-----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, Mp+P6fcwyvXl+laWkdKSVV9aKbB7QsSGdmkYLkfEKtUYdIS/EQJ02PN1Ua8dUaYE 56pSOV4qjy57yEQk8QSD/w== 0001157523-05-000460.txt : 20050121 0001157523-05-000460.hdr.sgml : 20050121 20050121164708 ACCESSION NUMBER: 0001157523-05-000460 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050114 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Amendments to the Registrant.s Code of Ethics, or Waiver of a Provision of the Code of Ethics FILED AS OF DATE: 20050121 DATE AS OF CHANGE: 20050121 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08696 FILM NUMBER: 05542041 BUSINESS ADDRESS: STREET 1: 1960 BRONSON ROAD STREET 2: BUILDING 1 CITY: FAIRFIELD STATE: CT ZIP: 06824 BUSINESS PHONE: 2032556044 MAIL ADDRESS: STREET 1: 1960 BRONSON ROAD STREET 2: BUILDING 1 CITY: FAIRFIELD STATE: CT ZIP: 06824 FORMER COMPANY: FORMER CONFORMED NAME: UNIVERSITY PATENTS INC DATE OF NAME CHANGE: 19920703 8-K 1 a4805071.txt COMPETITIVE TECHNOLOGIES, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 January 14, 2005 Date of Report (Date of earliest event reported) ----------------- COMPETITIVE TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) Delaware 1-8696 36-2664428 (State or other jurisdiction of (Commission (I.R.S. Employer incorporation) File Number) Identification No.) 1960 Bronson Road, Fairfield, Connecticut 06824 (Address of principal executive offices) (Zip Code) (203) 255-6044 (Registrant's telephone number, including area code) ----------------- Not Applicable (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement. 1) At the annual meeting of stockholders of Competitive Technologies, Inc. (the "Company"), held on January 14, 2005 (the "Annual Meeting"), the stockholders approved an amendment to the Company's 1997 Employees' Stock Option Plan to increase the number of shares with respect to which stock options may be granted by an additional 500,000 shares. A copy of the 1997 Employees' Stock Option Plan, as amended January 14, 2005, is filed in this report as Exhibit 10.1. 2) At the Annual Meeting, the stockholders also approved an amendment to the Company's 1996 Directors' Stock Participation Plan to extend the term by five (5) years and to increase the number of shares that may be issued under the plan by 80,000 shares, effective as of the first business day of January 2005. A copy of the 1996 Directors' Stock Participation Plan as amended January 14, 2005, is filed in this report as Exhibit 10.2. 3) On January 14, 2005, the Board of Directors of the Company revised the fees paid to non-employee directors. Effective January 1, 2005, each director who is not an employee of the Company or a subsidiary and who attends or participates in a meeting telephonically will be paid $1,000 for a Board of Directors meeting, $250 for a committee meeting that coincides with a Board of Directors meeting, and $500 for a committee meeting that does not coincide with a Board of Directors meeting. In addition, each director who is not an employee of the Company will receive an annual cash retainer of $10,000, payable in quarterly installments in arrears. Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers. (b) On January 14, 2005, Mr. Samuel M. Fodale, a member of the Board of Directors of the Company and Chairman of the Nominating and Corporate Governance Committee, retired from the Company's Board of Directors. Item 5.05. Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics. On January 14, 2005, the Board of Directors of the Company adopted a revised Corporate Code of Conduct ("Code"). The Code was designed to provide guidance to the Company's personnel to enable them to conduct the Company's business with the highest level of integrity. Specifically, the Code was amended to remove certain specific policies addressing harassment and discrimination because such policies were implicit in the Code's requirement to comply with all applicable laws, rules and regulations. The Code also includes information about the Company's anonymous Compliance Hotline. In addition, both the structure and language of the Code were revised and simplified. The revised Code was effective upon adoption by the Board of Directors. A copy of the Code, as amended on January 14, 2005, is filed in this report as Exhibit 14.1. Exhibit No. Description - ----------- ----------- Exhibit 10.1 Registrant's 1997 Employees' Stock Option Plan as amended January 14, 2005. Exhibit 10.2 Registrant's 1996 Directors' Stock Participation Plan as amended January 14, 2005. Exhibit 14.1 Registrant's Corporate Code of Conduct as adopted January 14, 2005. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. COMPETITIVE TECHNOLOGIES, INC. Date: January 21, 2005 By: /s/ John B. Nano ---------------------- Name: John B. Nano Title: President and Chief Executive Officer EXHIBIT INDEX Exhibit No. Description - ----------- ----------- Exhibit 10.1 Registrant's 1997 Employees' Stock Option Plan as amended January 14, 2005. Exhibit 10.2 Registrant's 1996 Directors' Stock Participation Plan as amended January 14, 2005. Exhibit 14.1 Registrant's Corporate Code of Conduct as adopted January 14, 2005. EX-10.1 2 a4805071ex101.txt EXHIBIT 10.1 Exhibit 10.1 ------------ 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. Page 1 (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. Page 2 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 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 ----------- (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. Page 4 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: Page 5 (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. Page 6 (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. Page 7 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. Page 8 (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. Page 9 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. Page 10 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. Page 11 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. Page 12 EX-10.2 3 a4805071ex102.txt EXHIBIT 10.2 Exhibit 10.2 ------------ COMPETITIVE TECHNOLOGIES, INC. 1996 DIRECTORS' STOCK PARTICIPATION PLAN As Amended January 14, 2005 1. Definitions. (a) "Plan" means this 1996 Directors' Stock Participation Plan. (b) "Company" means Competitive Technologies, Inc. (c) "Director" means a person who is a director of the Company and is not an employee of the Company or any subsidiary of the Company. 