SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of
the Securities Exchange Act of 1934
Check the appropriate box:
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COMPETITIVE COMPANIES, INC.
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(Name of Registrant As Specified In Its Charter)
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COMPETITIVE COMPANIES, INC.
19206 HUEBNER ROAD, SUITE 202
SAN ANTONIO, TEXAS 78258
NOTICE OF ACTION TO BE TAKEN BY
THE SHAREHOLDERS
AUGUST 21, 2013
To The Shareholders of Competitive Companies, Inc.
William H. Gray, an individual and the Chief Executive Officer of
Competitive Companies, Inc., a Nevada corporation (also referred to as the
"Company"), Lawrence Griffith, an individual and a director of Competitive
Companies, Inc., Tina Bagley, an individual, Angus Davis, an individual, and
Robert Merola, an individual (collectively, the "Majority Shareholders") are
entitled to vote a total of 26,234,858 shares of common stock and 100,000 shares
of Series D Preferred Stock (with 51% of the votes), or approximately 57.55% of
the total votes of the issued and outstanding voting stock of the Company. The
Majority Shareholders intend to adopt a resolution by written consent in lieu of
a meeting pursuant to the General Corporation Law of the State of Nevada in
order to ratify the adoption of the 2012 Stock Incentive Plan for the directors,
officers, employees and key consultants of Competitive Companies, Inc.,
effective October 10, 2012, as amended.
William H. Gray, Chief Executive Officer
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WE ARE NOT ASKING YOU FOR A CONSENT OR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
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COMPETITIVE COMPANIES, INC.
19206 HUEBNER ROAD, SUITE 202
SAN ANTONIO, TEXAS 78258
AUGUST 21, 2013
SHAREHOLDERS ACTION
The Majority Shareholders submitted their consent to the shareholder
resolutions described in this Information Statement on or about August 19, 2013
to be effective upon satisfaction by Competitive Companies, Inc. of all
applicable filing and notification requirements of the Securities and Exchange
Commission. As of August 19, 2013, the Majority Shareholders were entitled to
vote of record a total of 26,234,858 shares of our common stock, par value
$0.001 per share, and 100,000 shares of our preferred stock, par value $0.001
per share (with 51% of the total outstanding votes), or approximately 57.55% of
the total votes of the issued and outstanding voting stock of Competitive
Companies, Inc. The remaining outstanding shares of our common stock are held of
record by approximately 676 other shareholders, not including shares held in
"street name" in brokerage accounts which is unknown.
The Majority Shareholders are William H. Gray, our Chairman and Chief
Executive Officer, as an individual, Lawrence Griffith, a director of
Competitive Companies, Inc., as an individual, and Tina Bagley as an individual,
Angus Davis as an individual, and Robert Merola as an individual, who are
employees of the Company.
Holders of the common stock of record as of August 20, 2013 are
entitled to submit their consent to the shareholder resolutions described in
this information statement, although no shareholder consents other than those of
the Majority Shareholders are required to be submitted in order for the
resolution to be adopted.
We are not soliciting consents or proxies and shareholders have no
obligation to submit either of them. Whether or not shareholders submit consents
should not affect their rights as shareholders or the prospects of the proposed
shareholder resolutions being adopted. The Majority Shareholders have consented
to all of the shareholder resolutions described in this information statement.
Other shareholders who desire to submit their consents must do so by August 20,
2013 and once submitted will not be revocable. The affirmative vote of the
holders of a majority of the outstanding preferred and common voting stock of
Competitive Companies, Inc. is required to adopt the resolutions described in
this information statement. Nevada law does not require that the proposed
transactions be approved by a majority of the disinterested shareholders. A
total of 335,621,533 shares of common stock will be entitled to vote on our
proposed transactions described in this information statement.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY.
-1-
THE COMPANY AND THE TRANSACTIONS
PROPOSED SHAREHOLDER ACTION
Our executive offices are located at 19206 Huebner Road, Suite 202, San
Antonio, Texas 78258, and our telephone number is (210) 233-8980. As described
in the accompanying NOTICE OF ACTION TO BE TAKEN BY THE SHAREHOLDERS, we propose
to ratify the adoption of the 2012 Stock Incentive Plan for the directors,
officers, employees and key consultants of Competitive Companies, Inc.,
effective October 10, 2012, as amended.
2012 STOCK INCENTIVE PLAN FOR THE DIRECTORS, OFFICERS, EMPLOYEES AND
KEY CONSULTANTS OF COMPETITIVE COMPANIES, INC. Our board of directors voted
unanimously to adopt the 2012 Stock Incentive Plan for the directors, officers,
employees and key consultants of Competitive Companies, Inc., effective on
October 10, 2012 (the "Plan"). Our board believes that the adoption of the Plan
will be critical to us attracting, retaining, and motivating employees and other
eligible persons.
A summary of the principal provisions of the Plan are set forth in the
following paragraphs. The summary is not necessarily complete, and reference is
made to the full text of the Plan attached as Exhibit A to this information
statement. Capitalized terms used, but not defined herein, have the same meaning
as set forth in the Plan.
TYPES OF AWARDS. The Plan allows any of the following types of awards,
to be granted alone or in tandem with other awards:
STOCK OPTIONS. Stock options granted under the Plan may be either
incentive stock options ("ISOs"), which are intended to satisfy the requirements
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
nonstatutory stock options ("NSOs"), which are not intended to meet those
requirements. Award agreements for stock options may include rules for exercise
of the stock options after termination of service. Options may not be exercised
unless they are vested, and no option may be exercised after the end of the term
set forth in the award agreement.
STOCK APPRECIATION RIGHTS. A stock appreciation right entitles the
grantee to receive, with respect to a specified number of shares of common
stock, any increase in the value of the shares from the date the award is
granted to the date the right is exercised. Under the Plan, all stock
appreciation rights must be settled in common stock except as provided by the
Committee. Award agreements for stock appreciation rights may include rules for
exercise of the stock appreciation rights after termination of service.
