def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, For Use of the Commission Only (as permitted by 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional materials |
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Soliciting Material Pursuant To § 240.14a-12 |
SUPERCONDUCTOR TECHNOLOGIES INC.
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1) Title of each class
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(3) Per unit price
or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
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the
amount on which the
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o Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous filing
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(1) Amount previously
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(2) Form, schedule or
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NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD ON MAY 6,
2010
To Our Stockholders:
The Annual Meeting of Stockholders (our Annual
Meeting) of Superconductor Technologies Inc. will be
held on Thursday, May 6, 2010, at 11:00 a.m., local
time, at our offices at 460 Ward Drive, Santa Barbara,
California 93111 for the following purposes, as more fully
described in the accompanying Proxy Statement:
1. To elect two Class 3 directors to hold office
until our 2013 Annual Meeting of Stockholders or until their
successors are elected and qualified;
2. To amend our 2003 Equity Incentive Plan to increase the
number of shares authorized to be issued thereunder to 4,525,000;
3. To ratify the appointment of Stonefield Josephson, Inc.
as our independent registered public accounting firm for
2010; and
4. To transact such other business as may properly come
before our Annual Meeting or any adjournment(s) thereof.
Only stockholders of record at the close of business on
March 19, 2010 are entitled to notice of and to vote at our
Annual Meeting. A list of stockholders as of this date will be
available during normal business hours for examination at our
offices by any stockholder for any purpose relevant to our
Annual Meeting for a period of ten days prior to the meeting.
All stockholders are urged to attend our Annual Meeting in
person or vote by proxy. YOUR VOTE IS IMPORTANT. WHETHER OR
NOT YOU EXPECT TO ATTEND OUR ANNUAL MEETING IN PERSON, PLEASE
SIGN AND SUBMIT YOUR PROXY AS SOON AS POSSIBLE SO THAT YOUR
SHARES CAN BE VOTED AT OUR ANNUAL MEETING IN ACCORDANCE
WITH YOUR INSTRUCTIONS. The proxy is revocable at any time
prior to its exercise and will not affect your right to vote in
person in the event you attend our Annual Meeting.
By Order of the Board of Directors,
Jeffrey A. Quiram
President and Chief Executive Officer
Santa Barbara, California
April 2, 2010
TABLE OF CONTENTS
ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON MAY 6, 2010
460 Ward Drive
Santa Barbara, California
93111-2310
(805) 690-4500
INTRODUCTION
This Proxy Statement contains information related to the
solicitation of proxies by and on behalf of the Board of
Directors of Superconductor Technologies Inc. (our
Board) for use in connection with our Annual
Meeting of Stockholders to be held on Thursday, May 6,
2010, beginning at 11:00 a.m., local time, at our offices
located at 460 Ward Drive, Santa Barbara, California
93111, and at any and all adjournments or postponements thereof
(our Annual Meeting). At our Annual Meeting,
stockholders will be asked to consider and vote upon the
following proposals: (i) the election of two
Class 3 directors to hold office until our 2013 Annual
Meeting of Stockholders or until their successors are elected
and qualified; (ii) the amendment to our 2003 Equity
Incentive Plan to increase the number of shares authorized to be
issued thereunder to 4,525,000; (iii) the ratification of
the appointment of Stonefield Josephson, Inc. as our independent
registered public accounting firm for 2010; and (iv) the
transaction of such other business as may properly come before
our Annual Meeting. This Proxy Statement and the accompanying
proxy card are being mailed to stockholders on or about
April 2, 2010.
Important
Notice Regarding Availability of Proxy Materials for the 2010
Annual Meeting of Stockholders to be Held on May 6,
2010
Our Proxy Statement, Annual Report on
Form 10-K,
and proxy card are available on the Internet at
http://www.proxyvote.com
and at the SEC Filings section under the
Investors tab on our corporate website at
http://www.suptech.com.
INFORMATION
CONCERNING SOLICITATION AND VOTING
Record
Date
Only holders of record of our common stock at the close of
business on March 19, 2010 (the Record
Date) are entitled to notice of our Annual Meeting and
to vote at our Annual Meeting. As of the Record Date, we had
22,405,051 shares of our common stock issued and
outstanding.
Revocability
of Proxies
Any proxy given pursuant to this solicitation may be revoked by
the person giving it at any time before its use by delivering to
our Secretary, at or before the taking of the vote at our Annual
Meeting, a written notice of revocation or a duly executed proxy
bearing a later date or by attending our Annual Meeting and
voting in person.
Voting
and Solicitation
Each share of our common stock is entitled to one vote on all
matters presented at our Annual Meeting. Stockholders do not
have the right to cumulate their votes in the election of
directors.
Shares of common stock represented by properly executed proxies
will, unless such proxies have been previously revoked, be voted
in accordance with the instructions indicated thereon. In the
absence of specific
instructions to the contrary, properly executed unrevoked
proxies will be voted: (i) FOR the election of the two
nominees for Class 3 directors, (ii) FOR the
amendment to our 2003 Equity Incentive Plan to increase the
number of shares authorized to be issued thereunder to 4,525,000
and (iii) FOR the ratification of the selection of
Stonefield Josephson, Inc. as our independent registered public
accounting firm for 2010. No other business is expected to come
before our Annual Meeting. Should any other matter requiring a
vote of stockholders properly arise, the persons named in the
enclosed proxy card will vote such proxy in accordance with the
recommendation of our Board.
If you will not be able to attend our Annual Meeting to vote in
person, please vote your shares by completing and returning the
accompanying proxy card or by voting electronically via the
Internet or by telephone. To vote by mail, please mark, sign and
date the accompanying proxy card and return it promptly in the
enclosed postage paid envelope. To vote by Internet, go to
www.proxyvote.com and to vote by telephone, call
1-800-690-6903,
and follow the instructions to cast your vote. For voting by
Internet or telephone, you will need to have your
12-digit
control number located on your proxy card. Please do not return
the enclosed paper ballot if you are voting by Internet or
telephone.
We intend to solicit proxies primarily by mail. However,
directors, officers, agents and employees may communicate with
stockholders, banks, brokerage houses and others by telephone,
e-mail, in
person or otherwise to solicit proxies. We have no present plans
to hire special employees or paid solicitors to assist in
obtaining proxies, but reserve the option to do so. All expenses
incurred in connection with this solicitation will be borne by
us. We request that brokerage houses, nominees, custodians,
fiduciaries and other like parties forward the soliciting
materials to the underlying beneficial owners of our common
stock. We will reimburse reasonable charges and expenses in
doing so.
Quorum;
Abstentions; Broker Non-Votes
The required quorum for the transaction of business at our
Annual Meeting is the holders of a majority of the stock issued
and outstanding on the Record Date and entitled to vote at our
Annual Meeting, present in person or by proxy.
Shares that are voted FOR or AGAINST a
matter are treated as being present at the meeting for purposes
of establishing a quorum and are also treated as shares entitled
to vote at our Annual Meeting with respect to such matter.
We believe that abstentions should be counted for purposes of
determining the presence or absence of a quorum for the
transaction of business and the total number of votes cast with
respect to a proposal (other than the election of directors). In
the absence of controlling precedent to the contrary, we intend
to treat abstentions in this manner. Accordingly, abstentions
will have the same effect as a vote against a proposal (other
than the election of directors).
Broker non-votes are shares held in street name for which a
broker returns a proxy card but indicates that instructions have
not been received from the beneficial owners or other persons
entitled to vote and for which the broker does not have
discretionary voting authority. We count broker non-votes for
the purposes of determining the presence or absence of a quorum
for the transaction of business, but not for purposes of
determining the number of votes cast with respect to the
particular proposal on which the broker has expressly not voted.
Thus, a broker non-vote will not affect the outcome of the
voting on a proposal requiring solely a majority of shares voted.
If your shares of common stock are held by a bank, broker or
other nominee, please follow the instructions you receive from
your bank, broker or other nominee to have your shares of common
stock voted. If your shares are held by a broker, the broker
will ask you how you want your shares to be voted. If you give
the broker instructions, then your shares will be voted as you
direct. If you do not give instructions, then for the
ratification of the independent registered public accounting
firm, the broker may vote your shares in its discretion, but for
the election of directors and the amendment to our 2003 Equity
Incentive Plan, the broker may not be entitled to vote your
shares at all.
2
Deadline
for Receipt of Stockholder Proposals for 2011 Annual Meeting of
Stockholders
Pursuant to
Rule 14a-8
of the Securities and Exchange Commission
(SEC), proposals by eligible stockholders
that are intended to be presented at our 2011 Annual Meeting of
Stockholders must be received by our Corporate Secretary at
Superconductor Technologies Inc., 460 Ward Drive,
Santa Barbara, California 93111 not later than
December 3, 2010 in order to be considered for inclusion in
our proxy materials.
Stockholders intending to present a proposal at our 2011 Annual
Meeting of Stockholders must comply with the requirements and
provide the information set forth in our amended and restated
bylaws. Under our bylaws, a stockholders proposal must be
timely received, which means that a proposal must be delivered
to or mailed to our Secretary not less than 90 days prior
to the meeting; provided that if less than 100 days notice
or prior public disclosure of the meeting is given to
stockholders, then notice by a stockholder, to be timely
received, must be received by our Secretary not later than the
close of business on the 10th day following the day on
which such notice of the date of the meeting was mailed or such
public disclosure was made.
3
PROPOSAL ONE
ELECTION OF CLASS 3 DIRECTORS
Our Board currently consists of six directors divided into three
classes Class 1 (Mr. Quiram and
Mr. Kaplan), Class 2 (Mr. Horowitz and
Mr. Davis) and Class 3 (Mr. Vellequette and
Mr. Lockton) with the directors in each class
holding office for staggered terms of three years each or until
their successors have been duly elected and qualified.
Class 3 directors will be elected at our Annual
Meeting. The nominees for election as the
Class 3 directors are Mr. Lockton and
Mr. Vellequette. Each Class 3 director will serve
until our 2013 Annual Meeting of Stockholders or until his
successor is elected and qualified. Assuming the nominees are
elected, we will have six directors serving as follows:
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Class 1 directors: Jeffrey A. Quiram,
Martin A. Kaplan
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Terms expire at our 2011 annual meeting of stockholders.
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Class 2 directors: Lynn J. Davis, Dennis
J. Horowitz
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Terms expire at our 2012 annual meeting of stockholders.
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Class 3 directors: John D. Lockton, David
W. Vellequette
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Terms expire at our 2013 annual meeting of stockholders.
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The accompanying proxy card grants the proxy holder the power to
vote the proxy for substitute nominees in the event that any
nominee becomes unavailable to serve as a
Class 3 director. Management presently has no
knowledge that any nominee will refuse or be unable to serve as
a Class 3 director for the prescribed term.
Required
Vote
Directors are elected by a plurality of the shares
voted. Plurality means that the nominee with the largest number
of votes is elected, up to the maximum number of directors to be
chosen (in this case, two directors). Stockholders can either
vote for the nominee or withhold authority to vote
for the nominee. However, shares that are withheld will have no
effect on the outcome of the election of directors. Broker
non-votes also will not have any effect on the outcome of the
election of the directors.
Board
Recommendation
Our
Board Recommends a Vote For Mr. Lockton
and For Mr. Vellequette.
CORPORATE
GOVERNANCE AND BOARD MEETINGS AND COMMITTEES
Corporate
Governance Policies and Practices
The following is a summary of our corporate governance policies
and practices:
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Our Board has determined that all of our directors, other than
Mr. Quiram, are independent as defined by the rules of the
SEC and The NASDAQ Stock Market (NASDAQ). Our
Audit Committee, Compensation Committee and Governance and
Nominating Committee each consists entirely of independent
directors.
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We have a Code of Business Conduct and Ethics for all of our
employees, including our Chief Executive Officer, Chief
Financial Officer and Principal Accounting Officer. If we amend
any provision of our Code of Business Conduct and Ethics that
applies to our Chief Executive Officer, Chief Financial Officer
or Principal Accounting Officer (or any persons performing
similar functions), or if we grant any waiver (including an
implicit waiver) from any provision of our Code of Business
Conduct and Ethics to our Chief Executive Officer, Chief
Financial Officer or Principal Accounting Officer (or any
persons performing similar functions), we will disclose those
amendments or waivers on our website at
www.suptech.com/Investors/Corporate Governance/Amendments and
Waivers to the Code of Conduct within four business days
following the date of the amendment or waiver.
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Our Audit Committee reviews and approves all related-party
transactions.
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As part of our Code of Business Conduct and Ethics, we have made
a whistleblower hotline available to all employees
for anonymous reporting of financial or other concerns. Our
Audit Committee receives directly,
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without management participation, all hotline activity reports
concerning accounting, internal controls or auditing matters.
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Board
Leadership Structure and Role in Risk Oversight
Our Boards current policy is to separate the role of
Chairman of our Board and Chief Executive Officer. Our Board
believes that this structure combines accountability with
effective oversight. This structure also allows us to benefit
from the experience and knowledge of our Chairman, who has been
on our board since 1997, while reflecting the responsibilities
and contributions of our Chief Executive Officer. In addition,
we believe that the independence of our Chairman provides
additional oversight over the decisions of our management and
places additional control in the hands of our independent
directors.
Our Board is actively involved in overseeing our risk management
through our Audit Committee. Under its charter, our Audit
Committee is responsible for inquiring of management and our
independent auditors about significant areas of risk or exposure
and assessing the steps management has taken to minimize such
risks.
