EXHIBIT 10.36
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT is entered into as of March 28, 2003,
by and between _____________ (the "Executive") and Superconductor Technologies
Inc., a Delaware corporation (the "Company").
As of the effective date of this Agreement, Executive will continue to
serve as an at-will employee of the Company in his present position. In the
Event of a Change of Control, Executive will have such authority and
responsibilities as may be assigned to him by the Board of Directors of the
acquiring company. Executive's office will continue to be located in the Santa
Barbara, California area and Executive's duties shall primarily be performed
there. Executive will continue to earn an annual base salary of _____________
(subject to adjustment in accordance with Company's policy, but, effective upon
the occurrence of a Change in Control), which shall cover all hours worked,
payable in the time and manner that salary is paid by the Company to employees
generally, and subject to required tax withholding. Executive will continue to
be eligible to receive a bonus in accordance with Company's policy.
1. Definitions. The following definitions shall apply for all purposes
under this Agreement:
(a) Change in Control. "Change in Control" means the occurrence of
any of the following events on or after the effective date of this Agreement:
(i) When any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of
1934, as amended, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Company representing
thirty percent (30%) or more of the combined voting
power of the Company's then outstanding securities
entitled to vote generally in the election of
directors, other than the following persons:
(A) the Company,
(B) a subsidiary of the Company,
(C) a Company employee benefit plan,
including any trustee of such plan
acting as trustee, or
(D) any person who, as of the effective
date of this Agreement, has
publicly disclosed in filings with
the Securities and Exchange
Commission the beneficial ownership
of more than 5% of the combined
voting power of the Company's
outstanding securities entitled to
vote generally in the election of
directors;
(ii) 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 Company's assets;.
(iii) 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 effective
date of this Agreement, 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);
(iv) The sale, transfer or other disposition of all or
substantially all of the Company's assets; or
(v) The stockholders of the Company approve the
dissolution or liquidation of the Company;
A transaction shall not constitute a Change in Control if its
sole purpose is to change the state of the Company's incorporation or
to create a holding company that will be owned in substantially the
same proportions by the persons who held the Company's securities
immediately before such transaction.
(b) Cause. "Cause" means the occurrence of any of the following
events on or after the effective date of this Agreement:
(i) Executive's intentional unauthorized use or
disclosure of the confidential information or trade
secrets of the Company;
(ii) Executive's conviction of, or a plea of "guilty" or
"no contest" to, a felony under the laws of the
United States or any state thereof; or
(iii) Executive's intentional failure to perform assigned
duties after receiving written notification from his
superior and Executive's failure to correct such
deficiencies within ten (10) days after receiving
such written notification.
(c) Disability. "Disability" shall mean that, on or after the
effective date of this Agreement, the Executive is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months.
(d) Good Reason. "Good Reason" shall mean that, on or after the
effective date of a Change in Control, the Executive (without Executive's
written consent):
(i) Has incurred a material reduction in his or her
authority or responsibility in comparison to the
Executive's authority or responsibility prior to the
public announcement of the Change in Control;
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(ii) Has incurred one or more reductions in his or her
"total compensation" which is defined as follows:
(A) a reduction of more than 10% in base salary
unless it occurs in connection with a
restructuring or other cost-cutting measure
as evidenced by a comparable reduction in
the base salary of all executive officers or
(B) a reduction of more than 20% in the target
annual bonus percentage of base salary
unless it occurs in connection with a
restructuring or other cost-cutting measure
as evidenced by a comparable reduction in
the target annual bonus percentage of all
executive officers; or
(iii) Has been notified that his or her principal place of
work will be relocated by a distance of 50 miles or
more.
For purposes of this Agreement, "base salary" shall mean the
Executive's annualized base salary as set forth above and as may be subsequently
adjusted upward for increases and "executive officer" shall have the meaning set
forth in Rule 3b-7 under the Securities Exchange Act of 1934, as amended.
2. Severance Payment and Equity Compensation.
(a) The Executive shall be entitled to receive a severance payment
from the Company (the "Severance Payment") if within the first twenty-four (24)
month period after the occurrence of a Change in Control, either:
(i) The Executive voluntarily resigns his or her
employment for Good Reason within sixty (60) days
after the Executive becomes aware of the occurrence
of an event specified in Section 1(d); or
(ii) The Company terminates the Executive's employment for
any reason other than Cause, death or Disability.