STOCK AWARDS AND RESTRICTED STOCK. A stock award consists of the
transfer by us to a grantee of shares of our common stock, without other payment
for it, as additional compensation for services to us. Restricted stock is
common stock that is subject to restrictions, including a prohibition against
transfer and a substantial risk of forfeiture, until the end of a "restricted
period" during which the grantee must satisfy certain vesting conditions. If the
grantee does not satisfy the vesting conditions by the end of the restricted
period, the restricted stock is forfeited or will be repurchased by us at the
lower of the stock's fair market value or its issuance price if the restricted
stock was originally purchased by the grantee. During the restricted period, the
holder of restricted stock has the rights and privileges of a regular
stockholder, except that the restrictions set forth in the applicable award
agreement apply.
PERFORMANCE SHARES. A performance share consists of an award of common
stock to a participant based upon the achievement of performance objectives
determined by the Committee.
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ADMINISTRATION. The Plan will be administered by our board of directors
and our compensation committee ("Committee"), once a Committee is formed. The
Committee will at all times be composed of not less than two members of the
board of directors who are not our employees or consultants. The Plan gives the
Committee discretion, subject in certain cases to approval of our full board of
directors, to make awards under the Plan, to set the terms of award agreements
(including the type and amount of any award), to establish rules for the
interpretation and administration of the Plan, and to make other determinations
and take other actions consistent with the terms and purposes of the Plan. Until
the Committee is formed, the full board of directors will perform its functions.
ELIGIBILITY. Any officer, employee, or director of, or consultant or
other independent contractor for us or any of our subsidiaries will be eligible
to receive awards under the Plan.
SHARES AVAILABLE FOR AWARDS. The Plan authorizes 25,000,000 shares of
our common stock to be reserved for awards under the Plan. In addition, on each
anniversary of the Plan's effective date on or before the fifth anniversary of
the effective date of the Plan (i.e., October 10, 2012), the aggregate number of
shares of our common stock available for issuance under the Plan will be
increased by the lesser of (a) 5% of the total number of shares of our common
stock authorized but not issued under the Plan as of the December 31 immediately
preceding the anniversary of the effective date of the Plan, (b) 200,000 shares,
or (c) a lesser number of shares of our common stock as our board, in its sole
discretion, determines. In general, shares reserved for awards that lapse or are
cancelled will be added back to the pool of shares available for awards under
the Plan. In any year, an eligible employee, consultant, or director may receive
awards with respect to no more than 10,000,000 shares. If an award is to be
settled in a medium other than common stock, the number of shares on which the
award is based will count toward the limit. In response to certain extraordinary
events (such as merger, exchange, reorganization, or liquidation), the Committee
may provide for cash payments or award substitutions to reflect consideration
received by stockholders.
VESTING AND PERFORMANCE OBJECTIVES. Awards under the Plan are
forfeitable until they become vested. An award will become vested only if the
vesting conditions set forth in the award agreement (as determined by the
Committee) are satisfied. The vesting conditions may include performance of
services for a specified period, achievement of performance objectives, or a
combination of both criteria. Performance objectives selected by the Committee
as vesting conditions will be based on one or more of the following performance
measures: net earnings or net income (before or after taxes); earnings per
share; net sales or revenue growth; net operating profit; return measures
(including, but not limited to, return on assets, capital, equity, sales, or
revenue); cash flow (including, but not limited to, operating cash flow, free
cash flow, cash flow return on equity, and cash flow return on investment);
earnings before or after taxes, interest, depreciation, and/or amortization;
gross or operating margins; productivity ratios; share price (including, but not
limited to, growth measures and total shareholder return); expense targets;
margins; operating efficiency; market share; working capital targets; cash value
added; economic value added; market penetration; and product introductions, in
each case determined in accordance with generally accepted accounting principles
(subject to modifications approved by the Committee) consistently applied on a
business unit, division, subsidiary or consolidated basis or any combination of
those levels.
CHANGE IN CONTROL. Any stock option or restricted stock award granted
to any participant under the Plan that would have become vested upon continued
employment by the grantee will immediately vest in full and become exercisable
upon a change in control as that term is defined in the Plan.
NONTRANSFERABILITY. In general, awards under the Plan may not be
assigned or transferred except by will or the laws of descent and distribution.
The Committee may, however, allow the transfer of NSOs to members of a Plan
participant's immediate family or to a trust, partnership, or corporation in
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which the parties in interest are limited to the participant and members of the
participant's immediate family.
AMENDMENT AND TERMINATION. Our board of directors may amend, alter,
suspend, or terminate the Plan at any time. If necessary to comply with any
applicable law (including stock exchange rules), we will first obtain
stockholder approval. Amendments, alterations, suspensions, and termination of
the Plan generally may not impair a participant's (or a beneficiary's) rights
under an outstanding award. The rights may, however, be impaired if necessary to
comply with an applicable law or accounting principles (including a change in
the law or accounting principles) pursuant to a written agreement with the
participant.
DURATION. Unless it is terminated sooner, the Plan will terminate upon
the earlier of October 10, 2022 or the date all shares available for issuance
under the Plan have been issued and vested.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the names of our executive officers and
directors and all persons known by us to beneficially own 5% or more of the
issued and outstanding common stock of Competitive Companies, Inc. at August 9,
2013. Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage of ownership of that person,
shares of common stock subject to options held by that person that are currently
exercisable or become exercisable within 60 days of August 9, 2013 are deemed
outstanding even if they have not actually been exercised. Those shares,
however, are not deemed outstanding for the purpose of computing the percentage
ownership of any other person. The percentage ownership of each beneficial owner
is based on 335,621,533 outstanding shares of common stock as of August 9, 2013.
Except as otherwise listed below, the address of each person is c/o Competitive
Companies, Inc., 19206 Huebner Road, Suite 202, San Antonio, Texas 78258. Except
as indicated, each person listed below has sole voting and investment power with
respect to the shares set forth opposite such person's name as of August 9,
2013.
NAME, TITLE, AND ADDRESS NUMBER OF SHARES
OF STOCKHOLDER BENEFICIALLY OWNED (1) PERCENTAGE OWNERSHIP
----------------------------------- ---------------------- --------------------
William H. Gray, Chief Executive 6,234,858(2) 1.9%
Officer and Chairman
Lawrence Griffith, Director 500,000 *
All Current Directors and Executive 6,734,858(2) 2.0%
Officers as a Group (2 persons)
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*Indicate beneficial ownership of less than one percent.