Stockholder
Communications with Directors
Stockholders who want to communicate with our Board or with a
particular director or committee may send a letter to our
Secretary at Superconductor Technologies Inc., 460 Ward Drive,
Santa Barbara, California 93111. The mailing envelope
should contain a clear notation indicating that the enclosed
letter is a Board Communication or Director
Communication. All such letters should state whether the
intended recipients are all members of our Board or just certain
specified individual directors or a specified committee. The
Secretary will circulate the communications (with the exception
of commercial solicitations) to the appropriate director or
directors. Communications marked Confidential will
be forwarded unopened.
Attendance
at Annual Meetings of Stockholders
We expect that all of our Board members attend our Annual
Meetings of Stockholders in the absence of a showing of good
cause for failure to do so. All of the members of our Board
attended our 2009 Annual Meeting of Stockholders.
Board
Meetings and Committees
During 2009, each of our directors attended at least 75% of the
aggregate of (i) the total number of Board meetings and
(ii) the total number of meetings of the committees on
which the director served.
Board
of Directors
Our Board held a total of five meetings during 2009. Our Board
has three standing committees an Audit Committee
established in accordance with section 3(a)(58)(A) of the
Securities Exchange Act of 1934 (our Audit
Committee), a Compensation Committee (our
Compensation Committee) and a Governance and
Nominating Committee (our Nominating
Committee). Our Audit Committee, Compensation
Committee and Nominating Committee each have a charter, which is
available at the Corporate Governance section under
the Investors tab on our website at
www.suptech.com.
Audit
Committee
The principal functions of our Audit Committee are to hire our
independent public auditors, to review the scope and results of
the year-end audit with management and the independent auditors,
to review our accounting principles and our system of internal
accounting controls and to review our annual and quarterly
reports before filing them with the SEC. Our Audit Committee met
eight times during 2009. The current members of our Audit
Committee are Messrs. Horowitz (Chairman), Lockton, Davis
and Vellequette.
Our Board has determined that all members of our Audit Committee
are independent as defined under the rules of the
SEC and the listing standards of NASDAQ. Our Board has
determined that Mr. Vellequette is an audit committee
financial expert.
5
Compensation
Committee
Our Compensation Committee reviews and approves salaries,
bonuses and other benefits payable to the executive officers and
administers our management incentive plan. Our Compensation
Committee makes all compensation decisions with respect to our
Chief Executive Officer and makes recommendations to our Board
regarding non-equity compensation and equity awards to our other
named executive officers (set forth below under Executive
Compensation Summary Compensation Table) and
all other elected officers. In doing so, with respect to named
executive officers other than the Chief Executive Officer, our
Compensation Committee generally receives a recommendation from
our Chief Executive Officer and other officers as appropriate.
Our Chief Executive Officer also generally recommends the number
of options to be granted to executive officers, within a range
associated with the individual executives salary level,
and presents this to our Compensation Committee for its review
and approval.
Our Compensation Committee uses data from the Radford Executive
Survey, a nationally recognized executive compensation survey,
to review and compare our compensation levels to market
compensation levels, taking into consideration the other
companies size, the industry, and the individual
executives level of responsibility, as well as anecdotal
data regarding the compensation practices of other employers. We
do not annually benchmark our executive compensation against a
defined peer group, since we believe that defining such a group
is difficult and would not materially affect our decisions. Our
Compensation Committee does not generally hire an outside
consulting firm to assist with compensation, as we believe that
the value of doing so is exceeded by the costs. No compensation
consultant was engaged to provide advice or recommendations on
our executive or director compensation for 2009.
Our Compensation Committee also reviews the compensation of
directors and recommends to our Board the amounts and types of
cash to be paid and equity awards to be made to our directors.
Our Compensation Committee met four times during 2009. The
current members of our Compensation Committee are
Messrs. Davis (Chairman), Horowitz and Kaplan. Our Board
has determined that all members of our Compensation Committee
are independent as defined under the rules of the
SEC and the listing standards of NASDAQ. Our Compensation
Committee will only delegate its authority to the extent
consistent with our certificate of incorporation and bylaws and
applicable laws, regulations and listing standards.
Our Compensation Committee created the Stock Option Committee
(our Stock Option Committee) consisting of
two members our Compensation Committee Chairman and
the Chief Executive Officer. The purpose of our Stock Option
Committee is to facilitate the timely granting of stock options
in connection with hiring, promotions and other special
situations, and therefore our Stock Option Committee meets only
periodically as certain events occur. Our Stock Option Committee
is empowered to grant options to non-executive employees up to a
preset annual aggregate limit (120,000 shares for 2009).
The Stock Option Committee did not meet during 2009. Our
Compensation Committee supervises these grants and retains
exclusive authority for all executive officer grants and the
annual employee grants. The current members of our Stock Option
Committee are Messrs. Davis (Chairman) and Quiram.
Governance
and Nominating Committee
Our Nominating Committee is responsible for overseeing and, as
appropriate, making recommendations to our Board regarding,
membership and constitution of our Board and its role in
overseeing our affairs. Our Nominating Committee is responsible
for proposing a slate of directors for election by the
stockholders at each annual meeting and for proposing candidates
to fill any vacancies. Our Nominating Committee is also
responsible for the corporate governance practices and policies
of our Board and its committees. The current members of our
Nominating Committee are Messrs. Kaplan (Chairman),
Lockton, and Vellequette. Our Nominating Committee met three
times in 2009. Our Board has determined that all members of our
Nominating Committee are independent as defined
under the rules of the SEC and the listing standards of NASDAQ.
Our Nominating Committee manages the process for evaluating
current Board members at the time they are considered for
re-nomination. After considering the appropriate skills and
characteristics required on our Board, the current makeup of our
Board, the results of the evaluations, and the wishes of our
Board members to be re-
6
nominated, our Nominating Committee recommends to our Board
whether those individuals should be re-nominated.
Our Nominating Committee periodically reviews with our Board
whether it believes our Board would benefit from adding a new
member(s), and if so, the appropriate skills and characteristics
required for the new member(s). If our Board determines that a
new member would be beneficial, our Nominating Committee
solicits and receives recommendations for candidates and manages
the process for evaluating candidates. All potential candidates,
regardless of their source (including candidates recommended by
security holders), are reviewed under the same process. Our
Nominating Committee (or its chair) screens the available
information about the potential candidates. Based on the results
of the initial screening, interviews with viable candidates are
scheduled with Nominating Committee members, other members of
our Board and senior members of management. Upon completion of
these interviews and other due diligence, our Nominating
Committee may recommend to our Board the election or nomination
of a candidate.
Candidates for independent Board members have typically been
found through recommendations from directors or others
associated with us. Our stockholders may also recommend
candidates by sending the candidates name and resume to
our Nominating Committee under the provisions set forth above
for communication with our Board. No such suggestions from our
stockholders were received in time for our Annual Meeting.
Our Nominating Committee has no predefined minimum criteria for
selecting Board nominees, although it believes that (i) all
directors should share qualities such as: an ability to make
meaningful contributions to our board; independence; strong
communication and analytical skills; and a reputation for
honesty and ethical conduct; and (ii) independent directors
should share qualities such as: experience at the corporate,
rather than divisional level, in multi-national organizations as
large as or larger than us; and relevant, non-competitive
experience. Our Nominating Committee does not have a formal
policy with respect to diversity; however, our Nominating
Committee and our Board believe that it is important that we
have Board members whose diversity of skills, experience and
background are complementary to those of our other Board
members. In considering candidates for our Board, the Nominating
Committee considers the entirety of each candidates
credentials. In any given search, our Nominating Committee may
also define particular characteristics for candidates to balance
the overall skills and characteristics of our Board and our
perceived needs. However, during any search, our Nominating
Committee reserves the right to modify its stated search
criteria for exceptional candidates.
NON-EMPLOYEE
DIRECTOR COMPENSATION
Summary
of Compensation
Our directors who are also our employees do not receive
additional compensation for their service on our Board. Our
Board maintains a written compensation policy for our
non-employee directors. Each director other than our Chairman of
the Board receives an annual cash retainer of $20,000, and our
Chairman of the Board receives an annual cash retainer of
$40,000. The annual cash retainer is paid bi-annually and
requires that the director attend at least 75% of our Board
meetings. In addition, on the date of each annual meeting of
stockholders, each director other than our Chairman of the Board
receives a equity grant of 10,000 shares of our common
stock, and our Chairman of the Board receives a grant of
15,000 shares. In addition to the foregoing equity grants,
new directors receive an initial grant of 25,000 shares of
our common stock on the date that they join our Board. Initial
equity grants vest in three equal installments, on each
anniversary of the grant date, and annual grants vest in two
equal installments, on each anniversary of the grant date. Our
Board provides an additional $10,000 annual retainer (which is
paid bi-annually) as compensation for service as chairman of
each of our Audit Committee, Compensation Committee and
Nominating Committee.
Non-employee directors do not receive compensation from us other
than as a director or as committee member. There are no family
relationships among our directors and executive officers.
7
Non-employee
Director Compensation Table
The following table summarizes the compensation paid to our
non-employee directors for 2009:
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Fees Earned or
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Paid in Cash
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Stock Awards
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Total
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Name
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($)
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($)(1)
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($)
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John D. Lockton
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40,000
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48,600
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88,600
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Lynn J. Davis
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30,000
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32,400
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62,400
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Dennis J. Horowitz
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30,000
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32,400
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62,400
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Martin A. Kaplan
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30,000
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32,400
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62,400
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David W. Vellequette
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20,000
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32,400
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52,400
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The amounts in this column represent the aggregate grant date
fair value of the shares of restricted common stock calculated
in accordance with Accounting Standards Codification
(ASC) 718, under the assumptions included in
Note 5 to our audited financial statements for the year
ended December 31, 2009 included in our Annual Report on
Form 10-K
filed on March 17, 2010. As of December 31, 2009:
(i) Mr. Lockton had 32,000 options to purchase common
stock and 15,000 unvested shares of restricted common stock;
(ii) Mr. Davis had 21,400 options to purchase common
stock and 10,000 unvested shares of restricted common stock;
(iii) Mr. Horowitz had 30,500 options to purchase
common stock and 10,000 unvested shares of restricted common
stock; (iv) Mr. Kaplan had 23,000 options to purchase
common stock and 10,000 unvested shares of restricted common
stock; and (v) Mr. Vellequette had 15,000 options to
purchase common stock and 10,000 unvested shares of restricted
common stock. |
DIRECTORS
AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding
those individuals currently serving as our directors (or
nominated to serve as a director) and executive officers as of
March 19, 2010:
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Name
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Age
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|
Position
|
|
John D. Lockton(1)(3)
|
|
|
72
|
|
|
Chairman of the Board
|
Lynn J. Davis(1)(2)(4)
|
|
|
63
|
|
|
Director
|
Dennis J. Horowitz(1)(2)
|
|
|
63
|
|
|
Director
|
Martin A. Kaplan(2)(3)
|
|
|
72
|
|
|
Director
|
David W. Vellequette(1)(3)
|
|
|
53
|
|
|
Director
|
Jeffrey A. Quiram(4)
|
|
|
49
|
|
|
President, Chief Executive Officer and Director
|
William J. Buchanan
|
|
|
61
|
|
|
Controller (Principal Financial Officer and Principal Accounting
Officer)
|
Robert B. Hammond, Ph.D.
|
|
|
62
|
|
|
Senior Vice President, Chief Technical Officer
|
Robert L. Johnson
|
|
|
59
|
|
|
Senior Vice President, Operations
|
Terry A. White
|
|
|
58
|
|
|
Vice President, Worldwide Sales
|
Adam L. Shelton
|
|
|
43
|
|
|
Vice President, Product Management and Marketing
|
Thomas R. Giunta
|
|
|
49
|
|
|
Vice President, Engineering
|
|
|
|
(1) |
|
Member of our Audit Committee. |
|
(2) |
|
Member of our Compensation Committee. |
|
(3) |
|
Member of our Governance and Nominating Committee. |
|
(4) |
|
Member of our Stock Option Committee. |
Each of our directors and our current nominees was nominated
based on the assessment of our Nominating Committee and our
Board that he has demonstrated: an ability to make meaningful
contributions to our Board; independence; strong communication
and analytical skills; and a reputation for honesty and ethical
conduct. Our
8
Board consists of, and seeks to continue to include, persons
whose diversity of skills, experience and background are
complementary to those of our other directors.
John D. Lockton has served on our Board since 1997
and was named Chairman of our Board in 2001. From 1998 until his
retirement in 2008, Mr. Lockton served as a founder and was
initial chairman of IPWireless, Inc., a wireless internet access
and IP telephony service provider of 4G technology. From 1991 to
1998, he was President, Chief Executive Officer and a director
of International Wireless Communications, Inc., an operator of
cellular systems. From 1990 to 1991 he was Managing Partner of
Corporate Technology Partners, a joint venture with Bell Canada
Enterprises. In 1988, Mr. Lockton founded Cellular Data,
Inc., a cellular wireless data technology company, and Star
Associates, Inc., a cellular radio RSA company. He founded and
was a director of Interactive Network, Inc., a wireless-based
television company, and was Chairman of that companys
Board of Directors until 1994. From 1983 to 1987
Mr. Lockton was Executive Vice President of Pacific Bell
(now part of AT&T). From 1980 to 1983 he was President of
Warner Amex (now Warner) Cable Television, Inc. From 1968 to
1980 Mr. Lockton held various senior positions at
Dun & Bradstreet, including President of
Dun & Bradstreet International and President of
Moodys Investors Service. Mr. Lockton is a graduate
of Yale University (Phi Beta Kappa), Harvard Law School, and
holds an Executive M.B.A. from Columbia University.