2. Purpose. The purpose of the Plan is to attract and retain qualified Directors and to promote the best interests of the Company by giving them a proprietary interest in and closer identity with the Company through increased stock ownership. 3. Stock Subject to Plan. An aggregate of 180,000 shares of the Company's Common Stock shall be reserved for issuance under the Plan. Adjustment in the shares subject to the Plan shall be made as provided in Paragraph 6. 4. Issuance of Stock. On the first business day in January of each year for a period of fifteen years commencing in 1997 and ending in 2011, the Company shall issue to each Director who has been elected by the stockholders of the Company and who has served as a Director for a period of at least one year in consideration of the services rendered to the Company by such Director, an annual number of shares of the Company's Common Stock (rounded to the nearest whole share) equal to the lesser of (i) $15,000 divided by the per share fair market value of such Common Stock on the date of issuance, or (ii) 2,500 shares. In situations where a Director leaves the Board after completing a full year of service but before the January 1st issuance date, the annual stock compensation as described above shall be payable on a pro-rata basis up to the time of termination. Shares issued under the Plan may be either authorized but unissued shares or treasury shares. The Company shall in every case have a reasonable time to cause certificates for shares to be prepared and delivered. 1 5. Agreement of Director. As a condition to issuance and receipt of shares, if the Company in its sole discretion determines that such agreement is necessary in order to comply with Federal or State securities laws or other applicable laws, such Director shall agree that he takes the shares issued to him under the Plan for investment and not with any present intention to resell or distribute the same, and he shall sign and deliver to the Company a certificate to such effect at the time of such issuance. In such event the certificates evidencing such shares shall be appropriately legended and stop transfer instructions shall be placed with the Transfer Agent for the Company's Common Stock. The Company shall have no liability for failure to issue shares pending the meeting of any requirements which the Company is advised by counsel must be met under Federal or State securities laws or other applicable laws before such shares may be issued under the Plan. 6. Change in Shares. If any change is made in the Company's outstanding shares of Common Stock by reason of stock dividend in excess of 3% in the aggregate during any fiscal year of the Company, change in par value, stock split-up, recapitalization, reclassification or combination of shares, appropriate adjustment, disregarding fractional shares, shall be made to the kind and number of shares issuable under the Plan. 7. Effective Date; Term of Plan. The Plan shall become effective when approved by the stockholders of the Company and shall terminate following the close of business on the first business day of January, 2006. 8. Amendments. No amendment to the Plan shall be made, except upon approval of the stockholders of the Company, which will increase the number of shares reserved for issuance under the Plan, change the eligibility provisions or the formula for determining the number of shares to be issued as provided in Paragraph 4, or extend the term of the Plan; and no amendment to Plan provisions specifying the eligibility provisions or the formula for determining the amount, price and timing of shares to be issued shall be made more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder. 2 EX-14.1 4 a4805071ex141.txt EXHIBIT 14.1 Exhibit 14.1 ------------ COMPETITIVE TECHNOLOGIES, INC. Corporate Code of Conduct January 2005 - -------------------------------------------------------------------------------- COMPETITIVE TECHNOLOGIES, INC. Corporate Code of Conduct - -------------------------------------------------------------------------------- Dear Colleague: The financial success and value to society of Competitive Technologies, Inc. (the "Company" or "CTT"), as well as the respect it earns, depend not only on the Company's financial performance, but also on the principles under which the directors, officers and employees of the Company conduct its business. Pride in our Company must be based both on what we accomplish and how we accomplish it. CTT's Corporate Code of Conduct (the "Code") reflects the philosophy that our integrity and the manner in which we do business are essential to our success. The Code is designed to give a broad and clear understanding of the conduct that is expected of all of our employees, officers and directors, and goes beyond the letter of the law. Where possible, specific guidance is provided; however, there will almost certainly be situations where specific guidance is not provided by the Code. An equally important source of guidance therefore must be each individual's good judgment, sensitivity to what is right, and strong desire to do nothing that might bring discredit upon the individual or the Company. What you read in the Code probably will not surprise you, because the overriding theme of the Code can be summed up as follows: representatives of CTT must at all times, and in all matters, act with integrity and honesty. John B. Nano President and Chief Executive Officer Persons Covered by the Code. The Code applies to all of the officers, employees and directors of CTT and its subsidiaries, and all such persons must read this Code and be familiar with its contents and requirements. Unless the context requires otherwise, words in the Code such as "you" or "your" or "employees" or "personnel" refer to all officers, employees and directors of CTT and its subsidiaries. This Code is intended to provide sufficient guidance to enable CTT's personnel to