection with
the issuance or exercise of the option. A disqualifying disposition
will occur if the optionee makes a disposition of such shares within two
years from the date of the granting of the option or within one year
after the transfer of such shares to him. If a disqualifying
disposition is made, the difference between the option price and the
lesser of (i) the fair market value of the stock at the time the option
is exercised or (ii) the amount realized upon disposition of the stock
will be treated as ordinary income to the optionee at the time of
disposition and will be allowed as a deduction to the Company.
An exchange of Common Stock in payment of the option price in the
case of an incentive stock option, if the exchange is not a
disqualifying disposition of the stock exchanged, is considered to be
tax-free. Under proposed regulations, a number of shares received upon
exercise equal to the number of shares exchanged will have a basis equal
to the basis of the shares exchanged and the remaining shares received
will have a zero basis.
An exchange of statutory option stock to acquire other stock on
exercise of an incentive stock option is a taxable recognition
transaction with respect to the stock disposed of if the minimum
statutory holding period for such statutory option stock has not been
met. Statutory option stock includes stock acquired through exercise of
a qualified stock option, an incentive stock option, a restricted stock
option or an option granted under an employee stock purchase plan. If
there is such a premature disposition, ordinary income is attributed to
the optionee (and will be deductible by the Company) to the extent of
his "bargain" purchase on acquisition of the surrendered stock; and the
post-acquisition appreciation in value of such stock is taxed to him as
a short-term capital gain if held for less than the applicable holding
period for long-term capital gain, or long-term capital gain if held for
such applicable holding period, and will not be deductible by the
Company.
A portion of the excess of the amount deductible by the Company
over the value of options when issued may be subject to the alternative
minimum tax imposed on corporations.
The described tax consequences are based on current laws,
regulations and interpretations thereof, all of which are subject to
change and assume that the optionee has not purchased any shares of the
Company within six months prior to the exercise in question at a
purchase price less than the market price of shares on the date of
exercise. In addition, the discussion is limited to federal income
taxes and does not attempt to describe state and local tax effects which
may accrue to optionees or the Company.
Vote Required for Approval; Board Recommendation:
The vote required for approval of the 1997 Option Plan is a
majority of the shares of holders 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 believes that it is desirable to establish
the 1997 Option Plan in order to maintain and improve the Company's
ability to attract and retain key personnel and to serve as an incentive
to such personnel to make extra efforts to contribute to the success of
the Company's operations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE 1997 OPTION PLAN.
INFORMATION REGARDING INDEPENDENT PUBLIC
ACCOUNTANTS
Coopers & Lybrand L.L.P. served as independent public accountants
for the fiscal year ended July 31, 1997, 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 15, 1998.
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
has retained D.F. King & Co., Inc. to assist in the solicitation of
proxies and anticipates that the fees of such firm will be approximately
$4,000 plus expenses.
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,
1997, 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 12, 1997
EXHIBIT A
COMPETITIVE TECHNOLOGIES, INC.
1997 EMPLOYEES' STOCK OPTION PLAN
1. Purpose of the 1997 Employees' Stock Option Plan
The purpose of the Plan is to enable the Company to attract,
retain and motivate its employees by providing for or increasing the
proprietary interests of such employees in the Company through
increased stock ownership.
The Plan provides for options which either (i) qualify as
incentive stock options ("Incentive Options") within the meaning of
that term in Section 422 of the Internal Revenue Code of 1986, as
amended, or (ii) do not so qualify under Section 422 of the Code
("Nonstatutory Options") (collectively "Options"). Any Option granted
under this Plan will be clearly identified at the time of grant as to
whether it is intended to be either an Incentive Option or a
Nonstatutory Option.
2. Definitions.
The following terms, when appearing in the text of this Plan in
capitalized form, will have the meanings set out below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
heretofore or hereafter amended.
(c) "Committee" means the committee appointed by the Board
pursuant to Section 3 below.
(d) "Company" means Competitive Technologies, Inc. or any parent
or "subsidiary corporation", as that term is defined by Section 424(f)
of the Code, thereof, unless the context requires it to be limited to
Competitive Technologies, Inc.
(e) "Disabled Grantee" means a Grantee who is disabled within
the meaning of Section 422(c)(6) of the Code.
(f) "Employees" means the class of employees consisting of
individuals regularly employed by the Company on a full-time salaried
basis who are identified as key employees, or such other employees as
the Committee shall so determine.
(g) "Executive Officer" means those individuals who, on the last
day of the taxable year at issue: (i) served as the Company's chief
executive officer or was acting in a similar capacity, regardless of
compensation level; and (ii) the four most highly compensated
executive officers (other than the chief executive officer) all as
determined pursuant to Treasury Regulation 1.162-27(c)(2).