Mr. Lockton has extensive knowledge in telecommunications,
both as a director and in management positions with various
operational responsibilities.
Lynn J. Davis has served on our Board since 2005.
He served as President, Chief Operating Officer and director of
August Technology, a manufacturer of inspection equipment for
the semiconductor fabrication industry from 2005 to 2006. From
2002 to 2004, he was a partner at Tate Capital Partners Fund,
LLC, a private investment firm he co-founded. Prior to Tate,
Mr. Davis was an employee of ADC Telecommunications for
28 years, serving in 14 management positions, including
Corporate President, Group President and Chief Operating
Officer. He is also a member of the Board of Directors of
Flexsteel Industries Inc., a furniture manufacturer.
Mr. Davis holds a B.S. in electrical engineering from Iowa
State University and an M.B.A. from the University of Minnesota.
Mr. Davis has extensive knowledge in various management
roles in the telecommunications industry, including
manufacturing, sales and marketing. As a venture capitalist,
Mr. Davis has worked with smaller companies and brings a
valuable entrepreneurial approach to management and compensation
issues.
Dennis J. Horowitz has served on our Board since
1990. Mr. Horowitz is currently, and has been since 2005,
President of DH Partners, a consulting Company that helps
Chinese and American companies develop businesses in many
locations, especially Mexico. In 2005, he retired as Chairman of
the Board of Wolverine Tube, Inc., a manufacturer and
distributor of copper and copper alloy tube, of which he had
been the Chairman and CEO since 1998. From 1994 to 1997, he
served as Corporate Vice President and President of the Americas
of AMP Incorporated, an interconnection device company. From
1993 to 1994, Mr. Horowitz served as President and Chief
Executive Officer of Philips Technologies, a Philips Electronics
North America company. From 1990 to 1993, he served as President
and Chief Executive Officer of Philips Components, Discrete
Products Division. From 1988 to 1990, he served as President and
Chief Executive Officer of Magnavox CATV, and from 1980 to 1988
was involved in the general administration of North American
Philips Corporation. Mr. Horowitz was a director of
Technitrol Inc from 2005 to 2006. Mr. Horowitz holds an
M.B.A. and a B.A. in economics from St. Johns University.
Mr. Horowitzs leadership and business skill, along
with his long-term involvement with us as a director,
contributes an in-depth knowledge of our operations and a sense
of strategic continuity to our Board.
Martin A. Kaplan has served on our board since
2002. Since 2000, Mr. Kaplan has served as Chairman of the
Board of JDS Uniphase, Inc., a telecommunications equipment
company. Mr. Kaplan also currently serves as a director of
Tekelec. In a career spanning forty years, Mr. Kaplan
served as Executive Vice-President of Pacific Telesis Group,
which became a subsidiary of SBC Communications in 1997, from
1986 until 2000, as President, Network Services Group of Pacific
Bell, and its successor, Pacific Telesis, and in various other
senior management positions. Mr. Kaplan served as a
director of Redback Networks from 2004 until 2007 when it was
acquired by Ericsson. Mr. Kaplan earned a B.S. in
engineering from California Institute of Technology.
Mr. Kaplan has extensive business leadership and technical
experience in telecommunications.
David W. Vellequette has served on our Board since
2007. Mr. Vellequette currently serves as Chief Financial
Officer of JDS Uniphase, Inc., a telecommunications equipment
company, a position he has held since 2005. He joined JDS
Uniphase as Vice President and Operations Controller in 2004.
From 2002 to 2004, he served as Vice
9
President of Worldwide Sales and Service Operations at Openwave
Systems, Inc., an independent provider of software solutions for
the mobile communications and media industries. From 1992 and
2002, Mr. Vellequette held increasingly responsible
positions at Cisco Systems, first as Corporate Controller of
StrataCom Corporation (acquired by Cisco in 1996) and from
2000 as Vice President of Finance. From 1984 to 1992,
Mr. Vellequette was Corporate Controller of Altera
Corporation, a supplier of programmable silicon solutions to the
electronics industry. Mr. Vellequette began his finance
career as an auditor with Ernst & Young. He holds a
B.S. in Accounting from the University of California, Berkeley,
and is a CPA. Mr. Vellequette has extensive knowledge about
public and financial accounting matters.
Jeffrey A. Quiram has served on our Board, and has
been our President and Chief Executive Officer, since 2005. From
1991 to 2004, Mr. Quiram served ADC Telecommunications in a
variety of management roles, including Vice President of its
wireless business unit. Mr. Quiram has a B.S. in
Quantitative Methods and Computer Science from College of St.
Thomas, and an M.B.A. from University of Minnesota.
Mr. Quiram has extensive knowledge about product
development, business planning, and complex manufacturing. In
addition, he has extensive knowledge about our corporate
operations and market activities from serving as our Chief
Executive Officer.
William J. Buchanan has been with us since 1998
and has served as our Controller since 2000. For 16 years
prior to joining us, he was a self-employed private investor and
investment advisor. For the nine years prior to that, he served
in various executive and accounting positions with Applied
Magnetics Corp and Raytheon Co. Mr. Buchanan holds a B.A.
in Economics from California State University, Fresno.
Robert B. Hammond, Ph.D., has served as our Senior
Vice President and Chief Technical Officer since 1992.
Dr. Hammond served as our Secretary from October 1999 to
2002. From May 1991 to December 1991, and July 1992 to December
1992, he served as our Acting Chief Operating Officer. He served
as our Vice President of Technology, and Chief Technical
Officer, from August 1990 to December 1992. From December 1987
to August 1990, he served as our Program Manager.
Dr. Hammond also serves on our Technical Advisory Board.
For over eleven years prior to joining us, he was at Los Alamos
National Laboratory, a group that performs research,
development, and pilot production of solid-state electronics and
optics, most recently as Deputy Group Leader of Electronics
Research and Development. Dr. Hammond received his Ph.D.
and M.S. in applied physics and his B.S. in physics from the
California Institute of Technology.
Robert L. Johnson has been our Senior Vice
President, Operations since 2004. Mr. Johnson joined us in
2000 as Vice President of Wireless Manufacturing. From 1996 to
2000, Mr. Johnson was the Director and General Manager of
Schlumberger ATE. From 1990 to 1996, he served as Vice President
and General Manager of Harman International Industries.
Mr. Johnson studied industrial engineering at Arizona State
University.
Terry A. White has been our Vice President
Worldwide Sales since 2005. From 2003 to 2005, Mr. White
was Vice President of Worldwide Sales for Mahi Networks, a
telecom company. From 2002 to 2003, Mr. White was Vice
President of Global Sales at Turnstone Systems. Prior to that
position and from 1992 to 2001, he held various positions at ADC
Telecommunications, most recently as Senior Vice President of
BIA Sales. Mr. White has been employed in sales management
for more than 20 years. Mr. White holds a B.A. from
Kennesaw College.
Adam L. Shelton has been our Vice President,
Product Management and Marketing since 2006. From 2005 to 2006,
Mr. Shelton was the Senior Director of Marketing for
Motorola. From 2003 to 2005, he was the Senior Director of
Marketing for Advanced Fibre Communications (AFC), now Tellabs.
Mr. Shelton also held various management and executive
management positions with Mahi Networks, ATU Communications and
Bell Canada. Mr. Shelton graduated with deans honors
as a Civil Engineering Technologist from Seneca College in
Toronto, Canada.
Thomas R. Giunta has served as our Vice President
Engineering since March 2008. From 2004 to 2008 Mr. Giunta
held senior management positions in Motorolas IP Video
Solutions and Motorola Wireline Networks organizations. From
2002 to 2004, he served as vice president, switching development
engineering at Ciena Corporation. In addition, he previously
served in senior leadership and senior engineering/product
development and management roles at Mahi Networks, Advanced
Fibre Communications, Fujitsu Network Communications and
10
Alcatel. Mr. Giunta holds an M.B.A. from the W.P. Carey
School of Business at Arizona State University and B.S. in
Computer Science from Florida International University.
VOTING
SECURITIES OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of our
common stock as of March 19, 2010 by (i) each person
known by us to be the beneficial owner of more than 5% of our
outstanding common stock, (ii) each of our directors,
(iii) each of our executive officers named in the table
under Executive Compensation Summary
Compensation Table, and (iv) all of our directors and
executive officers as a group. Except as otherwise indicated in
the footnotes to the table, (i) the persons and entities
named in the table have sole voting and investment power with
respect to all shares beneficially owned, subject to community
property laws where applicable, and (ii) the address of
each person is
c/o Superconductor
Technologies Inc., 460 Ward Drive, Santa Barbara,
California 93111.
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Name
|
|
Shares(3)
|
|
Percentage Ownership
|
|
Xiaoxiong Zhang
|
|
|
2,877,361
|
(1)
|
|
|
12.8
|
%
|
3/F, Block B, Tongfang Information
Harbor, 11 Langshan, Nanshan Dist.,
Shenzhen, China 518057
|
|
|
|
|
|
|
|
|
Kopp Investment Advisors, LLC
|
|
|
5,587,900
|
(2)
|
|
|
24.9
|
%
|
7701 France Avenue South, #500
Edina, MN 55435
|
|
|
|
|
|
|
|
|
Jeffrey A. Quiram
|
|
|
425,970
|
|
|
|
1.9
|
%
|
William J. Buchanan
|
|
|
107,926
|
|
|
|
*
|
|
Robert L. Johnson
|
|
|
128,830
|
|
|
|
*
|
|
Robert B. Hammond
|
|
|
173,542
|
|
|
|
*
|
|
Adam L. Shelton
|
|
|
169,009
|
|
|
|
*
|
|
Thomas R. Giunta
|
|
|
101,706
|
|
|
|
*
|
|
Terry A. White
|
|
|
229,957
|
|
|
|
1.0
|
%
|
John D. Lockton
|
|
|
37,000
|
|
|
|
*
|
|
Dennis J. Horowitz
|
|
|
34,234
|
|
|
|
*
|
|
Lynn J. Davis
|
|
|
24,734
|
|
|
|
*
|
|
Martin A. Kaplan
|
|
|
29,464
|
|
|
|
*
|
|
David W. Vellequette
|
|
|
17,709
|
|
|
|
*
|
|
All executive officers and directors as a group (12 persons)
|
|
|
1,480,081
|
|
|
|
6.6
|
%
|
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
Based solely on information reported in a joint
Schedule 13G/A filed with the SEC on February 17,
2010, by China Poly Group, Ltd. (China Poly
Group), Hunchun Baoli Communications Co., Ltd.
(Baoli), Baoli Investment Group Ltd.
(Baoli Investment), and Xiaoxiong Zhang
(Mr. Zhang). Each of China Poly Group,
Baoli and Baoli Investment is a company organized under the laws
of the Peoples Republic of China. Mr. Zhang is the
majority and controlling shareholder of China Poly Group.
Collectively, China Poly Group, Baoli and Baoli Investment are
the beneficial owners of 2,877,361 shares of which
(i) China Poly Group has shared voting power with respect
to 1,924,296 shares and shared dispositive power with
respect to 2,277,361 shares; (ii) Baoli has shared
voting and dispositive power with respect to
2,148,296 shares; (iii) Baoli Investment has shared
dispositive power with respect to 600,000 shares; and
(iv) Mr. Zhang has shared voting power with respect to
1,924,296 shares and shared dispositive power with respect
to 2,877,361 shares. China Poly Group holds
353,065 shares directly and Baoli Investment holds
600,000 shares directly; such shares are subject to an
Irrevocable Proxy and Voting Agreement pursuant to which the
shares must be voted in proportion to other shares voting on an
issue. We are aware that Baoli subsequently transferred an
aggregate of 1,848,296 shares to affiliates and China Poly
Group transferred an aggregate of 353,065 shares to
affiliates in several transactions characterized as gifts. We do
not know whether such transferred shares continue to be |
11
|
|
|
|
|
beneficially owned by Mr. Zhang. The 353,065 shares
transferred by China Poly Group continue to be subject to an
Irrevocable Proxy and Voting Agreement pursuant to which the
shares must be voted in proportion to the other shares voting on
an issue. In addition, China Poly Group collectively owns
611,523 shares of our Series A Preferred Stock.
