<PAGE> 1
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 [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Confidential, For Use of the [ ] Definitive additional
Commission Only materials
(as permitted by 14a-6(e)(2))
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SUPERCONDUCTOR TECHNOLOGIES INC.
--------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and
state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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 by registration statement number, or the form or schedule
and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE> 2
[SUPERCONDUCTOR TECHNOLOGIES LOGO]
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 17, 2000
TO THE STOCKHOLDERS OF SUPERCONDUCTOR TECHNOLOGIES INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Superconductor Technologies Inc., a Delaware corporation (the "Company"), will
be held on May 17, 2000, at 11:00 a.m., local time, at the Pacifica Suites, 5490
Hollister Avenue, Santa Barbara, California 93111 for the following purposes:
1. To elect nine (9) directors to serve for the ensuing year and until
their successors are duly elected and qualified.
2. To approve an amendment to the Company's Certificate of Incorporation
increasing the authorized common stock of the Company from 30,000,000
shares to 75,000,000 shares.
3. To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors of the Company for the year ending December 31, 2000.
4. To transact such other business as may properly come before the meeting
or any adjournment(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 20, 2000 are
entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to ensure your representation at the meeting, you are urged to
mark, sign, date and return the enclosed proxy card as promptly as possible in
the postage-prepaid envelope enclosed for that purpose. Any stockholder
attending the Annual Meeting may vote in person even if such stockholder has
previously returned a proxy.
Martin S. McDermut
Vice President, Finance and
Administration
and Chief Financial Officer
Santa Barbara, California
April , 2000
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE
REQUESTED TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY
IN THE ENVELOPE PROVIDED.
<PAGE> 3
[SUPERCONDUCTOR TECHNOLOGIES LOGO]
460 WARD DRIVE
SANTA BARBARA, CALIFORNIA 93111-2310
(805) 683-7646
------------------------------
MEETING TO BE HELD MAY 17, 2000 AT:
PACIFICA SUITES
5490 HOLLISTER AVENUE
SANTA BARBARA, CA 93111
------------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
------------------------------
The enclosed Proxy is solicited on behalf of Superconductor Technologies
Inc. (the "COMPANY") for use at the Annual Meeting of Stockholders (the "ANNUAL
MEETING") to be held on Wednesday, May 17, 2000, at 11:00 a.m., local time, and
at any adjournment(s) thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will
be held at the Pacifica Suites, 5490 Hollister Avenue, Santa Barbara, California
93111.
The Company anticipates that these proxy solicitation materials will first
be mailed on or about April , 2000, to all stockholders entitled to vote at
the Annual Meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
RECORD DATE
Stockholders of record at the close of business on March 20, 2000 (the
"RECORD DATE") are entitled to notice of the Annual Meeting and to vote at the
Annual Meeting. At the Record Date, the following types and amounts of the
Company's stock, each with a par value of $0.001 per share, were issued and
outstanding: 13,986,960 shares of common stock, 50,000 shares of Series B-1
preferred stock, which were convertible into 1,055,409 shares of common stock on
the Record Date, and 106,000 shares of Series D preferred stock, which were
convertible into 2,120,000 shares of common stock on the Record Date.
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 the Secretary of the
Company at or before the taking of the vote at the Annual Meeting a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person.
VOTING AND SOLICITATION
Each share of common stock is entitled to one vote for each share of common
stock on all matters presented at the Annual Meeting. Each share of preferred
stock is entitled to the number of votes equal to the number of shares of common
stock that such share of preferred stock is convertible into as of the Record
Date on all matters presented at the Annual Meeting. The preferred stock shall
not be entitled to a separate class vote on any of the matters presented at the
Annual Meeting. Stockholders do not have the right to cumulate their votes in
the election of directors.
Shares of common stock and preferred 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 proxies will be voted: (i) FOR
the election
<PAGE> 4
of each of the Company's nominees for director, (ii) FOR approval of an
amendment to the Company's Certificate of Incorporation increasing the
authorized common stock of the Company from 30,000,000 shares to 75,000,000
shares and (iii) FOR the ratification of the appointment of
PricewaterhouseCoopers LLP as independent auditors of the Company for the year
ending December 31, 2000. No business other than that set forth in the
accompanying Notice of Annual Meeting of Stockholders is expected to come before
the Annual Meeting. Should any other matter requiring a vote of stockholders
properly arise, the persons named in the enclosed form of proxy will vote such
proxy in accordance with the recommendation of the Board of Directors.
Proxies may be solicited by certain of the directors, officers and
employees of the Company, without additional compensation, personally or by
telephone, telegram, letter or facsimile. In addition, the Company may reimburse
brokerage firms and other persons representing beneficial owners of shares for
their expenses in forwarding solicitation materials to such beneficial owners.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting
is a majority of the votes eligible to be cast by holders of shares of common
stock and preferred stock issued and outstanding on the Record Date. 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 the Annual Meeting (the "VOTES CAST") with respect to such
matter.
The Company believes that abstentions should be counted for purposes of
determining both (i) the presence or absence of a quorum for the transaction of
business and (ii) 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, the Company intends to treat abstentions in this manner.
Accordingly, abstentions will have the same effect as a vote against the
proposal.
In a 1988 Delaware case, Berlin v. Emerald Partners, the Delaware Supreme
Court held that, while broker non-votes should be counted for the purpose of
determining the presence or absence of a quorum for the transaction of business,
broker non-votes should not be counted for purposes of determining the number of
Votes Cast with respect to the particular proposal on which the broker has
expressly not voted. Accordingly, the Company intends to treat broker non-votes
in this manner. Thus, a broker non-vote will not affect the outcome of the
voting on a proposal.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 2001 Annual Meeting of Stockholders must
be received by the Company no later than January 1, 2001 in order to be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
2
<PAGE> 5
PROPOSAL ONE:
ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company provide for a Board of nine (9) directors. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for management's nine (9) nominees named below, all of whom (other than H.
