SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Check the appropriate box:
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by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Competitive Technologies, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
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6(i)(1) and 0-11.
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previous filing by registration statement number, or the
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Notes:
COMPETITIVE TECHNOLOGIES, INC.
1960 Bronson Road
Fairfield, Connecticut 06430
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on January 27, 2000
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 American Stock Exchange, 86 Trinity Place,
New York, New York 10006 on Thursday, January 27, 2000 at 10:00
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 authorize
2,000,000 shares of undesignated Class A Preferred Stock;
3. Considering and acting upon a proposal to approve
the 2000 Directors Stock Option Plan and reserve
250,000 shares of Common Stock for option grants under
the Plan; and
4. 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
December 20, 1999 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
s/ Jeanne Wendschuh
Jeanne Wendschuh
Secretary
December 22, 1999
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 January 27,
2000. 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 authorize
2,000,000 shares of undesignated Class A Preferred Stock; and FOR
approval of the 2000 Directors 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 December 27, 1999.
Only the holders of record of the Company's ______________
outstanding shares of Common Stock and 2,427 outstanding shares
of Preferred Stock at the close of business on December 20, 1999,
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.
ELECTION OF DIRECTORS
At the meeting a Board of six directors is to be elected by
plurality vote. The six nominees proposed by the Board of
Directors are named below.
All of the nominees named below are currently directors of
the Company. Michael G. Bolton, who was elected a director at
last year's meeting, resigned as a director during the year.
Frank R. McPike, Jr. and George W. Dunbar, Jr. were elected to
the board subsequent to last year's meeting. 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 Director of Company
Positions Currently During Past Five Since
Held with Company Years; Other Public
Directorships
_________________________________________________________________
George C.J. Bigar, Professional December, 1996
42, Director Investor.
George W. Dunbar, President and Chief November, 1999
Jr., 53, Director Executive Officer,
Metra BioSystems,
Inc. from 1991 to
August, 1999.
Director of Quidel
Corporation, Sonus
Pharmaceuticals,
Inc., and LJL
BioSystems, Inc.
Samuel M. Fodale, President, Central October, 1998
56, Director Maintenance
Services, Inc. (a
service and
warehousing
corporation serving
the automobile
industry).
Frank R. McPike, President and Chief February, 1999
Jr., 50, President, Operating Officer of (A)
Chief Operating the Company since
Officer, Treasurer, October, 1998;
Chief Financial Interim Chief
Officer and Director Executive officer of
the Company from
August to October,
1998; Secretary of
the Company from
August, 1989 to
February, 1999;
Treasurer of the
Company since July,
1988; Vice
President, Finance
and Chief Financial
Officer of the
Company since
December, 1983.
Charles J. Member of the June, 1999
Philippin, 49, management committee
Director of Investcorp
International, Inc.
(a global investment
group that acts as a
principal and
intermediary in
international
investment
transactions).
Director of Saks
Incorporated, CSK
Auto Corporation,
Nations Rent, Inc.,
Harborside
Healthcare
Corporation, Werner
Holding Co. (DE),
Inc. and Falcon
Building Products,
Inc.
John M. Sabin, 45, Business consultant December, 1996
Director and since September
Chairman of the 1999; Executive Vice
Board of Directors President and Chief
Financial Officer of
Hudson Hotels
Corporation (a
limited service
hotel development
and management
company) May, 1998
to September, 1999;
Senior Vice
President and
Treasurer, Vistana,
Inc. (a developer of
vacation timeshares)
February, 1997 to
May, 1998; 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.
Director of Cysive,
Inc.
(A) Also a director of the Company from July, 1988 to March, 1998.
Messrs. Bigar, Fodale (Chairman) and Sabin are members of the
audit committee. Messrs. Fodale (Chairman), Philippin and Sabin
are members of the nominating committee. Messrs. Bigar (Chairman),
Fodale and Sabin are members of the compensation and stock option
committee. Messrs. Bigar (Chairman), McPike, Philippin and Sabin
are members of the executive committee which was formed in August,
1999.
BENEFICIAL OWNERSHIP OF SHARES
The following information indicates the beneficial ownership of
the Company's Common Stock by each director and nominee, by the
sole executive officer 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 November 15,
1999 except as otherwise indicated in the footnotes.