(1) Except as pursuant to applicable community property laws, the persons
named in the table have sole voting and investment power with respect
to all shares of common stock beneficially owned. The total number of
issued and outstanding shares and the total number of shares owned by
each person does not include unexercised warrants and stock options,
and is calculated as of August 9, 2013.
(2) Does not include 100,000 shares of Series D Preferred Stock owned by
Mr. Gray, which have 51% of the outstanding votes of the Company but
are not convertible into shares of our common stock. Accordingly, Mr.
Gray controls approximately 52.9% of the outstanding votes.
-4-
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS. The following Compensation
Discussion and Analysis describes the material elements of compensation for our
executive officers identified in the Summary Compensation Table ("Named
Executive Officers"), and executive officers that we may hire in the future. See
"Executive Compensation-Executive Officer Compensation." As more fully described
below, our board of directors makes all decisions for the total direct
compensation of our executive officers, including the Named Executive Officers.
We do not have a compensation committee, so all decisions with respect to
management compensation are made by the whole board.
THE ELEMENTS OF OUR COMPENSATION PROGRAM
BASE SALARY. Executive officer base salaries are based on job
responsibilities and individual contribution. Our board of directors reviews the
base salaries of our executive officers, including our Named Executive Officers,
considering factors such as corporate progress toward achieving objectives
(without reference to any specific performance-related targets) and individual
performance experience and expertise. None of our Named Executive Officers have
employment agreements with us. Additional factors reviewed by our board of
directors in determining appropriate base salary levels and raises include
subjective factors related to corporate and individual performance. For the year
ended December 31, 2012, all executive officer base salary decisions were
approved by the board of directors.
Our board of directors determines base salaries for the Named Executive
Officers at the beginning of each fiscal year, and the board proposes new base
salary amounts, if appropriate, based on its evaluation of individual
performance and expected future contributions. We do not have a 401(k) Plan, but
if we adopt one in the future, base salary would be the only element of
compensation that would be used in determining the amount of contributions
permitted under the 401(k) Plan.
INCENTIVE COMPENSATION AWARDS. The Named Executives have been paid only
one bonus and our board of directors has not yet recommended a formal
compensation policy for the determination of bonuses. If our revenue grows and
bonuses become affordable and justifiable, we expect to use the following
parameters in justifying and quantifying bonuses for our Named Executive
Officers and other officers of Competitive Companies, Inc.: (1) the growth in
our revenue, (2) the growth in our earnings before interest, taxes, depreciation
and amortization, as adjusted ("EBITDA"), and (3) our stock price. The board has
not adopted specific performance goals and target bonus amounts, but may do so
in the future.
EQUITY INCENTIVE AWARDS. Effective October 10, 2012, our board of
directors adopted the Competitive Companies, Inc. 2012 Stock Incentive Plan
under which a total of 25,000,000 shares of our common stock have been reserved
for issuance as restricted stock or pursuant to the grant and exercise of stock
options. Our 2012 Stock Incentive Plan has been approved by the holders of a
majority of our outstanding shares, subject to the completion of our compliance
with applicable securities laws and regulations relating to notice and
disclosure. We believe equity incentive awards motivate our employees to work to
improve our business and stock price performance, thereby further linking the
interests of our senior management and our stockholders. The board considers
several factors in determining whether awards are granted to an executive
officer, including those previously described, as well as the executive's
position, his or her performance and responsibilities, and the amount of options
or other awards, if any, currently held by the officer and their vesting
schedule. Our policy prohibits backdating options or granting them
retroactively.
BENEFITS AND PREREQUISITES. At this stage of our business we have
limited benefits and no prerequisites for our employees other than health
insurance and vacation benefits that are generally comparable to those offered
by other small private and public companies or as may be required by applicable
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state employment laws. We do not have a 401(k) Plan or any other retirement plan
for our Named Executive Officers. We may adopt these plans and confer other
fringe benefits for our executive officers in the future.
SEPARATION AND CHANGE IN CONTROL ARRANGEMENTS. We do not have
employment agreements with our Named Executive Officers, but we do have
employment agreements with three of our employees. These three employees are
eligible for specific benefits and payments if their employment or engagement
terminates in a separation or if there is a change of control.
EXECUTIVE OFFICER COMPENSATION. The following table sets forth the
total compensation paid in all forms to the executive officers and directors of
Competitive Companies, Inc. during the periods indicated:
SUMMARY COMPENSATION TABLE
Stock All Other
Name and Principal Position Year Salary Awards (1) Compensation Total
----------------------------------- ---------- ------------ --------------- ------------------- --------------
William H. Gray (3) 2012 $ 120,000 $ -0- $ 39,734 $ 159,734
Chief Executive Officer and 2011 $ 94,034 $ -0- $ 6,000(2) $ 100,034
Chairman
Ray Powers (4) 2012 $ -0- $ -0- $ -0- $ -0-
Former President and Director 2011 $ 17,500 $ -0- $ 17,500 $ 17,500
Jerald Woods 2012 $ -0- $ -0- $ -0- $ -0-
Former Chief Executive Officer 2011 $ -0- $ -0- $ -0- $ -0-
------------------------------------
(1) Mr. Gray was ultimately issued 6,734,858 shares of common stock
pursuant to the acquisition of DiscoverNet, Inc. by the Company on
April 2, 2009. On February 11, 2012 there were 3,000,000 shares issued,
of which Mr. Gray subsequently exchanged 500,000 shares in a private
transaction. The remaining 3,734,858 shares were issued on June 30,
2012. The shares were not issued as compensation and no compensation
expense was recognized.
(2) Commencing August 1, 2012, Mr. Gray began to receive annual
compensation of $120,000 and an automobile allowance of $500 per month.
(3) Mr. Gray was appointed as Chief Executive Officer on February 10, 2009.
(4) Dr. Ray Powers was appointed President on February 10, 2009 and
resigned on August 15, 2011.
EMPLOYMENT AGREEMENTS. We have not entered into any employment
agreements with our Named Executive Officers to date, but we do have employment
agreements with three of our employees. We may enter into employment agreements
with our Named Executive Officers in the future.
