-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Frp+v+EWL/lb6nuhccC0m6fDh1CwSdKiPlFS0FY4BwC0+PKNv99ZUhvpMk9eDYS8 jWvlqkj3YWJro4N/GvTaMA== 0000102198-98-000011.txt : 19981125 0000102198-98-000011.hdr.sgml : 19981125 ACCESSION NUMBER: 0000102198-98-000011 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980731 FILED AS OF DATE: 19981124 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPETITIVE TECHNOLOGIES INC CENTRAL INDEX KEY: 0000102198 STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794] IRS NUMBER: 362664428 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-08696 FILM NUMBER: 98758328 BUSINESS ADDRESS: STREET 1: 1960 BRONSON ROAD STREET 2: P.O. BOX 340 CITY: FAIRFIELD STATE: CT ZIP: 06430 BUSINESS PHONE: 2032256044 MAIL ADDRESS: STREET 1: 1960 BRONSON ROAD STREET 2: P.O. BOX 340 CITY: FAIRFIELD STATE: CT ZIP: 06430 FORMER COMPANY: FORMER CONFORMED NAME: UNIVERSITY PATENTS INC DATE OF NAME CHANGE: 19920703 10-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A AMENDMENT NO. 1 AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July 31, 1998 Commission file number 1-8696 COMPETITIVE TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Annual Report for the fiscal year ended July 31, 1998 on Form 10-K as set forth in the pages attached hereto: (List all such items, financial statements, exhibits or other portions amended) Part III, Item 10. Directors and Executive Officers of the Registrant. Part III, Item 11. Executive Compensation. Part III, Item 12. Security Ownership of Certain Beneficial Owners and Management. Part III, Item 13. Certain Relationships and Related Transactions. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned hereunto duly authorized. COMPETITIVE TECHNOLOGIES, INC. Registrant Date: November 24, 1998 s/ Frank R. McPike, Jr. By: Frank R. McPike, Jr. President, Chief Operating Officer, Vice President, Finance, Treasurer, Chief Financial Officer and Authorized Signer PART III Item 10. Directors and Executive Officers of the Registrant The following table sets forth information with respect to each director of the registrant according to information furnished to the registrant by him: Name, Age and Principal Occupation Positions Presently During Past Five Director of Held with Years; Other Public Registrant Registrant Directorships Since George C.J. Bigar, Professional Investor. December, 42 1996 Michael G. Bolton, Managing Director, Pennsylvania September, 55 Early Stage Partners (a Safe- 1994 guard Scientifics, Inc. venture capital fund) since September, 1997; prior thereto Vice President, Lehigh University. Robert H. Brown, Jr., President and CEO, RHB Capital, March, 1998 45 LLC (a private investment company), since July, 1998; prior thereto Executive Vice President, Director of Corporate Finance, Dain Rauscher Incorporated, (an investment banking firm). Also a Director of Emerson Radio Corporation, Stevens Graphics Corporation and Claimsnet.com. Samuel M. Fodale, President, Central Maintenance October, 1998 55 Services, Inc. (a service and warehousing corporation serving the automobile industry). John M. Sabin, Executive Vice President December, 44 and Chief Financial Officer 1996 of Hudson Hotels Corporation (a limited service hotel development and management company) since May, 1998; 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 Acquisi- tions, 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. The following table sets forth information with respect to the registrant's sole executive officer when this amendment was prepared: Name and Age Positions and Offices with the Registrant Frank R. McPike, Jr., President and Chief Operating Officer of the 49 registrant since October, 1998; Secretary of the registrant since August, 1989; Treasurer of the registrant since July, 1988; Vice President, Finance and Chief Financial Officer of the registrant since December, 1983; Director of the registrant from July, 1988 to March, 1998. The terms of all officers of the registrant are until the first meeting of the newly elected Board of Directors following the forthcoming annual meeting of stockholders of the registrant and until their respective successors shall have been duly elected and shall have qualified, subject to employment agreements. Mr. McPike has an employment contract with the registrant; this contract is described in Item 11 of this Amendment to Form 10-K. There is no family relationship between any director or executive officer of the registrant. Item 11. Executive Compensation Summary Compensation The following table summarizes the total compensation accrued, earned or paid by the registrant for services rendered during each of the fiscal years ended July 31, 1998, 1997 and 1996 to the Chief Executive Officer of the registrant and each of the other executive officers of the registrant who had annual compensation for the fiscal year ended July 31, 1998 in excess of $100,000 (the "Specified Executives"): SUMMARY COMPENSATION TABLE Annual Compensation (A) Long Term Compensation Awards Securities All Other Name and Principal Fiscal Underlying Compensation Position Year Salary ($) Bonus ($) Options (#) ($) George M. Stadler, 1998 $197,000 -- 20,000 $318,245 (B) President and 1997 197,808 18,000 20,000 15,105 (C) Chief Executive 1996 172,923 -- 30,000 15,874 (C) Officer Frank R. McPike, 1998 167,000 -- 20,000 17,460 (C) Jr., Vice Presi- 1997 167,712 12,000 12,000 14,320 (C) dent, Finance and 1996 149,076 -- 15,000 14,977 (C) Chief Financial Officer, Secretary and Treasurer (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) Includes $300,000 accrued in the fiscal quarter ended July 31, 1998, to settle Mr. Stadler's employment contract which ran until July 31, 1999. On October 15, 1998, Mr. Stadler resigned from all positions with the registrant. See