Vaughan Blaxter, III) are presently directors of the Company. In the event that
any management nominee is unable or declines to serve as a director at the time
of the Annual Meeting, the proxies will be voted for any nominee who is
designated by the present Board of Directors to fill the vacancy. It is not
expected that any nominee will be unable or will decline to serve as a director.
The term of office of each person elected as a director will continue until the
next annual meeting of stockholders or until a successor has been duly elected
and qualified.
The names of the nominees are set forth below:
<TABLE>
<CAPTION>
NAME DIRECTOR SINCE
---- --------------
<S> <C>
Glenn E. Penisten........................................... 1987
M. Peter Thomas............................................. 1997
E. Ray Cotten............................................... 1996
Robert P. Caren, Ph.D. ..................................... 1988
Dennis J. Horowitz.......................................... 1990
John D. Lockton............................................. 1997
J. Robert Schrieffer, Ph.D. ................................ 1988
Joseph C. Manzinger......................................... 1999
H. Vaughan Blaxter, III..................................... N/A
</TABLE>
VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS
The nine (9) nominees receiving the highest number of affirmative votes
shall be elected as directors. Votes withheld from any director are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business but have no other legal effect under Delaware law.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THE NOMINEES SET FORTH ABOVE.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of five (5) meetings
during the fiscal year ended December 31, 1999. The Board of Directors has two
standing committees, an Audit Committee and a Compensation Committee. The Board
does not have a nominating committee or any committee performing similar
functions.
The functions of the Audit Committee are to recommend selection of
independent public accountants to the Board of Directors, to review the scope
and results of the year-end audit with management and the independent auditors
and to review the Company's accounting principles and its system of internal
accounting controls. The Audit Committee met two (2) times during fiscal 1999,
one (1) of which was telephonic. All members of the audit committee are
independent. The current members of the Audit Committee are Robert P. Caren,
Ph.D., Dennis J. Horowitz, John D. Lockton, J. Robert Schrieffer, Ph.D and
Joseph C. Manzinger.
The functions of the Compensation Committee are to review and approve
salaries, bonuses and other benefits payable to the Company's executive officers
and to administer the Company's 1999 Stock Plan, the Amended and Restated 1988
Stock Option Plan, the 1992 Director Option Plan, the 1992 Stock Option Plan and
the 1998 Nonstatutory Stock Option Plan. The Compensation Committee met four (4)
times during
3
<PAGE> 6
fiscal 1999. The current members of the Compensation Committee are Robert P.
Caren, Ph.D., Dennis J. Horowitz, John D. Lockton, J. Robert Schrieffer, Ph.D.
and Richard M. Johnston.
No incumbent director attended fewer than 75% of the aggregate of (i) the
total number of meetings of the Board of Directors held during fiscal 1999; and
(ii) the total number of meetings held by all committees of the Board of
Directors during fiscal 1999 on which such person served.
DIRECTOR COMPENSATION
Each nonemployee director receives an annual retainer of $8,000 per year
(so long as such director attends at least 75% of the Company's Board meetings)
and $2,000 per meeting attended. The nonemployee directors serving during 1999
were directors Robert P. Caren, Ph.D., Dennis J. Horowitz, J. Robert Schrieffer,
Ph.D., John D. Lockton, Richard M. Johnston and Joseph C. Manzinger.
Nonemployee directors also participate in the 1999 Stock Plan (the "STOCK
PLAN"), the 1992 Director Option Plan, as amended (the "DIRECTOR PLAN"), and the
1992 Stock Option Plan, as amended. The Director Plan provides for the automatic
grant of a nonstatutory stock option to purchase 15,000 shares of common stock
of the Company to each of the Company's nonemployee directors on the date on
which such person (i) first becomes a director or (ii) ceases to serve as a
representative of a stockholder of the Company. Nonemployee directors that have
served on the Board of Directors for at least six months also receive automatic
grants of nonstatutory stock options to purchase 10,000 shares of common stock
under the Directors Plan on June 1st of each year. Nonemployee directors that
serve on a committee of the Board of Directors also receive automatic grants of
nonstatutory stock options to purchase 1,000 shares of common stock for each
committee meeting attended under the Director Plan. During the fiscal year ended
December 31, 1999, directors Johnston and Manzinger each were granted an option
to purchase 15,000 shares of common stock at a per share exercise price of
$2.875 per share pursuant to the Director Plan. During the fiscal year ended
December 31, 1999, certain nonemployee directors received the following fully
vested, 10-year option grants at a per share exercise price of $2.938 under the
Stock Plan in lieu of past unpaid director's fees: Caren (10,971 shares),
Horowitz (10,971 shares), Johnston (3,072 shares), Lockton (10,971 shares) and
Manzinger (3,072 shares).
Except as described above, directors do not receive additional compensation
for their services as directors of the Company or as members of committees of
the Board of Directors. There are no family relationships between directors and
executive officers of the Company.
PROPOSAL TWO:
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
INCREASING THE AUTHORIZED COMMON STOCK OF THE COMPANY
The Board of Directors has adopted, subject to stockholder approval, an
amendment to the Company's Certificate of Incorporation to increase the number
of authorized shares of common stock of the Company to a total of 75,000,000
shares (the "AMENDMENT"). The authorized common stock of the Company, prior to
the approval of the Amendment, consisted of 30,000,000 shares. The authorized
preferred stock of the Company consists of 2,000,000 shares and will not be
affected by the Amendment.
The proposed additional shares may be used in connection with possible
stock splits or dividends, acquisitions, equity financings, management incentive
and employee benefit plans, investments, and for other purposes. At this time,
the Board has not decided whether or when to undertake a stock split, or the
number of shares it would issue with respect to each outstanding share if it
undertakes a split, and the Company has no present plans, understandings, or
agreements for the issuance or use of the proposed additional shares of common
stock in acquisitions or otherwise, but expects to explore potential
acquisitions from time to time as opportunities arise. The Board of Directors
believes that the proposed increase is desirable so that, as the need arises,
the Company will be able to issue the shares of common stock without the expense
and delay of a special stockholders' meeting.