conduct the Company's business with the utmost integrity. The Code does not, however, confer on any party other than the Company any additional rights or remedies, and it is not a contract, express or implied, guaranteeing employment for any specific duration or guaranteeing any specific terms or conditions of employment. The policies stated in the Code may be changed, suspended or cancelled at any time in the sole discretion of the Company. Some Highlights of the Code. o Employees must follow the law at all times, wherever they are. o Employees must avoid conflicts of interest. Be aware of appearances. o Financial records - both for internal activities and external transactions - must be timely and accurate. o Company assets - including computers, materials, and work time - must not be used for personal benefit. o Customers and suppliers must be dealt with fairly and at arm's length. o Employees must never attempt to bribe or improperly influence a government official or anyone else. o Employees must safeguard the Company's confidential information. o Violations of the Code include asking other employees to violate the Code, not reporting a Code violation, or failing to cooperate in a Code investigation. o Violating the Code will result in discipline. Discipline will vary depending on the circumstances of the particular violation and may include, among other things, a letter of reprimand, demotion, decrease in pay, loss of bonus or stock options, suspension, or even termination of employment. o If you have questions about the Code or any situation that may be covered by Code, always ask for guidance! Comply With The Law. Always follow and fully comply with all applicable laws, rules and regulations, and with this Code, wherever you are and in all circumstances that may arise during your employment with the Company. Your obligation to comply with all pertinent laws, rules and regulations applies whether or not the conduct or situation at issue is specifically described in or covered by this Code. You Are Accountable. It is your responsibility to read and understand this Code. You must comply with this Code in both letter and spirit. Ignorance of the Code will not excuse you from its requirements. You have an obligation to raise any concerns about possible violations of the Code. This includes situations where a manager or colleague, or anyone outside the Company, asks you to do anything that violates the Code. You also have an obligation to cooperate with any investigation by the Company concerning a possible violation of the Code. It is every employee's responsibility to actively ensure that his/her conduct, as well as the conduct of the other employees of the Company, complies with the Code. If you violate any provision of this Code, you will be subject to disciplinary action. Such disciplinary action is in the sole discretion of the Company and may include, but may not be limited to, reprimand, suspension, demotion, reduction or loss of pay or other compensation, or termination of employment. If you are uncertain about whether any conduct is in violation of the Code, you should ask for guidance from your supervisor or the Corporate Compliance Officer. Company Records. The Company must maintain accurate records and accounts in order to ensure that the Company's activities are properly managed and are conducted both legally and ethically. All Company personnel must therefore do everything that is reasonably possible, consistent with their job duties, to ensure that the Company's financial and other records, the Company's public disclosures, and all documents and reports filed with the Securities Exchange Commission or any other regulatory authority, are fair, accurate and timely, and are in compliance with all applicable laws and truthfully reflect the actual results of the Company's operations. All business or other transactions must be reported in such manner as is necessary to permit the preparation of accurate financial and other records, consistent with accepted principles of internal control, and prevent any fraudulent conduct. Avoid Conflicts of Interest and the Appearance of Conflicts of Interest. The Company realizes that you may take part in legitimate financial, business and other activities outside of your job with the Company. However, you owe a duty of undivided loyalty to the Company, and therefore your personal activities and relationships must not conflict, or appear to conflict, with the interests of the Company. Keep in mind that the Code cannot address every potential conflict of interest, so you must use your common sense. If you are unsure whether or not a situation creates a conflict of interest or the appearance of a conflict of interest, either avoid the situation or seek written approval of the situation from the Company's Corporate Compliance Officer or President. If a conflict of interest arises, the nature of the conflict should be fully disclosed and discussed with the Company's Corporate Compliance Officer or President. Where a conflict of interest prohibits you from engaging in a specified activity or transaction, the same prohibition may extend to your family, including your extended family. The following are some examples of situations that may involve conflicts of interest: Financial Interests and Relationships. You should not knowingly have an investment or financial interest in, or have any financial relationship or management or advisory position with, a supplier, customer, or current or potential competitor of the Company, except: >> You may own 1% or less of the stock of a supplier, customer, current or potential competitor unless ownership of the stock places you in a position to control or influence the issuer's actions. However, if you or your family has an investment or interest in a small organization doing business with the Company, a conflict of interest is likely. >> Customary transactions conducted on standard commercially available terms, such as a home mortgage or bank loan, are permissible. >> Transactions or relationships disclosed in writing to the Company's Corporate Compliance Officer and approved in writing are permissible. Outside Employment or Consulting. All