For all purposes under this Agreement, the amount of the Severance
Payment shall be equal to 1.5 times the Executive's annual base salary, as in
effect on the date of the termination of Executive's employment.
If Executive is entitled to a Severance Payment, then such Severance
Payment shall be made in monthly substantially equal cash pro-rata payments on
the first business day of each month over a 18-month period until the Severance
Payment is paid in full. The first such monthly payment shall be paid in the
month immediately following the date Executive becomes entitled to a Severance
Payment. Except as may be provided under Sections 2(b) and 2(c), the Severance
Payment shall be in lieu of any other post-termination of employment payments.
(b) Incentive Programs. If the Executive is entitled to a
Severance Payment under Section 2(a) and notwithstanding anything to the
contrary in any stock option or stock appreciation right (SAR) plans or
agreements, then (i) the Executive shall become immediately fully vested in all
of his/her outstanding stock options, SARs, warrants, restricted stock, phantom
stock or similar plans or agreements of the Company and (ii) the Executive (or
his/her personal representative if applicable) shall be permitted to exercise
any of his/her vested stock options/SARs until the earlier
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of (i) five (5) years after Executive's termination of employment or (ii) the
term of such unexercised stock options, warrants or SARs or (iii) ninety days
following the date that Executive becomes an employee of any of the Competing
Companies (as defined below) if such other employment commenced within 24 months
after Executive's termination of employment with the Company. For purposes of
this Section 2(b), the "Competing Companies" are: ISCO International, Inc.,
DuPont Superconductivity (a subsidiary of DuPont Corporation), CryoDevices, Inc.
and any other company (including, without limitation, any affiliates of the
foregoing) engaged in the development, manufacture or sale of cryogenic receiver
front-end devices for communications.
(c) Insurance Coverage. If the Executive is entitled to a
Severance Payment under Section 2(a), the Company shall pay for any group health
continuation coverage that the Company is otherwise required to offer under the
Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA") and for term
life insurance, in both cases on the same terms then available to other
executives subject to applicable caps (with respect to life insurance, based on
Executive's base salary in effect on the effective date of this Agreement) until
earlier of the date that (i) the Executive becomes covered by comparable health
coverage and/or life insurance coverage, as applicable, offered by another
employer, or (ii) is 18 months after the date upon which the Executive becomes
entitled to a Severance Payment under Section 2(a).
(d) Mitigation. Except as may be expressly provided elsewhere in
this Agreement, the Executive shall not be required to mitigate the amount of
any payment or benefit contemplated by this Section 2 (whether by seeking new
employment or in any other manner). No such payment shall be reduced by earnings
that the Executive may receive from any other source.
(e) Conditions. All payments and benefits provided under this
Section 2 are conditioned on Executive's continuing compliance with this
Agreement and the Company's policies and Executive's execution of a release of
claims and covenant not to xxx substantially in the form provided in Exhibit A
upon termination of employment.
3. Tax Effect of Payments.
(a) Excise Taxes. In the event that it is determined that any
payment or distribution of any type to or for the benefit of the Executive made
by the Company, by any of its affiliates, by any person who acquires ownership
or effective control of the Company or ownership of a substantial portion of the
Company's assets (within the meaning of section 280G of the Internal Revenue
Code of 1986, as amended, and the regulations thereunder (the "Code")) or by any
affiliate of such person, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the "Total
Payments"), would be subject to the excise tax imposed by section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest or penalties, are collectively referred to
as the "Excise Tax"), then such payments or distributions shall be limited to
such amount which would result in no portion of the payments or distributions
being subject to the Excise Tax.
