EXHIBIT 4.3
COMPETITIVE TECHNOLOGIES, INC.
1997 EMPLOYEES' STOCK OPTION PLAN
As Amended January 18, 2002
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 875,000 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 any Executive
Officer shall not exceed 300,000 shares for the first
fiscal year during which such person becomes an
Executive Officer and shall not exceed 100,000 shares
for any subsequent fiscal year during 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.