OUTSTANDING EQUITY AWARDS. As of August 9, 2013, we have granted at
total of 3,000,000 stock options to three employees of Competitive Companies,
Inc., each of whom was granted 1,000,000 of them. These stock options were
granted on October 8, 2012 and vest over a period of two years from the date of
first vesting commencing in 2013. They are exercisable for a period of three
years from the date of first vesting, and are exercisable at an exercise price
of $0.01 per share. In addition to the 1,000,000 stock options each such
employee was granted, we issued a total of 5,000,000 shares of our common stock
to each of those employees in February 2013, as additional compensation for
services rendered. We have not granted any equity awards to our officers or
directors.
-6-
OPTION AWARDS
During the year ended December 31, 2012, we did not grant any stock
options or other equity awards to our officers or directors.
OPTION EXERCISES AND STOCK VESTED. None of our executive officers
exercised any stock options or acquired stock through vesting of an equity award
during the fiscal year ended December 31, 2012.
DIRECTOR COMPENSATION. As a result of having limited resources during
most of 2012, we did not provide compensation to our board of directors.
ADDITIONAL INFORMATION
Additional information regarding the Company, its business, its capital
stock, and its financial condition are included in the Company's Form 10-K
annual report and its Form 10-Q quarterly reports. Copies of the Company's Form
10-K for its fiscal year ending December 31, 2012 as well as the Company's Form
10-Q for the quarters ending March 31, 2013 and June 30, 2013 are available upon
request to: William H. Gray, Chief Executive Officer, Competitive Companies,
Inc., 19206 Huebner Road, Suite 202, San Antonio, Texas 78258.
OTHER MATTERS
The Board of Directors of the Company is not aware that any matter
other than those described in this Information Statement is to be presented for
the consent of the shareholders.
UPON WRITTEN REQUEST BY ANY SHAREHOLDER TO WILLIAM H. GRAY, CHIEF
EXECUTIVE OFFICER OF THE COMPANY, AT COMPETITIVE COMPANIES, INC., 19206 HUEBNER
ROAD, SUITE 202, SAN ANTONIO, TEXAS 78258, TELEPHONE (210) 233-8980. A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE PROVIDED WITHOUT CHARGE.
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EXHIBIT A
2012 STOCK INCENTIVE PLAN FOR
THE DIRECTORS, OFFICERS, EMPLOYEES AND KEY CONSULTANTS
OF
COMPETITIVE COMPANIES, INC., EFFECTIVE OCTOBER 10, 2012, AS AMENDED
COMPETITIVE COMPANIES, INC.
2012 STOCK INCENTIVE PLAN
(AS ADOPTED ON OCTOBER 10, 2012)
1. PURPOSE. The purpose of the 2012 Stock Incentive Plan (the "Plan")
of Competitive Companies, Inc. (the "Company") is to increase stockholder value
and to advance the interests of the Company by furnishing a variety of economic
incentives ("Incentives") designed to attract, retain and motivate employees,
directors and certain key consultants of the Company. Incentives may consist of
opportunities to purchase or receive shares of Common Stock, $0.001 par value,
of the Company ("Common Stock") on terms determined under this Plan.
2. ADMINISTRATION. The Plan shall be administered by the Board of
Directors or by a stock option or compensation committee (the "Committee") of
the Board of Directors of the Company. The Committee, if constituted, shall
consist of not less than one director of the Company who shall be appointed from
time to time by the Board of Directors of the Company. Each member of the
Committee shall be (i) a "non-employee director" within the meaning of Rule
16b-3 of the Securities Exchange Act of 1934, as amended (including the
regulations promulgated thereunder, the "1934 Act") (a "Non-Employee Director"),
and (ii) shall be an "outside director" within the meaning of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code") and the regulations
promulgated thereunder. The Committee shall have complete authority to award
Incentives under the Plan, to interpret the Plan, and to make any other
determination which it believes necessary and advisable for the proper
administration of the Plan. The Committee's decisions and matters relating to
the Plan shall be final and conclusive on the Company and its participants. If
at any time there is no stock option or compensation committee, the term
"Committee", as used in the Plan, shall refer to the Board of Directors.
3. ELIGIBLE PARTICIPANTS. Officers of the Company, employees of the
Company or its subsidiaries, members of the Board of Directors, and consultants
or other independent contractors who provide services to the Company or its
subsidiaries shall be eligible to receive Incentives under the Plan when
designated by the Committee. Participants may be designated individually or by
groups or categories (for example, by pay grade) as the Committee deems
appropriate. Participation by officers of the Company or its subsidiaries and
any performance objectives relating to such officers must be approved by the
Committee. Participation by others and any performance objectives relating to
others may be approved by groups or categories (for example, by pay grade) and
authority to designate participants who are not officers and to set or modify
such targets may be delegated.
4. TYPES OF INCENTIVES. Incentives under the Plan may be granted in any
one or a combination of the following forms: (a) incentive stock options and
non-statutory stock options (section 6); (b) stock appreciation rights ("SARs")
(section 7); (c) stock awards (section 8); (d) restricted stock (section 8); and
(e) performance shares (section 9).
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5. SHARES SUBJECT TO THE PLAN.
5.1. NUMBER OF SHARES. Subject to adjustment as provided in
Section 10.6, the number of shares of Common Stock which may be issued
under the Plan shall not exceed 25,000,000 shares of Common Stock.
Shares of Common Stock that are issued under the Plan or are subject to
outstanding Incentives will be applied to reduce the maximum number of
shares of Common Stock remaining available for issuance under the Plan.
In addition, on each anniversary of October 10, 2012 (the "Effective
Date") on or before the fifth anniversary of the Effective Date,
commencing on October 10, 2012, the aggregate number of shares of the
Company's Common Stock reserved for issuance under this Plan shall be
increased automatically by the lesser of: (a) a number of shares equal
to five percent (5%) of the total number of remaining authorized shares
on the immediately preceding December 31st; (b) 200,000 shares; or (c)
such lesser number of shares as the Board of Directors, in its sole
discretion, determines. These limits on the number of shares subject to
the share reserve shall be subject to adjustment under Section 10.6 of
the Plan. Notwithstanding the foregoing, no person shall receive grants
of Incentives under the Plan that exceed 10,000,000 shares during any
one fiscal year of the Company.
