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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:
[ ] Preliminary proxy statement
[X] Definitive proxy statement [ ] Confidential, For Use of the
Commission Only (as permitted
by 14a-6(e)(2))
[ ] Definitive additional materials
[ ] 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:
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[SUPERCONDUCTOR TECHNOLOGIES LOGO]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 17, 2001
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, 2001, at 11:00 a.m., local time, at the Holiday Inn, 5650
Calle Real, Goleta, California 93117 for the following purposes:
1. To elect eight (8) directors to serve for the ensuing year and until
their successors are duly elected and qualified.
2. To approve a premium payment in common stock on the Company's Series E
convertible preferred stock.
3. To approve an amendment to the Company's bylaws providing for a division
of the board of directors into three classes.
4. To approve an amendment to the Company's Certificate of Incorporation
eliminating the right of shareholders to act by written consent.
5. To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors of the Company for the year ending December 31, 2001.
6. 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 April 4, 2001 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.
/s/ Martin S. McDermut
Martin S. McDermut
Vice President, Finance and
Administration
and Chief Financial Officer
Santa Barbara, California
April 4, 2001
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.
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[SUPERCONDUCTOR TECHNOLOGIES LOGO]
460 WARD DRIVE
SANTA BARBARA, CALIFORNIA 93111-2310
(805) 683-7646
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MEETING TO BE HELD MAY 17, 2001 AT:
HOLIDAY INN
5650 CALLE REAL
GOLETA, CA 93117
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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, 2001, 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 Holiday Inn, 5650 Calle Real, Goleta, California 93117.
The Company anticipates that these proxy solicitation materials will first
be mailed on or about April 4, 2001, to all stockholders entitled to vote at the
Annual Meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
RECORD DATE
Holders of record of voting stock at the close of business on April 4, 2001
(the "RECORD DATE") are entitled to notice of the Annual Meeting and to vote at
the Annual Meeting. At the Record Date, the Company's voting stock includes
17,889,613 shares of issued and outstanding common stock with a par value of
$0.001 per share. The Company also has 37,500 shares of Series E Preferred Stock
which were convertible into 2,089,136 shares of common stock on the Record Date.
The Series E Preferred Stock is non-voting.
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 on all matters presented
at the Annual Meeting. The Series E Preferred Stock is non-voting. 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 proxies will be voted: (i) FOR the election of
each of the Company's nominees for director, (ii) FOR approval of a premium
payment in common stock on the Company's Series E convertible preferred stock,
(iii) FOR approval of an amendment to the Company's bylaws providing for a
division of the board of directors into three classes, (iv) FOR approval of an
amendment to the Company's Certificate of Incorporation eliminating the right of
shareholders to act by
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written consent, and (v) FOR the ratification of the appointment of
PricewaterhouseCoopers LLP as independent auditors of the Company for the year
ending December 31, 2001. 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. Also, the Company has engaged
InvestorCom, Inc. as a proxy solicitor, for a fee, which includes a $7,000 fee
plus a per-call charge ranging from $4.25 to $6.50. 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 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 and broker non-votes should be counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
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 2002 Annual Meeting of Stockholders must
be received by the Company no later than January 20, 2002 in order to be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
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PROPOSAL ONE:
ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company provide for a Board of nine (9) directors.
However, since Mr. Glenn E. Penisten has declined to stand for re-election, the
Board has amended the Company's bylaws to provide that immediately following the
annual meeting, the Board shall consist of eight (8) directors. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for
management's eight (8) nominees named below, all of whom 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 and their proposed term of office (assuming the
passage of Proposal 3) are set forth below:
NAME DIRECTOR SINCE TERM OF OFFICER
---- -------------- ---------------
M. Peter Thomas.................................. 1997 Class 1
E. Ray Cotten.................................... 1996 Class 1
Robert P. Caren, Ph.D. .......................... 1988 Class 1
Dennis J. Horowitz............................... 1990 Class 2
John D. Lockton.................................. 1997 Class 2
J. Robert Schrieffer, Ph.D. ..................... 1988 Class 2
Joseph C. Manzinger.............................. 1999 Class 3
H. Vaughan Blaxter, III.......................... 2000 Class 3
If Proposal 3 is not passed, or does not become effective pursuant to its
terms, all nominees will be subject to re-election at the next annual meeting.
VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS
The eight (8) 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 seven meetings,
including three special telephonic meetings, during the fiscal year ended
December 31, 2000. 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 Company's Board of Directors has adopted a written
charter for the Audit Committee (see Appendix A). The Audit Committee met one
time formally and several times informally during fiscal 2000, all of which were
telephonic; and during fiscal 2000, in accordance with the Audit Committee
Charter, the Audit Committee chairman reviewed all quarterly reports on Form 10Q
before filing with the SEC. In
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addition, the Board of Directors has determined that all of the members of the
Committee are "independent" as defined by the rules of Nasdaq. The current
members of the Audit Committee are Robert P. Caren, Ph.D., Dennis Horowitz
(Chairman), 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
times during fiscal 2000. The current members of the Compensation Committee are
Robert P. Caren, Ph.D. (Chairman), Dennis Horowitz, John D. Lockton, J. Robert
Schrieffer, Ph.D. and H. Vaughan Blaxter, III.
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 2000, and
(ii) the total number of meetings held by all committees of the Board of
Directors during fiscal 2000 on which such person served.
DIRECTOR COMPENSATION
Each non-employee 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. Commencing in January 1, 2001, the Chairman
receives $4,000 per meeting. The non-employee directors serving during 2000
since the last annual meeting were directors Robert P. Caren, Ph.D., Dennis
Horowitz, J. Robert Schrieffer, Ph.D., John D. Lockton, Joseph C. Manzinger, and
H. Vaughan Blaxter, III.
Non-employee directors also participate in the 1999 Stock Plan, the 1992
Director Option Plan, as amended, and the 1988 and 1992 Stock Option Plans, as
amended. The Director Plan provides for the 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 first becomes a
director. Non-employee 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 each year. Non-employee 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 and committee chairmen receive automatic grants of
nonstatutory stock options to purchase 2,000 shares of common stock.