Name (and Address if Amount Beneficially Percent (B)
more than 5%) of Owned (A)
Beneficial Owners
Directors and Nominees
George C.J. Bigar 12,418 --
George W. Dunbar, Jr. -- --
Samuel M. Fodale 162,325 (C) 2.7%
Frank R. McPike, Jr. 113,114 (D) 1.9%
Charles J. Philippin 5,000 --
John M. Sabin 4,918 --
All directors and executive
officers as a group 297,775 (E) 5.0%
Additional 5% Owners
Dimensional Fund Advisors, Inc. 305,044 (F) 5.1%
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) Includes 99,100 shares of Common Stock held by Central
Maintenance Services, Inc., 9,000 shares of Common Stock
held by Missouri Recycling - St. Louis, Inc., 3,200 shares
of Common Stock held by children and 2,000 shares held by
spouse. Mr. Fodale has full voting and investment power for
all shares included.
(D) Consists of 19,572 shares of Common Stock, plus 93,542 stock
options deemed exercised solely for purposes of showing
total shares owned by Mr. McPike. Includes 6,214 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 9,665 shares of Common Stock allocated to Mr. McPike
under said Retirement Plan; Trustee has sole voting and
investment power with regard thereto.
(E) Consists of 204,233 shares of Common Stock plus 93,542 stock
options to purchase shares of Common Stock deemed exercised
solely for purposes of showing total shares owned by such
group.
(F) Information taken from Schedule 13G which states that the
information is as of December 31, 1998 and shows sole voting
and disposative power as to 305,044 shares. The Schedule
13G states that all securities reported on the schedule are
owned by advisory clients of Dimensional Fund Advisors, Inc.
and Dimensional Fund Advisors, Inc. disclaims beneficial
ownership of all such securities.
At December 20, 1999, 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, nominee for director or
executive officer of the Company at December 20, 1999.
Shares of Common Percent
Name Stock of UOP (A) of Class (B)
George C.J. Bigar None --
George W. Dunbar, Jr. None --
Samuel M. Fodale None --
Frank R. McPike, Jr. 14,000 --
Charles J. Philippin None --
John M. Sabin 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
accrued, earned or paid by the Company for services rendered
during each of the fiscal years ended July 31, 1999, 1998 and
1997 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, 1999 in excess of
$100,000 (the Specified Executives):
SUMMARY COMPENSATION TABLE
Annual Compensation (A)
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
______
Securities All Other
Name and Principal Fiscal Underlying Compensation
Position Year Salary ($) Bonus ($) Options (#) ($)
______________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Frank R. McPike, Jr. 1999 179,200 -- -- 16,422 (B)
President, Chief 1998 167,000 -- 20,000 17,460 (B)
Operating Officer 1997 167,712 12,000 12,000 14,320 (B)
and Chief Financial
Officer
George M. Stadler, 1999 -- -- -- -- (C)
formerly President 1998 197,000 -- 20,000 318,245 (C)
and Chief Executive 1997 197,808 18,000 20,000 15,105 (B)
Officer
</TABLE>
(A) 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.
(B) Consists principally of amounts contributed for each
executive officer to Competitive Technologies, Inc.'s
Employees' Common Stock Retirement Plan. The Company
contributed shares of its Common Stock valued at the mean
between its high and low prices on the American Stock
Exchange on July 31 of each year. Also includes premiums
paid for term life insurance policies (see below).
(C) In 1999, the Company paid all settlement costs, totalling
$298,000, which had been accrued in 1998. In 1998, includes
$300,000 accrued in the fiscal quarter ended July 31, 1998,
to settle Mr. Stadler's employment contract which ran until
July 31, 1999. On October 15, 1998, Mr. Stadler resigned
from all positions with the Company. See Employment
Agreements below. Also includes amounts contributed for Mr.
Stadler to Competitive Technologies, Inc.'s Employees'
Common Stock Retirement Plan. The Company contributed
shares of its Common Stock valued at the mean between its
high and low prices on the American Stock Exchange on July
31, 1998. Also includes premiums paid for term life
insurance policy (see below).
Option Grants
There were no option grants to the Specified Executives
during the fiscal year ended July 31, 1999.
Option Exercises and Year End Value
The following table summarizes stock options held by the
Specified Executives at the end of the fiscal year ended July 31,
1999:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION
VALUES
Number of
Securities Value of
Underlying Unexercised
Shares Unexercised In-the-Money
Acquired Options Options at
on Value at FY-End (#) FY-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) $ Unexercisable Unexercisable
______________________________________________________________________
Frank R. McPike, Jr. None -- 68,542/15,000 N/A / N/A
George M. Stadler None -- 190,000/0 N/A / N/A
Employment Agreements
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 through January 6, 2000
and for payment of compensation to him at a minimum rate of
$167,000 per year with such rate to be reviewed annually by the
Board of Directors. The agreement provides for automatic one-
year renewals beginning in 2000 unless terminated by either party
and for noncompetition by Mr. McPike for two years following
termination. 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.