5.2. CANCELLATION. To the extent that cash in lieu of shares
of Common Stock is delivered upon the exercise of an SAR pursuant to
Section 7.4, the Company shall be deemed, for purposes of applying the
limitation on the number of shares, to have issued the greater of the
number of shares of Common Stock which it was entitled to issue upon
such exercise or on the exercise of any related option. In the event
that a stock option or SAR granted hereunder expires or is terminated
or canceled unexercised as to any shares of Common Stock, such shares
may again be issued under the Plan either pursuant to stock options,
SARs or otherwise. In the event that shares of Common Stock are issued
as restricted stock or pursuant to a stock award and thereafter are
forfeited or reacquired by the Company pursuant to rights reserved upon
issuance thereof, such forfeited and reacquired shares may again be
issued under the Plan, either as restricted stock, pursuant to stock
awards or otherwise. The Committee may also determine to cancel, and
agree to the cancellation of, stock options in order to make a
participant eligible for the grant of a stock option at a lower price
than the option to be canceled.
5.3. TYPE OF COMMON STOCK. Common Stock issued under the Plan
in connection with stock options, SARs, performance shares, restricted
stock or stock awards, may be authorized and unissued shares or
treasury stock, as designated by the Committee.
6. STOCK OPTIONS. A stock option is a right to purchase shares of
Common Stock from the Company. Each stock option granted by the Committee under
this Plan shall be subject to the following terms and conditions:
6.1. PRICE. The option price per share shall be determined by
the Committee, subject to adjustment under Section 10.6.
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6.2. NUMBER. The number of shares of Common Stock subject to
the option shall be determined by the Committee, subject to adjustment
as provided in Section 10.6. The number of shares of Common Stock
subject to a stock option shall be reduced in the same proportion that
the holder thereof exercises a SAR if any SAR is granted in conjunction
with or related to the stock option.
6.3. DURATION AND TIME FOR EXERCISE. Subject to earlier
termination as provided in Section 10.4, the term of each stock option
shall be determined by the Committee but shall not exceed ten years and
one day from the date of grant. Each stock option shall become
exercisable at such time or times during its term as shall be
determined by the Committee at the time of grant. The Committee may
accelerate the exercisability of any stock option. Subject to the
foregoing and with the approval of the Committee, all or any part of
the shares of Common Stock with respect to which the right to purchase
has accrued may be purchased by the Company at the time of such accrual
or at any time or times thereafter during the term of the option.
6.4. MANNER OF EXERCISE. A stock option may be exercised, in
whole or in part, by giving written notice to the Company, specifying
the number of shares of Common Stock to be purchased and accompanied by
the full purchase price for such shares. The option price shall be
payable (a) in United States dollars upon exercise of the option and
may be paid by cash, uncertified or certified check or bank draft; (b)
at the discretion of the Committee, by delivery of shares of Common
Stock in payment of all or any part of the option price, which shares
shall be valued for this purpose at the Fair Market Value on the date
such option is exercised; or (c) at the discretion of the Committee, by
instructing the Company to withhold from the shares of Common Stock
issuable upon exercise of the stock option shares of Common Stock in
payment of all or any part of the exercise price and/or any related
withholding tax obligations, which shares shall be valued for this
purpose at the Fair Market Value or in such other manner as may be
authorized from time to time by the Committee. The shares of Common
Stock delivered by the participant pursuant to Section 6.4(b) must have
been held by the participant for a period of not less than six months
prior to the exercise of the option, unless otherwise determined by the
Committee. Prior to the issuance of shares of Common Stock upon the
exercise of a stock option, a participant shall have no rights as a
stockholder.
6.5. INCENTIVE STOCK OPTIONS. Notwithstanding anything in the
Plan to the contrary, the following additional provisions shall apply
to the grant of stock options which are intended to qualify as
Incentive Stock Options (as such term is defined in Section 422 of the
Code):
(a) The aggregate Fair Market Value (determined as of
the time the option is granted) of the shares of Common Stock
with respect to which Incentive Stock Options are exercisable
for the first time by any participant during any calendar year
(under all of the Company's plans) shall not exceed $100,000.
The determination will be made by taking incentive stock
options into account in the order in which they were granted.
If such excess only applies to a portion of an Incentive Stock
Option, the Committee, in its discretion, will designate which
shares will be treated as shares to be acquired upon exercise
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of an Incentive Stock Option.
(b) Any Incentive Stock Option certificate authorized
under the Plan shall contain such other provisions as the
Committee shall deem advisable, but shall in all events be
consistent with and contain all provisions required in order
to qualify the options as Incentive Stock Options.
(c) All Incentive Stock Options must be granted
within ten years from the earlier of the date on which this
Plan was adopted by Board of Directors or the date this Plan
was approved by the stockholders.
(d) Unless sooner exercised, all Incentive Stock
Options shall expire no later than 10 years after the date of
grant.
(e) The option price for Incentive Stock Options
shall be not less than the Fair Market Value of the Common
Stock subject to the option on the date of grant.
(f) If Incentive Stock Options are granted to any
participant who, at the time such option is granted, would own
(within the meaning of Section 422 of the Code) stock
possessing more than 10% of the total combined voting power of
all classes of stock of the employer corporation or of its
parent or subsidiary corporation, (i) the option price for
such Incentive Stock Options shall be not less than 110% of
the Fair Market Value of the Common Stock subject to the
option on the date of grant and (ii) such Incentive Stock
Options shall expire no later than five years after the date
of grant.
7. STOCK APPRECIATION RIGHTS. An SAR is a right to receive, without
payment to the Company, a number of shares of Common Stock, cash or any
combination thereof, the amount of which is determined pursuant to the formula
set forth in Section 7.4. An SAR may be granted (a) with respect to any stock
option granted under this Plan, either concurrently with the grant of such stock
option or at such later time as determined by the Committee (as to all or any
portion of the shares of Common Stock subject to the stock option), or (b)
alone, without reference to any related stock option. Each SAR granted by the
Committee under this Plan shall be subject to the following terms and
conditions:
7.1. NUMBER. Each SAR granted to any participant shall relate
to such number of shares of Common Stock as shall be determined by the
Committee, subject to adjustment as provided in Section 10.6. In the
case of an SAR granted with respect to a stock option, the number of
shares of Common Stock to which the SAR pertains shall be reduced in
the same proportion that the holder of the option exercises the related
stock option.