(b) Determination by Auditors. All mathematical determinations and
all determinations of whether any of the Total Payments are "parachute payments"
(within the meaning of section 280G of the Code) that are required to be made
under this Section 3, shall be made by the independent auditors retained by the
Company most recently prior to the Change in Control (the "Auditors"), who shall
provide their determination (the "Determination"), together with detailed
supporting calculations regarding the amount of any relevant matters, both to
the Company and to the Executive within seven (7) business days of the
Executive's termination date, if applicable, or such earlier time as is
requested by the Company or by the Executive. The Auditors shall furnish
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the Executive with a written statement that such Auditors have concluded that no
Excise Tax is payable (including the reasons therefor) and that the Executive
has substantial authority not to report any Excise Tax on the Executive's
federal income tax return. Any determination by the Auditors shall be binding
upon the Company and the Executive, absent manifest error. The Company shall pay
the fees and costs of the Accountants.
4. Successors.
(a) Company's Successors. Any successor (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company's business and/or assets,
shall be obligated to perform this Agreement in the same manner and to the same
extent as the Company would be required to perform it in the absence of a
succession.
(b) Executive's Successors. This Agreement and all rights of the
Executive hereunder shall inure to the benefit of, and be enforceable by, the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
5. Miscellaneous Provisions.
(a) Notice. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Executive,
mailed notices shall be addressed to him or her at the home address which he or
she most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its Secretary.
(b) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Executive and by an authorized officer of the
Company (other than the Executive). No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the
same condition or provision at another time.
(c) Whole Agreement. This Agreement contains all the legally
binding understandings and agreements between Executive and the Company
pertaining to the subject matter of this Agreement and supersedes all such
agreements, whether oral or in writing, previously entered into between the
parties
(d) Withholding Taxes. All payments made under this Agreement
shall be subject to reduction to reflect taxes required to be withheld by law.
(e) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.
(f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
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(g) Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in San Francisco in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. Discovery shall be permitted to the
same extent as in a proceeding under the Federal Rules of Civil Procedure,
including (without limitation) such discovery as is specifically authorized by
section 1283.05 of the California Code of Civil Procedure, without need of prior
leave of the arbitrator under section 1283.05(e) of such Code. Judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. All fees and expenses of the arbitrator and such Association and
attorney fees shall be paid as determined by the arbitrator.
(h) No Assignment. The rights of Executive to payments or benefits
under this Agreement shall not be made subject to option or assignment, either
by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor's
process, and any action in violation of this Subsection (h) shall be void.
(i) Nondisparagement; Confidentiality. On effective date of this
Agreement and thereafter, Executive agrees that he/she will not disparage the
Company or its directors, officers, employees, predecessor, successors or
assigns in any written or oral communications to any third party. Executive
further agrees that he/she will not direct anyone to make any disparaging oral
or written remarks to any third parties. During Executive's employment and
following Executive's termination of employment, Executive agrees to not
intentionally use or disclose the confidential information or trade secrets of
the Company.
(j) Nonsolicit. During the Executive's employment with Company,
the Executive shall not, directly or indirectly, either as an individual or as
an employee, agent, consultant, advisor, independent contractor, general
partner, officer, director, stockholder, investor, lender, or in any other
capacity whatsoever, of any person, firm, corporation or partnership induce or
attempt to induce any person who at the time of such inducement is an employee
of Company to perform work or service for any other person or entity other than
Company.
(k) Nondisclosure. Notwithstanding any requirement that the
Company may have to publicly disclose the terms of this Agreement pursuant to
applicable law or regulations, Executive agrees to use reasonable efforts to
maintain in confidence the existence of this Agreement, the contents and terms
of this Agreement, and the consideration for this Agreement (hereinafter
collectively referred to as "Agreement Information"). Executive also agrees to
take every reasonable precaution to prevent disclosure of any Agreement
Information to third parties, except for disclosures required by law or
absolutely necessary with respect to Executive's family members or personal
advisors who shall also agree to maintain confidentiality of the Agreement
Information.
(l) Notice of Employment. During Executive's employment and for 18
months after Executive's termination of employment, Executive will promptly
notify the Company in writing if Executive becomes (or agrees to become) an
employee of any other employer. Such notice shall include the name of the other
employer and the date of commencement of employment.
6. Effective Date and Term of Agreement. This Agreement is effective on
the date first written above and shall continue in effect until the Company
shall have given Executive three (3) years' written notice of cancellation;
provided, that, notwithstanding the delivery of any such notice, this Agreement
shall continue in effect for a period of three (3) years after a Change in
Control, if such Change in Control shall have occurred during the term of this
Agreement. Except as provided in
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the next paragraph, this Agreement shall terminate if Executive's employment is
terminated prior to a Change in Control.