Subject to the terms and conditions of the Series A
Preferred Stock and to customary adjustments to the conversion
rate, each share of our Series A Preferred Stock is
convertible into ten shares of our common stock so long as the
number of shares of our common stock beneficially owned by the
holder and related parties following such conversion does not
exceed 9.9% of our outstanding common stock. As a result, none
of China Poly Groups Series A Preferred Stock is
currently convertible. |
|
(2) |
|
Based solely on information reported in a Schedule 13D/A
filed with the SEC on September 2, 2009 by Kopp Investment
Advisors, LLC (KIA), Kopp Holding Company,
LLC (KHCLLC), and LeRoy C. Kopp
(Mr. Kopp), KIA is the beneficial owner
of and has sole voting authority with respect to 4,496,155 of
such shares and shared dispositive power with respect to 853,500
of such shares. As the parent entity of KIA, KHCLLC has indirect
beneficial ownership only and no voting or dispositive power
over any shares. Mr. Kopp beneficially owns
5,587,900 shares and has sole dispositive power with
respect to 4,734,400 of such shares. Mr. Kopps shares
include 1,087,745 shares of common stock subject to an
irrevocable proxy pursuant to which these such shares must be
voted in proportion to the other shares voting on an issue. |
|
(3) |
|
Includes shares issuable upon the exercise of stock options that
are exercisable within 60 days of March 19, 2010 as
follows: Mr. Quiram, 196,633 shares; Mr. Buchanan
34,004 shares; Mr. Johnson 32,927 shares;
Mr. Hammond 32,620 shares; Mr. Shelton,
94,219 shares; Mr. Giunta, 36,250 shares;
Mr. White, 128,951 shares; Mr. Lockton,
22,000 shares; Mr. Horowitz, 23,834 shares;
Mr. Davis, 14,734 shares; Mr. Kaplan,
16,544 shares; Mr. Vellequette, 7,709 shares; and
all executive officers and directors as a group,
640,425 shares. |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934,
our directors, executive officers and significant stockholders
(defined by statute as stockholders beneficially owning more
than 10% of our common stock) are required to file with the SEC
and us reports of ownership, and changes in ownership, of our
common stock. Based solely on a review of the reports, and on
written representations by certain directors and executive
officers, received by us, all of our executive officers,
directors and significant stockholders complied with all
applicable filing requirements under Section 16(a) during
2009.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following table sets forth the base salary and other
compensation of our (i) President and Chief Executive
Officer and (ii) our other two most highly compensated
officers for 2009 (our named executive officers)
with respect to 2009, 2008 and 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)(1)
|
|
($)(1)
|
|
($)
|
|
($)(2)
|
|
($)
|
|
Jeffrey A. Quiram
|
|
|
2009
|
|
|
|
315,000
|
|
|
|
157,629
|
|
|
|
|
|
|
|
|
|
|
|
109,045
|
|
|
|
581,674
|
|
President, Chief
|
|
|
2008
|
|
|
|
315,000
|
|
|
|
|
|
|
|
329,367
|
|
|
|
|
|
|
|
108,923
|
|
|
|
753,290
|
|
Executive Officer, Director
|
|
|
2007
|
|
|
|
315,650
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
110,885
|
|
|
|
526,535
|
|
Robert B. Hammond
|
|
|
2009
|
|
|
|
246,330
|
|
|
|
82,322
|
|
|
|
|
|
|
|
|
|
|
|
6,056
|
|
|
|
334,708
|
|
Senior Vice President,
|
|
|
2008
|
|
|
|
246,330
|
|
|
|
|
|
|
|
140,367
|
|
|
|
|
|
|
|
6,323
|
|
|
|
393,020
|
|
Chief Technical Officer
|
|
|
2007
|
|
|
|
248,442
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
1,290
|
|
|
|
273,732
|
|
Adam L. Shelton
|
|
|
2009
|
|
|
|
240,000
|
|
|
|
80,549
|
|
|
|
|
|
|
|
|
|
|
|
44,804
|
|
|
|
365,353
|
|
Vice President Product
|
|
|
2008
|
|
|
|
240,000
|
|
|
|
|
|
|
|
170,849
|
|
|
|
|
|
|
|
50,605
|
|
|
|
461,453
|
|
Management and Marketing
|
|
|
2007
|
|
|
|
240,000
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
46,532
|
|
|
|
310,532
|
|
12
|
|
|
(1) |
|
The Option Awards and Stock Awards amounts represent the
aggregate grant date fair value of the options to purchase
common stock or shares of restricted common stock (as
applicable) calculated in accordance with ASC 718, under the
assumptions included in Note 5 to our audited financial
statements for the year ended December 31, 2009 included in
our Annual Report on
Form 10-K
filed on March 17, 2010. |
|
(2) |
|
The All Other Compensation amounts shown reflect the value
attributable to term life insurance premiums and company 401K
matching for each named executive officer as well as other
perquisites described below. Each named executive officer is
responsible for paying income tax on such amounts. The aggregate
dollar amount of perquisites or other personal benefits for
Mr. Hammond is less than $10,000. Pursuant to the terms of
their employment agreements, Mr. Quiram received $104,578,
$104,456 and $110,435 in 2009, 2008 and 2007, respectively, for
travel expenses from his home in Minnesota, the lease of an
apartment near our Santa Barbara headquarters, the lease of
an automobile, and special indemnity payments to cover the taxes
resulting from the payment or reimbursement of such travel and
housing expenses; and Mr. Shelton received $40,492, $46,253
and $46,197 in 2009, 2008 and 2007, respectively, for travel
expenses for travel from his home in California to our
headquarters. |
Narrative
Disclosure To Summary Compensation Table
Employment
Agreement
We entered into an employment agreement with Mr. Quiram in
2005, which was amended in 2007. The employment agreement
provides for the following:
|
|
|
|
|
Appointment as our President, Chief Executive Officer and a
member of our Board;
|
|
|
|
A base salary, which has been $315,000 per year since 2006;
|
|
|
|
A bonus of up to 100% of his base salary based upon achievement
of annual performance goals to be developed by our Compensation
Committee and Mr. Quiram;
|
|
|
|
Accelerated vesting of all his equity grants in the event of an
Involuntary Termination or Change of Control (both as defined in
his employment agreement);
|
|
|
|
A severance payment equal to one years salary and
continued benefits for one year in the event of Involuntary
Termination;
|
|
|
|
In the event of a Change of Control, whether or not he is
terminated, Mr. Quiram is entitled to (i) payment of
two times his annual base salary, (ii) 24 months of
benefits coverage, and (iii) accelerated vesting of all of
his outstanding equity grants;
|
|
|
|
Payment or reimbursement of travel expenses from his present
home in Minnesota and the lease of an apartment for
Mr. Quiram near our Santa Barbara headquarters; and a
special indemnity payment for any taxes resulting from the
payment or reimbursement of such expenses; and
|
|
|
|
Lease of an automobile.
|
Change of
Control Agreements.
We also have change of control agreements with
Messrs. Hammond and Shelton. These change of control
agreements generally provide that, if the employees
employment is terminated within twenty-four months of a
Change of Control (as defined in the change of
control agreements) either (i) by us for any reason other
than death, Cause or Disability (as both
terms are defined in the change of control agreements) or
(ii) by the employee for Good Reason (as
defined in the change of control agreements), then the
terminated employee will be entitled to a severance benefits
salary continuation payments and continuation of health/life
insurance benefits for 18 months and accelerated vesting
for all outstanding unvested stock options and similar equity
securities held by the employee. Any payments or distributions
made to or for the benefit of the named employees under these
13
change of control agreements will be reduced, if necessary, to
an amount that would result in no excise taxes being imposed
under Internal Revenue Code Section 4999.
Non-Equity
Incentive Compensation
We maintain a bonus plan for executive officers and selected
other members of senior management. Under the plan, our
Compensation Committee establishes financial and other pertinent
objectives for the period and assigns each executive officer an
annual target bonus amount based on a percentage of his or her
base salary, which ranges from 20% to 100%. Our Compensation
Committee also retains the authority to award discretionary
bonuses for performance in other aspects of the business not
covered by the established goals. At the beginning of 2009, our
Compensation Committee decided, based on current economic
conditions, to not establish financial performance targets under
this plan for 2009 and to not award cash bonuses based on
financial objectives in 2009. Our Compensation Committee did
reserve its right to award discretionary bonuses if appropriate;
however no bonuses were awarded for 2009.
Equity
Grants
For 2009, we made the following grants of restricted stock
awards to our named executive officers:
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Name
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Grant Date(1)
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Number of Shares
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Jeffrey A. Quiram
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1/20/2009
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157,629
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Robert B. Hammond
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1/20/2009
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82,322
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Adam L. Shelton
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1/20/2009
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80,549
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(1) |
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50% of the shares vest on each of January 20, 2010 and
January 20, 2011. |
Outstanding
Equity Awards at Fiscal Year End
The following table sets forth certain information with respect
to outstanding options and unvested shares of restricted stock
on December 31, 2009:
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Option Awards
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Stock Awards
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Market
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Number of
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Number of
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Value of
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Securities
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Number of
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Shares or
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Shares or
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Underlying
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Securities
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Units of
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Units of
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Unexercised
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Underlying
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Stock That
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Stock That
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Options (#)
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Unexercised
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Option
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Option
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Have Not
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Have Not
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Exercisable
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Options (#)
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Exercise
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Expiration
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Vested
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Vested
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Name
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(1)
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Unexercisable
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Price ($)
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Date
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(5)
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($)(6)
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Jeffrey A Quiram
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120,000
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6.90
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5/25/2015
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45,833
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4,167
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(2)
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5.12
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2/20/2018
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|
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|
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|
|
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22,592
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14,143
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(3)
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5.12
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2/20/2018
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|
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|
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|
|
|
|
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157,629
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384,615
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Robert B Hammond
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15,583
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1,417
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(2)
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5.12
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2/20/2018
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13,251
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8,294
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(3)
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5.12
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2/20/2018
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|
|
|
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|
|
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82,322
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200,866
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Adam L Shelton
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50,417
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4,583
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(4)
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4.03
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4/24/2016
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22,000
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2,000
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(2)
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5.12
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2/20/2018
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12,910
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8,081
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(3)
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5.12
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2/20/2018
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|
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80,549
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196,540
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(1) |
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These options are fully vested. |
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(2) |
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These options fully vested on February 20, 2010. |
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(3) |
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These options will vest ratably, monthly, until fully vested
February 20, 2011. |
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(4) |
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These options will fully vest on April 24, 2010. |
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(5) |
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50% of the shares vest on each of January 20, 2010 and
January 20, 2011. |
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(6) |
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The market value is calculated using the closing share price of
our common stock of $2.44 on December 31, 2009. |
14
PROPOSAL TWO
APPROVAL
OF AMENDMENT TO THE 2003 EQUITY INCENTIVE PLAN
We believe that our officers and other key employees should have
a significant stake in our stock price performance under
programs that link compensation to stockholder return. As a
result, stock option grants and other equity incentives are an
integral part of our compensation program. We presently grant
equity incentives only under our 2003 Equity Incentive Plan, as
amended (the Plan). The Plan has an aggregate limit
of 2,500,000 shares of our common stock for all awards and
related sublimits on awards to a single person and on certain
types of equity awards. In addition to stock options outstanding
under the Plan, we have stock options outstanding under the
following prior equity compensation plans: the 1999 Stock Option
Plan, the 1998 Stock Option Plan and the Non-statutory
1992 Directors Option Plan. All of these plans are
administered by our Compensation Committee, but new grants may
only be made under the Plan.
As of March 19, 2010, we had fewer than 246,000 shares
of our common stock available for issuance under the Plan for
future equity grants. Therefore, on March 29, 2010, our
Board approved, and under this proposal you are being requested
to approve, an increase in the total shares available for grants
under the Plan from 2,500,000 shares of our common stock to
4,525,000 shares of our common stock. This Proposal does
not affect any of the sublimits currently in the Plan.
Below is a summary description of the Plan, which summarizes its
essential features. This summary is qualified in its entirety by
reference to the full text of the Plan, as proposed to be
amended, which is attached to this Proxy Statement as
Annex A.
Summary
of the Plan
Eligibility. The Plan provides for
grants to our key employees, directors and consultants. As of
March 19, 2010, there were approximately
115 employees, directors and consultants eligible to
receive awards under the Plan.
Purpose. The purpose of the Plan is to
promote our success, and enhance our value, by linking the
personal interests of participating employees, directors and
consultants to those of our stockholders and by providing such
employees, directors and consultants with an incentive for
outstanding performance. The Plan is further intended to provide
us flexibility in our ability to motivate, attract and retain
the services of outstanding individuals upon whose judgment,
interest and special efforts we are largely dependent for the
successful conduct of our operations.
Administration. The Plan is
administered by our Compensation Committee.
Types of Awards. The Plan provides for
stock options, stock appreciation rights (SARs),
restricted stock awards, performance unit awards and performance
share awards:
Options. Plan participants may receive options
to purchase shares of our common stock for an exercise price
fixed on the date of the grant. The exercise price may not be
less than the fair market value of our common stock on the date
of the grant. Grants of option rights under the Plan may be
incentive stock options or non-qualified stock options. An
incentive stock option is an option that is intended to qualify
as an incentive stock option under Section 422
of the Internal Revenue Code. A Plan participant may pay the
exercise price of an option in cash, by check, or by the
transfer of unrestricted shares of our common stock owned for a
period of time acceptable to our Compensation Committee and
having a value at the time of exercise equal to the exercise
price, by any other consideration our Compensation Committee may
deem appropriate, or by a combination thereof. Our Compensation
Committee shall determine the vesting schedule and requirements
for continuous service associated with each grant of options and
may provide for earlier vesting under specified circumstances.
The vesting or exercise of option rights may be subject to the
optionee or the achievement of management objectives. No
incentive options shall be exercisable more than 10 years
after the date of grant.