7.2. DURATION. Subject to earlier termination as provided in
Section 10.4, the term of each SAR shall be determined by the Committee
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but shall not exceed ten years and one day from the date of grant.
Unless otherwise provided by the Committee, each SAR shall become
exercisable at such time or times, to such extent and upon such
conditions as the stock option, if any, to which it relates is
exercisable. The Committee may in its discretion accelerate the
exercisability of any SAR.
7.3. EXERCISE. An SAR may be exercised, in whole or in part,
by giving written notice to the Company, specifying the number of SARs
which the holder wishes to exercise. Upon receipt of such written
notice, the Company shall, within 90 days thereafter, deliver to the
exercising holder certificates for the shares of Common Stock or cash
or both, as determined by the Committee, to which the holder is
entitled pursuant to Section 7.4.
7.4. PAYMENT. Subject to the right of the Committee to deliver
cash in lieu of shares of Common Stock (which, as it pertains to
officers and directors of the Company, shall comply with all
requirements of the 1934 Act), the number of shares of Common Stock
which shall be issuable upon the exercise of an SAR shall be determined
by dividing:
(a) the number of shares of Common Stock as to which
the SAR is exercised multiplied by the amount of the
appreciation in such shares (for this purpose, the
"appreciation" shall be the amount by which the Fair Market
Value of the shares of Common Stock subject to the SAR on the
exercise date exceeds (1) in the case of an SAR related to a
stock option, the purchase price of the shares of Common Stock
under the stock option or (2) in the case of an SAR granted
alone, without reference to a related stock option, an amount
which shall be determined by the Committee at the time of
grant, subject to adjustment under Section 10.6); by
(b) the Fair Market Value of a share of Common Stock
on the exercise date.
In lieu of issuing shares of Common Stock upon the exercise of
a SAR, the Committee may elect to pay the holder of the SAR cash equal
to the Fair Market Value on the exercise date of any or all of the
shares which would otherwise be issuable. No fractional shares of
Common Stock shall be issued upon the exercise of an SAR; instead, the
holder of the SAR shall be entitled to receive a cash adjustment equal
to the same fraction of the Fair Market Value of a share of Common
Stock on the exercise date or to purchase the portion necessary to make
a whole share at its Fair Market Value on the date of exercise.
8. STOCK AWARDS AND RESTRICTED STOCK. A stock award consists of the
transfer by the Company to a participant of shares of Common Stock, without
other payment therefor, as additional compensation for services to the Company.
A share of restricted stock consists of shares of Common Stock which are sold or
transferred by the Company to a participant at a price determined by the
Committee (which price shall be at least equal to the minimum price required by
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applicable law for the issuance of a share of Common Stock) and subject to
restrictions on their sale or other transfer by the participant. The transfer of
Common Stock pursuant to stock awards and the transfer and sale of restricted
stock shall be subject to the following terms and conditions:
8.1. NUMBER OF SHARES. The number of shares to be transferred
or sold by the Company to a participant pursuant to a stock award or as
restricted stock shall be determined by the Committee.
8.2. SALE PRICE. The Committee shall determine the price, if
any, at which shares of restricted stock shall be sold to a
participant, which may vary from time to time and among participants
and which may be below the Fair Market Value of such shares of Common
Stock at the date of sale.
8.3. RESTRICTIONS. All shares of restricted stock transferred
or sold hereunder shall be subject to such restrictions as the
Committee may determine, including, without limitation any or all of
the following:
(a) a prohibition against the sale, transfer, pledge
or other encumbrance of the shares of restricted stock, such
prohibition to lapse at such time or times as the Committee
shall determine (whether in annual or more frequent
installments, at the time of the death, disability or
retirement of the holder of such shares, or otherwise);
(b) a requirement that the holder of shares of
restricted stock forfeit, or (in the case of shares sold to a
participant) resell back to the Company at his or her cost,
all or a part of such shares in the event of termination of
his or her employment or consulting engagement during any
period in which such shares are subject to restrictions;
(c) such other conditions or restrictions as the
Committee may deem advisable.
8.4. ESCROW. In order to enforce the restrictions imposed by
the Committee pursuant to Section 8.3, the participant receiving
restricted stock shall enter into an agreement with the Company setting
forth the conditions of the grant. Shares of restricted stock shall be
registered in the name of the participant and deposited, together with
a stock power endorsed in blank, with the Company. Each such
certificate shall bear a legend in substantially the following form:
The transferability of this certificate and the
shares of Common Stock represented by it are subject to the
terms and conditions (including conditions of forfeiture)
contained in the 2012 Stock Incentive Plan (the "Plan") of
Competitive Companies, Inc. (the "Company"), and an agreement
entered into between the registered owner and the Company. A
copy of the Plan and the agreement is on file in the office of
the secretary of the Company.
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8.5. END OF RESTRICTIONS. Subject to Section 10.5, at the end
of any time period during which the shares of restricted stock are
subject to forfeiture and restrictions on transfer, such shares will be
delivered free of all restrictions to the participant or to the
participant's legal representative, beneficiary or heir.
8.6. STOCKHOLDER. Subject to the terms and conditions of the
Plan, each participant receiving restricted stock shall have all the
rights of a stockholder with respect to shares of stock during any
period in which such shares are subject to forfeiture and restrictions
on transfer, including without limitation, the right to vote such
shares. Dividends paid in cash or property other than Common Stock with
respect to shares of restricted stock shall be paid to the participant
currently.
9. PERFORMANCE SHARES. A performance share consists of an award which
shall be paid in shares of Common Stock, as described below. The grant of
performance shares shall be subject to such terms and conditions as the
Committee deems appropriate, including the following:
9.1. PERFORMANCE OBJECTIVES. Each performance share will be
subject to performance objectives for the Company or one of its
operating units to be achieved by the end of a specified period. The
number of performance shares granted shall be determined by the
Committee and may be subject to such terms and conditions as the
Committee shall determine. If the performance objectives are achieved,
each participant will be paid in shares of Common Stock or cash. If
such objectives are not met, each grant of performance shares may
provide for lesser payments in accordance with formulas established in
the award.
9.2. NOT STOCKHOLDER. The grant of performance shares to a
participant shall not create any rights in such participant as a
stockholder of the Company until the payment of shares of Common Stock
with respect to an award.