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.
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PROPOSAL TWO:
APPROVAL OF A PREMIUM PAYMENT IN COMMON STOCK
ON THE COMPANY'S SERIES E CONVERTIBLE PREFERRED STOCK
In September 2000, the Company raised $37.5 million in private equity from
the sale of 37,500 shares of newly created Series E Convertible Preferred Stock
and warrants to purchase an additional 1,044,568 shares of common stock. The
preferred stock is non-voting, has a stated value of $1,000 per share and is
convertible into common stock at an initial conversion price of $17.95 per
common share for the first nine months. Beginning June 28, 2001, the preferred
stock is convertible at the lower of $17.95 per common share or the market price
of the common stock at the time of conversion, subject to a floor. The preferred
stock automatically converts into common stock on the second anniversary of the
closing. Based on the current conversion price of $17.95 per common share, the
preferred stock is convertible into 2,089,136 shares of common stock. The
optional and automatic conversions of preferred stock are limited to a maximum
of 3,544,656 shares of common stock. The preferred stock carries a 7% premium,
payable upon conversion in cash or common stock subject to certain limitations,
at the Company's option.
The Company is generally subject to what is known as the "19.9% limitation"
in accordance with the rules of NASDAQ with respect to issuance of common stock
on conversion of the Series E Preferred. Under this rule, without stockholder
approval the Company can only issue up to 19.9% of the outstanding shares of
common stock in a single transaction. Therefore, the 19.9% limitation will not
restrict the Company's issuance of common stock in lieu of the premium payment
if their issuance has been previously approved by the stockholders.
The Board of Directors of the Company has therefore unanimously approved
submission of this Proposal Two to the stockholders. The reason for this
proposal is to preserve the Company's flexibility to pay the premium in shares
if it is then in the Company's best interest. If Proposal Two is not approved by
the stockholders and the Series E Preferred is converted, the 19.9% limitation
may, as a practical matter, significantly limit the Company's ability to issue
common stock for the premium owed. The premium could be a maximum of $2,625,000
per twelve month period that the Series E Preferred is outstanding if all
preferred stock is converted at once. The requirement to pay the premium in cash
could have an adverse effect on the Company's liquidity. This flexibility to use
common stock rather than cash to pay the premium would be essential if the
Company did not have sufficient cash available to pay the premium at the time of
conversion.
VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
The approval of a premium payment on the Company's Series E Convertible
Preferred Stock requires the affirmative vote of a majority of the Votes Cast.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THIS PROPOSAL.
PROPOSAL THREE:
APPROVAL OF AN AMENDMENT TO THE COMPANY'S BYLAWS PROVIDING FOR A DIVISION OF THE
BOARD OF DIRECTORS INTO THREE CLASSES.
The Board of Directors of the Company has unanimously approved and
recommended to the stockholders an amendment to Article III, Section 3 of the
Company Bylaws to provide that the Board of Directors be divided into three
classes -- Class 1, Class 2 and Class 3 -- with the directors in each class to
hold office for staggered terms of three years each. Under the combined effect
of Delaware law and the Company Bylaws, the Bylaw Amendment would become
effective upon stockholder approval. However, as described below, the terms of
the Bylaw Amendment provide that it would not be effective during any period
prohibited by applicable California law.
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This year's bylaw amendment contains a provision intended to avoid
conflicts with certain provisions of the California General Corporation Law
("CGCL") which may be applicable to the Company from time to time. Under CGCL
sec. 2115, certain provisions of the CGCL are applicable to a foreign
corporation conducting a majority of its business in California and having more
than one half of its outstanding voting securities held of record by persons
located in California, unless it (i) has outstanding securities listed on the
New York Stock Exchange or the American Stock Exchange or (ii) has (a)
outstanding securities qualified for trading on the NASDAQ National Market
System and (b) at least 800 holders of its equity securities. The Company
believes that sec. 2115 is not presently applicable to the Company.
A foreign corporation subject to sec. 2115 must comply with the provisions
of CGCL sec. 301.5 which relate to, among other things, classified boards. The
bylaw amendment complies with all of the relevant provisions of sec. 301.5
except those relating to the size of each class. In the case of a classified
board consisting of three classes, sec. 301.5 requires a minimum of three
directors for each class. Since the bylaw amendment does not conform to this
requirement, it contains a provision, which suspends classification of the Board
during any period in which sec. 301.5 is applicable to the Company.
If the bylaw amendment is adopted, ARTICLE III, Section 2 of the Company
Bylaws will read as follows:
(a) The Board of Directors shall consist of eight (8) members. Such
set number of directors may be changed from time to time by resolution of
the Board of Directors, except as otherwise provided by law or the
Certificate of Incorporation. Any director may resign at any time upon
written notice to the Corporation. Directors need not be stockholders.
(b) Subject to the last two sentences of this subsection, the Board of
Directors shall be divided into three classes, as nearly equal in numbers
as the then total number of directors constituting the entire Board of
Directors permits with the term of office of one class expiring each year.