employees are expected to devote their entire working time to the performance of their duties for the Company. Employees should therefore avoid outside business or consulting activities that could divert their time, interest or talents from Company business. Employees may only engage in non-Company employment or consulting activities when such activities are approved in advance, in writing, by the President of the Company. Outside Directorships. The director of a corporation has access to sensitive information and charts the course of the corporation. When Company personnel are invited to play that role for an outside organization, the Company must take steps to shield both the individual and the Company from even the appearance of impropriety. For that reason, except with respect to an individual serving at the Company's request as a director of a company in which the Company has an investment interest, Company personnel may not serve as directors of any other commercial enterprise unless such service is approved in advance in writing by the Company's President or the Board of Directors. Gifts and Entertainment. To avoid both the reality and the appearance of any improper business relations, you should neither give to nor accept from suppliers, customers or competitors, any gifts, hospitality or entertainment that could be considered lavish or excessive. Gifts, hospitality and entertainment of reasonable value are permissible so long as they are within the customary reciprocal courtesies between the Company's personnel and their business associates, they are made to promote general business goodwill, and they are fully reported to and approved by the Company. Related Party Transactions. Without prior approval by both a majority of the Company's Board of Directors and a majority of the Company's disinterested directors who are not employees of the Company, no sale or purchase of property, supplies or services shall be made by the Company to or from any director or officer of the Company, members of a director's or officer's family, or entities in which any of these persons is a director, officer or owner of 5% or more of that entity's equity interests. Corporate Opportunities. Part of your duty of loyalty to the Company requires that you offer to the Company all opportunities of which you become aware that are related to the Company's business. Therefore, if you become aware of a business opportunity related to the Company's business, you must report it to the Company. You may not personally take advantage of any opportunity that is related to the Company's business unless you have reported it to the Company and the Company's President has given you written permission to pursue the opportunity in lieu of the Company. Proper Use of Company Assets. Company assets are meant for Company and not personal use. Company assets include your time at work and work product, as well as the Company's equipment, computers and software, company information, and trademarks and name. Directors, officers and employees may not utilize the services of Company personnel or utilize Company assets for their own personal benefit or the personal benefit of anyone outside the Company absent prior written approval by the Corporate Compliance Officer or the Company's President. Common sense should be exercised. For example, an occasional personal phone call from the workplace is inevitable and is not prohibited, while substantial personal phone calls represent a misuse of Company assets and are prohibited. In sum, you must recognize that that misuse or misappropriation of Company assets may be considered theft, is a violation of the Code, and can result in termination or employment or even criminal prosecution. Prohibited Payments. Bribes, kickbacks or other improper payments, whether made to governmental officials or to anyone in the private sector, have no place in the Company's business and are strictly prohibited. This prohibition covers both direct payments and indirect payments, such as those made through a consultant or other third party or by reimbursement of Company personnel for payments made personally by them. Furthermore, the Company's directors, officers and employees shall not directly or indirectly accept any bribes, kickbacks or other improper payments. Political Contributions. No Company contributions may be made to support the campaign of any candidate seeking political office or the activities of any political party except as permitted under U.S. law. Contributions include things such as direct payments, purchase of tickets to fund-raising events, and provision of Company-paid employees, facilities, equipment, transportation or other services to a candidate seeking political office or to political committees. Corporate political contributions may be made only upon receipt of written authorization by the Company's Corporate Compliance Officer or President that such contributions are permitted under applicable U.S. law. Computer and Electronic Communications. The Company provides computers and related equipment and software for use in conducting the business of the Company. The Company's computer system (which includes all of the software as well as all of the computers or other hardware comprising the computer system), and all information transmitted, received or stored on the Company's computer system, are the property of the Company. The computer system is to be used for purposes related to the Company's business, and should not be used for personal use other than infrequent and incidental use of non-business e-mail that does not interfere with the efficient use of the computer system for Company business. The Company reserves the right to monitor the use of its computer system and other equipment to ensure appropriate use. Such monitoring may include the periodic review of documents that are created, transmitted, or received on the computer system; the tracking and identification of Internet websites contacted; and the monitoring of voice or facsimile communications. Employees do not have any personal privacy right with respect to the use, transmittal, receipt or storage of information in the Company's computer