9.3. NO ADJUSTMENTS. No adjustment shall be made in
performance shares granted on account of cash dividends which may be
paid or other rights which may be issued to the holders of Common Stock
prior to the end of any period for which performance objectives were
established.
9.4. EXPIRATION OF PERFORMANCE SHARES. If any participant's
employment or consulting engagement with the Company is terminated for
any reason other than normal retirement, death or disability prior to
the achievement of the participant's stated performance objectives, all
the participant's rights on the performance shares shall expire and
terminate unless otherwise determined by the Committee. In the event of
termination of employment or consulting by reason of death, disability,
or normal retirement, the Committee, in its own discretion may
determine what portions, if any, of the performance shares should be
paid to the participant.
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10. GENERAL.
10.1. EFFECTIVE DATE. The Plan will become effective upon its
approval by the Company's Board of Directors, subject to approval by
the Company's stockholders. Unless approved by the Company's
stockholders within one year after the date of the Plan's adoption by
the Board of Directors, the Plan shall not be effective for any
purpose.
10.2. DURATION. The Plan shall remain in effect until all
Incentives granted under the Plan have either been satisfied by the
issuance of shares of Common Stock or the payment of cash or been
terminated under the terms of the Plan and all restrictions imposed on
shares of Common Stock in connection with their issuance under the Plan
have lapsed. No Incentives may be granted under the Plan after the
tenth anniversary of the date the Plan is approved by the stockholders
of the Company.
10.3. NON-TRANSFERABILITY OF INCENTIVES. No stock option, SAR,
restricted stock or performance award may be transferred, pledged or
assigned by the holder thereof (except, in the event of the holder's
death, by will or the laws of descent and distribution to the limited
extent provided in the Plan or the Incentive), or pursuant to a
qualified domestic relations order as defined by the Code or Title I of
the Employee Retirement Income Security Act, or the rules thereunder,
and the Company shall not be required to recognize any attempted
assignment of such rights by any participant. Notwithstanding the
preceding sentence, stock options may be transferred by the holder
thereof to the holder's spouse, children, grandchildren or parents
(collectively, the "Family Members"), to trusts for the benefit of
Family Members, to partnerships or limited liability companies in which
Family Members are the only partners or shareholders, or to entities
exempt from federal income taxation pursuant to Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended. During a participant's
lifetime, a stock option may be exercised only by him or her, by his or
her guardian or legal representative or by the transferees permitted by
the preceding sentence.
10.4. EFFECT OF TERMINATION OR DEATH. In the event that a
participant ceases to be an employee or director of or consultant to
the Company for any reason, including death or disability, any
Incentives may be exercised or shall expire at such times as may be
determined by the Committee.
10.5. ADDITIONAL CONDITION. Notwithstanding anything in this
Plan to the contrary: (a) the Company may, if it shall determine it
necessary or desirable for any reason, at the time of award of any
Incentive or the issuance of any shares of Common Stock pursuant to any
Incentive, require the recipient of the Incentive, as a condition to
the receipt thereof or to the receipt of shares of Common Stock issued
pursuant thereto, to deliver to the Company a written representation of
present intention to acquire the Incentive or the shares of Common
Stock issued pursuant thereto for his or her own account for investment
and not for distribution; and (b) if at any time the Company further
determines, in its sole discretion, that the listing, registration or
qualification (or any updating of any such document) of any Incentive
or the shares of Common Stock issuable pursuant thereto is necessary on
any securities exchange or under any federal or state securities or
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blue sky law, or that the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with the award of any Incentive, the issuance of shares of
Common Stock pursuant thereto, or the removal of any restrictions
imposed on such shares, such Incentive shall not be awarded or such
shares of Common Stock shall not be issued or such restrictions shall
not be removed, as the case may be, in whole or in part, unless such
listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the
Company.
10.6. ADJUSTMENT. In the event of any recapitalization, stock
dividend, stock split, combination of shares or other change in the
Common Stock, the number of shares of Common Stock then subject to the
Plan, including shares subject to restrictions, options or achievements
of performance shares, shall be adjusted in proportion to the change in
outstanding shares of Common Stock. In the event of any such
adjustments, the purchase price of any option, the performance
objectives of any Incentive, and the shares of Common Stock issuable
pursuant to any Incentive shall be adjusted as and to the extent
appropriate, in the discretion of the Committee, to provide
participants with the same relative rights before and after such
adjustment.
10.7. INCENTIVE PLANS AND AGREEMENTS. Except in the case of
stock awards or cash awards, the terms of each Incentive shall be
stated in a plan or agreement approved by the Committee. The Committee
may also determine to enter into agreements with holders of options to
reclassify or convert certain outstanding options, within the terms of
the Plan, as Incentive Stock Options or as non-statutory stock options
and in order to eliminate SARs with respect to all or part of such
options and any other previously issued options.
10.8. WITHHOLDING.
(a) The Company shall have the right to withhold from
any payments made under the Plan or to collect as a condition
of payment, any taxes required by law to be withheld. At any
time when a participant is required to pay to the Company an
amount required to be withheld under applicable income tax
laws in connection with a distribution of Common Stock or upon
exercise of an option or SAR, the participant may satisfy this
obligation in whole or in part by electing (the "Election") to
have the Company withhold from the distribution the number of
shares of Common Stock having a value up to the minimum amount
of withholding taxes required to be collected on the
transaction. The value of the shares to be withheld shall be
based on the Fair Market Value of the Common Stock on the date
that the amount of tax to be withheld shall be determined
("Tax Date").
(b) Each Election must be made prior to the Tax Date.
The Committee may disapprove of any Election, may suspend or
terminate the right to make Elections, or may provide with
respect to any Incentive that the right to make Elections
shall not apply to such Incentive. An Election is irrevocable.
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10.9. NO CONTINUED EMPLOYMENT, ENGAGEMENT OR RIGHT TO
CORPORATE ASSETS. No participant under the Plan shall have any right,
because of his or her participation, to continue in the employ of the
Company for any period of time or to any right to continue his or her
present or any other rate of compensation. Nothing contained in the
Plan shall be construed as giving an employee, a consultant, such
persons' beneficiaries or any other person any equity or interests of
any kind in the assets of the Company or creating a trust of any kind
or a fiduciary relationship of any kind between the Company and any
such person.