(h) "Fair Market Value" means, with respect to the common stock
of the Company, the price at which the stock would change hands
between an informed, able and willing buyer and seller, neither of
which is under a compulsion to enter into the transaction. Fair
Market Value will be determined in good faith by the Committee in
accordance with a valuation method which is consistent with the
guidelines set forth in Treasury Regulation 1.421-7 (e) (2) or any
applicable regulations issued pursuant to Section 422(a) of the Code.
Fair Market Value will be determined without regard to any restriction
other than a restriction which, by its terms, will never lapse.
(i) "Grantee" means an eligible Employee under this Plan who has
been granted an Option.
(j) "Incentive Option" means an Option that qualifies for the
benefit described in Section 421 of the Code, by virtue of compliance
with the provisions of Section 422 of the Code.
(k) "Nonstatutory Option" means an Option that is not an
Incentive Option.
(l) "Option" means either an Incentive Option or a Nonstatutory
Option granted under this Plan.
(m) "Option Agreement" means the agreement entered into between
the Company and an individual Grantee and specifying the terms and
conditions of the Option granted to the Grantee, which terms and
conditions will recite or incorporate by reference: (i) the provisions
of this Plan which are not subject to variation; and (ii) the variable
terms and conditions of each Option granted hereunder which will apply
to that Grantee.
(n) "Optionee" means a Grantee, and, under the appropriate
circumstances, his guardian, representative, heir, distributee,
legatee or successor in interest, including any transferee.
(o) "Plan" means this 1997 Employees' Stock Option Plan, as the
same may from time to time be amended.
(p) "Stock" means the Company's common stock.
3. Administration of the Plan.
(a) Committee Membership. The Plan shall be administered by a
committee appointed by the Board, to be known as the Compensation
Committee (the "Committee"). The Committee shall be not less than two
members and comprised solely of Non-employee Directors, as defined by
Rule 16b-3(b)(3)(i) of the Securities Exchange Act of 1934 ("1934
Act"), or any successor definition adopted by the Securities and
Exchange Commission, and who shall each also qualify as an Outside
Director for purposes of Section 162(m) of the Code. Any vacancy
occurring on the Committee may be filled by appointment by the Board.
The Board at its discretion may from time to time appoint members to
the Committee in substitution of members previously appointed, may
remove members of the Committee and may fill vacancies, however
caused, in the Committee.
(b) Committee Procedures. The Committee shall select one of its
members as chairman and shall hold meetings at such times and places
as it may determine. A quorum of the Committee shall consist of a
majority of its members, and the Committee may act by vote of a
majority of its members present at a meeting at which there is a
quorum, or without a meeting by written consent signed by all members
of the Committee. If any powers of the Committee hereunder are limited
or denied by the Board or under applicable law, the same powers may be
exercised by the Board.
(c) Committee Powers and Responsibilities. The Committee will
interpret the Plan, prescribe, amend and rescind any rules or
regulations necessary or appropriate for the administration of the
Plan, and make such other determinations and take such other actions
it deems necessary or advisable, except as otherwise expressly
reserved for the Board. Subject to the limitations imposed by the
Board or under applicable law and the terms of the Plan, the Committee
may periodically determine which Employees should receive Options
under the Plan, whether the options shall be Incentive Options or
Nonstatutory Options, the number of shares covered by such Options,
the per share purchase price for such shares, and the terms thereof,
including but not limited to transferability of such Options, and
shall have full power to grant such Options. In making its
determinations, the Committee shall consider, among other relevant
factors, the importance of the duties of the Grantee to the Company,
his or her experience with the Company, and his or her future value to
the Company. All decisions, interpretations and other actions of the
Committee shall be final and binding on all Grantees, Optionees and
all persons deriving their rights from a Grantee or Optionee. No
member of the Board or the Committee shall be liable for any action
taken or failed to be taken in good faith or for any determination
made pursuant to the Plan.
4. Stock Subject to Plan.
This Plan authorizes the Committee to grant Options to Employees
up to the aggregate amount of 275,000 shares of Stock, subject to
eligibility and any limitations specified herein. Adjustment in the
shares subject to the Plan shall be made as provided in Section 9.
Any shares covered by an Option which, for any reason, expires,
terminates or is canceled may be reoptioned under the Plan.
5. Eligibility
(a) General Rule. All Employees defined in Section 2(f) shall be
eligible.
(b) Ten Percent Stockholders. An employee who owns more than
ten percent (10%) of the total combined voting power of all classes of
outstanding Stock shall not be eligible for designation as a Grantee
of an Incentive Option unless (i) the exercise price for each share of
Stock subject to such Incentive Option is at least one hundred ten
percent (110%) of the Fair Market Value of a share of Stock on the
date of grant, and (ii) such Incentive Option, by its terms, is not
exercisable after the expiration of five (5) years from the date of
grant.