Whenever this subsection comes into effect, directors of the first class
shall be elected to hold office for a term expiring at the next succeeding
annual meeting, directors of the second class shall be elected to hold
office for a term expiring at the second succeeding annual meeting and
directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. The directors shall be
assigned to their respective classes by resolution of the Board of
Directors at the time of the effectiveness of this subsection. At each
subsequent annual meeting of stockholders, the successors to the class of
directors whose term shall then expire shall be elected to hold office for
a term expiring at the third succeeding annual meeting. In the event that
the foregoing provisions of this subsection shall conflict with Section
301.5 of the California General Corporation Law ("CGCL") at a time when
such Section is legally applicable to this Corporation as a result of
Section 2115 of the CGCL (or any successor provisions thereto), the terms
of any directors then in office shall be reduced by the minimum extent
necessary to eliminate such conflict. Thereafter, all directors shall be
elected at each annual meeting of stockholders until the foregoing
provisions of this subsection relating to the classification of directors
can be reinstated, at which time the terms of the directors shall expire as
provided in the second through fourth sentences of this subsection.
And Article III, Section 3.4.1 of the Bylaws of the Company would be
amended to read in its entirety as follows:
Vacancies and newly created directorships resulting from any increase
in the authorized number of directors may be filled by a majority of the
directors then in office, although less than a quorum, or by a sole
remaining director or by the stockholders entitled to vote at any Annual or
Special Meeting held in accordance with Article II, and the directors so
chosen shall hold office until the next election of the class for which
such directors have been chosen and until their successors are duly elected
and qualified, or until their earlier resignation or removal.
If the Bylaw Amendment is adopted and becomes effective pursuant to its
terms, all directors will be elected to their classified terms as described in
this Proxy Statement. Initially, the term of the Class 1 directors would expire
at the next annual meeting in 2002, and the terms of Class 2 and Class 3
directors would expire
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at the 2003 and 2004 annual meetings, respectively. Successors to the directors
in each class would then be elected for three-year terms. The Bylaw Amendment
would thus have the effect of causing only one class of directors per year to be
elected, with the directors in the other two classes remaining in office until
the elections held in later years.
The Bylaw Amendment was approved by the Board based on its observation of a
trend towards third parties accumulating substantial stock positions in public
companies as a prelude to proposing a takeover, a restructuring or sale of all
or part of the company, or other similar extraordinary corporate action. Such
actions are often by the third party without advance notice to, or consultation
with, management of the company involved. In many cases, the purchaser also
seeks representation on the company's board of directors in order to increase
the likelihood that the extraordinary corporate action proposed will be
implemented by the company. If the Company resists the efforts of the purchaser
to obtain representation on the board, the purchaser may commence a proxy
contest to have its nominees elected in place of some or all of the existing
directors. The Board of Directors believes that an imminent threat of removal in
such situations would severely curtail its ability to negotiate effectively.
Under such pressure, management could be deprived of the time and information
necessary to evaluate the takeover proposal, to study alternative proposals and
to help ensure that the best price is obtained in any transaction, which may
ultimately occur.
Under Delaware law, a director of a corporation with a classified board of
directors may be removed by the stockholders only for cause unless the
certificate of incorporation provides otherwise. The Company Certificate of
Incorporation does not provide otherwise, and the contrary provision in the
Bylaws will be ineffective as a matter of law and will be suspended if this
proposal is passed. Therefore, if the Bylaw Amendment is approved, the holders
of a majority of the outstanding voting shares would be able to remove a
director during their elected terms only for "cause." In this context, "cause"
is not defined by statute. If a vacancy occurs during the term of any director,
under Delaware law the majority of the Board may fill the vacancy, and the
director so appointed will hold office until the next election of the class to
which he or she was appointed.
Although there have been no problems with respect to continuity or
stability of the Board of Directors in the past, the Board believes that the
longer time required to displace a classified board may help to ensure the
future continuity and stability of the Company management and policies, since a
majority of the directors at any given time will ordinarily have had prior
experience as directors of the Company.
The Board of Directors of the Company has also unanimously approved and
recommended to the stockholders an amendment to the Company Certificate of
Incorporation, which will, if approved by the stockholders, require that all
action taken by the stockholders be taken at a meeting (see "Proposal 4"). In
addition, the Company's Bylaws include a provision, which limits persons who can
call a special meeting of stockholders to the Board, the Chairman, the president
or chief executive officer. Neither the Certificate of Incorporation nor the
Bylaws of the Company contain any other provisions which management believes
have an anti-takeover effect. Management has no current intention of proposing
any additional anti-takeover measures in the future.
In considering this proposal, stockholders should be aware that the Bylaw
Amendment, if approved, together with the "anti-takeover" provision in the
Company Bylaws and the proposed "anti-takeover" provision in the Company
Certificate of Incorporation discussed under Proposal Four, might have the
effect of preventing even a majority stockholder from electing any directors or
taking any other action until the next annual meeting. Thus, the Bylaw
Amendment, along with the other "anti-takeover" provisions will, if approved,
make any change in the composition of the Board of Directors more difficult. For
example, the holder or holders of a majority of the Company voting stock might
not be able to elect a majority of the Company directors until two or more
annual meetings have been held. As a result, some persons who might otherwise
seek to take over the Company may decide not even to attempt such step because
of the potential that the Company might have a Board of Directors not under
their control for some period of time. In addition, changes in management not
related to a takeover will become more difficult.
Takeovers or changes in management of the Company which are proposed and
effected without prior negotiations with the Company management are not
necessarily detrimental to the Company and its
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stockholders. Indeed, their decreased likelihood might discourage certain
potential stockholders from acquiring the Company stock, thus potentially
reducing trading activity to the possible disadvantage of some or, under certain
conditions, all of the Company stockholders. However, the Board believes that
the benefits of seeking to protect its ability to negotiate with the proponent
of an unfriendly or unsolicited proposal to take over or restructure the Company
outweigh the disadvantages of discouraging such proposals. The Bylaw Amendment
is not being submitted as the result of, and the Board is unaware of, any
specific effort by any persons to obtain control of the Company or to accumulate
large amounts of its stock.
VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
Under Delaware law and the Company Bylaws, the affirmative vote of the
holders of a majority of the outstanding shares of the Company Common Stock is
required to adopt the Bylaw Amendment. As a result, abstentions and broker
non-votes are effectively equivalent to votes against the Bylaw Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THIS PROPOSAL.
PROPOSAL FOUR:
THE APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION ELIMINATING THE RIGHT OF SHAREHOLDERS TO ACT BY
WRITTEN CONSENT.
The Board of Directors of the Company has unanimously approved and
recommended to the stockholders an amendment to add a TWELFTH Article to the
Company Certificate of Incorporation that would provide that all action taken by
stockholders must be taken at a meeting, rather than by written consent as
permitted by Section 228 of the Delaware General Corporation Law (the
"Certificate Amendment"). Under Delaware law, the Certificate Amendment would
become effective upon filing of a Certificate of Amendment with the Delaware
Secretary of State.
If the Certificate Amendment is adopted, the TWELFTH Article of the Company
Certificate of Incorporation will read as follows:
No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
Under Delaware law, unless specifically prohibited in the certificate of
incorporation, any action required or permitted to be taken by stockholders at
an annual or special meeting may be taken without notice, a meeting or a
stockholder vote if a written consent setting forth the action to be taken is
signed by the holders of shares of outstanding stock having the requisite number
of votes that would be necessary to authorize such action at a meeting of
stockholders. Thus, significant corporate action could be taken without the
minority stockholders even knowing that such action was being considered. The
Board believes that it is important for stockholders to be able to learn about
and to discuss matters, which may affect their rights, and for management to be
able to give advance consideration to any such matters. As a result, the Board
concluded it is inappropriate for stockholders of a publicly held corporation to
take corporate action without a regularly scheduled meeting. The proposed
prohibition of stockholder action by consent would give all the stockholders of
the Company the sufficient time and opportunity to participate in determining
any proposed action.
The Board of Directors of the Company has also unanimously approved and
recommended to the stockholders an amendment to the Company Bylaws, which will,
if approved by the stockholders, provide for the classification of directors
(see "Proposal Three"). In addition, the Company's Bylaws include a provision,
which limits persons who can call a special meeting of stockholders to the
Board, the Chairman, the president or chief executive officer. Neither the
Certificate of Incorporation nor the Bylaws of the Company contain any other
provisions which management believes have an anti-takeover effect. Management
has no current intention of proposing any additional anti-takeover measures in
the future. The effect of the Certificate
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Amendment, along with the "anti-takeover" provision in the Company Bylaws and
the proposed "anti-takeover" provision discussed under Proposal Three, might be
to prevent even a majority stockholder from electing any directors or taking any
other action until the next annual meeting of stockholders.
Thus, the Certificate Amendment, if approved, together with the
"anti-takeover" provision in the Company Bylaws and the proposed "anti-takeover"
provision discussed under Proposal Three, will make any change in the
composition of the Board of Directors more difficult. For example, the holder or
holders of a majority of the Company voting stock might not be able to elect a
majority of the Company directors until two or more annual meetings have been
held due to the fact that they cannot take any action until the next annual
meeting of stockholders. As a result, some persons who might otherwise seek to
take over the Company may decide not even to attempt such step because of the
potential that the Company might have a Board of Directors not under their
control for some period of time. In addition, changes in management not related
to a takeover will become more difficult.
As was discussed under Proposal Three above, stockholders must weigh the
advantages of Proposal Four against the possibility that it could mean a
reduction in takeover attempts or trading activity in the Company stock.
VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
Under Delaware law, the affirmative vote of the holders of a majority of
the Company Common Stock is required to adopt the Certificate Amendment. As a
result, abstentions and broker non-votes are effectively equivalent to votes
against the Certificate Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THIS PROPOSAL.
PROPOSAL FIVE:
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, 2001.
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.
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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:
NAME AGE PRINCIPAL OCCUPATION
---- --- --------------------
John D. Lockton(1)(2)..................... 63 Chairman of the Board of the Company, Managing
Director of IPWireless, Inc.
M. Peter Thomas........................... 59 President, Chief Executive Officer and Director
E. Ray Cotten............................. 70 Senior Vice President, Business Development and
Chief Marketing Officer
Robert B. Hammond, Ph.D. ................. 51 Senior Vice President, Chief Technology Officer
and Secretary
Robert L. Johnson......................... 50 President, STI Wireless Systems, North America
David R. Chase............................ 40 Vice President, Marketing
Martin S. McDermut........................ 50 Vice President, Finance and Administration and
Chief Financial Officer
William J. Buchanan....................... 52 Controller, Chief Accounting Officer
Robert P. Caren, Ph.D.(1)(2).............. 68 Retired Corporate Vice President, Science and
Engineering, Lockheed Corporation
Dennis J. Horowitz(1)(2).................. 54 Chairman, President, Chief Executive Officer and
Director of Wolverine Tube, Inc.
Glenn E. Penisten......................... 69 Director
J. Robert Schrieffer, Ph.D.(1)(2)......... 69 Chairman of the Technical Advisory Board of the
Company; University Professor, Florida State
University; Chief Scientist of the National High
Magnetic Field Laboratory
Joseph C. Manzinger(1).................... 42 Vice President and a director of The Hillman
Company
H. Vaughan Blaxter, III(1)(2)............. 59 Vice President, General Counsel and a director of
The Hillman Company
- ---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
John Lockton joined our Board of Directors in December 1997 and was named
Chairman of the Board January 1, 2001. Mr. Lockton is a founder, initial
chairman and is now managing director of IPWireless, Inc., a wireless internet
access and IP telephony service provider of 3G technology. 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 and from March 1998 until June 1998 he served IWC as Vice-Chairman and a
director. In September 1998, IWC filed for bankruptcy protection under Chapter
11 of the U.S. Bankruptcy Code. 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 held various senior positions 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 M.B.A. from Columbia
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
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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 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 May 2000 Mr. Cotten has served
as the Company's Senior Vice President, Business Development and Chief Marketing
Officer and from March 1999 to May 2000 he 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 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.
