Exhibit 10.1
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COMPETITIVE TECHNOLOGIES, INC.
1997 EMPLOYEES' STOCK OPTION PLAN
As Amended January 14, 2005
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.
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(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 ss.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.
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3. Administration of the Plan.
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(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.
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This Plan authorizes the Committee to grant Options to Employees up to
the aggregate amount of 1,525,000 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
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(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.
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6. Terms and Conditions of All Options Under the Plan.
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(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:
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(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:
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(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:
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(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.
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(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
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(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.
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Cash proceeds from the sale of Stock pursuant to Options granted under
the Plan shall constitute general funds of the Company.
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9. Adjustments.
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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.
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(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:
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(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.
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11. Rights as a Stockholder.
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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.
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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.
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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.
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14. No Right to Continued Employment.
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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.
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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.
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16. Modification, Extension and Renewal.
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(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.
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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.
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