Employment Agreements below. Also includes amounts contributed for Mr. Stadler to Competitive Technologies, Inc.'s Employees' Common Stock Retirement Plan. The registrant contributed shares of its Common Stock valued at the mean between its high and low prices on the American Stock Exchange on July 31, 1998. Also includes premiums paid for term life insurance policy (see below). (C) Consists principally of amounts contributed for each executive officer to Competitive Technologies, Inc.'s Employees' Common Stock Retirement Plan. The registrant contributed shares of its Common Stock valued at the mean between its high and low prices on the American Stock Exchange on July 31 of each year. Also includes premiums paid for term life insurance policies (see below). Option Grants The following table summarizes the stock options granted by the registrant during the fiscal year ended July 31, 1998 to the Specified Executives: OPTION GRANTS IN LAST FISCAL YEAR Individuals Grants % of Total Number Options of Granted Securities to Underlying Employees Grant Options in Exercise Date Granted Fiscal Price Expiration Present Name (#) Year ($/Sh) Date Value ($)(C) George M. Stadler 20,000 (A) 24% $11.094 (A) $62,207 Frank R. McPike, 20,000 (B) 24% 11.094 7/31/07 $62,207 Jr. (A) The expiration date at time of grant was July 31, 2007. Options for 5,000 shares became exercisable on August 1, 1998. The remaining options as originally granted were to vest as shown in note (B) below. Under the terms of the Voluntary Release and Exit Agreement between the registrant and Mr. Stadler described below, options for another 5,000 shares became exercisable on October 15, 1998 and Mr. Stadler forfeited options for 10,000 shares. Under the terms of the Voluntary Release and Exit Agreement, all exercisable options may be exercised on or before July 31, 2001. (B) Options become exercisable as follows: 25% August 1, 1998; 25% August 1, 1999; 50% August 1, 2000. (C) The fair value of each option grant was estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions: (1) dividend yield, 0.0%; (2) expected volatility, 42.1%; (3) risk-free interest rate, 6.39%; and (4) expected life, 4 years. These amounts have not been adjusted for any changes subsequent to the grant date noted in note (A) above. Option Exercises and Year End Value The following table summarizes the stock options exercised during the fiscal year ended July 31, 1998 and stock options held at the end of the fiscal year ended July 31, 1998 by the Specified Executives: AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES Number of Securities Value of Underlying Unexercised Shares Unexercised In-the-Money Acquired Options Options at on Value at FY-End (#) FY-End ($) Exercise Realized Exercisable/ Exercisable/ Name (#) $ Unexercisable Unexercisable George M. Stadler None -- 180,000/20,000 $152,500/N/A Frank R. McPike, Jr. 10,958 $51,278 83,542/20,000 54,574/N/A Employment Agreements On October 15, 1998, Mr. Stadler and the registrant entered into a Voluntary Release and Exit Agreement under which Mr. Stadler resigned from his employment, positions, offices and directorships with the registrant, 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, a copy of which is attached as Exhibit 10.11 to this Form 10-K, provides, among other things, that (i) the registrant will continue to pay Mr. Stadler his base salary at the rate of $197,000 per year through July 31, 1999; (ii) at Mr. Stadler's request received after March 20, 1999, the registrant will pay the remaining balance of the salary continuation in a lump sum payment; (iii) the registrant will pay Mr. Stadler the gross sum of $25,000 to cover unused vacation pay; (iv) the registrant will pay the costs of outplacement assistance for Mr. Stadler up to six months at up to $2,000 per month; (v) the registrant will make additional payments in connection with maintenance of health, life and dental insurance and car expenses through July 31, 1999; and (vi) 190,000 currently vested options held by Mr. Stadler under the registrant's stock option plans will remain vested though July 31, 2001. On January 7, 1997, the registrant entered into an employment contract with Frank R. McPike, Jr. providing for his employment as Chief Financial Officer of the registrant 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 registrant the right to terminate for cause, which is defined as any criminal act by Mr. McPike. Other Arrangements The registrant provides term life insurance for certain of its officers. The policy amount in the event of death is $500,000 for Mr. Stadler and $250,000 for Mr. McPike. Premiums of $1,245 for Mr. Stadler's policy in each of 1998, 1997 and 1996 and $460 for Mr. McPike's policy in each of 1998, 1997 and 1996 were paid by the registrant. Through December 31, 1996, the registrant maintained a simplified employee pension ("SEP") plan for its employees pursuant to the Internal Revenue Code. Effective January 1, 1997, the registrant 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 registrant 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 ($9,500 for 1997 and $10,000 for 1998). For fiscal 1998, the registrant contributed $13,768 for Mr. Stadler and $13,768 for Mr. McPike. The amounts contributed for Messrs. Stadler and McPike in fiscal 1998 covered two annual calendar years and did not exceed the Internal Revenue Service limitation. Effective August 1, 1990, the registrant 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 registrant are eligible to participate in the Retirement Plan. Annually, a committee of independent directors determines the number of shares of the registrant'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 registrant'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 registrant's contributions are held in trust with a separate account established for each participant. The maximum amount of registrant 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 registrant'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 registrant. 