On October 15, 1998, Mr. Stadler and the Company entered
into a Voluntary Release and Exit Agreement under which Mr.
Stadler resigned from his employment, positions, offices and
directorships with the Company, including his employment under an
employment contract dated August 1, 1995 which had provided for a
term of employment through July 31, 1999. The Voluntary Release
and Exit Agreement provided, among other things, that (i) the
Company continue to pay Mr. Stadler his base salary at the rate
of $197,000 per year through July 31, 1999; (ii) the Company pay
Mr. Stadler the gross sum of $25,000 to cover unused vacation
pay; (iii) the Company pay the costs of outplacement assistance
for Mr. Stadler up to six months at up to $2,000 per month; (iv)
the Company make payments in connection with maintenance of
health, life and dental insurance and car expenses through July
31, 1999; and (v) 190,000 vested options held by Mr. Stadler
under the Company's stock option plans remain vested and
exercisable through July 31, 2001.
Other Arrangements
The Company provides term life insurance for certain of its
officers. The policy amount in the event of death is $250,000
for Mr. McPike and $500,000 for Mr. Stadler. Premiums of $460
for Mr. McPike's policy in each of 1999, 1998 and 1997 were paid
by the Company and $1,245 for Mr. Stadler's policy in each of
1999 (accrued in contract settlement costs in fiscal 1998), 1998
and 1997.
Through December 31, 1996, the Company maintained a
simplified employee pension (SEP) plan for its employees 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 a salary reduction
up to 15% of his compensation as defined in the plan to be
contributed by the Company to the plan for the employee.
Employee contributions for any calendar year are limited to a
specific dollar amount determined by the Internal Revenue Service
($10,000 for 1999 and 1998). For fiscal 1999, the Company
contributed $10,000 each for Mr. McPike and Mr. Stadler.
Effective August 1, 1990, the Company adopted the
Competitive Technologies, Inc. Employees' Common Stock Retirement
Plan (the Retirement Plan). The Retirement Plan is a qualified
stock bonus plan 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 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
generally will be twice as large in proportionate terms as the
contribution made with respect to compensation below that 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 may be
contributed to the Retirement Plan in any year is the number of
shares with a fair market value equal to 15% of that year's
compensation reduced by the 401-K plan contributions made for
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 his 401-K plan contributions.
Participants become entitled to distributions of the vested
shares allocated to their accounts upon disability, death or
other termination of employment. Participants obtain a 100%
vested interest in the shares allocated to 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 contributed to the Retirement Plan is held in
the custody of the Retirement Plan's trustee, Webster Trust in
New Britain, Connecticut. The trustee has the power to vote
Company shares owned by the Retirement Plan. For the fiscal
years ended July 31, 1999 and 1998, the Board authorized a
contribution of 13,384 and 11,594 shares, respectively. Shares
allocated to Mr. McPike, the Company's sole executive officer at
July 31, 1999, under the Retirement Plan for the year ended July
31, 1999 were 2,674. See also Summary Compensation Table - "All
Other Compensation" for dollar values ascribed to contributions
for Mr. 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. Amounts may
be credited to the incentive fund when the Company earns
operating income (as defined in said plan) for a fiscal year. In
fiscal 1999, the Company credited $46,837 to this incentive fund.
No amounts were credited to this fund prior to fiscal 1999.
The Company has in effect a Key Employees' Stock Option Plan
and a 1997 Employees' Stock Option Plan (the Option Plans) with
respect to its Common Stock, $.01 par value, which provide for
granting either incentive stock options under Section 422 of the
Internal Revenue Code or nonqualified options. (Incentive
options under both Option Plans and non-qualified options granted
under the 1997 Employees' Stock Option Plan must be granted at
not less than 100% of fair market value on the grant date.
Nonqualified options under the Key Employees' Stock Option Plan
may be granted at not less than 85% of fair market value on the
grant date.) Stock appreciation rights may also be granted under
the Key Employees' Stock 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 granted, irrespective of the termination of
the optionee's employment with the Company.
Director Compensation
The Company pays each director who is not an employee of the
Company or a subsidiary of the Company $1,000 for each Board
meeting attended (increased from $750 in April, 1999). Directors
also receive $250 for attending each committee meeting that
coincides with a Board meeting and $500 for attending 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 attending such meetings. The Company
reimburses directors for out-of-pocket expenses incurred to
attend Board and committee meetings. In addition to meeting
fees, since July 1, 1999, the Company has paid outside directors
an annual cash retainer of $7,500, payable in quarterly install
ments. The annual retainer prior to July 1, 1999, was $5,000.