(c) Attribution Rules. For purposes of Subsection (b) above, in
determining stock ownership, an Employee shall be deemed to own the
Stock owned, directly or indirectly, by or for his brothers, sisters
(whether by whole or half blood), spouse, ancestors and lineal
descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its stockholders, partners or beneficiaries.
(d) Outstanding Stock. For purposes of Subsection (b) above,
"Outstanding Stock" shall include all Stock actually issued and
outstanding immediately after the grant. "Outstanding Stock" shall
not include shares authorized for issuance under outstanding options
held by the Employee or by any other person.
(e) Individual Limits of Executive Officers. Subject to the
provisions of Section 9 hereof, the number of option shares granted in
a fiscal year to each Executive Officer shall not exceed 100,000
shares for any fiscal year in which such person serves as an Executive
Officer
(f) Incentive Option Limitation. The aggregate Fair Market
Value of the stock for which Incentive Options granted to any one
eligible Employee under this Plan and under all incentive stock option
plans of the Company, its parent(s) and subsidiaries, may by their
terms first become exercisable during any calendar year shall not
exceed $100,000, determining Fair Market Value of the stock subject to
any Option as of the time that Option is granted. If the date on
which one or more Incentive Options could be first exercised would be
accelerated pursuant to any other provision of the Plan or any Stock
Option Agreement referred to in Section 6(a), or an amendment thereto,
and the acceleration of such exercise date would result in a violation
of the restriction set forth in the preceding sentence, then
notwithstanding any such other provision the exercise date of such
Incentive Options shall be accelerated only to the extent, if any,
that is permitted under Section 422 of the Code and the exercise date
of the Incentive Options with the lowest option prices shall be
accelerated first. Any exercise date which cannot be accelerated
without violating the $100,000 restriction of this section shall
nevertheless be accelerated, and the portion of the Option becoming
exercisable thereby shall be treated as a Nonstatutory Option.
6. Terms and Conditions of All Options Under the Plan.
(a) Option Agreement. All Options granted under the Plan shall
be evidenced by a written Option Agreement and shall be subject to all
applicable terms and conditions of the Plan and may be subject to any
other terms and conditions which are not inconsistent with the Plan
and which the Committee deems appropriate for inclusion in an Option
Agreement.
(b) Number of Shares. Each Option Agreement shall specify the
number of shares of the Stock each such Employee will be entitled to
purchase pursuant to the Option and shall provide for the adjustment
of such number in accordance with Section 9. Each Option Agreement
shall state the minimum number of shares which must be exercised at
any time, if any.
(c) Nature of Option. Each Option Agreement shall specify the
intended nature of the Option as an Incentive Option, a Nonstatutory
Option or partly of each type.
(d) Exercise Price. Each Option Agreement shall specify the
exercise price. The exercise price of either the Incentive Option or
the Nonstatutory Option shall not be less than one hundred percent
(100%) of the Fair Market Value of a share of Stock on the date of
grant. Subject to the foregoing, the exercise price under any Option
shall be determined by the Committee in its sole discretion. The
exercise price shall be payable in the form described in Section 7.
(e) Term of Option. The Option Agreement shall specify the term
of the Option. The term of any Option granted under this Plan is
subject to expiration, termination, and cancellation as set forth
within this Plan.
(f) Exercisability. Each Option Agreement shall specify the
date when all or any installment of the Option is to become
exercisable. Such Option shall not be exercisable after the
expiration of such term which shall be fixed by the Committee, but in
any event not later than ten years from the date such Option is
granted. Subject to the provisions of the Plan, the Committee may
grant Options which are vested, or which become vested upon the
happening of an event or events as specified by the Committee.
(g) Withholding Taxes. Upon exercise of any Nonstatutory Option
(or any Incentive Option which is treated as a Nonstatutory Option
because it fails to meet the requirements set forth in the Code for
Incentive Options), the Optionee must tender full payment to the
Company for any federal income tax withholding required under the Code
in connection with such exercise ("Withholding Tax"). If the Optionee
fails to tender to the Company the Withholding Tax, the Committee, at
its discretion, shall withhold from the Optionee any and all shares
subject to such Option, and accordingly, subject to Withholding Tax
until such time as either of the following events has occurred:
(i) the Employee tenders to the Company payment in cash to
pay the Withholding Tax; or
(ii) the Company withholds from the Employee's wages an
amount sufficient to pay the Withholding Tax.
(h) Termination and Acceleration of Option.