system or any other Company equipment. All passwords or other methods of limiting access to information on the Company's computer system or other equipment must be disclosed to the Company (the Company will designate the person who is responsible for maintaining the files containing all such passwords or other access codes). Employees may not read or access another employee's e-mail, voicemail, or computer or other files without the prior approval of an authorized Company officer. There are high risks associated with improper use of computer equipment and software. Therefore only Company personnel are allowed to use the Company's computer system unless prior approval is obtained from an authorized Company officer allowing use by someone outside the Company. Information from the Company's computer system may only be disclosed to authorized persons. The Company has installed a variety of security mechanisms, including firewalls, to optimize the safety and security of the Company's computer system. Anyone who attempts to disable, defeat, circumvent, or subvert any Company security device will be subject to disciplinary action, which may include immediate dismissal. Only software authorized and properly licensed by the Company may be stored or used on a Company computer. With the increasing risk posed by computer viruses, it is mandatory that unauthorized software not be stored or run on a Company computer. Any unauthorized software that is found on a Company computer will be removed, and is a serious transgression. In addition, software on the Company's computers may not be altered without advance written approval by the Company. Software and applications developed by employees, as well as reports and documents prepared by them in the course of their work for the Company or using the Company's software and equipment, are the property of the Company. Any employee whose employment with the Company terminates for any reason must return to the Company all software, forms, and other documents or property of the Company. Any files received from others outside the Company, whether attached to e-mail or on a transportable disk, must be checked for viruses. Anti-virus software is part of the standard package on all Company computers. You are responsible for updating virus definitions and scanning all files on the Company computer you use regularly. Please pay attention to all Company notices regarding viruses. All communications that are made using the Company's computer system or other equipment, such as telephones and facsimile machines, should be carried out in a professional manner. Any e-mail or other communication disseminated in a public forum should be treated with the same care and consideration as a letter sent on Company letterhead that may be discoverable by an opponent in litigation. Any communication should be consistent with the Company's business practices and confidentiality policies, must not disclose any trade secrets or intellectual property, may not violate anyone's rights in any way (such as, for example, defamation or harassment), and should be treated as if it is a communication with the media. Company personnel may not use Company equipment or time to access web sites containing "inappropriate" content (such as adult or pornographic web sites, gambling sites, or web sites with pirated software). The Company's computer and other equipment may not be knowingly used to transmit viruses and similar harmful code, conduct denial of service attacks, violate any other system's acceptable use policy, or violate the law. Anyone violating this policy will be subject to disciplinary action, up to and including termination of employment. Staff members with supervisory responsibilities must ensure that individuals under their supervision are aware of their responsibilities under this policy. If you have any question as to whether any anticipated use of the Company's computer system or other equipment is permissible, check with your manager before engaging in any such use. Insider Trading. In the course of your employment or association with the Company, you may become aware of non-public material information relating to the Company. Securities laws prohibit persons from trading securities on the basis of non-public material information. This is commonly referred to as insider trading, and all directors, officers and employees of the Company are prohibited from engaging in insider trading. The Company has a long-standing commitment to comply with all applicable federal and state securities laws and regulations, and insists that all of its directors, officers and employees - no matter what their positions - fully comply with such laws and regulations. Material non-public information includes any information that an investor might consider important in deciding whether to buy, sell, or hold securities that has not been disclosed to the public. Examples of material non-public information may include things such as financial results and forecasts; new product developments; obtaining or losing important contracts; changes in the rates or estimated rates of sales, earnings or dividends; changes in auditors; stock splits or reverse splits; possible mergers, acquisitions, joint ventures, tender offers or major purchases or sales of securities or assets; major management changes or change in control of the Company; major changes in business direction; sales or purchases by the Company of its own securities; and major litigation developments. Such information can be favorable or unfavorable. Getting a major new contract or customer, and losing a major contract or customer, can both be material non-public information. Information is considered non-public unless is has been disclosed to the public. Examples of effective disclosure include public filings with securities regulatory authorities and issuance of Company press releases. The information must not only be publicly disclosed; there must also be adequate time for the market as a whole to digest the information. If you become aware of material non-public information relating to the Company, you may not buy or sell shares or other securities of the Company until that