In August, 1999, the Board formed an executive committee
with Mr. Bigar as chairman. The Board has provided that the
Company compensate him at the rate of $8,000 per month for four
months due to the substantial commitment of time to be required
of Mr. Bigar as chairman.
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 issuance
date, 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 would be payable in shares on a pro-rata basis up
to the termination date. In January, 1999 an aggregate of 10,625
shares was issued under this plan (2,500 each to Messrs. Bigar,
Michael G. Bolton (who resigned as a director effective September
30, 1999), Robert H. Brown, Jr., (who resigned as a director
February 11, 1999) and Sabin and 625 shares to Mr. Fodale).
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 officers, consistent with
employment contracts.
The Company has a compensation program that consists of salary
and performance bonus (which are generally reviewed annually) 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. In fiscal
1999, the Company credited $46,837 to this incentive fund; $46,800
was paid from this fund in October, 1999 to employees of the
Company other than Mr. McPike. No amounts were credited to this
fund prior to fiscal 1999. (See pages ___ and ___). 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 October, 1999, the Committee awarded Mr. McPike a
salary increase from $180,000 to $185,000 per annum. In November,
1999, the Committee awarded a $25,000 bonus to Mr. McPike in
recognition of his service in restructuring the Company and
achieving operating profitability in fiscal 1999.
The Committee determines options to be granted under Company
Option Plans. These plans provide additional incentive to maximize
stockholder value. The plans may also utilize vesting periods to
encourage option recipients 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:
George C.J. Bigar
Samuel M. Fodale
John M. Sabin
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, 1994 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)
1994 1995 1996 1997 1998 1999
Competitive
Technologies,
Inc. $100.00 $ 80.83 $136.67 $146.67 $113.33 $ 79.17
Industry Index
6794 $100.00 $191.30 $378.96 $409.38 $459.84 $257.59
Broad Market
AMEX $100.00 $121.28 $124.13 $147.53 $161.02 $165.58
BOARD MEETINGS AND COMMITTEES
During the last full fiscal year, fourteen (14) meetings of
the Board of Directors of the Company were held. During the same
period the audit committee met three (3) times, the compensation
and stock option committee met seven (7) times, and the nominating
committee met four (4) times. No incumbent director attended fewer
than 75% of the aggregate number of meetings of the Board and
committees of which he was a member.
The function of the audit committee is to review with the
Company's auditors the scope and adequacy of the audit and the
Company's accounting practices, procedures and policies and to
advise 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 Plans 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.) 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.
PROPOSED AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
TO AUTHORIZE 2,000,000 SHARES
OF UNDESIGNATED CLASS A 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
authorize the issuance of 2,000,000 shares of a new class of
undesignated preferred stock (the "Class A Preferred Stock").
The text of the proposed amendment to the Restated Certificate of
Incorporation is attached as Exhibit A to this Proxy Statement
and we urge you to read the Exhibit for a more complete
understanding.
Many publicly held companies have charters which provide for
undesignated preferred stock. The Board believes it advisable to
authorize such a class of preferred stock to have such shares
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 term "undesignated preferred stock" refers 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
2,000,000 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). No creation or issuance of such Class A Preferred Stock
may be made without approval by three-fourths (75%) of the whole
Board of Directors of the Company then in office.
Article Fourth of the Company's Restated Certificate of
Incorporation currently authorizes the Company to issue
20,000,000 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 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 Directors 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 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 all outstanding shares of the Company's Common
Stock and Existing Preferred Stock entitled to vote thereon,
voting together as one class.
The Board believes that this type of stock is an important
tool that will enhance the Board's ability to act promptly and
efficiently in the best interests of the Company and its
stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF THE PROPOSED AMENDMENT.
PROPOSAL TO APPROVE THE
2000 DIRECTORS STOCK OPTION PLAN
The Board of Directors has adopted, subject to stockholder
approval, the 2000 Directors Stock Option Plan (the "2000
Directors Plan").
Description of the 2000 Directors Plan
The persons who will be eligible to receive options under
the 2000 Directors Plan will be directors of the Company who are
not employees of the Company or any subsidiary. All of the
current directors of the Company except Mr. McPike (currently
five in number) will be eligible to receive options.
On the date of the forthcoming annual meeting of
stockholders, each individual who is elected as a director at the
meeting and is an eligible director will receive an initial
option to purchase 10,000 shares of the Company's Common Stock.
If a new person who is eligible to receive options is elected a
director after the forthcoming annual meeting, whether by the
stockholders or by the Board, such new director will also
receive, on the date he or she is first elected a director, an
initial option to purchase 10,000 shares of the Company's Common
Stock.