For Incentive Options:
(i) If the employment of a Grantee who is not a Disabled
Grantee is terminated without cause, or such Grantee
voluntarily quits or retires under any retirement plan of
the Company, any then outstanding and exercisable stock
option held by such a Grantee shall be exercisable, in
accordance with the provisions of the Option Agreement, by
such Grantee at any time prior to the expiration date of
such Option or within three months after the date of
termination of employment or service, whichever is the
shorter period.
(ii) If the employment of a Grantee who is a Disabled
Grantee is terminated without cause, any then outstanding
and exercisable Option held by such a Grantee shall be
exercisable, in accordance with the provisions of the Option
Agreement, by such a Grantee at any time prior to the
expiration date of such Option or within one year after the
date of such termination of employment or service, whichever
is the shorter period.
For all Options issued hereunder:
(i) If the Company terminates the employment of a Grantee
for cause, all outstanding stock options held by the Grantee
at the time of such termination shall automatically
terminate unless the Committee notifies the Grantee that his
or her options will not terminate. A termination "for
cause" shall be defined under each written Option Agreement.
The Company assumes no responsibility and is under no
obligation to notify a Permitted Transferee (as hereafter
defined in section 13) of early termination of an Option on
account of a Grantee's termination of employment.
(ii) Whether termination of employment or other service is a
termination "for cause" or whether a Grantee is a Disabled
Grantee shall be determined in each case, in its discretion,
by the Committee and any such determination by the Committee
shall be final and binding.
(iii) Following the death of a Grantee during employment,
any outstanding and exercisable Options held by such Grantee
at the time of death shall be exercisable, in accordance
with the provisions of the Option Agreement, by the person
or persons entitled to do so under the Will of the Grantee,
or, if the Grantee shall fail to make testamentary
disposition of the stock option or shall die intestate, by
the legal representative of the Grantee at any time prior to
the expiration date of such Option or within one year after
the date of death, whichever is the shorter period.
(iv) The Committee may grant Options, or amend Options
previously granted, to provide that such Options continue to
be exercisable up to ten years after the date of grant
irrespective of the termination of the Grantee's employment
with the Company, and which vest upon grant or become vested
upon the happening of an event or events specified by the
Committee, although the exercise of such vested Options in
the case of Incentive Options more than three months after
termination of employment may convert such Options to
Nonstatutory Options with respect to the income tax
consequences of such exercise.
7. Payment for Shares
(a) Cash. Payment in full for shares purchased under an Option
shall be made in cash (including check, bank draft or money order) at
the time that the Option is exercised.
(b) Stock. In lieu of cash an Optionee may, with the consent of
the Committee, make payment for Stock purchased under an Option, in
whole or in part, by tendering to the Company in good form for
transfer, shares of Stock valued at Fair Market Value on the date the
Option is exercised. Such shares will have been owned by the Optionee
or the Optionee's representative for the time specified by the
Committee but in no case shall the Optionee or his representative have
held a beneficial interest in such tendered shares for a period less
than six months prior to the exercise of the Option.
8. Use of Proceeds from Stock.
Cash proceeds from the sale of Stock pursuant to Options granted
under the Plan shall constitute general funds of the Company.
9. Adjustments.
Changes or adjustments in the Option price, number of shares
subject to an Option or other specifics as the Committee should decide
will be considered or made pursuant to the following rules:
(a) Upon Changes in Stock. If the outstanding Stock is
increased or decreased, or is changed into or exchanged for a
different number or kinds of shares or securities, as a result of one
or more reorganizations, recapitalization, stock splits, reverse stock
splits, split-up, combination of shares, exchange of shares, change in
corporate structure, or otherwise, appropriate adjustments will be
made in the exercise price and/ or the number and/or kind of shares or
securities for which Options may thereafter be granted under this Plan
and for which Options then outstanding under this Plan may thereafter
be exercised. The Committee will make such adjustments as it may deem
fair, just and equitable to prevent substantial dilution or
enlargement of the rights granted to or available for Optionees. No
adjustment provided for in this Section 9 will require the Company to
issue or sell a fraction of a share or other security. Nothing in
this Section will be construed to require the Company to make any
specific or formula adjustment.
(b) Prohibited Adjustment. If any such adjustment provided for
in this Section 9 requires the approval of stockholders in order to
enable the Company to grant or amend Options, then no such adjustment
will be made without the required stockholder approval.
Notwithstanding the foregoing, if the effect of any such adjustment
would be to cause an Incentive Option to fail to continue to qualify
under Section 422 of the Code or to cause a modification, extension or
renewal of such stock option within the meaning described in Section
424 of the Code, the Committee may elect that such adjustment not be
made but rather shall use reasonable efforts to effect such other
adjustment of each then outstanding Option as the Committee, in its
sole discretion, shall deem equitable and which will not result in any
disqualification, modification, extension or renewal (within the
meaning of Section 424 of the Code) of such Incentive Option.