information has been disclosed to the public and there has been an adequate opportunity for the information to be absorbed by the market. Similarly, if you obtain material non-public information about another company, such as a supplier or a customer, or if you learn that the Company is planning a major transaction with another company (such as a take-over), you must not trade in the securities of the other company until that information has been disclosed to the public and there has been an adequate opportunity for the information to be absorbed by the market. Equally important, you must not disclose or give "tips" about material non-public information to relatives or friends - or to anyone else - which would enable the receiver of the tip to profit from that information through securities trading. Furthermore, do not discuss such information in elevators, restaurants or other public places. It is particularly dangerous to trade immediately before the Company announces quarterly sales and earnings results. Therefore, it is Company policy that directors, officers or employees of the Company may not trade in the Company's stock during the period from the end of any fiscal quarter (October 31, January 31, April 30 and July 31) until at least one business day has elapsed following the release for publication of quarterly or annual statements of sales and earnings. Even after that publication, however, you must not trade if you are aware of material information that has not yet been disclosed. However, you can trade if the purchase or sale is made pursuant to a contract, instruction, or plan in full compliance with SEC Rule 10b 5-1. Any director, officer or employee of the Company who establishes an arrangement under Rule 10b 5-1 should promptly deliver a written copy of the arrangement to the Corporate Compliance Officer. The Company will be free, in its discretion, to make those arrangements public. If you have a question regarding the trading of securities or whether certain information is material or has been adequately disclosed to the public, you should contact the Corporate Compliance Officer, and abstain from trading in the Company's securities or disclosing information to people outside the Company until you have been informed that such trading is permissible, or that the information is not material or has been publicly disclosed. This policy is not designed to restrict the freedom of employees, officers or directors to make appropriate personal investments. Nevertheless, insider trading is a serious matter, it is illegal and can result in criminal as well as civil penalties, and it is prohibited by the Company. Antitrust Laws. All applicable antitrust laws must be observed. For example, directors, officers or employees must refrain from discussions, agreements or understandings with any party with respect to any matter which could be construed as price fixing or stabilization, bid-rigging, limits on service or allocation of services, customers or territories. Relationships with Government Entities and Officials. The Company's relationships and contacts with government entities and officials must be completely proper. Company directors, officers and employees must scrupulously avoid any dealings with government entities or officials that are improper or that might be construed to be improper in any way. Confidential Information. One of the Company's most important assets is its confidential information and the confidential information licensed or otherwise entrusted to it by others. The Company's legal obligations and its competitive position often mandate that this information remains confidential. It is your obligation to safeguard both the Company's confidential information and the confidential information licensed or otherwise entrusted to the Company by others. You may not disclose or share such confidential information with anyone outside the Company unless it is necessary and authorized as part of your job responsibilities. Confidential information generally falls into two categories. The first category encompasses confidential information that is intended for internal use at the Company only. This information typically relates to things such as the Company's operations, customer lists, pricing policies, and trade secrets (confidential information used in the course of business to give the Company a competitive advantage). It also often relates to technology owned by third parties and licensed, marketed or otherwise used by the Company in providing technology evaluation and management services to corporations, government agencies, universities, or others. This category of confidential information belongs to the Company or is entrusted to the Company on a confidential basis, and the Company endeavors to keep such information confidential indefinitely. You are likewise obligated to do so. The second category, by contrast, involves confidential corporate information that the Company routinely discloses at some point to the investing public. This information often gauges the Company's financial performance (for example, quarterly financial results of the Company's operations), or identifies events that have or may have a significant or material impact on the value of the Company's securities. As outlined in the section of this Code entitled "Insider Trading," premature use or disclosure of such information may expose the individual involved to onerous civil and criminal penalties. Confidential information in either category must not be disclosed by directors, officers or employees to anyone outside the Company, except as authorized for a legitimate Company business purpose (such as contacts with the Company's accountants or lawyers, or in connection with a business transaction in which such disclosure is appropriate and authorized). Even within the Company, confidential information should be discussed only with those who have a need to know the information. A director's, officer's or employee's obligation to safeguard confidential information continues even after his or her association with the Company has ended. Any unauthorized disclosure of confidential information to others outside the Company, including