10.10. DEFERRAL PERMITTED. Payment of cash or distribution of
any shares of Common Stock to which a participant is entitled under any
Incentive shall be made as provided in the Incentive. Payment may be
deferred at the option of the participant if provided in the Incentive.
10.11. AMENDMENT OF THE PLAN. The Board may amend or
discontinue the Plan at any time. However, no such amendment or
discontinuance shall adversely change or impair, without the consent of
the recipient, an Incentive previously granted. Further, no such
amendment shall, without approval of the shareholders of the Company,
(a) increase the maximum number of shares of Common Stock which may be
issued to all participants under the Plan, (b) change or expand the
types of Incentives that may be granted under the Plan, (c) change the
class of persons eligible to receive Incentives under the Plan, or (d)
materially increase the benefits accruing to participants under the
Plan.
10.12 SALE, MERGER, EXCHANGE OR LIQUIDATION. Unless otherwise
provided in the agreement for an Incentive, in the event of an
acquisition of the Company through the sale of substantially all of the
Company's assets or through a merger, exchange, reorganization or
liquidation of the Company or a similar event as determined by the
Committee (collectively a "transaction"), the Committee shall be
authorized, in its sole discretion, to take any and all action it deems
equitable under the circumstances, including but not limited to
providing for any one or more of the following:
(1) The Plan and all Incentives shall terminate and the
holders of (i) all outstanding vested options shall receive, in lieu of
any shares of Common Stock they would be entitled to receive under such
options, such stock, securities or assets, including cash, as would
have been paid to such participants if their options had been exercised
and such participant had received Common Stock immediately prior to
such transaction (with appropriate adjustment for the exercise price,
if any), (ii) performance shares and/or SARs that entitle the
participant to receive Common Stock shall receive, in lieu of any
shares of Common Stock each participant was entitled to receive as of
the date of the transaction pursuant to the terms of such Incentive, if
any, such stock, securities or assets, including cash, as would have
been paid to such participant if such Common Stock had been issued to
and held by the participant immediately prior to such transaction, and
(iii) any Incentive under this Agreement which does not entitle the
participant to receive Common Stock shall be equitably treated as
determined by the Committee.
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(2) Participants holding outstanding vested Common Stock based
Incentives shall receive, with respect to each share of Common Stock
issuable pursuant to such Incentives as of the effective date of any
such transaction, at the determination of the Committee, cash,
securities or other property, or any combination thereof, in an amount
equal to the excess, if any, of the Fair Market Value of such Common
Stock on a date within ten days prior to the effective date of such
transaction over the option price or other amount owed by a
participant, if any, and that such Incentives shall be cancelled,
including the cancellation without consideration of all options that
have an exercise price below the per share value of the consideration
received by the Company in the transaction.
(3) The Plan (or replacement plan) shall continue with respect
to Incentives not cancelled or terminated as of the effective date of
such transaction and provide to participants holding such Incentives
the right to earn their respective Incentives on a substantially
equivalent basis (taking into account the transaction and the number of
shares or other equity issued by such successor entity) with respect to
the equity of the entity succeeding the Company by reason of such
transaction.
(4) All unvested, unearned or restricted Incentives, including
but not limited to restricted stock for which restrictions have not
lapsed as of the effective date of such transaction, shall be void and
deemed terminated, or, in the alternative, for the acceleration or
waiver of any vesting, earning or restrictions on any Incentive.
The Board of Directors may restrict the rights of participants
or the applicability of this Section 10.12 to the extent necessary to
comply with Section 16(b) of the Securities Exchange Act of 1934, the
Internal Revenue Code or any other applicable law or regulation. The
grant of an Incentive award pursuant to the Plan shall not limit in any
way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure or to merge, exchange or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.
10.13. DEFINITION OF FAIR MARKET VALUE. For purposes of this
Plan, the "Fair Market Value" of a share of Common Stock at a specified
date shall, unless otherwise expressly provided in this Plan, be the
amount which the Committee or the Board of Directors determines in good
faith to be 100% of the fair market value of such a share as of the
date in question; provided, however, that notwithstanding the
foregoing, if such shares are listed on a U.S. securities exchange or
are quoted on the Nasdaq National Market, Nasdaq Small-Cap Market or
over-the-counter market for companies that file public reports with the
Securities and Exchange Commission (collectively, "Nasdaq"), then Fair
Market Value shall be determined by reference to the last sale price of
a share of Common Stock on such U.S. securities exchange or Nasdaq on
the applicable date. If such U.S. securities exchange or Nasdaq is
closed for trading on such date, or if the Common Stock does not trade
on such date, then the last sale price used shall be the one on the
date the Common Stock last traded on such U.S. securities exchange or
Nasdaq.
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10.14. CHANGE IN CONTROL. (a) Upon a Change in Control, as
defined in paragraph (b) of this Section 10.14, any stock option or
restricted stock award granted to any Participant under this Plan that
would have become vested upon continued employment by the Participant
shall immediately vest in full and become exercisable, notwithstanding
any provision to the contrary of such award, and notwithstanding the
discretion of the Committee pursuant to Section 10.12.
(b) For purposes of this Section 10.14, "Change in Control"
means:
(1) The acquisition by any person, entity or "group," within
the meaning of Section 13(d) (3) or 14(d) (2) of the Securities
Exchange Act of 1934 (the "Exchange Act") (excluding, for this purpose,
(A) the Company, (B) any employee benefit plan of the Company or its
subsidiaries which acquires beneficial ownership of voting securities
of the Company, or (C) William H. Gray) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 33% or
more of either the then outstanding shares of common stock or the
combined voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of directors; or
(2) Individuals who, as of October 10, 2012, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any person
becoming a director subsequent to October 10, 2012 whose appointment to
fill a vacancy, or whose election or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest
relating to the election of the directors of the Company, as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board; or
(3) Approval by the stockholders of the Company of (A) a
reorganization, merger or consolidation, in each case, with respect to
which persons who were the stockholders of the Company immediately
prior to such reorganization, merger or consolidation do not,
immediately thereafter, own more than 50% of the combined voting power
of the reorganized, merged or consolidated company's then outstanding
voting securities entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company, or (B) a
liquidation or dissolution of the Company or (C) the sale of all or
substantially all of the assets of the Company.
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