Robert L. Johnson is President, STI Wireless, North America and was named
to that position in November 2000. Mr. Johnson joined the company in April 2000
as Vice President of Wireless Manufacturing. From 1996 to early 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 received his B.S. in industrial engineering from Arizona
State University.
David R. Chase has served as Vice President, Marketing since May 2000 and
prior to that Vice President of Systems & 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 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. From September 1996 to February
2000 Mr. McDermut was Vice President of Finance and Administration, Secretary
and Chief Financial Officer of International Remote Imaging Systems, Inc., a
medical technology firm. Mr. McDermut served as Chief Financial Officer of
Dental/Medical Diagnostics Systems, Inc. from June to August 1996. From 1994 to
June 1996 Mr. McDermut held similar positions in
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other start-up and early-stage entities. From 1975 to 1993, he was with the
accounting and consulting firm of Coopers & Lybrand L.L.P., 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 a M.B.A. in Finance and Accounting from
the University of Chicago and a B.A. in Economics from the University of
Southern California.
William J. Buchanan joined the Company in January 1998 and has served as
its controller since June 2000. Prior to being named controller Mr. Buchanan
served in various other accounting positions with the Company. For 16 years
prior to joining the Company, Mr. Buchanan 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 has a B.A. in economics from California State University, Fresno.
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. He is a member of the Board of Directors of Litex
Inc. and Hawkeye Enterprises.
Dennis J. Horowitz has served on our Board of Directors since June 1990.
Mr. Horowitz is currently Chairman, President, Chief Executive Officer and
Director 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 Aerovox Corporation. Mr. Horowitz
holds an M.B.A and a B.A. in economics from St. John's University.
Glenn E. Penisten served as Chairman of our Board of Directors from May
1994 until December 31, 2000. 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.
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 has received many
other professional honors including the National Medal of Science. Dr.
Schrieffer is currently 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.
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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 and became a director of The Hillman Company in 2000. 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 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 Finali Corporation, IQNavigator, Inc., Syvox Corporation,
The MicroOptical Corporation, and Stratos Product Development Group, LLC. Mr.
Manzinger holds a B.S. in Accounting from Indiana University of Pennsylvania and
a M.B.A. from the University of Chicago.
H. Vaughan Blaxter, III has served as a member of our Board of Directors
since May 2000. Mr. Blaxter has been Vice President, General Counsel and a
director of the Hillman Company since 1978. Mr. Blaxter previously served on the
board of directors of Read Rite Corporation (from 1990 through 1996) and Genus,
Inc. (from 1990 through 1995). Mr. Blaxter received a B.S. from Washington and
Jefferson College and a J.D. from the University of Pittsburgh School of Law.
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VOTING SECURITIES OF PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
common stock as of March 2, 2001, 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.
NUMBER OF PERCENTAGE
NAME SHARES OWNERSHIP
---- --------- ----------
Wilmington Securities, Inc. and Affiliated Parties(1)....... 6,183,472 34.56%
824 Market Street, Suite 900
Wilmington, Delaware 19801
RGC International Investors,LDC............................. 2,402,506 11.84%
C/o Rose Glen Capital Management, L.P.(2)
3 Bala Plaza East, Suite 501
251 St. Asaphs Road
Bala Cynwyd, PA 19004
John D. Lockton(3).......................................... 30,721 *
M. Peter Thomas(4).......................................... 181,474 *
E. Ray Cotten(3)............................................ 163,750 *
Robert B. Hammond(5)........................................ 74,324 *
Robert L. Johnson(3)........................................ 15,000 *
David R. Chase(6)........................................... 26,741 *
Martin S. McDermut(7)....................................... 35,251 *
William J. Buchanan(8)...................................... 12,106 *
Robert P. Caren(9).......................................... 36,821 *
Dennis J. Horowitz(10)...................................... 43,255 *
Glenn E. Penisten(11)....................................... 131,591 *
J. Robert Schrieffer(3)..................................... 12,150 *
Joseph C. Manzinger(12)..................................... 18,822 *
H. Vaughan Blaxter, III..................................... 3,000 *
All executive officers and directors as a group (14
persons)(13).............................................. 785,006 4.26%
- ---------------
* Less than one percent.
(1) Based on information contained in a Schedule 13D, as amended, filed by
Wilmington and persons affiliated with Wilmington. 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 HLH Trustees
(other than Mr. Grefenstette, who is a trustee of such trusts) disclaim
beneficial ownership of such shares.
(2) Includes a total of 2,089,136 shares issuable upon conversion of preferred
stock and 313,370 shares issuable upon exercise of warrants exercisable
within 60 days of March 2, 2001.
(3) All shares are issuable upon the exercise of stock options that are
exercisable within 60 days of March 2, 2001.
(4) Includes 152,041 shares issuable upon the exercise of stock options that
are exercisable within 60 days of March 2, 2001.
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17
(5) Includes 18,042 shares issuable upon the exercise of stock options that are
exercisable within 60 days of March 2, 2001.
(6) Includes 14,791 shares issuable upon the exercise of stock options that are
exercisable within 60 days of March 2, 2001.
(7) Includes 31,251 shares issuable upon the exercise of stock options that are
exercisable within 60 days of March 2, 2001.
(8) Includes 1,606 shares issuable upon the exercise of stock options that are
exercisable within 60 days of March 2, 2001.