4
<PAGE> 7
Authorized but unissued shares of the Company's common stock may be issued
at such times, for such purposes and for such consideration as the Board of
Directors may determine to be appropriate without further authority from the
Company's stockholders, except as otherwise required by Delaware law or the
rules of The Nasdaq Stock Market.
The Amendment could make it more difficult for a third party to acquire the
Company. It could also discourage proxy contests and make it more difficult for
stockholders to elect directors and take other corporate actions. As a result,
the Amendment could limit the price that investors are willing to pay in the
future for shares of the Company's common stock.
If the proposal is adopted, it will become effective upon filing of a
Certificate of Amendment to the Company's Certificate of Incorporation.
VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
The approval of the amendment to the Company's Certificate of Incorporation
increasing the authorized common stock of the Company requires the affirmative
vote of a majority of the outstanding common stock and preferred stock (voting
on an as-converted basis) of the Company, the common stock and preferred stock
voting together as a single class.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THIS PROPOSAL.
PROPOSAL THREE:
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP, independent
accountants, to audit the financial statements of the Company for the fiscal
year ending December 31, 2000.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the Annual Meeting and will have the opportunity to make a statement if such
person desires to do so. Such representative is expected to be available to
respond to appropriate questions.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
Ratification of the Board's appointment of PricewaterhouseCoopers LLP
requires the affirmative vote of a majority of the Votes Cast. In the event the
stockholders do not approve the selection of PricewaterhouseCoopers LLP, the
appointment of the independent auditors will be reconsidered by the Board of
Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THIS PROPOSAL.
5
<PAGE> 8
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding those
individuals currently serving as the directors (or nominated to serve as a
director) and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
---- --- --------------------
<S> <C> <C>
Glenn E. Penisten....................... 68 Chairman of the Board of the Company
M. Peter Thomas......................... 58 President, Chief Executive Officer and Director
E. Ray Cotten........................... 69 Senior Vice President, Marketing and Sales and
Director of the Company
Robert B. Hammond, Ph.D. ............... 50 Senior Vice President, Chief Technology Officer
and Secretary
Michael M. Eddy, Ph.D. ................. 39 Vice President, Materials Operations
Neal O. Fenzi........................... 39 Vice President, Engineering
David R. Chase.......................... 39 Vice President, Systems and Applications
Engineering
Martin S. McDermut...................... 49 Vice President, Finance and Administration and
Chief Financial Officer
Robert P. Caren, Ph.D.(1)(2)............ 67 Retired Corporate Vice President, Science and
Engineering, Lockheed Corporation
Dennis J. Horowitz(1)(2)................ 53 President, Chief Executive Officer and Director of
Wolverine Tube, Inc.
John D. Lockton(1)(2)................... 62 Chairman of IPWireless, Inc.
J. Robert Schrieffer, Ph.D.(1)(2)....... 68 Chairman of the Technical Advisory Board of the
Company; University Professor, Florida State
University; Chief Scientist of the National High
Magnetic Field Laboratory
Richard M. Johnston(2).................. 64 Vice President-Investments and a director of The
Hillman Company
Joseph C. Manzinger(1).................. 41 Vice President of The Hillman Company
H. Vaughan Blaxter, III................. 58 Vice President, General Counsel and a director of
The Hillman Company
</TABLE>
- ---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Glenn E. Penisten has served as Chairman of our Board of Directors since
May 1994. Mr. Penisten is a founder of the company and has served on its Board
since May 1987. He served as our Chief Executive Officer from August 1987 to
June 1988. He has been a General Partner of Alpha Partners, a venture capital
firm, since 1985. Mr. Penisten was Chairman of the American Electronics
Association in 1982, while he was Chairman of the Board of Directors and Chief
Executive Officer of American Microsystems Inc., a semiconductor company. Mr.
Penisten is a director of Bell Microproducts Inc., IKOS Systems, Inc., Network
Peripheral, Inc. and Pinnacle Systems. Mr. Penisten holds a B.S. in electrical
engineering from Oklahoma State University.
M. Peter Thomas became President and Chief Executive Officer and a member
of our Board of Directors effective April 7, 1997. Prior to April 1997, Mr.
Thomas was President and Chief Executive Officer of First Pacific Networks,
Inc., a cable telephony systems company, from June, 1995 to January 1997, which
company filed for bankruptcy in February 1997 under Chapter 11 of the U.S.
Bankruptcy Code. From August 1991 to May 1995, Mr. Thomas consulted with The
Stanbridge Group, a company he co-founded. Mr. Thomas also served as President
and Chief Executive Officer of Ericsson North America, Inc., the North American
operating subsidiary of Sweden's L.M. Ericsson. The North American operation
included divisions providing cellular infrastructure systems, central office
switching systems and loop transmission systems, PABXs, and copper and fiber
optic cable products. Prior to this assignment, Mr. Thomas was President and
Chief Operating Officer of Telenova, Inc., a start-up voice and data PABX
manufacturer, and President of the ITT Telecom Network Systems Division, a
network telecommunications systems business. He also served as
6
<PAGE> 9
general manager of four divisions at Northern Telecom, Ltd., the last being the
DMS 10 Switching Division, Nortel's first digital switching division in the U.S.
Mr. Thomas received his B.S.E. in Aerospace Engineering from Princeton
University and his M.B.A. from the Harvard Business School.
E. Ray Cotten joined our Board of Directors in July 1996 and served as Vice
Chairman of the Board until February 1999. Since March 1999, he has served as
Senior Vice President, Sales and Marketing. Since August 1994, he has served as
Chairman of the Board of Impulse Telecommunications Corporation, a wireless
communications consulting and engineering firm ("Impulse"). Prior to joining
Impulse, from December 1992 to August 1994, Mr. Cotten was President, Chief
Executive Officer and Chief Operating Officer of Scott Instruments Corporation,
a pioneer in voice recognition systems company and from December 1990 to
November 1992, he was President and Chief Executive Officer of ACS Software
Products Group, a software company for the apparel industry. Prior to that, he
also served as Vice-Chairman and co-founder of NetAmerica, a digital networking
company, held vice-president positions at Microdynamics, Inc., a CAD/ CAM
company for the apparel industry, Northern Telecom, Inc., a telecommunications
company, Data Transmission Corporation, a digital networking company, and
Danray, a communications switch manufacturing company, and spent nearly 10 years
with Texas Instruments, where he held various management positions. Mr. Cotten
received his B.A. in business from Oklahoma State University.