Stock Appreciation Rights
(SAR). The Plan permits the grant of
three types of SARs: Affiliated SARs, Freestanding SARs, Tandem
SARs, or any combination thereof. An Affiliated SAR is an SAR
that is granted in connection with a related option and that
will be deemed to automatically be exercised simultaneously with
the exercise of the related option. A Freestanding SAR is a SAR
that is granted independently of
15
any options. A Tandem SAR is a SAR that is granted in connection
with a related option, the exercise of which requires a
forfeiture of the right to purchase a share under the related
option (and when a share is purchased under the option, the SAR
is similarly cancelled). Our Compensation Committee has complete
discretion to determine the number of SARs granted to any
optionee or recipient and the terms and conditions pertaining to
such SARs. However, the grant price must be at least equal to
the fair market value of a share of our common stock on the date
of grant in the case of a Freestanding SAR and equal to the
option price of the related option in the case of an Affiliated
or Tandem SAR.
Restricted Stock Awards. The Plan permits the
grant of restricted stock awards, which are restricted shares of
our common stock that vest in accordance with terms established
by our Compensation Committee. Our Compensation Committee may
impose restrictions and conditions on the shares, including,
without limitation, restrictions based upon the achievement of
specific performance goals (company-wide, divisional
and/or
individual),
and/or
restrictions under applicable federal or state securities laws.
Our Compensation Committee may accelerate the time at which any
restrictions lapse,
and/or
remove any restrictions.
Performance Unit/Share Awards. The Plan
permits the grant of performance unit and performance share
awards, which are payable in cash, our common stock, or a
combination thereof. Each performance unit has an initial value
that is established by our Compensation Committee at the time of
its grant. Each performance share has an initial value equal to
the fair market value of a share of our common stock on the date
of its grant. The number
and/or value
of performance unit/shares that will be paid out to recipients
will depend upon the extent to which performance goals
established by our Compensation Committee are satisfied. After a
performance unit/share award has vested, the recipient will be
entitled to receive a payout of the number of performance
unit/shares earned by the recipient, to be determined as a
function of the extent to which the corresponding performance
goals have been achieved. Our Compensation Committee also may
waive the achievement of any performance goals for such
performance units/shares. Subject to the applicable award
agreement, performance units/shares awarded to recipients will
be forfeited upon the earlier of the recipients
termination of employment or the date set forth in the award
agreement.
Term. No grants of incentive stock
options may be made under the Plan after March 20, 2013.
All awards made under the Plan that remain outstanding
subsequent to that date shall continue to be governed by the
terms of the Plan.
Nontransferability of Award. Awards
granted under the Plan may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by
will or by the applicable laws of descent and distribution.
However, an optionee or recipient may designate one or more
beneficiaries to receive any exercisable or vested awards
following his or her death.
Plan Benefits. As the grant of awards
under the Plan is discretionary, it is impossible to determine
the amount and terms of such future grants under the Plan. Our
common stock underlies all of the options and rights to be
awarded under the Plan. The market value of our common stock at
the close of trading on March 19, 2010 was $2.97 per share.
The limits and
sub-limits
on the number of awards under the Plan, and the number of shares
and price per share applicable to any outstanding award, are
subject to adjustment in the event of stock dividends, stock
splits, combinations of shares, recapitalizations, mergers,
consolidations or other reorganizations.
Prohibition on Repricing. Our
Compensation Committee may not lower the exercise price of
outstanding option rights without the approval of our
stockholders.
Federal Tax Aspects. The following is a
summary of certain federal income tax consequences relating to
awards under the Plan, based on federal income tax laws
currently in effect. This summary is not intended to and does
not describe all of the possible tax consequences that could
result from the acquisition, holding, exercise or disposition of
an option right or shares of common stock purchased or granted
pursuant to, or any other award granted under, the Plan and does
not describe any state, local or foreign tax consequences.
Tax Consequences to Participants
Incentive Stock Options. A Plan
participant will not recognize income upon the grant of an
option intended to be an incentive stock option. Furthermore, a
Plan participant will not recognize ordinary income
16
upon the exercise of an incentive stock option if he or she
satisfies certain employment and holding period requirements
although the exercise may be subject to alternative minimum tax.
To satisfy the employment requirement, a Plan participant must
exercise the option not later than three (3) months after
he or she ceases to be our employee (one (1) year if he or
she is disabled). To satisfy the holding period requirement, a
Plan participant must hold the shares acquired upon exercise of
the incentive stock option for more than two (2) years from
the grant of the option and more than one (1) year after
the shares are transferred to him or her. If these requirements
are satisfied, the Plan participant will be taxed on the
difference between his or her basis in the shares and the net
proceeds of the sale at capital gain rates on the sale of the
shares.
If a Plan participant disposes of shares of our common stock
acquired upon the exercise of an incentive stock option without
satisfying the holding period requirement, the Plan participant
will usually recognize ordinary income at the time of
disposition equal to the amount of the difference between the
fair market value of that stock on the date the option is
exercised and the exercise price of the option.
Non-Qualified Stock Options. In
general, a Plan participant will not recognize income at the
time an option is granted. At the time of exercise of the
option, he or she will recognize ordinary income if the shares
are not subject to a substantial risk of forfeiture (as defined
in Section 83 of the Internal Revenue Code). The amount of
such income will be equal to the difference between the option
exercise price and the fair market value of the shares of our
common stock on the date of exercise. At the time of the sale of
the shares of our common stock acquired pursuant to the exercise
of an option, appreciation in value of the shares after the date
of exercise will be treated as either short-term or long-term
capital gain, and depreciation in value will be treated as
short-term or long-term capital loss, depending on how long the
shares have been held. Long-term capital gains may be eligible
for reduced rates if the participant has satisfied applicable
holding period requirements.
Stock Appreciation Rights. A Plan
participant will not recognize income upon the grant of a stock
appreciation right. In general, a participant will recognize
ordinary income at the time he or she receives payment on a
stock appreciation right in the amount of the payment.
Restricted Shares. In general, a Plan
participant will not recognize ordinary income upon receipt of
restricted shares. The Plan participant will recognize ordinary
income when the shares are transferable by the Plan participant
or are no longer subject to a substantial risk of forfeiture,
whichever occurs first. At such time, the Plan participant will
recognize ordinary income in an amount equal to the current fair
market value of the shares. A Plan participant may, however,
elect to recognize ordinary income when the restricted shares
are granted in an amount equal to the fair market value of the
shares at that time, determined without regard to the
restrictions. Any appreciation in the value of the shares after
the date the shares become transferable or are no longer subject
to substantial risk of forfeiture, or after the participant has
made the election referred to in the preceding sentence, if
applicable, will be treated as either short-term or long-term
capital gain, and any depreciation in value will be treated as
either short-term or long-term capital loss, depending upon how
long the shares have been held.
Performance Units. A Plan participant
will not recognize income upon the grant of performance units.
In general, a Plan participant will recognize ordinary income at
the time he or she receives payment with respect to performance
units in the amount of the payment.
Tax Consequences to Us
To the extent that a Plan participant recognizes ordinary income
as described above, we will be entitled to a corresponding
deduction provided that, among other things, the income meets
the test of reasonableness, is an ordinary and necessary
business expense, is not an excess parachute payment
within the meaning of Section 280G of the Internal Revenue
Code and is not disallowed by the $1,000,000 limitation on
certain executive compensation under Section 162(m) of the
Internal Revenue Code
Required
Vote
Proposal Two requires the affirmative vote of a majority of
the votes cast on the proposal. Stockholders may vote
for or against the proposal, or they may
abstain from voting on the proposal. Abstentions will have the
17
effect of voting against the proposal, but broker
non-votes will not have any effect on the outcome of this
proposal.
Board
Recommendation
Our Board Recommends a Vote For
Approval of the Amendment to the 2003 Equity Incentive
Plan.
PROPOSAL THREE
RATIFICATION
OF APPOINTMENT OF
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee has selected Stonefield Josephson, Inc., an
independent registered public accounting firm, to audit our
financial statements for 2010. Our Audit Committee is submitting
its selection to our stockholders for ratification. Stonefield
Josephson, Inc. has served as our auditor since 2006 and has no
financial interest of any kind in us except the professional
relationship between auditor and client. A representative of
Stonefield Josephson is expected to attend our Annual Meeting,
will be afforded an opportunity to make a statement if he or she
desires to do so, and will be available to respond to
appropriate questions by stockholders.
Required
Vote
Proposal Three requires the affirmative vote of a majority
of the votes cast on the proposal. Stockholders may vote
for or against the proposal, or they may
abstain from voting on the proposal. Abstentions will have the
effect of voting against the proposal, but broker non-votes will
not have any effect on the outcome of this proposal. In the
event the stockholders do not approve this proposal, our Audit
Committee will reconsider the appointment of Stonefield
Josephson, Inc. as our independent registered public accounting
firm.
Board
Recommendation
Our Board Recommends a Vote For the
Ratification of the Appointment of our Independent Registered
Public Accounting Firm.
AUDIT
COMMITTEE REPORT
The information contained in this Audit Committee Report
shall not be deemed incorporated by reference in any filing
under the Securities Act of 1933 or the Securities Exchange Act
of 1934, whether made before or after the date hereof and
irrespective of any general incorporation language in any such
filing (except to the extent that we specifically incorporate
this information by reference) and shall not otherwise be deemed
soliciting material or filed with the
SEC or subject to Regulation 14A or 14C, or to the
liabilities of Section 18 of the Securities Exchange Act of
1934 (except to the extent that we specifically incorporate this
information by reference).
Our Audit Committee reviews our financial reporting process on
behalf of our Board. Management has the primary responsibility
for the financial statements and the reporting process,
including the system of internal controls. Our Audit Committee
has reviewed and discussed the audited financial statements with
management. In addition, our Audit Committee has discussed with
the independent auditors the matters required to be discussed by
Statements on Auditing Standards No. 61, as amended.
Our Audit Committee has also received the written disclosures
and the letter from the independent accountants required by
applicable requirements of the Public Company Accounting
Oversight Board regarding the independent accountants
communications with the audit committee concerning independence,
and has discussed with Stonefield Josephson, Inc. its
independence, including whether their provision of other
non-audit services to us is compatible with maintaining its
independence.
Our Audit Committee discussed with our independent auditors the
overall scope and plans for the audit. Our Audit Committee meets
with the independent auditors, with and without management
present to discuss the results of their examinations, the
evaluation of our internal controls and the overall quality of
our reporting.
18
Based upon the review and discussions referred to in the
foregoing paragraphs, our Audit Committee recommended to our
Board that the audited financial statements be included in our
Annual Report on
Form 10-K
for 2009 for filing with the SEC. Our Audit Committee and our
Board also have recommended, subject to stockholder approval,
the selection of our independent auditors.
AUDIT COMMITTEE
Dennis J. Horowitz (Chairman)
David W. Vellequette
John D. Lockton
Lynn J. Davis
FEES PAID
TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee regularly reviews and determines whether
specific non-audit projects or expenditures with our independent
registered public accounting firm, Stonefield Josephson, Inc.,
potentially affects its independence. Our Audit Committees
policy is to pre-approve all audit and permissible non-audit
services provided by Stonefield Josephson, Inc. Pre-approval is
generally provided by our Audit Committee for up to one year, as
detailed as to the particular service or category of services to
be rendered, and is generally subject to a specific budget. Our
Audit Committee may also pre-approve additional services of
specific engagements on a
case-by-case
basis.
The following table sets forth the aggregate fees billed to us
by Stonefield Josephson, Inc. for 2009 and 2008, all of which
were pre-approved by our Audit Committee:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Audit fees(1)
|
|
$
|
219,613
|
|
|
$
|
227,849
|
|
Audit-related fees(2)
|
|
$
|
|
|
|
$
|
|
|
All other fees(3)
|
|
$
|
21,319
|
|
|
$
|
|
|
Total
|
|
$
|
240,932
|
|
|
$
|
227,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes fees for professional services rendered for the audit
of our annual financial statements and review of our annual
report on
Form 10-K
and for reviews of the financial statements included in our
quarterly reports on
Form 10-Q
for the first three quarters of 2009 and 2008. |
|
(2) |
|
Fees related to financial reporting or disclosure matters not
classified as audit services. |
|
(3) |
|
In 2009, these fees related to services rendered for our
S-3
registration statement. |
TRANSACTIONS
WITH RELATED PERSONS
We and Hunchun BaoLi Communication Co. Ltd.
(BAOLI), who beneficially owns more than 10%
of our stock, have established a joint venture to manufacture
and market our
SuperLink®
interference elimination solution for the China market. Our
agreements provide that BAOLI will provide the manufacturing
expertise and financing in exchange for 55% of the equity and we
will provide an exclusive license in the China market of the
enabling technology in exchange for 45% of the equity and a
royalty on sales.
On June 23, 2009, as part of a registered direct offering,
Leroy C. Kopp, who together with his affiliated investment
advisory entities (collectively, with Mr. Kopp, the
Kopp Group) beneficially owns more than 10%
of our stock, purchased 3,000,000 shares of our common
stock under a Common Stock Purchase Agreement dated as of
June 22, 2009, at a price per share of $3.00, for gross
proceeds to us of $9,000,000. On August 27, 2009,
Mr. Kopp (on behalf of himself and the Kopp Group)
(i) confirmed to NASDAQ the Kopp Groups agreement to
sell or otherwise reduce their holdings of our common stock by
1,087,745 shares no later than June 30, 2010 and
(ii) agreed pursuant to a proxy to vote a total of
(A) 1,087,745 shares of our common beneficially owned
by the Kopp Group,
19
less (B) any shares of our common stock that cease to be
beneficially owned by the Kopp Group after the date of the
proxy, as reflected in the public filings of the Kopp Group, in
proportion to the all other shares voting on an issue.