(9) Includes 29,471 shares issuable upon the exercise of stock options that are
exercisable within 60 days of March 2, 2001.
(10) Includes 39,805 shares issuable upon the exercise of stock options that are
exercisable within 60 days of March 2, 2001.
(11) Includes 62,997 shares held by a trust for the benefit of Glenn and Mary
Louise Penisten. Also includes 18,334 shares issuable upon the exercise of
stock options that are exercisable within 60 days of March 2, 2001.
(12) Includes 500 shares issuable upon the exercise of stock options that are
exerciseable within 60 days of March 2, 2001.
(13) See footnotes (3)-(12). Includes 523,812 shares issuable upon exercise of
stock options held by executive officers and directors that are exercisable
within 60 days of March 2, 2001.
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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, 2000, 1999 and 1998 by the Company's Chief Executive Officer and the five
executive officers other than the Chief Executive Officer whose total salary and
bonus for fiscal year 2000 exceeded $100,000.
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
----------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) OPTIONS(#) COMPENSATION($)(2)
- --------------------------- ---- --------- -------- ------------------ ------------ ------------------
M. Peter Thomas........... 2000 285,394 70,000 -- 250,000 1,290
President and Chief 1999 249,269 25,000 -- 30,000 1,733
Executive Officer 1998 229,806 -- -- 40,000 2,293
E. Ray Cotten............. 2000 195,582 28,080 -- 20,000 3,810
Senior Vice President, 1999 179,635 -- -- 66,066 4,959
Business Development 1998 159,764 -- -- -- 6,300
Robert B. Hammond......... 2000 194,613 27,675 -- 40,000 690
Senior Vice President 1999 182,456 -- -- -- 1,036
and Chief Technical 1998 171,888 -- -- 17,000 1,400
Officer
Robert L. Johnson(4)...... 2000 116,462(4) 20,048 -- 100,000 504
President, STI Wireless -- -- -- -- -- --
Systems, North America -- -- -- -- -- --
David R. Chase............ 2000 150,630 21,087 -- 20,000 292
Vice President, Marketing 1999 133,654 -- -- 12,000 257
1998 123,226 -- -- 8,000 261
Martin S. McDermut(5)..... 2000 167,212(5) 24,975 43,374(3) 100,000 398
Vice President, Finance 1999 -- -- -- -- --
and Administration, 1998 -- -- -- -- --
Chief Financial Officer
- ---------------
(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) One time relocation expenses.
(4) Mr. Johnson joined the Company in April 2000 and at December 31, 2000 his
base compensation was at a rate of $180,000 per annum.
(5) Mr. McDermut joined the Company in February 2000 and at December 31, 2000
his base compensation was at a rate of $185,000 per annum.
EMPLOYMENT AGREEMENTS
In addition to the executive compensation set forth in the table above,
pursuant to an employment agreement between M. Peter Thomas and the Company
approved in February 2001, Mr. Thomas is paid a base salary of $300,000 and is
entitled to twelve months' salary as severance and employee and dependent health
and insurance benefits in the event of an involuntary termination and all
unvested options to purchase common stock of the Company will be accelerated to
vest immediately if such termination occurs. E. Ray Cotten is entitled to twelve
months severance, including a continuation of base salary and employee and
dependent health and insurance benefits, in the event of involuntary termination
as set forth in an Employment Agreement between the Company and Mr. Cotten dated
July 1, 1997. There are no other employment agreements between the Company and
any of its executive officers.
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OPTION GRANTS IN FISCAL 2000
The following table sets forth certain information regarding stock options
granted during the fiscal year ended December 31, 2000 to each of the executive
officers named in the table under "Executive Officer Compensation--Summary
Compensation Table."
INDIVIDUAL GRANTS
--------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(3)
OPTIONS IN FISCAL PRICE EXPIRATION -----------------------------
NAME GRANTED(1) YEAR(2) ($/SH) DATE 5%($) 10%($)
---- ---------- ---------- -------- ---------- ------------ -------------
M. Peter Thomas(4)....... 250,000 28.28% 30.688 4/5/10 4,824,880 12,227,192
E. Ray Cotten............ 20,000 2.26% 11.375 11/6/10 143,074 362,576
Robert B. Hammond........ 20,000 2.26% 8.9062 1/24/10 112,021 283,884
20,000 2.26% 11.375 11/6/10 143,074 362,576
Robert L. Johnson........ 60,000 6.79% 28.00 4/9/10 1,056,543 2,677,487
20,000 2.26% 21.188 8/24/10 266,500 675,364
20,000 2.26% 11.375 11/6/10 143,074 362,576
David R. Chase........... 20,000 2.26% 18.625 5/16/10 234,263 593,669
Martin S. McDermut....... 100,000 11.31% 7.8125 1/30/10 491,324 1,245,111
- ---------------
(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
2000 was 884,030, 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 2000, assuming that the stock appreciates in value from
the date of grant until the end of the option term at the compounded 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) Options vest five years from the date of grant, but earlier if certain
earnings targets are met.
AGGREGATED OPTION EXERCISES IN FISCAL 2000 AND 2000 FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information concerning the exercise
of stock options during fiscal 2000 and the value of unexercised options as of
December 31, 2000 for each of the executive officers named in the table under
"Executive Compensation -- Summary Compensation Table."
SHARES VALUE
ACQUIRED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE(1) UNEXERCISABLE(1)
NAME ON EXERCISE ($) (#) (#) ($) ($)
---- ----------- --------- ----------- ------------- -------------- ----------------
M. Peter Thomas......... 179,000 3,123,948 114,750 306,250 2,813 14,603
E. Ray Cotten(2)(3)..... 11,250 666,675 130,717 53,033 -- --
Robert B. Hammond....... 120,209 4,214,734 12,979 48,812 547 6,560
Robert L. Johnson(3).... -- -- -- 100,000 -- --
David R. Chase(3)....... 34,875 2,142,522 12,355 32,770 -- --
Martin S. McDermut(3)... -- -- -- 100,000 -- --
- ---------------
(1) Market value of underlying securities based on the $3.625 closing price of
the Company's common stock on December 29, 2000 (the last market trading day
in 2000), minus the exercise price.