Each eligible director holding office on the first business
day of January of each year subsequent to the date of grant of
his or her initial option will receive an additional option to
purchase 10,000 shares of the Company's Common Stock. If
sufficient shares are not available under the 2000 Directors Plan
on any option issuance date, the number of options will be
reduced prorata.
Each option will have an exercise price of 100% of fair
market value at date of grant, will have a term of ten years from
date of grant, and will fully vest on the date of grant.
If a person's directorship is terminated by reason of death
or permanent disability as described in the 2000 Directors Plan,
options may be exercised within one year after termination. If
the termination is for any other reason, options may be exercised
only within 180 days after termination. In no event may an
option be exercised after expiration of its ten-year term.
Payment for shares purchased on exercise of an option will
be in cash, or in lieu thereof, in whole or in part in shares of
Common Stock owned at least six months prior to exercise and
valued at fair market value on the exercise date.
An aggregate of 250,000 shares of the Company's Common Stock
will be reserved for issuance under the 2000 Directors Plan. If
the current eligible directors (each of whom is a nominee for re-
election) are re-elected at the forthcoming annual meeting, an
aggregate of 50,000 initial option grants will be made to those
directors on the meeting date. Any shares covered by options
which expire or are terminated may be re-optioned under the Plan.
The term of the 2000 Directors Plan extends to the first
business day of January, 2010. However, based on the expected
number of future option grants, it is anticipated that the
250,000 shares reserved for issuance will be exhausted well
before 2010. When this occurs, no additional options will be
issuable under the 2000 Directors Plan unless the Company's
stockholders approve an increase in the number of shares reserved
for issuance.
Provision is made in the 2000 Directors Plan for adjustments
by the Board for such matters as stock splits and reorganizations
to prevent substantial dilution or enlargement of the rights
covered or to be covered by option grants. Generally, options
will not be transferable, but the Board will have the authority,
in its discretion, to permit limited family transfers.
At any time the Board may amend or discontinue the 2000
Directors Plan, except that no amendment may be made, except with
stockholder approval, that will increase the number of shares
reserved for options or reduce the option price below 100% of
fair market value on date of grant (except for adjustments as
described above), or change the requirements for participation
under the Plan. No options may be granted under the Plan after
the first business day of January, 2010.
A complete copy of the 2000 Directors Plan is attached to
this Proxy Statement as Exhibit B and we urge you to read the
Exhibit for a more complete understanding.
The Company expects to register under the Securities Act of
1933 the shares issuable under the 2000 Directors Plan.
Had the 2000 Directors Plan been in effect on February 12,
1999, the date of last year's annual meeting of stockholders,
options would have been granted as follows:
Number of Option Exercise
Name and Position Options Price per Share
_________________________________________________________________
Specified Executives 0 N/A
Specified Executives
as a Group 0 N/A
Current Non-Executive
Directors:
Four directors on
February 12, 1999 (one
of whom resigned on
September 30, 1999) 40,000 $ 6.5000
One director elected
June 25, 1999 10,000 $ 6.2500
One director elected
November 19, 1999 10,000 $ 5.5625
Non-Executive Officers
and Employees as a group 0 N/A
In addition, assuming no resignations, on January 3, 2000,
an aggregate of 50,000 options would have been granted to the Non-
Executive Directors at an exercise price of 100% of fair market
value on date of grant.
On December 20, 1999, 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 $______ per share.
Federal Income Tax Consequences
The grant of options under the 2000 Directors Plan will have
no immediate tax consequences to the Company or the optionee. On
exercise the difference between the option price and the fair
market value of the shares on the measuring date (normally the
exercise date of the option) will be taxable as ordinary income
to the optionee and will be deductible by the Company. A portion
of the excess of the deduction allowed the Company over the value
of the option when issued may be subject to the alternative
minimum tax imposed upon corporations. Gain or loss on the
subsequent sale of the shares will be eligible for capital gain
or loss treatment by the optionee and will have no federal income
tax consequences to the Company. The optionee will have a tax
basis in the shares equal to the exercise price of the option
plus the amount taxable as ordinary income to the optionee upon
acquisition of the shares.
If the optionee pays the exercise price of the option by
tendering shares that the optionee already owns, the exchange
will constitute a tax-free exchange to the optionee to the extent
that the same number of shares are received as are tendered. The
new shares will retain the basis and holding period of the
tendered shares. If the optionee receives additional shares
(representing the excess of the fair market value of all shares
received as a result of exercising the option over the option
price), the fair market value of the additional shares will be
taxable as ordinary income to the optionee and the optionee will
have a basis in these shares equal to their fair market value.
The Company will receive an income tax deduction equal to the
fair market value of these shares to the same extent that they
are taxable to the optionee.