to family and friends, is a violation of this Code and may violate the law. Dissemination of Information About the Company. The Company's communications with the public must be accurate. Only the President, and persons specifically designated by the President, are authorized to issue press releases, speak with shareholders and securities analysts, or otherwise similarly communicate with the public or others on behalf of the Company. Frequently, dissemination of information about the Company is made through press releases, reports to shareholders, reports filed with government agencies, and other Company communications. Any unauthorized dissemination of certain information may cause injury to individuals or to the business interests of the Company. Further, directors, officers and employees expressing personal opinions on subjects related to Company business should avoid giving the impression that they are speaking on behalf of the Company. Employees may have written agreements with the Company concerning the confidentiality of certain proprietary information. However, every Company director, officer and employee - whether or not he or she has a written agreement with the Company - has the obligation to insure that any information they have concerning the Company's business, finances and personnel is handled professionally, with discretion, and disseminated only as authorized through the appropriate channels. All advertising and promotional activities must also be conducted in a manner consistent with scrupulous business ethics and applicable legal requirements. Authority to Sign Contracts and Incur Obligations. Only the Company's President or an officer specifically designated by the President or the Board of Directors can sign contracts or otherwise incur obligations on behalf of the Company involving amounts in excess of $10,000. Any such designation by the President must be as to a specific transaction or matter, and not a blanket grant of authority. Absent a specific designation or approval of the Board of Directors or the President, an officer or other employee of the Company is only authorized to sign contracts or otherwise incur obligations on behalf of the Company that are normally within the scope of that officer's or employee's job duties, are entered into in the ordinary course of business and involve amounts not greater than $10,000 in the aggregate. Procedures for Requesting and Granting Exceptions to the Code of Conduct. Situations could arise that may warrant an exception to strict application of the Code. Examples of such situations might include, but are not limited to, cases of particular personal hardship, or other circumstances where the nature of the transaction or conduct at issue may properly require or permit different treatment. Requests for exemptions from strict application of the Code must be submitted in writing to the Corporate Compliance Officer using a copy of the "Exemption Request Form" that is appended to the Code. Any exemption request must describe in detail all pertinent information regarding the proposed transaction or conduct for which the exemption is requested so that an informed decision may be made regarding the exemption request. In emergency situations, a request may be made orally and subsequently confirmed in writing. In the case of a member of the Board of Directors or an officer, only the President of the Company may authorize an exception or special handling. The necessary approvals for an exemption are required to be obtained in advance of an action requiring an exemption. Penalties for Violations. If you violate any provision of this Code, if you violate any applicable law, rule or regulation, you will be subject to disciplinary action. Such disciplinary action is in the sole discretion of the Company and may include, but may not be limited to, reprimand, suspension, demotion, reduction or loss of pay or other compensation, or termination of your employment or association with the Company. Reporting Violations. You are required to report violations or suspected violations of the Code. This reporting obligation includes situations where a manager or colleague, or someone outside the Company, asks you to violate the Code. You must promptly report possible violations or suspected violations of the Code, and you can do so in the following two ways: 1. You may submit your report to Paul Levitsky, the Corporate Compliance Officer, by (Tel. No. (203) 255-6044; or, via e-mail at plevitsky@competitivetech.net). The Corporate Compliance Officer is primarily responsible for ensuring that this Code governs the activities of all Company personnel, and for handling and investigating reports of violations of the Code. If appropriate, you should contact your immediate supervisor at the same time you contact the Corporate Compliance Officer. 2. You may submit your report to the Chair of the Audit Committee of CTT's Board of Directors at the following address: Audit Committee Chair c/o Corporate Secretary Competitive Technologies, Inc. 1960 Bronson Road Fairfield, CT 06824 With respect to financial or other SEC mandated disclosures only, you may make an anonymous report of concerns regarding possible violations of the Code by calling the CTT Compliance Line Hotline (Tel. No. (800) 560-6987). If you file a report anonymously, your report must contain as much specific information as possible in order for the persons investigating to adequately assess the situation and remedy any possible violations. Managers have important responsibilities under the Code. Managers must understand the Code, seek guidance when necessary, and report suspected Code violations. If a manager knows that an employee is contemplating a prohibited action and does nothing, the manager will be responsible along with the employee. All reports of violations or suspected violations of the Code will be investigated. In the course of the Company's investigation of reports of violations or suspected violations of the Code, the Company will, to the extent permitted by law, make reasonable and appropriate efforts to maintain the confidentiality of the investigation and the confidentiality of the identity of