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. Registrant stock contributed to the Retirement Plan is held in the custody of the Retirement Plan's trustee, Webster Trust in Westport, Connecticut. The trustee has the power to vote registrant shares owned by the Retirement Plan. For the fiscal year ended July 31, 1998, the Board authorized a contribution of 11,594 shares. Shares allocated to Messrs. Stadler and McPike under the Retirement Plan for the year ended July 31, 1998, were 1,971 and 1,971, respectively, and were 3,942 shares for all executive officers as a group. See also Summary Compensation Table - "All Other Compensation" for dollar values ascribed to contributions for Messrs. Stadler and McPike. The registrant has an incentive compensation plan pursuant to which an amount equal to 10% of the operating income of the registrant (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 registrant by a committee, none of whose members is eligible to receive awards. No amounts may be credited to the incentive fund until such time, if ever, as the registrant experiences a fiscal year in which operating income (as defined in said plan) has been earned. No such operating income has yet been earned. The registrant 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 registrant'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 registrant. Director Compensation The registrant pays each director who is not an employee of the registrant or a subsidiary of the registrant the sum of $750 for each Board meeting attended. Directors also receive $250 for attending each committee meeting that coincides with a Board meeting and $500 for attendance at a committee meeting that does not coincide with a Board meeting. Directors who participate in telephonic board and/or committee meetings are paid one half the fee for attendance at such meetings. Out-of-pocket expenses involved in attendance are also reimbursed. Commencing January 1, 1997, in addition to meeting fees, outside directors are paid an annual cash retainer of $5,000, payable in quarterly installments. The registrant 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 registrant 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 registrant'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, 1998 an aggregate of 10,908 shares were issued under this plan (1,818 each to Messrs. Bigar, Bolton and Sabin and three directors who did not stand for re-election at the last annual meeting). On April 1, 1998 an aggregate of 1,098 shares were issued under this Plan to three (3) directors who did not stand for re-election. Item 12. Security Ownership of Certain Beneficial Owners and Management The following information indicates the beneficial ownership of the registrant's Common Stock by each director of the registrant, by the sole current executive officer of the registrant, and by each person known to the registrant to be the beneficial owner of more than 5% of the registrant's outstanding Common Stock. Such information has been furnished to the registrant by the indicated owners as of November 5, 1998 except as otherwise indicated in the footnotes. Name (and Address if more than 5%) of Beneficial Amount Beneficially Owners Owned (A) Percent (B) Directors George C.J. Bigar 17,481 -- Michael G. Bolton 8,012 -- Robert H. Brown, Jr. 1,000 -- Samuel M. Fodale 161,700 (C) 2.7% John M. Sabin 2,418 -- Executive Officer Frank R. McPike, Jr. 86,323 (D) 1.4% All directors and executive officers as a group 276,871 (E) 4.6% Additional 5% Owners Dimensional Fund Advisors, Inc. 311,800 (F) 5.2% 1299 Ocean Avenue, 11th Floor Santa Monica, CA 90401 (A) Except as indicated in the notes which follow, the designated person or group has sole voting and investment power. (B) Percentages of less than 1% are not shown. (C) 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. (D) Consists of 17,781 shares of Common Stock, plus 68,542 stock options deemed exercised solely for purposes of showing total shares owned by Mr. McPike. Includes 4,423 shares of Common Stock held by Webster Trust as Trustee under the registrant's Employees' Common Stock Retirement Plan, as to which Mr. McPike has shared investment power. Does not include 8,781 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 208,329 shares of Common Stock plus 68,542 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, 1997 and shows sole voting power as to 199,700 shares and sole power of disposition as to 311,800 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 November 5, 1998, the stock transfer records maintained by the registrant 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 registrant, beneficially owned by each director of the registrant, by the sole current executive officer of the registrant, and by each person known to the registrant to be the beneficial owner of more than 5% of the registrant's outstanding Common Stock at November 5, 1998. Shares of Common Percent Name Stock of UOP (A) of Class (B) George C.J. Bigar None -- Michael G. Bolton None -- Robert H. Brown, Jr. None -- Samuel M. Fodale None -- John M. Sabin None -- Frank R. McPike, Jr. 14,000 -- All directors and executive officers of the registrant 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 registrant and 1,927 shares of UOP common stock owned by Genetic Technology Management, Inc., a wholly-owned subsidiary of the registrant. (B) Percentages of less than 1% are not shown. Item 13. Certain Relationships and Related Transactions N/A -----END PRIVACY-ENHANCED MESSAGE-----