If an optionee transfers a transferable option in accordance
with the provisions of the 2000 Directors Plan, the transfer will
not cause the optionee to recognize any income at the time of
transfer. At the time the transferee exercises the option, the
optionee or his estate (and not the transferee) will have
ordinary income as described above. If the transferee exercises
the option, the transferee's basis in the stock will be the fair
market value of the stock on the date of exercise. For gift tax
purposes, the transfer of the option will constitute a completed
gift on the date of the transfer, since options are fully vested
on the date of grant.
The described tax consequences are based on current laws,
regulations and interpretations thereof, all of which are subject
to change. 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 participants or the Company.
Vote Required for Approval; Board Recommendation
The vote required for approval of the 2000 Directors Plan is
a majority of the shares of holders of Common and Preferred Stock
(voting as a single class) present or represented and entitled to
vote on the matter 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.
Awards made pursuant to the 2000 Directors Plan will be in
addition to the cash fees paid to non-employee directors and the
1996 Directors' Stock Participation Plan described above under
"Director Compensation."
The Board of Directors believes that it is desirable to
approve the 2000 Directors Plan for the following reasons:
-- To assist the Company in attracting and retaining
qualified outside directors;
-- To promote the best interests of the Company by
giving its outside directors an additional incentive to
improve the financial performance of the Company as
reflected in the market performance of its stock; and
-- To encourage its outside directors to take a
proprietary interest in and closer identity with the
Company through increased stock ownership.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF THE 2000 DIRECTORS PLAN.
INFORMATION REGARDING INDEPENDENT PUBLIC
ACCOUNTANTS
PricewaterhouseCoopers LLP served as independent public
accountants for the fiscal year ended July 31, 1999, and the
Board of Directors has selected PricewaterhouseCoopers to serve
for the current year. A representative of PricewaterhouseCoopers
is expected to be present at the annual meeting to make a
statement if he desires to do so and to be available to respond
to appropriate questions.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the
next annual meeting (expected to be held in early January, 2001)
under SEC Rule 14a-8 must be received by the Company for
inclusion in the Company's proxy statement and form of proxy
relating to that meeting (expected to be mailed in late November,
2000) not later than August 2, 2000.
Notice of stockholder matters intended to be submitted at
the next annual meeting outside the processes of Rule 14a-8 will
be considered untimely if not received by the Company a
reasonable time before the Company mails its proxy materials for
its next annual meeting. Since the Company expects to mail its
proxy materials in late November, 2000, the Company intends to
take the position that notice of such matters is untimely if not
received by October 18, 2000. The discretionary authority
described in the last sentence of this proxy statement will be
conferred with respect to any such untimely matters.
GENERAL
The Company will bear the cost of solicitation of proxies.
In addition to being solicited by mail, proxies may be solicited
personally or by telephone or telegraph. The Company will
reimburse brokerage houses and other custodians, nominees and
fiduciaries for forwarding proxy materials to principals in
obtaining their proxies.
The Company will provide without charge (except for
exhibits) to any record or beneficial owner of its securities, on
written request, a copy of the Company's annual report on Form 10-
K filed with the Securities and Exchange Commission for the
fiscal year ended July 31, 1999, 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 Jeanne Wendschuh, 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.
Jeanne Wendschuh
Secretary
Dated: December 22, 1999
EXHIBIT A
PROPOSED AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION OF
COMPETITIVE TECHNOLOGIES, INC.
Assuming that the amendment authorizing 2,000,000 shares of
undesignated Class A Preferred Stock 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 of all classes which the Corporation shall have authority
to issue is 22,035,920 shares, of which 20,000,000 shares shall
be Common Stock, having a par value of $.01 per share, 2,000,000
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; provided however that no
creation or issuance of such Class A Preferred Stock may be made
without approval by three-fourths (75%) of the whole Board of
Directors of the Corporation then in office. 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, 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 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."
EXHIBIT B
COMPETITIVE TECHNOLOGIES, INC.
2000 DIRECTORS STOCK OPTION PLAN
1. Purpose
This Stock Option Plan (the "Plan") is intended to assist
Competitive Technologies, Inc., a Delaware corporation (the
"Company"), in attracting and retaining qualified directors
("Directors") and to promote the best interests of the Company by
giving its Directors an additional incentive to improve the
financial performance of the Company and a proprietary interest
in and closer identity with the Company and its stockholders
through increased stock ownership.
2. Eligibility
The persons who shall be eligible to receive options under
the Plan ("Options") shall be Directors of the Company who are
not employees of the Company or any subsidiary of the Company
(the "Eligible Directors" or "Grantees").