ANNUAL
REPORT TO STOCKHOLDERS
Our Annual Report on
Form 10-K
for the year ended December 31, 2009 is being mailed to our
stockholders along with this Proxy Statement.
OTHER
MATTERS
We know of no other matters to be submitted at our Annual
Meeting. If any other matters properly come before the meeting,
it is the intention of the persons named in the enclosed proxy
card to vote the shares they represent as our Board may
recommend.
By Order of the Board of Directors,
Jeffrey A. Quiram
President and Chief Executive Officer
Santa Barbara, California
April 2, 2010
20
ANNEX A
2003
Equity Incentive Plan, as proposed to be amended
Superconductor Technologies Inc. hereby adopts the 2003 Equity
Incentive Plan, effective as of March 20, 2003, as amended
May 25, 2005, March 13, 2006, September 21, 2007,
April 3, 2008 and May 6, 2010 (the
Plan) as follows:
SECTION 1
BACKGROUND,
PURPOSE AND DURATION
1.1 Background and Effective
Date. The Plan provides for the granting
of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights (or SARs), Restricted Stock, Performance
Units, and Performance Shares. The Plan is adopted and effective
as of March 20, 2003, subject to approval by the
stockholders of the Company within twelve (12) months. The
Company will seek stockholder approval in the manner and to the
degree required under Applicable Laws. Awards may be granted
prior to the receipt of stockholder approval, but such grants
shall be null and void if such approval is not in fact received
within twelve (12) months.
1.2 Purpose of the
Plan. The purpose of the Plan is to
promote the success, and enhance the value, of the Company by
aligning the interests of Participants with those of the
Companys shareholders, and by providing Participants with
an incentive for outstanding performance. The Plan is further
intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of outstanding
individuals, upon whose judgment, interest, and special effort
the success of the Company largely is dependent.
1.3 Duration of the
Plan. The Plan shall commence on the date
specified in Section 1.1 and subject to SECTION 12
(concerning the Boards right to amend or terminate the
Plan), shall remain in effect thereafter. However, without
further stockholder approval, no Incentive Stock Option may be
granted under the Plan on or after March 20, 2013.
1.4 Termination of Old
Plans. The Companys four existing
stock option plans (the 1992 Stock Option Plan, the Nonstatutory
1992 Directors Stock Option Plan, the 1998 Stock Option
Plan and the 1999 Stock Option Plan) shall terminate effective
upon stockholder approval of this Plan, and no further grants of
awards shall be made under those plans after the date of such
approval. The termination of those plans will not affect the
rights of holders of options previously granted and outstanding
under those plans.
SECTION 2
DEFINITIONS
The following words and phrases shall have the following
meanings unless a different meaning is plainly required by the
context:
2.1 1934 Act means the
Securities Exchange Act of 1934, as amended. Reference to a
specific section of the Exchange Act or regulation thereunder
shall include such section or regulation, any valid regulation
promulgated under such section, and any comparable provision of
any future legislation or regulation amending, supplementing or
superseding such section or regulation.
2.2 Affiliate means any
corporation or any other entity (including, but not limited to,
partnerships and joint ventures) controlling, controlled by, or
under common control with the Company.
2.3 Affiliated SAR means an SAR
that is granted in connection with a related Option, and which
automatically will be deemed to be exercised at the same time
that the related Option is exercised.
2.4 Applicable Laws means the
requirements relating to the administration of equity plans
under U.S. state corporate laws, U.S. federal and
state securities laws, the Code, any stock exchange or quotation
system on which the Shares are is listed or quoted and the
applicable laws of any foreign country or jurisdiction where
Awards are, or will be, granted under the Plan.
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2.5 Award means, individually or
collectively, a grant under the Plan of Nonqualified Stock
Options, Incentive Stock Options, SARs, Restricted Stock,
Performance Units, or Performance Shares.
2.6 Award Agreement means the
written agreement setting forth the terms and provisions
applicable to each Award granted under the Plan.
2.7 Board or Board of
Directors means the Board of Directors of the
Company.
2.8 Change in Control is defined
in Section 15.4.
2.9 Code means the Internal
Revenue Code of 1986, as amended. Reference to a specific
section of the Code or regulation thereunder shall include such
section or regulation, any valid regulation promulgated under
such section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding
such section or regulation.
2.10 Committee means the
committee appointed by the Board to administer the Plan pursuant
to Section 3.1.
2.11 Company means Superconductor
Technologies Inc., a Delaware corporation, or any successor
thereto.
2.12 Consultant means an
individual who provides significant services to the Company
and/or an
Affiliate, including a Director who is not an Employee.
2.13 Director means any
individual who is a member of the Board of Directors of the
Company.
2.14 Disability means a permanent
and total disability within the meaning of Code
Section 22(e)(3).
2.15 Employee means an employee
of the Company or of an Affiliate, whether such employee is so
employed at the time the Plan is adopted or becomes so employed
subsequent to the adoption of the Plan.
2.16 ERISA means the Employee
Retirement Income Security Act of 1974, as amended. Reference to
a specific section of ERISA shall include such section, any
valid regulation promulgated thereunder, and any comparable
provision of any future legislation amending, supplementing or
superseding such section.
2.17 Fair Market Value means as
of any date, the value of a Share determined as follows:
(a) If the Shares are listed on any established stock
exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap
Market of The Nasdaq Stock Market, its Fair Market Value shall
be the closing sales price for such Share (or the closing bid,
if no sales were reported) as quoted on such exchange or system
on the day of, or the last market trading day prior to, the day
of determination, as reported in The Wall Street Journal or such
other source as the Committee deems reliable;
(b) If the Shares are regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair
Market Value of the Share shall be the mean between the high bid
and low asked prices for the Shares on the day of, or the last
market trading day prior to, the day of determination, as
reported in The Wall Street Journal or such other source as the
Committee deems reliable; or
(c) In the absence of an established market for the Shares,
the Fair Market Value shall be determined in good faith by the
Committee.
2.18 Freestanding SAR means a SAR
that is granted independently of any Option.
2.19 Incentive Stock Option or
ISO means an option to purchase
Shares, which is designated as an Incentive Stock Option and is
intended to meet the requirements of Section 422 of the
Code.
2.20 Nonqualified Stock Option
means an option to purchase Shares which is not intended to be
an Incentive Stock Option.
2.21 Option means an Incentive
Stock Option or a Nonqualified Stock Option.
2.22 Option Price means the price
at which a Share may be purchased pursuant to an Option.
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2.23 Participant means an
Employee, Consultant or Director who has an outstanding Award.
2.24 Performance Share means an
Award granted to an Employee pursuant to SECTION 8 having
an initial value equal to the Fair Market Value of a Share on
the date of grant.
2.25 Performance Unit means an
Award granted to an Employee pursuant to SECTION 8 having
an initial value (other than the Fair Market Value of a Share)
that is established by the Committee at the time of grant.
2.26 Period of Restriction means
the period during which the transfer of Shares of Restricted
Stock are subject to restrictions.
2.27 Plan means the
Superconductor Technologies Inc. 2003 Equity Incentive Plan, as
set forth in this instrument and as hereafter amended from time
to time.
2.28 Restricted Stock means an
Award granted to a Participant pursuant to SECTION 7.
2.29 Retirement means, in the
case of an Employee, a Termination of Employment by reason of
the Employees retirement at or after age 62.
2.30 Rule 16b-3
means
Rule 16b-3
promulgated under the 1934 Act, and any future regulation
amending, supplementing or superseding such regulation.
2.31 Section 16 Person
means a person who, with respect to the Shares, is subject to
Section 16 of the 1934 Act.
2.32 Shares means the shares of
common stock, $0.001 par value, of the Company.
2.33 Stock Appreciation Right or
SAR means an Award, granted alone or
in connection with a related Option, that pursuant to the terms
of SECTION 7 is designated as an SAR.
2.34 Subsidiary means any
subsidiary corporation (other than the Company) as
defined in Code Section 424(f).
2.35 Tandem SAR means an SAR that
is granted in connection with a related Option, the exercise of
which shall require forfeiture of the right to purchase an equal
number of Shares under the related Option (and when a Share is
purchased under the Option, the SAR shall be canceled to the
same extent).
2.36 Termination of Employment
means a cessation of the employee-employer or director or other
service arrangement relationship between an Employee, Consultant
or Director and the Company or an Affiliate for any reason,
including, but not by way of limitation, a termination by
resignation, discharge, death, Disability, Retirement, or the
disaffiliation of an Affiliate, but excluding any such
termination where there is a simultaneous reemployment or
re-engagement by the Company or an Affiliate.
SECTION 3
ADMINISTRATION
3.1 The Committee. The Plan
shall be administered by a committee of the Board that meets the
requirements of this Section 3.1 (hereinafter referred to
as the Committee ). The Committee shall consist of
not less than two (2) Directors. The members of the
Committee shall be appointed from time to time by, and shall
serve at the pleasure of, the Board of Directors. The Committee
shall be comprised solely of Directors who are both
outside directors under
Rule 16b-3
and independent directors under the requirements of
any national securities exchange or system upon which the Shares
are then listed
and/or
traded.
3.2 Authority of the
Committee. The Committee shall have all
powers and discretion necessary or appropriate to administer the
Plan and to control its operation, including, but not limited
to, the power (a) to determine which Employees, Consultants
and Directors shall be granted Awards, (b) to prescribe the
terms and conditions of such Awards, (c) to interpret the
Plan and the Awards, (d) to adopt rules for the
administration, interpretation and application of the Plan as
are consistent therewith, and (e) to interpret, amend or
revoke any such rules.
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The Committee, in its sole discretion and on such terms and
conditions as it may provide, may delegate all or any part of
its authority and powers under the Plan to one or more directors
and/or
officers of the Company; provided, however , that the Committee
may not delegate its authority and powers with respect to
Section 16 Persons.
3.3 Decisions Binding. All
determinations and decisions made by the Committee shall be
final, conclusive, and binding on all persons, and shall be
given the maximum deference permitted by law.
SECTION 4
SHARES SUBJECT
TO THE PLAN
4.1 Shares Available.
4.1.1 Maximum Shares Available under
Plan. The aggregate number of Shares
available for issuance under the Plan may not exceed four
million five hundred twenty five thousand (4,525,000) Shares.
Such shares may be authorized but unissued shares or treasury
shares.
4.1.2 Intentionally omitted.
4.1.3 Limitation on Incentive Stock Options and Stock
Appreciation Rights. No Participant may
receive Options and SARs for more than one hundred twenty
thousand (120,000) Shares in the aggregate in any single
calendar year; provided, however , that a Participant may
receive Options and SARs for up two hundred forty thousand
(240,000) Shares in the Participants initial year of
service to the Company.
4.1.4 General Award Limitation. No
Participant may receive Awards under the Plan, the value of
which Awards is based solely on an increase in the value of
Shares after the date of grant of such Awards, for more than one
hundred twenty thousand (120,000) Shares in the aggregate in any
single calendar year; provided, however, that a Participant may
receive Options and SARs for up two hundred forty thousand
(240,000) Shares in the Participants initial year of
service to the Company. The foregoing annual limitation
specifically includes the grant of any Awards representing
qualified performance-based compensation within the
meaning of Section 162(m) of the Code.
4.1.5 Adjustments. All Share
numbers in this Section 4.1 are subject to adjustment as
provided in SECTION 15.
4.2 Number of Shares. The
following rules will apply for purposes of the determination of
the number of Shares available for grant under the Plan:
(a) While an Award is outstanding, it shall be counted
against the authorized pool of Shares, regardless of its vested
status.
(b) The grant of an Option or Restricted Stock shall reduce
the Shares available for grant under the Plan by the number of
Shares subject to such Award.
(c) The grant of a Tandem SAR shall reduce the number of
Shares available for grant by the number of Shares subject to
the related Option (i.e., there is no double counting of Options
and their related Tandem SARs); provided, however , that, upon
the exercise of such Tandem SAR, the authorized Share pool shall
be credited with the appropriate number of Shares representing
the number of shares reserved for such Tandem SAR less the
number of Shares actually delivered upon exercise thereof or the
number of Shares having a Fair Market Value equal to the cash
payment made upon such exercise.
(d) The grant of an Affiliated SAR shall reduce the number
of Shares available for grant by the number of Shares subject to
the SAR, in addition to the number of Shares subject to the
related Option; provided, however, that, upon the exercise of
such Affiliated SAR, the authorized Share pool shall be credited
with the appropriate number of Shares representing the number of
shares reserved for such Affiliated SAR less the number of
Shares actually delivered upon exercise thereof or the number of
Shares having a Fair Market Value equal to the cash payment made
upon such exercise.
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(e) The grant of a Freestanding SAR shall reduce the number
of Shares available for grant by the number of Freestanding SARs
granted; provided, however , that, upon the exercise of such
Freestanding SAR, the authorized Share pool shall be credited
with the appropriate number of Shares representing the number of
shares reserved for such Freestanding SAR less the number of
Shares actually delivered upon exercise thereof or the number of
Shares having a Fair Market Value equal to the cash payment made
upon such exercise.
(f) The Committee shall in each case determine the
appropriate number of Shares to deduct from the authorized pool
in connection with the grant of Performance Units
and/or
Performance Shares.
(g) To the extent that an Award is settled in cash rather
than in Shares, the authorized Share pool shall be credited with
the appropriate number of Shares having a Fair Market Value
equal to the cash settlement of the Award.