Robert B. Hammond, Ph.D. has served as Senior Vice President and Chief
Technical Officer since December 1992, having served as Vice President,
Technology, and Chief Technical Officer since August 1990. He has also served as
Secretary since October 1999. From May 1991 to December 1991 and July 1992 to
December 1992, he served as Acting Chief Operating Officer, and from December
1987 to August 1990, he served as 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, most recently as Deputy Group Leader of
Electronics Research and Development, a group that performs research,
development and pilot production of solid state electronics and optics. Dr.
Hammond received his Ph.D. and M.S. in applied physics and his B.S. in physics
from the California Institute of Technology.
Michael M. Eddy, Ph.D., has served as Vice President, Materials Operations
since August 1998, having served as Vice President, Operations since July 1997.
Dr. Eddy joined us in 1988. Prior to that Dr. Eddy held research positions at
Rutherford Appleton Laboratory in England and the University of California at
Santa Barbara. Dr. Eddy holds a Bsc in chemistry from Sheffield University, a
Ph.D. in chemistry from Oxford University and an M.B.A. from Pepperdine
University.
Neal O. Fenzi became Vice President, Engineering in July 1997. Mr. Fenzi
joined us in 1992 and held the position of Director of RF Engineering. From 1982
to 1992 Mr. Fenzi worked in various engineering and management positions at
Hughes Aircraft Company, Space and Communications Group and Amplica, Inc., a
developer of microwave amplifier and sub-assemblies. Mr. Fenzi received his
B.S.E.E. in 1982 from New Mexico State University.
David R. Chase has served as Vice President of Systems and Applications
Engineering since August 1999. From August 1996 to August 1999, he held the
position of Director of Systems Engineering. From February 1995 to August 1996,
he held the position of Manager, Product Development & Pilot Production. From
August 1993 to February 1995, he held the position of Program Manager. Prior to
joining the Company, from January 1985 to July 1993, Mr. Chase held several
engineering and management positions at Network Equipment Technologies, a
telecommunications equipment manufacturer. Mr. Chase has a BSEE and MSEE from
the University of California, Santa Barbara.
Martin S. McDermut joined us as Chief Financial Officer, Vice President of
Finance and Administration in February 2000. Prior to joining our company, Mr.
McDermut was Vice President of Finance and Administration, Secretary and Chief
Financial Officer of International Remote Imaging Systems, Inc., a medical
technology firm, from September 1996 to February 2000. Mr. McDermut served as
Chief Financial Officer of Dental/Medical Diagnostics Systems, Inc. (formerly
Edudata Corporation) from June to August 1996. From June 1995 to April 1996, Mr.
McDermut was Vice President and Chief Financial Officer of All-Comm Media
Corporation, and, prior to that, he held the same roles at Pet Metro, Inc., an
early stage retail chain. From 1975 to 1993, he was with the accounting and
consulting firm of Coopers & Lybrand L.L.P.,
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<PAGE> 10
becoming a partner in 1988. From 1990 to 1993, Mr. McDermut practiced in the
firm's Los Angeles Entrepreneurial Advisory Services Group and was named its
head in 1992. He is a Certified Public Accountant and holds an M.B.A. in Finance
and Accounting from the University of Chicago and a B.A. in Economics from the
University of Southern California.
Robert P. Caren, Ph.D., has served on both our Board of Directors and our
Technical Advisory Board since January 1988. From 1988 to 1995, when he retired,
Dr. Caren served as Corporate Vice President, Sciences and Engineering, for
Lockheed Martin Corporation. Dr. Caren is a fellow of the American Institute of
Aeronautics and Astronautics, American Astronautics Society and the American
Association for the Advancement of Science. He is a member of the National
Academy of Engineering, a member of the California Council on Science and
Technology and past Chairman of the Research Division of the Defense
Preparedness Association. Dr. Caren received his Ph.D., M.S. and B.S. in physics
from Ohio State University.
Dennis J. Horowitz has served on our Board of Directors since June 1990.
Mr. Horowitz is currently President and Chief Executive Officer of Wolverine
Tube, Inc., a manufacturer and distributor of copper and copper alloy tube. From
September 1994 to April 1997, he served as Corporate Vice President and
President of the Americas of AMP Incorporated, an interconnection device
company. From October 1993 to August 1994, Mr. Horowitz served as President and
Chief Executive Officer of Philips Technologies, a Philips Electronics North
America company. From April 1990 to September 1993, Mr. Horowitz 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 he was involved in the general
administration of North American Philips Corporation. Mr. Horowitz is a director
of Wolverine Tube, Inc. and Aerovox Corporation. Mr. Horowitz holds an M.B.A and
a B.A. in economics from St. John's University.
John D. Lockton joined our Board of Directors in December 1997. Mr. Lockton
is currently Chairman of IPWireless, Inc., a wireless internet access and IP
telephony service provider. From August 1991 to March 1998, he was President,
Chief Executive Officer and a director of International Wireless Communications,
Inc. ("IWC"), an operator of cellular systems which filed for bankruptcy
protection in September 1998 under Chapter 11 of the U.S. Bankruptcy Code. He
was the Vice-Chairman and a director of IWC from March 1998 until June 1998 and
remained involved with the company until September 1998. From May 1990 to August
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
company's Board of Directors until December 1994. From 1983 to 1987 Mr. Lockton
was Executive Vice President of Pacific Bell (now Pacific Telesis). From 1980 to
1983 he was President of Warner Amex (now Time Warner) Cable Television, Inc.
From 1968 to 1980 Mr. Lockton served in various capacities at Dun & Bradstreet.
Mr. Lockton is the primary inventor of a patented wireless technology for
Personal Communication Services (PCS). Mr. Lockton is a graduate of Yale
University (Phi Beta Kappa), Harvard Law School and received an Executive MBA
from Columbia University.