3. Stock
Subject to the provisions of Section 10, an aggregate of
250,000 shares of the Company's common stock, $.01 par value
("Common Stock") will be reserved for issuance upon the exercise
of Options to be granted from time to time under the Plan. In
the event that any outstanding Option under the Plan for any
reason expires or is canceled or terminated, the shares of Common
Stock allocable to the unexercised portion of such Option may
again be subject to an Option under the Plan. The Company's
obligation to grant Options hereunder is limited to the number of
shares of Common Stock available for issuance hereunder, as
described in the preceding two sentences. In the event that, on
the date of grant, the number of shares available under the Plan
is less than the number of shares needed for the Options to be
granted on such date, then the Option to be granted to each
Director eligible to receive an Option on such date shall be
prorated, according to the number of shares available under this
section. Nothing contained herein shall obligate the Company to
issue an Option for a fractional share of Common Stock.
4. Administration
The Board of Directors (the "Board") will administer and
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. All decisions,
determinations, interpretations and other actions by the Board
shall be final and binding on all Grantees of Options granted
under the Plan and all persons deriving their rights from a
Grantee. No member of the Board shall be liable for any action
taken or failed to be taken in good faith or determination made
pursuant to the Plan.
5. Terms and Conditions of Options
Options granted pursuant to the Plan shall be evidenced by
Option agreements in such form as the Board shall from time to
time approve ("Option Agreements"), which Option Agreements shall
comply with and be subject to the following terms and conditions:
(a) Grant of Options.
(i) Initial Grant. On the day of the next annual meeting of
stockholders, expected to be held in January 2000, each
individual who, on such date, is elected as a Director at such
meeting and is an Eligible Director, shall receive an Option for
10,000 shares of the Company's Common Stock. Thereafter, on the
date any new Eligible Director is elected to office during the
term of this Plan, whether by the stockholders or by the Board,
such new Eligible Director shall receive an Option for 10,000
shares of the Company's Common Stock.
(ii) Annual Grants. Each Eligible Director holding office on the
first business day in January of each year subsequent to the date
on which such person received an Option grant pursuant to Section
5(a)(i) above will receive, on that date, an additional Option
for 10,000 shares of the Company's Common Stock.
(b) Fair Market Value. The fair market value for purposes of
the Plan is defined as the average of the high and the low sales
prices as of a specified date as reported on the principal
exchange on which the Company's Common Stock is traded, or if
such sales price is not available, as determined in good faith
(using customary valuation methods) by resolution of the Board
("Fair Market Value").
(c) Option Price. Each Option Agreement shall state the price
at which the Option shares therein may be exercised, which price
shall be equal to 100% of the Fair Market Value on the date of
grant.
(d) Term. The term of any Option shall be ten years from its
grant date.
(e) Exercisability. Each Option shall be 100% vested upon grant.
(f) Transferability. The Board shall retain the authority and
discretion to permit an Option to be transferable as long as such
transfers are made only to one or more of the following: children
of Grantee, spouse of Grantee, or grandchildren of Grantee, or
trusts for the benefit of Grantee and/or the aforementioned
family members ("Permitted Transferees"), 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.
(g) Termination of Option. An Option shall terminate and shall
not be exercisable if Grantee ceases to be a Director of the
Company, except that (i) if such Grantee's directorship is
terminated on account of death or permanent disability, Grantee
or his or her successors or assigns may at any time within one
year after termination of Grantee's directorship exercise the
Option and (ii) if such Grantee's directorship is terminated for
any reason other than death or permanent disability, Grantee or
his or her successors or assigns may at any time within 180 days
after termination of Grantee's directorship exercise the Option.
Notwithstanding the foregoing provisions of this Section 5(g), an
Option may not be exercised to any extent by anyone after the
expiration of its term. For purposes of this Section 5(g),
"permanent disability" shall mean a physical or mental impairment
which is expected to be of long and continuous duration or
expected to end in death, which impairment prevents the Grantee
from performing his duties as a Director. The determination of
the Board as to whether a Grantee is permanently disabled shall
be final and binding on all persons.
(h) Minimum Exercise. The minimum number of shares with respect
to which an Option may be exercised in part at any time is 100.
6. Restrictions on Shares
(a) Investment Purposes, Etc. Prior to the issuance or delivery
of any shares of the Common Stock under the Plan, the person
exercising the Option may be required to:
(i) represent and warrant that the shares of Common 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;
(ii) 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 Securities Act of 1933, as amended
("1933 Act") and any applicable state or foreign securities laws
or pursuant to appropriate exemptions from any such
registrations; and
(iii) execute such further documents as may reasonably
be required by the Board upon exercise of the Option or any part
thereof, including but not limited to any stock restriction
agreement that the Board may choose to require.