(c) Further Limitations. Nothing in this Section will entitle
the Optionee to adjustment of his Option in the following
circumstances:
(i) The issuance or sale of additional shares of the
Stock, through public offering or otherwise;
(ii) The issuance or authorization of an additional class
of capital stock of the Company;
(iii) The conversion of convertible preferred stock or debt
of the Company into Stock; and
(iv) The payment of dividends except as provided in
Section 9 (a).
The grant of an Option shall not affect in any way the right or power
of the Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any
part of its business or assets.
10. Legal Requirements:
(a) Compliance with All Laws. The Company will not be required
to issue or deliver any certificates for shares of Stock prior to (a)
the listing of any such Stock to be acquired pursuant to the exercise
of any Option on any stock exchange on which the Stock may then be
listed, and (b) the compliance with any registration requirements or
qualification of such shares under any federal securities laws,
including without limitation the Securities Act of 1933, as amended
("1933 Act"), the rules and regulations promulgated thereunder, or
state securities laws and regulations, the regulations of any stock
exchange or interdealer quotation system on which the Company's
securities may then be listed, or obtaining any ruling or waiver from
any government body which the Company may, in its sole discretion,
determine to be necessary or advisable, or which, in the opinion of
counsel to the Company, is otherwise required.
(b) Compliance with Specific Code Provisions. It is the intent
of the Company that the Plan and its administration conform strictly
to the requirements of Section 422 of the Code with respect to
Incentive Options. Therefore, notwithstanding any other provision of
this Plan, nothing herein will contravene any requirement set forth in
Section 422 of the Code with respect to Incentive Options and if
inconsistent provisions are otherwise found herein, they will be
deemed void and unenforceable or automatically amended to conform, as
the case may be.
(c) Plan Subject to Delaware Law. All questions arising with
respect to the provisions of the Plan will be determined by
application of the Code and the laws of the state of Delaware except
to the extent that Delaware laws are preempted by any federal law.
11. Rights as a Stockholder.
An Optionee shall have no rights as a stockholder with respect to
any Stock covered by his Option until the date of issuance of the
stock certificate to him after receipt of the consideration in full
set forth in the Option Agreement. Except as provided in Section 9
hereof, no adjustments will be made for dividends, whether ordinary or
extraordinary, whether in cash, securities, or other property, or for
distributions for which the record date is prior to the date on which
the Option is exercised.
12. Restrictions on Shares.
Prior to the issuance or delivery of any shares of the Stock
under the Plan, the person exercising the Option may be required to:
(a) represent and warrant that the shares of the Stock to be
acquired upon exercise of the Option are being acquired for investment
for the account of such person and not with a view to resale or other
distribution thereof;
(b) represent and warrant that such person will not, directly or
indirectly, sell, transfer, assign, pledge, hypothecate or otherwise
dispose of any such shares unless the sale, transfer, assignment,
pledge, hypothecation or other disposition of the shares is pursuant
to the provisions of this Plan and effective registrations under the
1933 Act and any applicable state or foreign securities laws or
pursuant to appropriate exemptions from any such registrations; and
(c) execute such further documents as may reasonably be
required by the Committee upon exercise of the Option or any part
thereof, including but not limited to any stock restriction agreement
that the Committee may choose to require.
Nothing in this Plan shall assure any Optionee that shares
issuable under this Option are registered on a Form S-8 under the
1933 Act or on any other Form. The certificate or certificates
representing the shares of the Stock to be issued or delivered upon
exercise of an Option may bear a legend evidencing the foregoing and
other legends required by any applicable securities laws.
Furthermore, nothing herein or any Option granted hereunder will
require the Company to issue any Stock upon exercise of any Option if
the issuance would, in the opinion of counsel for the Company,
constitute a violation of the 1933 Act, applicable state securities
laws, or any other applicable rule or regulation then in effect. The
Company shall have no liability for failure to issue shares upon any
exercise of Options because of a delay pending the meeting of any such
requirements.
13. Transferability.
The Committee shall retain the authority and discretion to permit
a Nonstatutory Option, but in no case an Incentive Option, to be
transferable as long as such transfers are made only to one or more of
the following: family members, limited to children of Grantee, spouse
of Grantee, or grandchildren of Grantee, or trusts for the benefit of
Grantee and/or such family members ("Permitted Transferee"), provided
that such transfer is a bona fide gift and accordingly, the Grantee
receives no consideration for the transfer, and that the Options
transferred continue to be subject to the same terms and conditions
that were applicable to the Options immediately prior to the
transfer. Options are also subject to transfer by will or the laws of
descent and distribution. Options granted pursuant to this Plan shall
not be otherwise transferred, assigned, pledged, hypothecated or
disposed of in any way, whether by operation of law or otherwise. A
Permitted Transferee may not subsequently transfer an Option. The
designation of a beneficiary shall not constitute a transfer.