J. Robert Schrieffer, Ph.D. founded our Technical Advisory Board in August
1987 and has served as its Chairman since that time. He also served on our Board
of Directors since October 1988. Dr. Schrieffer received the Nobel Prize in
Physics in 1972 for work in superconductivity theory, and he has received many
other professional honors including the National Medal of Science. Dr.
Schrieffer is currently the President of the American Physical Society. He is
also the University Eminent Scholar of the State of Florida University System
and has been the Chief Scientist of the National High Magnetic Field Laboratory
since January 1992. Dr. Schrieffer was Chancellor's Professor of Physics and
Director of the Institute for Theoretical Physics at the University of
California, Santa Barbara from 1980 to 1991. Dr. Schrieffer serves on a number
of government and industrial committees and is a Fellow of the Los Alamos
National Laboratory, heading its Advanced Study Program in High Temperature
Superconductivity Theory from 1988 to 1993. Dr. Schrieffer received his Ph.D.
and M.S. in physics from the University of Illinois and his B.S. in physics from
the Massachusetts Institute of Technology.
8
<PAGE> 11
Richard M. Johnston has served as a member of our Board of Directors since
June 1999. Mr. Johnston has been the Vice President-Investments and a director
of The Hillman Company, the parent company of Wilmington Securities, Inc., a
private corporation engaged in diversified investments and operations, for more
than five years. Mr. Johnston currently serves as Chairman of the Board of
Metrocall, Inc., a Nasdaq traded company that provides paging and other wireless
messaging services nationally. Mr. Johnston also currently is Chairman of the
Board of SCCI Health Services Corporation and Xypoint Corporation and is a
director of Park'n View, Inc., Ralin Medical, Inc. and U.S. Media Holdings,
Inc., all privately held companies. Mr. Johnston holds a B.S. in commerce from
Washington & Lee University and an M.B.A. from the Wharton School of Finance at
the University of Pennsylvania.
Joseph C. Manzinger has served as a member of our Board of Directors since
June 1999. Mr. Manzinger was appointed Vice President of The Hillman Company in
January 1998. From 1990 through 1998, Mr. Manzinger has also held positions with
The Hillman Company as Director -- Investment Review and Manager of Special
Projects. Mr. Manzinger served as a consultant for McKinsey & Company, and also
spent time with PriceWaterhouse & Co. and Parker/Hunter Inc., a regional
investment bank and brokerage firm. Mr. Manzinger serves as a director for a
variety of private companies, including Syvox Corporation, The MicroOptical
Corporation, RPM Industries, Inc., Selectus Pharmaceuticals, Inc and Stratos
Product Development Group, LLC. Mr. Manzinger holds a B.S. in Accounting from
Indiana University of Pennsylvania and an M.B.A. from the University of Chicago.
H. Vaughan Blaxter, III has served as Vice President, Secretary and General
Counsel of The Hillman Company since 1978 and as a director of The Hillman
Company since 1982. Mr. Blaxter previously served on the board of directors of
Read Rite Corporation (from 1990 through 1996) and Genus, Inc. (from 1990
through 1995). He currently serves on the boards of directors of Syvox
Corporation and Stratos Product Development Group, LLC, both privately held
companies. Mr. Blaxter received a B.S. from Washington and Jefferson College and
a J.D. from the University of Pittsburgh School of Law.
9
<PAGE> 12
VOTING SECURITIES OF PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
common stock as of March 20, 2000, by (i) each person known by the Company to be
the beneficial owner of more than 5% of the Company's common stock, (ii) by each
director, (iii) by each of the executive officers named in the table under
"Executive Compensation -- Summary Compensation Table," and (iv) all directors
and executive officers as a group. Except as otherwise indicated in the
footnotes to the table, 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.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
NAME SHARES OWNERSHIP
---- ---------------- --------------------
<S> <C> <C>
Wilmington Securities, Inc. and Affiliated Parties(1)..... 6,181,553 39.02%
824 Market Street, Suite 900
Wilmington, Delaware 19801
TGI Fund III, LLC and Affiliated Parties(2)............... 1,320,000 8.62
6501 Columbia Center
701 Fifth Street
Seattle, Washington 98104
Glenn E. Penisten(3)...................................... 151,591 1.08
M. Peter Thomas(4)........................................ 244,601 1.72
E. Ray Cotten(5).......................................... 130,444 *
Robert B. Hammond(5)...................................... 82,982 *
Michael M. Eddy(6)........................................ 46,513 *
Neal O. Fenzi(5).......................................... 45,459 *
David R. Chase(7)......................................... 27,626 *
Martin S. McDermut........................................ 0 *
J. Robert Schrieffer(8)................................... 6,150 *
Robert P. Caren(9)........................................ 30,738 *
Dennis J. Horowitz(10).................................... 37,255 *
John D. Lockton(5)........................................ 20,971 *
Richard M. Johnston(5).................................... 3,072 *
Joseph C. Manzinger(11)................................... 19,572 *
All executive officers and directors as a group (14
persons)(12)............................................ 846,974 5.76
</TABLE>
- ---------------
* Less than one percent.
(1) Based on information contained in a Schedule 13D, as amended, filed by
Wilmington and persons affiliated with Wilmington. Includes a total of
1,855,410 shares issuable upon the conversion of preferred stock for the
purchase of common stock that are convertible or exercisable within 60 days
of March 20, 2000. Wilmington is an indirect, wholly owned subsidiary of
The Hillman Company, a private corporation engaged in diversified
investments and operations. The Hillman Company is controlled by Henry L.
Hillman, Elsie Hilliard Hillman and C.G. Grefenstette, Trustees of the
Henry L. Hillman Trust dated November 18, 1985 (the "HLH Trustees"). Each
of the HLH Trustees shares voting and disposition power over the assets of
The Hillman Company. The above total includes 485,020 shares of Common
Stock which were owned beneficially of record or issuable upon the
conversion of preferred stock owned beneficially of record by four trusts
for members of the Hillman family. The HLH Trustees (other than Mr.