4.3 Lapsed Awards. If an
Award is cancelled, terminates, expires, or lapses for any
reason (with the exception of the termination of a Tandem SAR
upon exercise of the related Option, or the termination of a
related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award again shall be available to be
the subject of an Award.
SECTION 5
STOCK
OPTIONS
5.1 Grant of
Options. Options may be granted to
Employees, Consultants and Directors at any time and from time
to time, as determined by the Committee in its sole discretion.
The Committee, in its sole discretion, shall determine the
number of Shares subject to Options granted to each Participant.
The Committee may grant ISOs, NQSOs, or a combination thereof.
5.2 Award Agreement. Each
Option shall be evidenced by an Award Agreement that shall
specify the Option Price, the expiration date of the Option, the
number of Shares to which the Option pertains, any conditions to
exercise of the Option, and such other terms and conditions as
the Committee, in its discretion, shall determine. The Award
Agreement also shall specify whether the Option is intended to
be an ISO or a NQSO.
5.3 Option Price. Subject
to the provisions of this Section 5.3, the Option Price for
each Option shall be determined by the Committee in its sole
discretion.
5.3.1 Nonqualified Stock
Options. In the case of a Nonqualified Stock
Option, the Option Price shall be not less than one hundred
percent (100%) of the Fair Market Value of a Share on the date
that the Option is granted.
5.3.2 Incentive Stock Options. In
the case of an Incentive Stock Option, the Option Price shall be
not less than one hundred percent (100%) of the Fair Market
Value of a Share on the date that the Option is granted;
provided, however , that if at the time that the Option is
granted, the Employee (together with persons whose stock
ownership is attributed to the Employee pursuant to
Section 424(d) of the Code) owns stock possessing more than
10% of the total combined voting power of all classes of stock
of the Company or any of its Subsidiaries, the Option Price
shall be not less than one hundred and ten percent (110%) of the
Fair Market Value of a Share on the date that the Option is
granted.
5.3.3 Substitute
Options. Notwithstanding the provisions of
Sections 5.3.1 and 5.3.2, in the event that the Company or
an Affiliate consummates a transaction described in
Section 424(a) of the Code (e.g., the acquisition of
property or stock from an unrelated corporation), persons who
become Employees, Consultants or Directors on account of such
transaction may be granted Options in substitution for options
granted by their former employer. If such substitute Options are
granted, the Committee, in its sole discretion, may determine
that such substitute Options shall have an exercise price less
than 100% of the Fair Market Value of the Shares on the date the
Option is granted.
5.4 Expiration of
Options. Unless the applicable stock
option agreement provides otherwise, each Option shall terminate
upon the first to occur of the events listed in
Section 5.4.1, subject to Section 5.4.2.
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5.4.1 Expiration Dates.
(a) The date for termination of the Option set forth in the
Award Agreement;
(b) The expiration of ten years from the date the Option
was granted, or
(c) The expiration of three months from the date of the
Participants Termination of Employment for a reason other
than the Participants death, Disability or
Retirement, or
(d) The expiration of twelve months from the date of the
Participants Termination of Employment by reason of
Disability, or
(e) The expiration of twelve months from the date of the
Participants death, if such death occurs while the
Participant is in the employ or service of the Company or an
Affiliate.
5.4.2 Committee Discretion. The
Committee shall provide, in the terms of each individual Option,
when such Option expires and becomes unexercisable. After the
Option is granted, the Committee, in its sole discretion may
extend the maximum term of such Option. The foregoing
discretionary authority is subject to the limitations and
restrictions on Incentive Stock Options set forth in
Section 5.8.
5.5 Exercise of
Options. Options granted under the Plan
shall be exercisable at such times, and subject to such
restrictions and conditions, as the Committee shall determine in
its sole discretion. After an Option is granted, the Committee,
in its sole discretion, may accelerate the exercisability of the
Option.
5.6 Payment. The Committee
shall determine the acceptable form of consideration for
exercising an Option, including the method of payment. In the
case of an Incentive Stock Option, the Committee shall determine
the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(a) cash;
(b) check;
(c) promissory note;
(d) other Shares which (i) in the case of Shares
acquired upon exercise of an Option, have been owned by the
Participant for more than six (6) months on the date of
surrender, and (ii) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised;
(e) consideration received by the Company from a licensed
broker under a cashless exercise program implemented by the
Company to facilitate same day exercises and sales
of Options;
(f) a reduction in the amount of any Company liability to
the Participant, including any liability attributable to the
Participants participation in any Company-sponsored
deferred compensation program or arrangement;
(g) any combination of the foregoing methods of
payment; or
(h) such other consideration and method of payment for the
issuance of Shares to the extent permitted by applicable laws.
5.7 Restrictions on Share
Transferability. The Committee may impose
such restrictions on any Shares acquired pursuant to the
exercise of an Option, as it may deem advisable, including, but
not limited to, restrictions related to Federal securities laws,
the requirements of any national securities exchange or system
upon which such Shares are then listed
and/or
traded,
and/or any
blue sky or state securities laws.
5.8 Certain Additional Provisions for Incentive
Stock Options.
5.8.1 Exercisability. The
aggregate Fair Market Value (determined at the time the Option
is granted) of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by any Employee
during any calendar year (under all plans of the Company and its
Subsidiaries) shall not exceed $100,000.
5.8.2 Termination of
Employment. No Incentive Stock Option may be
exercised more than three months after the Participants
termination of employment for any reason other than Disability
or death, unless (a) the
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Participant dies during such three-month period, and
(b) the Award Agreement
and/or the
Committee permits later exercise. No Incentive Stock Option may
be exercised more than one year after the Participants
termination of employment on account of Disability, unless
(a) the Participant dies during such one-year period, and
(b) the Award Agreement
and/or the
Committee permit later exercise.
5.8.3 Company and Subsidiaries
Only. Incentive Stock Options may be granted
only to persons who are Employees of the Company
and/or a
Subsidiary at the time of grant.
5.8.4 Expiration. No Incentive
Stock Option may be exercised after the expiration of
10 years from the date such Option was granted; provided,
however , that if the Option is granted to an Employee who,
together with persons whose stock ownership is attributed to the
Employee pursuant to Section 424(d) of the Code, owns stock
possessing more than 10% of the total combined voting power of
all classes of the stock of the Company or any of its
Subsidiaries, the Option may not be exercised after the
expiration of 5 years from the date that it was granted.
5.9 Nontransferability of
Options. No Option granted under the Plan
may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will, the laws of
descent and distribution, or as provided under SECTION 9.
All Options granted to a Participant under the Plan shall be
exercisable during his or her lifetime only by such Participant.
SECTION 6
STOCK
APPRECIATION RIGHTS
6.1 Grant of SARs. An SAR
may be granted to an Employee, Consultant or Director at any
time and from time to time as determined by the Committee, in
its sole discretion. The Committee may grant Affiliated SARs,
Freestanding SARs, Tandem SARs, or any combination thereof. The
Committee shall have complete discretion to determine the number
of SARs granted to any Participant, and consistent with the
provisions of the Plan, the terms and conditions pertaining to
such SARs. However, the grant price of a Freestanding SAR shall
be at least equal to the Fair Market Value of a Share on the
date of grant. The grant price of Tandem or Affiliated SARs
shall equal the Option Price of the related Option.
6.2 Exercise of Tandem
SARs. Tandem SARs may be exercised for
all or part of the Shares subject to the related Option upon the
surrender of the right to exercise the equivalent portion of the
related Option. A Tandem SAR may be exercised only with respect
to the Shares for which its related Option is then exercisable.
6.2.1 ISOs. Notwithstanding any
contrary provision of the Plan, with respect to a Tandem SAR
granted in connection with an ISO: (i) the Tandem SAR shall
expire no later than the expiration of the underlying ISO;
(ii) the value of the payout with respect to the Tandem SAR
shall be for no more than one hundred percent (100%) of the
difference between the Option Price of the underlying ISO and
the Fair Market Value of the Shares subject to the underlying
ISO at the time the Tandem SAR is exercised; and (iii) the
Tandem SAR shall be exercisable only when the Fair Market Value
of the Shares subject to the ISO exceeds the Option Price of the
ISO.
6.3 Exercise of Affiliated
SARs. An Affiliated SAR shall be deemed
to be exercised upon the exercise of the related Option. The
deemed exercise of an Affiliated SAR shall not necessitate a
reduction in the number of Shares subject to the related Option.
6.4 Exercise of Freestanding
SARs. Freestanding SARs shall be
exercisable on such terms and conditions as the Committee, in
its sole discretion, shall determine.
6.5 SAR Agreement. Each SAR
shall be evidenced by an Award Agreement that shall specify the
grant price, the term of the SAR, the conditions of exercise,
and such other terms and conditions as the Committee, in its
sole discretion, shall determine.
6.6 Expiration of SARs. An
SAR granted under the Plan shall expire upon the date determined
by the Committee, in its sole discretion, and set forth in the
Award Agreement. Notwithstanding the foregoing, the rules of
Section 5.4 (pertaining to Options) also shall apply to
SARs.
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6.7 Payment of SAR
Amount. Upon exercise of an SAR, a
Participant shall be entitled to receive payment from the
Company in an amount determined by multiplying:
(a) The difference between the Fair Market Value of a Share
on the date of exercise over the grant price; times
(b) The number of Shares with respect to which the SAR is
exercised.
At the discretion of the Committee, the payment upon SAR
exercise may be in cash, in Shares of equivalent value, or in
some combination thereof.
6.8 Nontransferability of
SARs. No SAR granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will, the laws of descent and
distribution, or as permitted under SECTION 9. An SAR
granted to a Participant shall be exercisable during the
Participants lifetime only by such Participant.
SECTION 7
RESTRICTED
STOCK
7.1 Grant of Restricted
Stock. Subject to the terms and
provisions of the Plan, the Committee, at any time and from time
to time, may grant Shares of Restricted Stock to Employees,
Consultants or Directors in such amounts as the Committee, in
its sole discretion, shall determine.
7.2 Restricted Stock
Agreement. Each Award of Restricted Stock
shall be evidenced by an Award Agreement that shall specify the
Period of Restriction, the number of Shares granted, and such
other terms and conditions as the Committee, in its sole
discretion, shall determine. Unless the Committee determines
otherwise, shares of Restricted Stock shall be held by the
Company as escrow agent until the restrictions on such Shares
have lapsed.
7.3 Transferability. Except
as provided in this SECTION 7, Shares of Restricted Stock
may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable Period
of Restriction. All rights with respect to the Restricted Stock
granted to a Participant under the Plan shall be available
during his or her lifetime only to such Participant.
7.4 Other Restrictions. The
Committee, in its sole discretion, may impose such other
restrictions on any Shares of Restricted Stock as it may deem
advisable including, without limitation, restrictions based upon
the achievement of specific performance goals (Company-wide,
divisional,
and/or
individual),
and/or
restrictions under applicable Federal or state securities laws;
and may legend the certificates representing Restricted Stock to
give appropriate notice of such restrictions. For example, the
Committee may determine that some or all certificates
representing Shares of Restricted Stock shall bear the following
legend:
The sale or other transfer of the shares of stock
represented by this certificate, whether voluntary, involuntary,
or by operation of law, is subject to certain restrictions on
transfer as set forth in the Superconductor Technologies Inc.
2003 Equity Incentive Plan, and in a Restricted Stock Agreement.
A copy of the Plan and such Restricted Stock Agreement may be
obtained from the Secretary of Superconductor Technologies
Inc.
7.5 Removal of
Restrictions. Except as otherwise
provided in this SECTION 7, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall
be released from escrow as soon as practicable after the last
day of the Period of Restriction. The Committee, in its
discretion, may accelerate the time at which any restrictions
shall lapse,
and/or
remove any restrictions. After the restrictions have lapsed, the
Participant shall be entitled to have any legend or legends
under Section 7.4 removed from his or her Share
certificate, and the Shares shall be freely transferable by the
Participant.
7.6 Voting Rights. During
the Period of Restriction, Participants holding Shares of
Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares, unless the Committee
determines otherwise.
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7.7 Dividends and Other
Distributions. During the Period of
Restriction, Participants holding Shares of Restricted Stock
shall be entitled to receive all dividends and other
distributions paid with respect to such Shares, unless otherwise
provided in the Award Agreement. If any such dividends or
distributions are paid in Shares, the Shares shall be subject to
the same restrictions on transferability and forfeitability as
the Shares of Restricted Stock with respect to which they were
paid.
7.8 Return of Restricted Stock to
Company. Subject to the applicable Award
Agreement and Section 7.5, upon the earlier of (a) the
Participants Termination of Employment, or (b) the
date set forth in the Award Agreement, the Restricted Stock for
which restrictions have not lapsed shall revert to the Company
and, subject to Section 4.3, again shall become available
for grant under the Plan.
7.9 Repurchase
Option. Unless the Committee determines
otherwise, the Restricted Stock Purchase Agreement shall grant
the Company a repurchase option exercisable upon the voluntary
or involuntary termination of the Participants service
with the Company for any reason (including death or Disability).
The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price
paid by the Participant and may be paid by cancellation of any
indebtedness of the Participant to the Company. The repurchase
option shall lapse at a rate determined by the Committee.