14. No Right to Continued Employment.
This Plan and any Option granted under this Plan will not confer
upon any Optionee any right with respect to continued employment by
the Company nor shall they alter, modify, limit or interfere with any
right or privilege of the Company under any employment agreement
heretofore or hereafter executed with any Optionee, including the
right to terminate any Optionee's employment at any time for or
without cause, to change his level of compensation or to change his
responsibilities or position.
15. Corporate Reorganizations.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company as a result of
which the outstanding securities of the class then subject to Options
hereunder are changed into or exchanged for cash or property or
securities not of the Company's issue, or upon a sale of substantially
all the property of the Company to, or the acquisition of stock
representing more than eighty percent (80%) of the voting power of the
stock of the Company then outstanding by another corporation or
person, the Plan will terminate and all Options will lapse. The
result described above will not occur if provision is made in writing
in connection with such transaction for the continuance of the Plan
and/or for the assumption of Options earlier granted, or the
substitution for such Options of options covering the stock of a
successor employer corporation, or a parent or a subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and
prices, in which event the Plan and Options theretofore granted will
continue in the manner and under the terms so provided. If the Plan
and unexercised Options shall terminate pursuant to the foregoing, all
persons holding any unexercised portions of Options then outstanding
shall have the right, at such time prior to the consummation of the
transaction causing the termination as the Company shall designate, to
exercise the unexercised portions of their options, including the
portions thereof which would but for this Section 15 not yet be
exercisable.
16. Modification, Extension and Renewal.
(a) Options. Subject to the conditions of and within the
limitations prescribed in the Plan herein, the Committee may modify,
extend, cancel or renew outstanding Options. Notwithstanding the
foregoing, no modification will, without the prior written consent of
the Optionee, alter, impair or waive any rights or obligations
associated with any Option earlier granted under the Plan.
(b) Plan. The Board may at any time and from time to time
interpret, amend or discontinue the Plan, subject to the limitation,
however, that, except as provided in Section 9 (relating to
adjustments upon changes in stock), no amendment shall be made, except
upon stockholder approval, which will:
(1) Increase the number of shares reserved for Options
under the Plan; or
(2) Reduce the Option price below 100% of Fair Market
Value at the time an Option is granted; or
(3) Change the requirements for eligibility for
participation under the Plan.
17. Plan Date and Duration.
The Plan shall take effect on the date it is adopted by the Board
subject to approval by the stockholders. Options may not be granted
under this Plan after September 30, 2007.
EXHIBIT B
PROPOSED AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION OF
COMPETITIVE TECHNOLOGIES, INC.
Assuming that both the amendment increasing authorized Common Stock to
20,000,000 shares and the amendment authorizing 5,000,000 shares of
undesignated Class A Preferred Stock are adopted, Article Fourth of
the Restated Certificate of Incorporation will be amended to read as
follows:
"FOURTH: (a) Authorized Stock. The total number of shares of stock of
all classes which the Corporation shall have authority to issue is
25,035,920 shares, of which 20,000,000 shares shall be Common Stock,
having a par value of $.01 per share, 5,000,000 shares shall be Class
A Preferred Stock, having a par value of $.01 per share, and 35,920
shares shall be Preferred Stock, having a par value of $25.00 per
share.
(b) Class A Preferred Stock. The relative rights, privileges,
and restrictions relating to the Class A Preferred Stock are as
follows:
(1) Shares of Class A Preferred Stock may be issued in one or
more series at such time or times and for such consideration as the
Board of Directors may determine. Each such series shall be given a
distinguishing designation. All shares of any one series shall have
preferences, limitations and relative rights identical with those of
other shares of the same series and, except to the extent otherwise
provided in the description of such series, with those of other shares
of Class A Preferred Stock.