Grefenstette, who is a trustee of such trusts) disclaim beneficial
ownership of such shares.
(2) Based on information contained in a Schedule 13D, filed by the TGI Fund and
persons affiliated with TGI Fund. Includes a total of 1,320,000 shares
issuable upon the conversion of preferred stock or exercise of warrants for
the purchase of common stock that are convertible or exercisable within 60
days
10
<PAGE> 13
of March 20, 2000. TGI Fund is a limited liability company managed by
Tredegar Investments, Inc. Both entities are engaged in diversified
investments and operations. Tredegar Investments, Inc. is an affiliate of
Tredegar Corporation, a public corporation engaged in manufacturing of
plastics and aluminum extrusions and has interests in drug discovery, drug
delivery and a variety of other emerging technologies.
(3) Includes 62,997 shares held by a trust for the benefit of Glenn and Mary
Louise Penisten. Also includes 88,334 shares issuable upon the exercise of
stock options that are exercisable within 60 days of March 20, 2000.
(4) Includes 244,168 shares issuable upon the exercise of stock options that
are exercisable within 60 days of March 20, 2000.
(5) All shares are issuable upon the exercise of stock options that are
exercisable within 60 days of March 20, 2000.
(6) Includes 45,313 shares issuable upon the exercise of stock options that are
exercisable within 60 days of March 20, 2000.
(7) Includes 4,751 shares issuable upon the exercise of stock options that are
exercisable within 60 days of March 20, 2000.
(8) Includes 2,500 shares issuable upon the exercise of stock options that are
exercisable within 60 days of March 20, 2000.
(9) Includes 23,388 shares issuable upon the exercise of stock options that are
exercisable within 60 days of March 20, 2000.
(10) Includes 33,805 shares issuable upon the exercise of stock options that are
exercisable within 60 days of March 20, 2000.
(11) Includes 3,072 shares issuable upon the exercise of stock options that are
exercisable within 60 days of March 20, 2000.
(12) See footnotes (3) - (11). Includes 728,259 shares issuable upon exercise of
stock options held by executive officers and directors that are exercisable
within 60 days of March 20, 2000.
11
<PAGE> 14
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation received for services
rendered to the Company in all capacities during the fiscal years ended December
31, 1999, 1998 and 1997 by the Company's Chief Executive Officer and the four
executive officers other than the Chief Executive Officer whose total salary and
bonus for fiscal year 1999 exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
----------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) OPTIONS(#) COMPENSATION($)(2)
- --------------------------- ---- --------- -------- ------------------ ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
M. Peter Thomas.......... 1999 249,269 25,000 -- 30,000 1,733
President and Chief 1998 229,806 -- -- 40,000 2,293
Executive Officer 1997 162,798(3) -- 15,000(4) 280,000 1,644
E. Ray Cotten............ 1999 179,635 -- -- 66,066 4,959
Senior Vice President, 1998 159,764 -- -- -- 6,300
Sales and Marketing 1997 166,076 -- -- -- 6,542
Robert B. Hammond........ 1999 182,456 -- -- -- 1,036
Senior Vice President 1998 171,888 -- -- 17,000 1,400
and Chief Technical 1997 165,080 -- -- 60,000(5) 932
Officer
Neal O. Fenzi............ 1999 148,918 -- -- 12,000 294
Vice President, 1998 126,441 -- -- 20,000 294
Engineering 1997 110,162 -- -- 40,000 250
Benson Chin(6)........... 1999 136,428 -- -- 12,000 920
Vice President, 1998 48,536 -- -- 60,000 487
Wireless Manufacturing 1997 -- -- -- -- 0
</TABLE>
- ---------------
(1) Excludes certain perquisites and other amounts that, for any executive
officer, in the aggregate did not exceed the lesser of $50,000 or 10% of the
total annual salary and bonus for such executive officer.
(2) Term life insurance premiums.
(3) Mr. Thomas commenced employment with the Company in April 1997; amount shown
reflects pro rated annual salary of $200,000.
(4) Relocation expenses.
(5) Includes 15,000 shares which replaced a 1996 grant of an option to purchase
15,000 shares which was canceled.
(6) Mr. Chin resigned from the Company in February 2000.
EMPLOYMENT AGREEMENTS
In addition to the executive compensation set forth in the table above,
pursuant to a letter agreement between M. Peter Thomas and the Company dated
April 3, 1997, Mr. Thomas is entitled to six months' salary as severance in the
event of a change in his position with the Company not for cause, and 70,000 of
the 280,000 options to purchase common stock of the Company issued in connection
with that letter agreement will be accelerated to vest immediately upon a change
of control if accompanied by a change in Mr. Thomas' position with the Company.
E. Ray Cotten is entitled to twelve months severance, including a continuation
of base salary and employee and dependent health and insurance benefits, in the
event of involuntary termination as set forth in an Employment Agreement between
the Company and Mr. Cotten dated July 1, 1997. There are no other employment
agreements between the Company and any of its executive officers.
12
<PAGE> 15
OPTION GRANTS IN FISCAL 1999
The following table sets forth certain information regarding stock options
granted during the fiscal year ended December 31, 1999 to each of the executive
officers named in the table under "Executive Officer Compensation -- Summary
Compensation Table."
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE
OPTIONS AT ASSUMED ANNUAL RATES
NUMBER OF GRANTED OF STOCK PRICE
SECURITIES TO APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM(3)
OPTIONS IN FISCAL PRICE EXPIRATION --------------------------
NAME GRANTED(#)(1) YEAR(2) ($/SH) DATE 5%($) 10%($)
---- -------------- ---------- -------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
M. Peter Thomas...... 30,000 9.12 2.875 07/29/09 54,242 137,460
E. Ray Cotten........ 66,066(4) 20.08 4.125 03/01/09 177,388 434,330
Robert B. Hammond.... -- -- -- -- -- --
Neal O. Fenzi........ 12,000 3.65 3.625 07/29/09 27,357 69,328
Benson Chin.......... 12,000 3.65 3.625 07/29/09 27,357 69,328
</TABLE>
- ---------------
(1) Except as set forth herein, each option vests over a four-year period at the
rate of 1/4 of the shares subject to the option at the end of the first
twelve months and 1/36 of the remaining shares subject to the option at the
end of each monthly period thereafter so long as such optionee's employment
with the Company has not terminated.