the reporting employee, but such confidentiality cannot be guaranteed. Compliance with the Law and Policy of Non-Retaliation. It is the Company's objective that its business at all times be conducted in compliance the Code and all applicable laws and regulatory requirements. Accordingly, the Company prohibits any form of retaliation against an employee (or any other person) for filing a bona fide and truthful report of a violation or suspected violation of the Company's Code or any law, rule or regulation, or for assisting or participating in the investigation of any report of a violation or suspected violation of the Company's Code or any law, rule or regulation. For example, the Company prohibits any retaliation against an employee, such as disciplinary action or termination of employment, for: o disclosing information to a government or law enforcement agency, or a representative of the Company, when the employee has a good faith and reasonable belief that the information demonstrates a violation or possible violation of a federal or state law, regulation, or rule; o providing information, filing, testifying, or participating in a proceeding filed or about to be filed, or otherwise assisting in an investigation or proceeding regarding, any conduct that the employee reasonably and in good faith believes involves a violation or possible violation of any federal or state law, regulation, or rule; or o providing information to the Company's representatives or other persons when the employee has a good faith and reasonable belief that the information discloses a violation or possible violation of the Company's Code. If any employee believes he or she has been subjected to any retaliation by the Company or any of its agents for reporting suspected misconduct in accordance with this policy, he or she may file a complaint in accordance with the procedures set forth above in this Code in the section entitled "Reporting Violations." Retaliation by any director, officer, employee or agent of the Company against any individual who seeks advice, raises a concern, or reports any violation or suspected violation of any law, rule or regulation, or of the Code, is strictly prohibited and will not be tolerated. The Company will take action against any individual who engages in any retaliatory conduct in violation of this policy, and such action may include, if appropriate, termination of employment. However, this policy of non-retaliation is not intended to protect a person who is involved in wrongdoing about which he or she is making a report, or to protect any person who intentionally makes a false report. Private Communications with the Audit Committee of the Board of Directors. The Audit Committee of the Company's Board of Directors has determined that it will meet privately at least annually with the Company's internal accountants. Any employee may communicate privately with any member of the Audit Committee or its Chairperson on any matter the employee believes should be discussed privately. Any such communications may be by telephone or by private letter. As of November 16, 2004, the members of the Audit Committee are: John M. Sabin, Chairman 14709 Lancraft Court Darnestown, MD 20874 (301) 519-8150 George W. Dunbar, Jr. 109 Via Santa Maria Los Gatos, CA 95030-6333 (408) 356-7955 Charles J. Philippin 45 Clearwater Avenue Massapequa, NY 11758 (516) 795-1387 Implementation of the Corporate Code of Conduct. When an individual commences employment with the Company, and when a director is elected, a copy of this Code will be furnished to such individual. Within ten (10) days of his or her receipt of a copy of this Code, the individual must review the Code and return to the Corporate Compliance Officer a properly completed and signed Acknowledgment of Receipt in the form appended to this Code. Each director, officer and employee of the Company must report, as provided in the section of this Code entitled "Reporting Violations" and within ten (10) days of becoming aware of such conduct, any conduct which the individual reasonably believes constitutes a violation or suspected violation of the Company's Code or any applicable law, rule or regulation. Competitive Technologies, Inc. Corporate Code of Conduct Noncompliance Report Form To: From: Date: Re: After reviewing the Corporate Code of Conduct (Revised: January 2005) of Competitive Technologies, Inc. (the "Code"), I believe that there has been noncompliance with the Code as described below (the description should include at a minimum the nature of the noncompliance; the names of the parties involved; and whether an exemption to the Code of Conduct is also being requested (if an exemption is being requested, also attach the Exemption Request Form)). Please use additional sheets, if necessary. - ------------------------------------------- ------------------------- Signature Date Competitive Technologies, Inc. Corporate Code of Conduct Exemption Request Form To: Corporate Compliance Officer From: Date: Re: Exemption Request Concerning Corporate Code of Conduct I am requesting an exemption from the Corporate Code of Conduct (Revised: January 2005) of Competitive Technologies, Inc. (the "Code") in connection with the matter described below (the description should include at a minimum the purpose and proposed date of the action; the names of the parties involved; and the consequences of not receiving approval for the exception). Please use additional sheets, if necessary. - ------------------------------------------- ------------------------- Signature Date Competitive Technologies, Inc. Corporate Code of Conduct Acknowledgment of Receipt To: Corporate Compliance Officer Re: Corporate Code of Conduct I hereby confirm that I have received a copy of the Corporate Code of Conduct (Rev. 010405) of Competitive Technologies, Inc. (the "Code"). I further confirm that I have read the Code; that I understand the Code; and that I will comply with the Code at all times during my employment or association with Competitive Technologies, Inc. Dated:_____________ ___________________________________ Signature Name:______________________________ (please print) -----END PRIVACY-ENHANCED MESSAGE-----