(2) Authority is hereby expressly granted to the Board of
Directors to fix from time to time by resolution or resolutions
providing for the establishment and/or issuance of any series of Class
A Preferred Stock, the designation of such series and the preferences,
limitations and relative rights of the shares of such series,
including the following:
(A) The distinctive designation and number of shares comprising
such series, which number may (except where otherwise provided by the
Board of Directors in creating such series) be increased or decreased
(but not below the number of shares then outstanding) from time to
time by action of the Board of Directors;
(B) The voting rights, if any, which shares of that series shall
have, which may be special, conditional, limited or otherwise;
provided, however, that shares of Class A Preferred Stock, if not
convertible into Common Stock, will not have more than one vote per
share, except as otherwise required by law, and if convertible into
Common Stock will not have more votes per share than they would have
if they were so converted, except as otherwise required by law;
(C) The rate of dividends, if any, on the shares of that series,
whether dividends shall be non-cumulative to the extent earned,
partially cumulative or cumulative (and, if cumulative, from which
date or dates), whether dividends shall be payable in cash, property
or rights, or in shares of the Corporation's capital stock, and the
relative rights of priority, if any, of payment of dividends on shares
of that series over shares of any other series, shares of Preferred
Stock or shares of Common Stock;
(D) Whether the shares of that series shall be redeemable and, if
so, the terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable, the event or
events upon or after which they shall be redeemable, whether they
shall be redeemable at the option of the Corporation, the stockholder
or another person, the amount per share payable in case of redemption
(which amount may vary under different conditions and at different
redemption dates), whether such amount shall be a designated amount or
an amount determined in accordance with a designated formula or by
reference to extrinsic data or events and whether such amount shall be
paid in cash, indebtedness, securities or other property or rights,
including securities of any other corporation;
(E) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series and, if so, the terms
of and amounts payable into such sinking fund;
(F) The rights to which the holders of the shares of that series
shall be entitled in the event of voluntary or involuntary dissolution
or liquidation of the Corporation, and the relative rights of
priority, if any, of payment of shares of that series over shares of
any other series, shares of Preferred Stock or shares of Common Stock
in any such event;
(G) Whether the shares of that series shall be convertible into
or exchangeable for cash, shares of stock of any other class or any
other series, indebtedness, or other property or rights, including
securities of another corporation, and, if so, the terms and
conditions of such conversion or exchange, including the rate or rates
of conversion or exchange, and whether such rates shall
be a designated amount or an amount determined in accordance with a
designated formula or by reference to extrinsic data or events, the
date or dates upon or after which they shall be convertible or
exchangeable, the duration for which they shall be convertible or
exchangeable, the event or events upon or after which they shall be
convertible or exchangeable, and whether they shall be convertible or
exchangeable at the option of the Corporation, the stockholder or
another person, and the method (if any) of adjusting the rate of
conversion or exchange in the event of a stock split, stock dividend,
combination of shares, or similar event;
(H) Whether the issuance of any additional shares of such
series, or of any shares of any other series, shall be subject to
restrictions as to issuance, or as to the powers, preferences or
rights of any such other series; and
(I) Any other preferences, privileges and powers and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions of such series, as the Board of Directors
may deem advisable and as shall not be inconsistent with the
provisions of this Article FOURTH and to the full extent now or
hereafter permitted by the laws of the State of Delaware.
(c) Preferred Stock and Common Stock. The designations and the
powers, preferences and rights, and the qualifications, limitations or
restrictions of the Preferred Stock and Common Stock of the
Corporation are as follows:
(1) Dividends: The holders of the Preferred Stock shall be
entitled to receive, out of any funds of the Corporation lawfully
available for dividends under the laws of the State of Delaware, if,
as and when declared by the Board of Directors in its discretion,
preferential dividends at the rate of 5% of the par value of the
Preferred Stock, per share per annum, and no more, payable quarterly
on the 30th day of January, April, July and October, respectively, in
each year, before any dividends shall be declared or paid upon or set
apart for, or other distribution shall be ordered or made in respect
of, any shares of Common Stock; provided, however, that dividends on
the Preferred Stock shall be noncumulative, so that if such dividends
on the Preferred Stock are not declared or paid, in whole or in part,
the unpaid dividends shall not accumulate.
(2) Preference Upon Liquidation: In the event of any
liquidation, dissolution or winding up of the Corporation or any
reduction of its capital resulting in any distribution of its assets
to its stockholders, whether voluntary or involuntary, the holders of
the Preferred Stock shall be entitled to receive, for each share
thereof, out of the assets of the Corporation, whether from capital,
surplus or earnings available for distribution to its stockholders,
$25.00 per share in cash, before any distribution of assets of the
Corporation shall be made to the holders of the Common Stock; but the
holders of the Preferred Stock shall be entitled to no further
participation in such distribution. If, upon any such liquidation,
dissolution, winding up or reduction, the assets of the Corporation
distributable as aforesaid among the holders of the Preferred Stock
shall be insufficient to permit of the payment to them of the full
preferential amount aforesaid, then the entire assets of the
Corporation to be distributed shall be distributed ratably among the
holders of the Preferred Stock in proportion to the full preferential
amount to which they are respectively entitled. A consolidation or
merger of the Corporation, or a sale or transfer of all or
substantially all of its assets as an entirety, shall not be regarded
as a voluntary liquidation, dissolution or winding up of the
Corporation.