This Agreement shall remain effective if, in connection with an impending Change
in Control that is actually consummated, the Company terminates the Executive's
employment for any reason other than Cause, death or Disability or the Executive
voluntarily resigns for Good Reason. The Company's Board shall determine in good
faith whether such a termination or resignation is occurring in connection with
an impending Change in Control. However, such a termination or resignation shall
in any event be deemed to be in connection with an impending Change in Control
if such termination or resignation (i) is required by the merger agreement or
other instrument relating to such Change in Control or (ii) is made at the
express request of the other party (or parties) to the transaction constituting
such Change in Control.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.
EXECUTIVE:
____________________________________________
COMPANY:
____________________________________________
By: Xxxx X. Xxxxxxx
As Its: Chairman of the Board
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EXHIBIT A
Form of Release of Claims and Covenant Not To Xxx
In consideration of the payments and other benefits that Superconductor
Technologies Inc. (the "Company") is providing to _________________
("Executive") under the Change in Control Agreement entered into by and between
Executive and the Company, dated _________, 2003, the Executive, on his/her own
behalf and on behalf of Executive's representatives, agents, heirs and assigns,
waives, releases, discharges and promises never to assert any and all claims,
demands, actions, costs, rights, liabilities, damages or obligations of every
kind and nature, whether known or unknown, suspected or unsuspected that
Executive ever had, now have or might have as of the date of Executive's
termination of employment with the Company against the Company or its
predecessors, parent, affiliates, subsidiaries, stockholders, owners, directors,
officers, employees, agents, attorneys, insurers, successors, or assigns
(including all such persons or entities that have a current and/or former
relationship with the Company) for any claims arising from or related to
Executive's employment with the Company, its parent or any of its affiliates and
subsidiaries and the termination of that employment.
These released claims also specifically include, but are not limited to, any
claims arising under any federal, state and local statutory or common law, such
as (as amended and as applicable) Title VII of the Civil Rights Act, the Age
Discrimination in Employment Act, the Americans With Disabilities Act, the
Employee Retirement Income Security Act, the Family Medical Leave Act, the Equal
Pay Act, the Fair Labor Standards Act, the Industrial Welfare Commission's
Orders, the California Fair Employment and Housing Act, the California
Constitution, the California Government Code, the California Labor Code and any
other federal, state or local constitution, law, regulation or ordinance
governing the terms and conditions of employment or the termination of
employment, and the law of contract and tort and any claim for attorneys' fees.
Furthermore, the Executive acknowledges that this waiver and release is knowing
and voluntary and that the consideration given for this waiver and release is in
addition to anything of value to which Executive was already entitled. Executive
acknowledges that there may exist facts or claims in addition to or different
from those which are now known or believed by Executive to exist. Nonetheless,
this Agreement extends to all claims of every nature and kind whatsoever,
whether known or unknown, suspected or unsuspected, past or present. Executive
also expressly waives the provisions of California Civil Code section 1542,
which provides: "A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of executing the
release, which if known by him/her must have materially affected his settlement
with the debtor." With respect to the claims released in the preceding
sentences, the Executive will not initiate or maintain any legal or
administrative action or proceeding of any kind against the Company or its
predecessors, parent, affiliates, subsidiaries, stockholders, owners, directors,
officers, employees, agents, successors, or assigns (including all such persons
or entities that have a current or former relationship with the Company), for
the purpose of obtaining any personal relief, nor assist or participate in any
such proceedings, including any proceedings brought by any third parties (except
as otherwise required or permitted by law). The Executive further acknowledges
that he/she has been advised by this writing that:
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- he/she should consult with an attorney prior to
executing this release;
- he/she has at least twenty-one (21) days within which
to consider this release;
- he/she has up to seven (7) days following the
execution of this release by the parties to revoke
the release; and
- this release shall not be effective until such seven
(7) day revocation period has expired.
Executive agrees that the release set forth above shall be and remain in effect
in all respects as a complete general release as to the matters released.
EXECUTIVE
__________________________________ Date:_____________________________
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