SECTION 8
PERFORMANCE
UNITS AND PERFORMANCE SHARES
8.1 Grant of Performance
Units/Shares. Performance Units and
Performance Shares may be granted to Employees, Consultants or
Directors at any time and from time to time, as shall be
determined by the Committee, in its sole discretion. The
Committee shall have complete discretion in determining the
number of Performance Units and Performance Shares granted to
each Participant.
8.2 Value of Performance
Units/Shares. Each Performance Unit shall
have an initial value that is established by the Committee at
the time of grant. Each Performance Share shall have an initial
value equal to the Fair Market Value of a Share on the date of
grant. The Committee shall set performance goals in its
discretion which, depending on the extent to which they are met,
will determine the number
and/or value
of Performance Units/Shares that will be paid out to the
Participants. The time period during which the performance goals
must be met shall be called the Performance Period .
8.3 Earning of Performance
Units/Shares. After the applicable
Performance Period has ended, the holder of Performance
Units/Shares shall be entitled to receive a payout of the number
of Performance Units/Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent
to which the corresponding performance goals have been achieved.
After the grant of a Performance Unit/Share, the Committee, in
its sole discretion, may adjust
and/or waive
the achievement of any performance goals for such Performance
Unit/Share.
8.4 Form and Timing of Payment of Performance
Units/Shares. Payment of earned
Performance Units/Shares shall be made as soon as practicable
after the expiration of the applicable Performance Period. The
Committee, in its sole discretion, may pay earned Performance
Units/Shares in the form of cash, in Shares (which have an
aggregate Fair Market Value equal to the value of the earned
Performance Units/Shares at the close of the applicable
Performance Period) or in a combination thereof.
8.5 Cancellation of Performance
Units/Shares. Subject to the applicable
Award Agreement, upon the earlier of (a) the
Participants Termination of Employment, or (b) the
date set forth in the Award Agreement, all remaining Performance
Units/Shares shall be forfeited by the Participant to the
Company, and subject to Section 4.3, the Shares subject
thereto shall again be available for grant under the Plan.
8.6 Nontransferability. Performance
Units/Shares may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will, the
laws of descent and distribution, or as permitted under
SECTION 9. A Participants rights under the Plan shall
be exercisable during the Participants lifetime only by
the Participant or the Participants legal representative.
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SECTION 9
BENEFICIARY
DESIGNATION
If permitted by the Committee, a Participant may name a
beneficiary or beneficiaries to whom any unpaid vested Award
shall be paid in event of the Participants death. Each
such designation shall revoke all prior designations by the same
Participant and shall be effective only if given in a form and
manner acceptable to the Committee. In the absence of any such
designation, benefits remaining unpaid at the Participants
death shall be paid to the Participants estate and,
subject to the terms of the Plan, any unexercised vested Award
may be exercised by the Committee or executor of the
Participants estate.
SECTION 10
DEFERRALS
The Committee, in its sole discretion, may permit a Participant
to defer receipt of the payment of cash or the delivery of
Shares that would otherwise be due to such Participant under an
Award. Any such deferral elections shall be subject to such
rules and procedures as shall be determined by the Committee in
its sole discretion.
SECTION 11
RIGHTS OF
EMPLOYEES AND CONSULTANTS
11.1 No Effect on Employment or
Service. Nothing in the Plan shall
interfere with or limit in any way the right of the Company to
terminate any Participants employment or service at any
time, with or without cause.
11.2 Participation. No
Employee, Consultant or Director shall have the right to be
selected to receive an Award under this Plan, or, having been so
selected, to be selected to receive a future Award.
SECTION 12
AMENDMENT,
SUSPENSION, OR TERMINATION
The Board, in its sole discretion, may alter, amend or terminate
the Plan, or any part thereof, at any time and for any reason.
However, as required by Applicable Laws, no alteration or
amendment shall be effective without further stockholder
approval. Neither the amendment, suspension, nor termination of
the Plan shall, without the consent of the Participant, alter or
impair any rights or obligations under any Award theretofore
granted. No Award may be granted during any period of suspension
nor after termination of the Plan.
SECTION 13
TAX
WITHHOLDING
13.1 Withholding
Requirements. Prior to the delivery of
any Shares or cash pursuant to an Award, the Company shall have
the power and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount sufficient to
satisfy Federal, state, and local taxes required to be withheld
with respect to such Award.
13.2 Shares Withholding. The
Committee, in its sole discretion and pursuant to such
procedures as it may specify from time to time, may permit a
Participant to satisfy the minimum statutory tax withholding
obligation, in whole or in part, by delivering to the Company
Shares already owned for more than six (6) months having a
value equal to the amount required to be withheld. The value of
the Shares to be delivered will be based on their Fair Market
Value on the date of delivery.
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SECTION 14
INDEMNIFICATION
Each person who is or shall have been a member of the Committee,
or of the Board, shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, notion, suit, or
proceeding to which he or she may be a party or in which he or
she may be involved by reason of any action taken or failure to
act under the Plan or any Award Agreement and against and from
any and all amounts paid by him or her in settlement thereof,
with the Companys approval, or paid by him or her in
settlement thereof, with the Companys approval, or paid by
him or her in satisfaction of any judgment in any such action,
suit, or proceeding against him or her, provided he or she shall
give the Company an opportunity, at its own expense, to handle
and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the
Companys Certificate of Incorporation or Bylaws, as a
matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.
SECTION 15
ADJUSTMENTS
UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR ASSET
SALE
15.1 Changes in Capitalization; No Award
Repricing. Subject to any required action
by the shareholders of the Company, the number of Shares covered
by each outstanding Award, and the number of Shares which have
been authorized for issuance under the Plan but as to which no
Awards have yet been granted or which have been returned to the
Plan upon cancellation or expiration of an Award, as well as the
price per Share covered by each such outstanding Award, shall be
proportionately adjusted for any increase or decrease in the
number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of
the Shares, or any other increase or decrease in the number of
issued Shares effected without receipt of consideration by the
Company; provided, however , that conversion of any convertible
securities of the Company shall not be deemed to have been
effected without receipt of consideration. Such
adjustment shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of
Shares subject to an Award. Further, except for the adjustments
provided herein, no Award may be amended to reduce its initial
exercise price, and no Award may be cancelled and replaced with
an Award with a lower price.
15.2 Dissolution or
Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Committee shall
notify each Participant as soon as practicable prior to the
effective date of such proposed transaction. The Committee in
its discretion may provide for a Participant to have the right
to exercise his or her Award until ten (10) days prior to
such transaction as to all of the Shares covered thereby,
including Shares as to which the Award would not otherwise be
exercisable. In addition, the Committee may provide that any
Company repurchase option applicable to any Shares purchased
upon exercise of an Award shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at
the time and in the manner contemplated. To the extent it has
not been previously exercised, an Award will terminate
immediately prior to the consummation of such proposed action.
15.3 Merger or Asset
Sale. In the event of a merger of the
Company with or into another corporation, or the sale of
substantially all of the assets of the Company, each outstanding
Award shall be assumed or an equivalent option or right
substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the
Award, the Participant shall fully vest in and have the right to
exercise the Award as to all of the Shares as to which it would
not otherwise be vested or exercisable. If an Award becomes
fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the
Committee shall notify the Participant in writing or
electronically that the Award shall be fully vested and
exercisable for a period of fifteen (15) days from the date
of such notice, and the Award shall
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terminate upon the expiration of such period. For the purposes
of this paragraph, the Award shall be considered assumed if,
following the merger or sale of assets, the option or right
confers the right to purchase or receive, for each Share subject
to the Award immediately prior to the merger or sale of assets,
the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of
Shares for each Share held on the effective date of the
transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders
of a majority of the outstanding Shares); provided, however ,
that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation
or its Parent, the Committee may, with the consent of the
successor corporation, provide for the consideration to be
received upon the exercise of the Award, for each Share subject
to the Award, to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per
share consideration received by holders of Shares in the merger
or sale of assets.
15.4 Change in Control. In
the event of a Change of Control (as defined below), except as
otherwise determined by the Board, the Participant shall fully
vest in and have the right to exercise the Awards as to all of
the Shares, including Shares as to which it would not otherwise
be vested or exercisable. If an Award becomes fully vested and
exercisable as the result of a Change of Control, the Committee
shall notify the Participant in writing or electronically prior
to the Change of Control that the Award shall be fully vested
and exercisable for a period of fifteen (15) days from the
date of such notice, and the Award shall terminate upon the
expiration of such period. For purposes of this Agreement, a
Change of Control means the happening of any of the
following events:
(a) When any person, as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (other than
the Company, a Subsidiary or a Company employee benefit plan,
including any trustee of such plan acting as trustee) is or
becomes the beneficial owner (as defined in
Rule 13d-3
under the Exchange Act), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the
combined voting power of the Companys then outstanding
securities entitled to vote generally in the election of
directors; or
(b) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve an
agreement for the sale or disposition by the Company of all or
substantially all the Companys assets; or
(c) A change in the composition of the Board of Directors
of the Company, as a result of which fewer than a majority of
the directors are Incumbent Directors. Incumbent Directors
shall mean directors who either (A) are directors of
the Company as of the date the Plan is approved by the
stockholders, or (B) are elected, or nominated for
election, to the Board of Directors of the Company with the
affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating
to the election of directors to the Company).
SECTION 16
CONDITIONS
UPON ISSUANCE OF SHARES
16.1 Legal
Compliance. Shares shall not be issued
pursuant to the exercise of an Award unless the exercise of such
Award and the issuance and delivery of Shares shall comply with
Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
16.2 Investment
Representations. As a condition to the
exercise of an Award, the Company may require the person
exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the
Company, such a representation is required.
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SECTION 17
INABILITY
TO OBTAIN AUTHORITY
The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed
by the Companys counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not
have been obtained.
SECTION 18
RESERVATION
OF SHARES
The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
SECTION 19
LEGAL
CONSTRUCTION
19.1 Gender and
Number. Except where otherwise indicated
by the context, any masculine term used herein also shall
include the feminine; the plural shall include the singular and
the singular shall include the plural.
19.2 Severability. In the
event any provision of the Plan shall be held illegal or invalid
for any reason, such illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed
and enforced as if the illegal or invalid provision had not been
included.
19.3 Requirements of
Law. The granting of Awards and the
issuance of Shares under the Plan shall be subject to all
Applicable Laws.
19.4 Securities Law
Compliance. With respect to
Section 16 Persons, transactions under this Plan are
intended to comply with all applicable conditions of
Rule 16b-3.
To the extent any provision of the Plan, Award Agreement or
action by the Committee fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed
advisable by the Committee.
19.5 Governing Law. The
Plan and all Award Agreements shall be construed in accordance
with and governed by the laws of the State of Delaware.
19.6 Captions. Captions are
provided herein for convenience only, and shall not serve as a
basis for interpretation or construction of the Plan.
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DETACH HERE
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SUPERCONDUCTOR TECHNOLOGIES INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 2010
The undersigned stockholder of SUPERCONDUCTOR TECHNOLOGIES INC., a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement,
each dated April 2, 2010, and hereby appoints each of Jeffrey A. Quiram and William J. Buchanan, or
any of them, as proxy and attorney-in-fact with full power of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the Annual Meeting of Stockholders of
Superconductor Technologies Inc. to be held on Thursday, May 6, 2010 at 11:00 a.m., local time, at
the offices of Superconductor Technologies Inc., located at 460 Ward Drive, Santa Barbara,
California and at any adjournment or adjournments thereof, and to vote all shares of capital stock
that the undersigned would be entitled to vote if then and there personally present, on the matters
set forth on the reverse side.
[SEE REVERSE SIDE] CONTINUED AND TO BE SIGNED ON REVERSE SIDE [SEE REVERSE SIDE]
[BACK OF PROXY]
DETACH HERE
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
x Please mark votes as in this example
1. TO ELECT TWO CLASS 3 DIRECTORS.
Nominees: John D. Lockton and David W. Vellequette
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o WITHHOLD ALL
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(INSTRUCTION: To withhold authority to vote for any individual nominee, mark the For All Nominees
Except box and write that nominees name in the space provided above.)
2. PROPOSAL TO AMEND OUR 2003 EQUITY
INCENTIVE PLAN TO INCREASE THE NUMBER OF
SHARES AUTHORIZED TO BE ISSUED THEREUNDER TO
4,525,000.
3. PROPOSAL TO RATIFY THE SELECTION
OF STONEFIELD JOSEPHSON, INC. AS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM OF
SUPERCONDUCTOR TECHNOLOGIES INC. FOR 2010.
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FOR
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As to any other matters that may properly come before the meeting or any adjournments thereof, the
proxy holders are authorized to vote in accordance with their best judgment.
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MARK HERE FOR ADDRESS CHANGE AND NOTE AT RIGHT.
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PLEASE CHECK HERE IF YOU PLAN TO ATTEND THE MEETING.
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(This Proxy should be marked, dated and signed by the stockholder(s) exactly as his or her name
appears hereon, and returned promptly in the enclosed envelope. Persons signing in a fiduciary
capacity should so indicate. If shares are held by joint tenants or as community property, both
must sign.)
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Signature:
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Signature:
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THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENT OF THE SUPERCONDUCTOR
TECHNOLOGIES INC. 2003 EQUITY INCENTIVE PLAN AND FOR THE RATIFICATION OF THE APPOINTMENT OF
STONEFIELD JOSEPHSON, INC. AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF SUPERCONDUCTOR
TECHNOLOGIES INC. FOR 2010, AND AS THE PROXY HOLDERS DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.