(3) Voluntary Redemption: The Corporation may, at its option,
expressed by resolution of its Board of Directors, at any time or from
time to time, redeem the whole or any part of the Preferred Stock at a
redemption price for each share thereof equal to $25.00. Notice of
any proposed redemption of shares of Preferred Stock shall be given by
the Corporation by mailing a copy of such notice at least 30 days
prior to the date fixed for such redemption to the holders of record
of the shares of Preferred Stock to be redeemed, at their respective
addresses appearing on the books of the Corporation. If less than all
the shares of Preferred Stock are to be redeemed as herein provided,
the redemption shall be made in such amount, at such place, by such
method, either by lot or pro rata, and subject to such provisions of
convenience as shall from time to time be determined by resolution of
the Board of Directors. From and after the date fixed in any such
notice as the date of redemption, unless default shall be made by the
Corporation in providing moneys at the time and place specified for
the payment of the redemption price pursuant to said notice, all
rights of the holders of said shares of Preferred Stock so called for
redemption as stockholders of the Corporation, except only the right
to receive the redemption price, shall cease and determine and such
shares shall be deemed no longer to be outstanding.
(4) Voting Power: The holders of the Preferred Stock and of the
Common Stock shall possess full voting power for the election of
directors and for all other purposes. Holders of stock of such class
entitled to vote shall have one vote for each share of stock held by
them.
(d) No Preemptive Rights. No holder of any class of stock of
the Corporation, whether now or hereafter authorized, shall have any
preemptive, preferential or other rights to subscribe for or purchase
or acquire any shares of any class of stock or any other securities of
the Corporation, whether now or hereafter authorized, and whether or
not convertible into, or evidencing or carrying the right to purchase,
shares or any other securities now or hereafter authorized, and
whether the same shall be issued for cash, service or property, or by
way of dividend or otherwise."
PROPOSED AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION OF
COMPETITIVE TECHNOLOGIES, INC.
Assuming that only the amendment increasing the authorized Common
Stock to 20,000,000 shares is adopted, Article Fourth of the Restated
Certificate of Incorporation will be amended to read as follows:
FOURTH: (a) Authorized Stock: The total number of shares of
stock which the Corporation shall have authority to issue shall
be 20,035,920 shares, of which 35,920 shares, with a par value of
$25.00 each, are to be Preferred Stock, and 20,000,000 shares,
with a par value of $.01 each, are to be Common Stock.
PROXY
COMPETITIVE TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS, DECEMBER 19, 1997
The undersigned stockholder of COMPETITIVE TECHNOLOGIES, INC.
hereby appoints GEORGE M. STADLER and FRANK R. McPIKE, JR., each with
full power of substitution, as attorneys and proxies to vote all of
the shares of stock of said Company which the undersigned is entitled
to vote at the Annual Meeting of Stockholders of said Company to be
held on Friday, December 19, 1997 at 9:00 A.M. local time at the
Norwalk Inn, 99 East Avenue, Norwalk, Connecticut 06851, or at any
adjournments thereof, with all powers the undersigned would possess if
personally present, as indicated below, and for the transaction of
such other business as may properly come before said meeting or any
adjournment thereof, all as set forth in the November 12, 1997 Proxy
Statement for said meeting:
1. Election of Directors:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
(except as marked to the vote for all nominees
contrary below) listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through nominee's name in the
list below.
George C.J. Bigar, Michael G. Bolton, Bruce E. Langton, H.S.
Leahey, Frank R. McPike, Jr., John M. Sabin, George M. Stadler,
Harry Van Benschoten
2. Approval of Amendment to Restated Certificate of Incorporation
increasing authorized number of common shares from 7,964,080 to
20,000,000
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of Amendment to Restated Certificate of Incorporation
authorizing 5,000,000 shares of undesignated Class A Preferred
stock
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Approval of 1997 Employees' Stock Option Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued and to be signed on reverse side)
(continued from other side)
A majority of the members of said Proxy Committee who shall be
present in person or by substitute at said meeting, or in case but one
shall be present then that one, shall have and exercise all of the
powers of said Proxy Committee.
This proxy will be voted as directed but if no direction is
indicated it will be voted FOR the election of the nominees named in
proposal (1) and FOR proposals (2), (3) and (4), inclusive as
described herein. On other matters that may come before said meeting,
this proxy will be voted in the discretion of the above-named Proxy
Committee.
_______________________________________
_______________________________________
(Signature of Stockholder)
DATE: __________________________, 1997
Note: Please sign exactly as your name
or names appear above. If the stock is
registered in the name of more than one
person, the proxy should be signed by
all named holders. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title. If a corporation, please sign in
full corporate name by president or
other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