(2) Total number of shares subject to options granted to employees in fiscal
1999 was 328,960, which number includes options granted to employee
directors, but excludes options granted to nonemployee directors and
consultants.
(3) The Potential Realizable Value is calculated based on the fair market value
on the date of grant, which is equal to the exercise price of options
granted in fiscal 1999, assuming that the stock appreciates in value from
the date of grant until the end of the option term at the annual rate
specified (5% and 10%). Potential Realizable Value is net of the option
exercise price. The assumed rates of appreciation are specified in rules of
the SEC and do not represent the Company's estimate or projection of future
stock price. Actual gains, if any, resulting from stock option exercises and
common stock holdings are dependent on the future performance of the common
stock and overall stock market conditions, as well as the option holders'
continued employment through the exercise/vesting period. There can be no
assurance that the amounts reflected in this table will be achieved.
(4) One half of this option vested on 1/1/2000 as a result of the achievement of
certain sales targets. The remainder will vest on 1/1/2001 if certain sales
targets are achieved in 2000. If these targets are not achieved, the vesting
schedule will revert to that described in footnote 1 above.
13
<PAGE> 16
AGGREGATED OPTION EXERCISES IN FISCAL 1999 AND 1999 FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information concerning the value of
unexercised options as of December 31, 1999 for each of the executive officers
named in the table under "Executive Compensation -- Summary Compensation Table."
<TABLE>
<CAPTION>
SHARES VALUE
ACQUIRED ON REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME EXERCISE ($) (#) (#) ($)(1) ($)(1)
---- ----------- -------- ----------- ------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
M. Peter Thomas........... -- -- 203,334 146,666 210,000 165,000
E. Ray Cotten(2).......... -- -- 105,184 69,816 -- 49,550
Robert B. Hammond......... -- -- 108,938 33,062 61,472 49,268
Neal O. Fenzi............. -- -- 60,250 38,250 54,756 32,656
Benson Chin............... -- -- 20,000 52,000 -- 15,000
</TABLE>
- ---------------
(1) Market value of underlying securities based on the $4.875 closing price of
the Company's common stock on December 31, 1999 (the last market trading day
in 1999), minus the exercise price.
(2) Of a total of 108,934 options to purchase common stock of the Company
granted to Mr. Cotten during fiscal 1996, 93,934 options will be accelerated
to vest immediately upon "acquisition of the Company" defined as "the
acquisition or merger of the Company into another entity or the acquisition
or merger of another entity into the Company which is valued at or in excess
of $2.5 million or is significant to the Company as determined by the Board
of Directors of the Company in its sole discretion."
(3) The fair market value of the Company's common stock as of December 31, 1999
was $4.875, which did not exceed the exercise price of such exercisable or
unexercisable options held by such person.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and the holders of more than 10%
of the Company's common stock to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
equity securities of the Company. Based solely upon a review of such forms, or
on written representations from certain reporting persons that no other reports
were required for such persons, the Company believes that all reports required
pursuant to Section 16(a) with respect to its executive officers, directors and
10% stockholders for the 1999 fiscal year were complied with.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors is composed
of five nonemployee directors, namely, Robert P. Caren, Ph.D., Dennis J.
Horowitz, John D. Lockton, J. Robert Schrieffer, Ph.D. and Richard M. Johnson.
No interlocking relationship exists between the Company's Board of Directors and
the compensation committee of any other company, and no such interlocking
relationship has existed in the past.
COMPENSATION COMMITTEE REPORT
The Compensation Committee (the "COMPENSATION COMMITTEE") of the Board of
Directors of the Company is comprised of five independent, nonemployee directors
who have no interlocking relationships with the Company or any of its
affiliates. As part of their duties, the Compensation Committee reviews
compensation levels of the executive officers to insure compensation is in line
with performance and industry practices. The goal of the Compensation Committee
is to insure the compensation practices of the Company are sufficient to attract
the necessary technical and manufacturing talent to enable the growth from a
development stage company into one with commercialized products.
The Compensation Committee meets with the Chief Executive Officer to gather
input on the performance of the other executive officers. In determining
individual salaries for officers, consideration is given to
14
<PAGE> 17
individual factors, such as experience, performance and responsibilities within
the Company, as well as industry-specific comparables. Because the
superconductivity industry is small, the Compensation Committee uses other
industries for comparable measures which have similar manufacturing techniques
and challenges, in particular the wireless and semiconductor industries. As the
Company is still in the development stages, bonus plans are based upon goal
attainment rather than upon profitability. Historically, the Company has not
given bonuses on an annual or recurring basis.
The Compensation Committee also administers the Company's Stock Option
Program, which is made available to all employees. In addition to the executive
officers, the Compensation Committee also reviews stock option grants to all
employees. The size of the stock option awards is based primarily on an
individual's performance, responsibilities and position with the Company, as
well as such individual's present equity ownership and unvested and vested stock
options. The Compensation Committee believes the stock option program is crucial
to the retention and motivation of all employees. The Compensation Committee
also believes it is essential to insure all employees have a stake in the
Company. With all employees as stakeholders, the Compensation Committee believes
this enhances the overall stockholder value and creates an environment in which
creativity and technical achievement will excel.
The Compensation Committee also administers the Executive Incentive
Compensation Plan (commencing in 2000), which is made available to senior
managers. The Plan is predicated on awarding an incentive payment based on
achievement of an individuals objectives and goals, presuming the Company
achieves a minimum performance in that fiscal year. The Compensation Committee
believes this incentive plan is important to the retention of senior management
by providing additional incentives for executive personnel who influence the
profitability of the Company.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
When setting the Chief Executive Officer's compensation, the Compensation
Committee does so without such person's attendance. The Chief Executive
Officer's compensation is determined based on comparable salaries of chief
executive officers in comparable technology companies. As stated previously, the
superconductivity industry is small; the Compensation Committee uses other
industries for comparable measures which have some of the same manufacturing
techniques and challenges.