(b) Resale Restrictions. Nothing in this Plan shall assure any
Grantee that shares issuable under the 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 Common
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 Common 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 or foreign 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.
(c) Registration. If the Company should elect in the future to
register under the 1933 Act shares issuable under this Plan, the
Board may modify or eliminate such of the foregoing
representations and warranties as the Board may deem appropriate.
7. Payment for Shares
(a) Cash. Payment in full for shares purchased under an Option
may 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 a Grantee may make payment for
Common Stock purchased under an Option, in whole or in part, by
tendering to the Company in good form for transfer, shares of
Common Stock valued at Fair Market Value on the date the Option
is exercised. Such shares must have been owned by the Grantee or
the Grantee's representative for a period of at least 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. No Implied Covenants
Neither this Plan nor any action taken hereunder shall be
construed as giving any Director any right to be retained in
office.
10. Adjustments
Changes or adjustments in the Option price, number of shares
subject to an Option or other specifics as the Board should
decide will be considered or made pursuant to the following
rules:
(a) Upon Changes in Common Stock. If the outstanding Common
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
Board 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 Grantees. No adjustment
provided for in this Section 10 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 10 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.
(c) Further Limitations. Nothing in this Section will entitle
the Grantee to adjustment of his or her Option in the following
circumstances:
(i) The issuance or sale of additional shares of the Common
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 Common Stock; and
(iv) The payment of dividends except as provided in Section
10(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.
11. 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 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
a 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, or options covering the stock of a successor
corporation, or a parent or a subsidiary thereof, with
appropriate adjustments as to the number of shares and prices, in
which event the Plan and Options theretofore granted will
continue in the manner and under the terms so provided.
12. Rights as a Stockholder
A Grantee shall have no rights as a stockholder with respect
to any Common Stock covered by his or her Option until the date
of issuance of the stock certificate to the Grantee after receipt
of the consideration in full set forth in the Option Agreement.
Except as provided in Section 10 hereof, no adjustments will be
made for dividends, whether ordinary or extraordinary, whether in
cash, securities, or other property, or other distributions for
which the record date is prior to the date on which the stock
certificate is issued to the Grantee.
13. Legal Requirements
(a) Compliance with All Laws. The Company will not be required
to issue or deliver any certificates for shares of Common Stock
prior to (a) the listing of any such Common Stock to be acquired
pursuant to the exercise of any Option on any stock exchange on
which the Common 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 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) Plan Subject to Delaware Law. All questions arising with
respect to the provisions of the Plan will be determined by the
laws of the state of Delaware except to the extent that Delaware
laws are preempted by any federal law.
14. Modification, Extension and Renewal
(a) Options. Subject to the conditions of, and within the
limitations prescribed in the Plan herein, the Board may modify,
cancel or renew outstanding Options. Notwithstanding the
foregoing, no modification will, without the prior written
consent of the Grantee, alter, impair or waive any rights or
obligations associated with any Option earlier granted under the
Plan.
(b) Plan. The Board at any time, and from time to time, may
interpret, amend or discontinue the Plan, subject to the
limitation, however, that, except as provided in Section 10, no
amendment shall be made, except upon stockholder approval, which
will:
(i) Increase the number of shares reserved for Options under the
Plan; or
(ii) Reduce the Option price below that which is stated in this
Plan for any Option granted to a Director covered by this Plan;
or
(iii) Change the requirements for eligibility for
participation under the Plan.
15. Plan Date and Duration
This Plan shall become effective on the date that the
stockholders approve the Plan at the forthcoming annual meeting
of stockholders expected to be held in January 2000. Options may
not be granted under the Plan after the first business day of
January 2010.
PROXY
COMPETITIVE TECHNOLOGIES, INC.
This Proxy is Solicited on Behalf of the Board of Directors for the
Annual Meeting of Stockholders, January 27, 2000
The undersigned stockholder of COMPETITIVE TECHNOLOGIES, INC.
hereby appoints FRANK R. McPIKE, JR. and MICHAEL R. NOVACK, 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 Thursday, January 27, 2000, at 10:00 A.M.
local time at the American Stock Exchange, 86 Trinity Place, New
York, New York 10006, 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 December 22, 1999 Proxy Statement for said
meeting:
1. Election of Directors:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees
contrary 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, George W. Dunbar, Jr., Samuel M. Fodale, Frank R.
McPike, Jr., Charles J. Philippin, John M. Sabin
2. Approval of amendment to the Company's Restated Certificate of
Incorporation to authorize 2,000,000 shares of Undesignated
Class A Preferred Stock
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of 2000 Directors 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) and (3) 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: _________________
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.