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(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 29, 2000
was $3.625, which did not exceed the exercise price of such exercisable or
unexercisable options held by such person.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, the Company's
directors and officers and its significant stockholders (defined by statute as
stockholders beneficially owning more than 10% of the common stock) are required
to file with the Securities and Exchange Commission and the Company reports of
ownership, and changes in ownership, of common stock. Based solely on a review
of the reports received by it, the Company believes that, during the year ended
December 31, 2000, all of its officers, directors and significant stockholders
complied with all applicable filing requirements under Section 16(a), except for
(i) a single report filed one day late relating to an open market purchase of
common stock by Michael Eddy while he served as an executive officer and (ii) an
exercise of stock options by Robert Hammond which was reported on a Form 5
rather than the required Form 4 filing.
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 Horowitz,
John D. Lockton, J. Robert Schrieffer, Ph.D. and H. Vaughan Blaxter, III. 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 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.
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
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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 an acceptable 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 similar technology companies. As stated previously, the
superconductivity industry is small; the Compensation Committee uses other
industries, such as telecommunications and semiconductor manufactures for
comparable measures, which have similar manufacturing techniques and challenges.
M. Peter Thomas, has served as the Company's Chief Executive Officer since
beginning 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. During 2000,
Mr. Thomas' compensation was increased to $300,000 and he was granted an
additional option to purchase 250,000 shares of common stock, vesting five years
from the date of grant, but earlier if certain earnings targets are met. The
Company also leases a car for Mr. Thomas' use. In February 2001, the terms of a
new employment agreement with the Company for Mr. Thomas were approved, which
provides for annual compensation of $300,000.
$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.
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.
H. Vaughan Blaxter, III
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FEES PAID TO INDEPENDENT AUDITORS
AUDIT FEES
The aggregate fees billed for professional services rendered for (i) the
audit of the Company's annual financial statements for its fiscal year ended
December 31, 2000 and (ii) the review of the Company's quarterly financial
statements during the fiscal year was $111,675.
FINANCIAL INFORMATION SYSTEM DESIGN AND IMPLEMENTATION FEES.
No fees were billed for professional services rendered relating to
financial information system design and implementation during the fiscal year
ended December 31, 2000.
ALL OTHER FEES.
The aggregate fees billed for services rendered by the principal accountant
was $202,977 for all other services rendered during the fiscal year ended
December 31, 2000.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including the system of
internal controls. The Audit Committee has reviewed and discussed the audited
financial statements with management. In addition, the Audit Committee has
discussed with the independent auditors the matters required to be discussed by
Statements on Auditing Standards No. 61, "Communication With Audit Committees".
The Audit Committee has also received the written disclosures and the
letter from the independent accountants required by Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees", and has
discussed with PricewaterhouseCoopers its independence, including whether their
provision of other non-audit services to the Company is compatible with
maintaining its independence.
The Committee discussed with the Company's independent auditions the
overall scope and plans for the respective audits. The Committee meets with the
independent auditors, with and without management present to discuss the results
of their examinations, the evaluation of the Company's internal controls and the
overall quality of the Company's reporting.
Based upon the review and discussions referred to in the foregoing
paragraph, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the last fiscal year for filing with the Commission. The Audit
Committee and the Board also have recommended, subject to shareholder approval,
the selection of the Company's independent auditors.
Robert P. Caren, Ph.D.
Dennis J. Horowitz
John D. Lockton
J. Robert Schrieffer, Ph.D.
Joseph C. Manzinger
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23
STOCK PRICE PERFORMANCE GRAPH
The graph and table below compare the cumulative total stockholders' return
on the Company's common stock since December 31, 1995 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).
[PERFORMANCE GRAPH]
- --------------------------------------------------------------------------------------
Company Index 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99 12/29/00
- --------------------------------------------------------------------------------------
Superconductor
Technologies $ 69.23 $ 60.58 $ 48.08 $ 59.62 $ 75.00 $ 80.56
Nasdaq Composite 139.92 171.69 208.83 291.60 541.16 234.81
H&Q Technology
Index 146.30 183.68 213.58 329.03 730.50 [41.29]
- --------------------------------------------------------------------------------------
21
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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 4, 2001
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25
APPENDIX A
SUPERCONDUCTOR TECHNOLOGIES, INC.
AUDIT COMMITTEE CHARTER
STATEMENT OF POLICY
The Audit Committee of the Board of Directors shall assist the directors in
fulfilling their oversight responsibilities. The Audit Committee will review the
financial reporting process, the system of internal controls, the audit process
and the Company's process for monitoring compliance with laws and regulations.
In performing its duties, the Audit Committee will maintain free and open
communication between the directors, the independent auditors, the internal
auditors and the financial management of the Company.
ORGANIZATION
The Audit Committee shall be comprised of at least three directors who are
independent of the management and the Company. Members of the Audit Committee
shall be considered independent if they have no relationship to the Company
that, in the opinion of the Board, may interfere with the exercise of their
independence from management and the Company. All Audit Committee members will
have the ability to read and understand financial statements and at least one
member will have or have had prior experience in accounting or related financial
management. The Audit Committee will meet a minimum of twice a year.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible in order to be able to best react
to changing conditions, and to ensure that the corporate accounting and
reporting practices of the Company are in accordance with all requirements and
are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
- Obtain the approval of the full Board of Directors of this Charter, and
review and reassess this charter at least annually or as conditions
dictate.
- Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the Company and its
divisions and subsidiaries.
- Have a clear understanding with the independent auditors that they are
ultimately accountable to the Board of Directors and the Audit Committee,
as the shareholders' representatives, who have the ultimate authority in
deciding to engage, evaluate and, if appropriate, terminate their
services.
- Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit, including the timing
of the audit, the procedures to be utilized and the adequacy of the
independent auditors' compensation. At the conclusion of the audit
process, review with the independent auditors their findings.
- Review with the independent auditors the performance of the Company's
financial and accounting personnel, as well as the adequacy and
effectiveness of the accounting and financial controls of the Company.
Elicit any recommendations for the improvement of such internal controls
or particular areas where new or more detailed controls or procedures are
desirable.
- Review communications received by the Company from regulators and other
legal and regulatory matters that may have a material effect on the
financial statements or on the Company's compliance policies.
- Inquire of management and the independent auditors about significant
areas of risk or exposure and assess the steps management has taken to
minimize such risks.
A-1
26
- Review the financial statements contained in the annual report to
shareholders and other SEC filings with management and the independent
auditors to determine that the independent auditors are satisfied with
the disclosure and content of the financial statements to be presented to
the shareholders. Review with financial management and the independent
auditors the results of their analysis of significant financial reporting
issues and practices, including changes in or adoptions of accounting
principles and disclosure practices, review significant period-end
adjustments and discuss any other matters required to be communicated to
the Committee by the auditors. Also review with financial management and
the independent auditors their judgments about the quality, not just
acceptability, of accounting principles and the clarity of the financial
disclosure practices used or proposed to be used and particularly, the
degree of aggressiveness or conservatism of the Company's accounting
principles and underlying estimates and other significant decisions made
in preparing the financial statements.
- Management and the independent auditors will review with the Committee
Chairman the interim financial reports before they are filed with the
Securities and Exchange Commission or other regulators.
- Provide opportunity for the independent auditors to meet with the members
of the Audit Committee without members of management present. Among the
items to be discussed in these meetings are the independent auditors'
evaluation of the Company's financial accounting and auditing personnel
and the cooperation that the independent auditors received during the
course of the audit.
- Review accounting and financial human resources and succession planning
within the Company.
- Report the results of the annual audit to the Board of Directors and, if
requested by the Board, invite the independent auditors to attend the
full Board of Directors' meeting to assist in reporting the results of
the annual audit or to answer the directors' questions.
- On an annual basis, obtain from the independent auditors a written
Communication delineating all their relationships and professional
services, as required by Independence Standards Board Standard No. 1,
Independence Discussion with Audit Committees. In addition, review with
the independent auditors the nature and scope of any disclosed
relationships or professional services and take, or recommend that the
Board of Directors take, appropriate action to ensure the continuing
independence of the auditors.
- Submit the minutes of all meetings of the Audit Committee to, or discuss
the matters discussed at each committee meeting with, the Board of
Directors.
- Investigate any matter brought to its attention within the scope of its
duties with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
- Confirm in writing to the NASD annually or with respect to any changes on
the Audit Committee regarding independence, financial capabilities and
the annual review and reassessment of the Audit Committee Charter.
- Disclose in the Company's Proxy Statement the Audit Committee Charter.
The Charter will be included in the Proxy Statement every three years or
when significant amendments are made to it.
A-2
27
DETACH HERE
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS SUPERCONDUCTOR TECHNOLOGIES INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 2001
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 4, 2001 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, 2001 at
11:00 a.m., local time, at the Holiday Inn , located at 5650 Calle Real, Goleta,
California 93117, 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.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[SEE REVERSE SIDE] [SEE REVERSE SIDE]
28
[BACK OF PROXY]
DETACH HERE
[X] Please mark
votes as in
this example
1. ELECTION OF DIRECTORS
Nominees: M. Peter Thomas; E. Ray Cotten; Robert P. Caren, Ph.D.; Dennis
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.)
If the nominees for Directors are elected and Proposal 3 is passed, the nominees
will fill the classes as described in the Proxy Statement, and a vote for
nominee will constitute a vote to elect such nominee to such class.
FOR AGAINST ABSTAIN
2. PROPOSAL TO APPROVE A PREMIUM PAYMENT [ ] [ ] [ ]
IN COMMON STOCK ON THE COMPANY'S
SERIES E CONVERTIBLE PREFERRED STOCK
FOR AGAINST ABSTAIN
3. PROPOSAL TO APPROVE AN AMENDMENT TO THE [ ] [ ] [ ]
COMPANY'S BYLAWS PROVIDING FOR A DIVISION OF
THE BOARD OF DIRECTORS INTO THREE CLASSES.
FOR AGAINST ABSTAIN
4. PROPOSAL TO APPROVE AN AMENDMENT [ ] [ ] [ ]
TO THE COMPANY'S CERTIFICATE OF INCORPORATION
ELIMINATING THE RIGHT OF SHAREHOLDERS TO ACT
BY WRITTEN CONSENT.
FOR AGAINST ABSTAIN
5. PROPOSAL TO RATIFY THE APPOINTMENT OF [ ] [ ] [ ]
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
AUDITORS OF THE COMPANY FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2001.
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 [ ]
29
(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 APPROVAL OF A PREMIUM PAYMENT
IN COMMON STOCK ON THE SERIES E PREFERRED, FOR AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION ELIMINATING THE SHAREHOLDERS RIGHT TO ACT BY
WRITTEN CONSENT AND FOR AN AMENDMENT TO THE COMPANY'S BYLAWS DIVIDING THE
DIRECTORS INTO THREE CLASSES, AND FOR THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE YEAR
ENDING DECEMBER 31, 2001 AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.