M. Peter Thomas, who served as the Company's Chief Executive Officer during
all of fiscal 1999 and 1998, began his employment with the Company in April
1997. At the time of his hire, the Board set Mr. Thomas' annual salary at
$200,000. In addition to his salary, at the time of hire, Mr. Thomas was granted
an option to purchase 280,000 shares of the Company's common stock, vesting over
a period of 4 years. In 1998, Mr. Thomas' salary was increased to $230,000 and
he was granted an additional option to purchase 40,000 shares of common stock,
vesting over a period of 4 years. During 1999, Mr. Thomas' compensation was
increased to $260,000 from $230,000 and he was granted an additional option to
purchase 30,000 shares of common stock, vesting over a period of 4 years. The
Company also leases a car for Mr. Thomas' use.
$1,000,000 LIMIT ON TAX DEDUCTIBLE COMPENSATION
Section 162(m), enacted as part of the Omnibus Budget Reconciliation Act of
1993, limits to $1,000,000 the deductibility, for any year beginning after
December 31, 1993, of compensation paid by a public corporation to the chief
executive officer and the next four most highly compensated executive officers
unless such compensation is performance-based within the meaning of Section
162(m) and the regulations thereunder.
15
<PAGE> 18
The Compensation Committee intends to continue to utilize performance-based
compensation in order to minimize the effect of the limits imposed by Section
162(m) and seeks to assure the maximum tax deductibility of all compensation it
authorizes. However, the Compensation Committee believes that its primary
responsibility is to provide a compensation program that will attract, retain
and reward the executive talent necessary to the Company's success.
Consequently, the Compensation Committee recognizes that the loss of a tax
deduction may be necessary in some circumstances.
Robert P. Caren, Ph.D.
Dennis J. Horowitz
John D. Lockton
J. Robert Schrieffer, Ph.D.
Richard M. Johnston
16
<PAGE> 19
STOCK PRICE PERFORMANCE GRAPH
The graph and table below compare the cumulative total stockholders' return
on the Company's common stock since December 31, 1994 with the Nasdaq-U.S.
Composite Index and the Hambrecht & Quist Technology Index over the same period
(assuming the investment of $100 in the Company's common stock and in the two
other indices, and reinvestment of all dividends).
<TABLE>
<CAPTION>
12/30/94 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C> <C>
Superconductor Technologies $100.00 $ 69.23 $ 60.58 $ 48.08 $ 59.62 $ 75.00
Nasdaq Composite 100.00 139.92 171.69 208.83 291.60 541.16
H&Q Technologies Index 100.00 146.30 183.68 213.58 329.03 730.50
</TABLE>
17
<PAGE> 20
FORM 10-K
The Company will mail without charge, upon written request, a copy of the
Annual Report on Form 10-K, including the financial statements, schedules and
list of exhibits. Requests should be sent to Superconductor Technologies Inc.,
460 Ward Drive, Santa Barbara, California 93111, Attn: Investor Relations.
The Company knows of no other matters to be submitted at the 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 the Board of Directors may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
Santa Barbara, California
April , 2000
18
<PAGE> 21
DETACH HERE
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SUPERCONDUCTOR TECHNOLOGIES INC.
ANNUAL MEETING OF STOCKHOLDERS
May 17, 2000
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 , 2000 and hereby appoints
M. Peter Thomas and Martin S. McDermut or either of them, proxies and
attorneys-in-fact, with full power to each 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 May 17, 2000 at
11:00 a.m., local time, at the Pacifica Suites, located at 5490 Hollister
Avenue, Santa Barbara, California, and at any adjournment or adjournments
thereof, and to vote all shares of capital stock which the undersigned would be
entitled to vote if then and there personally present, on the matters set forth
on the reverse side.
[X] Please mark votes as in this example
1. ELECTION OF DIRECTORS
Nominees: Glenn E. Penisten; M. Peter Thomas; E. Ray Cotten; Robert P. Caren,
Ph.D.; Dennis J. Horowitz; John D. Lockton; J. Robert Schrieffer, Ph.D.; Joseph
C. Manzinger; H. Vaughan Blaxter, III.
FOR ALL NOMINEES [ ] WITHHELD FROM ALL NOMINEES [ ]
- --------------------------------------------------------------------------------
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
their name in the space provided above.)
[SEE REVERSE SIDE] CONTINUED AND TO BE SIGNED ON REVERSE SIDE [SEE REVERSE
SIDE]
- --------------------------------------------------------------------------------
DETACH HERE
<PAGE> 22
2. Proposal to Approve an Amendment to the Company's Certificate of
Incorporation Increasing the Authorized Common Stock of the Company from
30,000,000 Shares to 75,000,000 Shares.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
3. Proposal to Ratify the Appointment of PricewaterhouseCoopers LLP as
Independent Auditors of the Company for the Fiscal Year ending December 31,
1999.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
As to any other matters which
may properly come before the
meeting or any adjournments
thereof, the proxyholders are
authorized to vote in accordance
with their best judgment.
MARK HERE FOR ADDRESS CHANGE AND
NOTE AT LEFT [ ]
PLEASE CHECK HERE IF YOU PLAN TO
ATTEND THE MEETING [ ]
(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 should
sign.)
Signature:
--------------------------------
Date:
--------------------------------
Signature:
--------------------------------
Date:
--------------------------------
THIS PROXY WILL BE VOTED AS
DIRECTED, OR IF NO CONTRARY
DIRECTION IS INDICATED, WILL BE
VOTED FOR THE ELECTION OF
DIRECTORS, FOR AMENDMENT TO THE
COMPANY'S CERTIFICATE OF
INCORPORATION INCREASING THE
AUTHORIZED COMMON STOCK OF THE
COMPANY, AND FOR THE
RATIFICATION OF THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT AUDITORS OF THE
COMPANY FOR THE YEAR ENDING
DECEMBER 31, 1999 AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH
OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
