Superconductor Technologies Inc.

2003 EQUITY INCENTIVE PLAN,
AS AMENDED MAY 25, 2005

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TABLE OF CONTENTS

         
SECTION 1: BACKGROUND, PURPOSE AND DURATION
    1  
1.1 Background and Effective Date
    1  
1.2 Purpose of the Plan
    1  
1.3 Duration of the Plan
    1  
1.4 Termination of Old Plans
    1  
SECTION 2 DEFINITIONS
    1  
2.1 1934 Act
    1  
2.2 Affiliate
    2  
2.3 Affiliated SAR
    2  
2.4 Applicable Laws
    2  
2.5 Award
    2  
2.6 Award Agreement
    2  
2.7 Board or Board of Directors
    2  
2.8 Change in Control
    2  
2.9 Code
    2  
2.10 Committee
    2  
2.11 Company
    2  
2.12 Consultant
    2  
2.13 Director
    2  
2.14 Disability
    3  
2.15 Employee
    3  
2.16 ERISA
    3  
2.17 Fair Market Value
    3  
2.18 Freestanding SAR
    3  
2.19 Incentive Stock Option
    3  
2.20 Nonqualified Stock Option
    3  
2.21 Option
    3  
2.22 Option Price
    3  
2.23 Participant
    3  
2.24 Performance Share
    4  
2.25 Performance Unit
    4  
2.26 Period of Restriction
    4  
2.27 Plan
    4  
2.28 Restricted Stock
    4  
2.29 Retirement
    4  
2.30 Rule 16b-3
    4  
2.31 Section 16 Person
    4  
2.32 Shares
    4  
2.33 Stock Appreciation Right or SAR
    4  
2.34 Subsidiary
    4  
2.35 Tandem SAR
    4  
2.36 Termination of Employment
    4  
SECTION 3 ADMINISTRATION
    5  
3.1 The Committee
    5  
3.2 Authority of the Committee
    5  
3.3 Decisions Binding
    5  
SECTION 4 SHARES SUBJECT TO THE PLAN
    5  
4.1 Shares Available
    5  

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4.1.1 Maximum Shares Available Under Plan
    5  
4.1.2 Limitation on Restricted Stock, Performance Units and Performance Shares
    5  
4.1.3 Limitation on Incentive Stock Options and Stock Appreciation Rights
    5  
4.1.4 General Award Limitation
    6  
4.1.5 Adjustments
    6  
4.2 Number of Shares
    6  
4.2 Lapsed Awards
    7  
SECTION 5 STOCK OPTIONS
    7  
5.1 Grant of Options
    7  
5.2 Award Agreement
    7  
5.3 Option Price
    7  
5.3.1 Nonqualified Stock Options
    7  
5.3.2 Incentive Stock Options
    7  
5.3.3 Substitute Options
    7  
5.4 Expiration of Options
    8  
5.4.1 Expiration Dates
    8  
5.4.2 Committee Discretion
    8  
5.5 Exercise of Options
    8  
5.6 Payment
    8  
5.7 Restrictions on Share Transferability
    9  
5.8 Certain Additional Provisions for Incentive Stock Options
    9  
5.8.1 Exercisability
    9  
5.8.2 Termination of Employment
    9  
5.8.3 Company and Subsidiaries
    9  
5.8.4 Expiration
    9  
5.9 Nontransferability
    10  
SECTION 6 STOCK APPRECIATION RIGHTS
    10  
6.1 Grant of SARs
    10  
6.2 Exercise of Tandem SARs
    10  
6.2.1 ISOs
    10  
6.3 Exercise of Affiliated SARs
    10  
6.4 Exercise of Freestanding SARs
    10  
6.5 SAR Agreement
    10  
6.6 Expiration of SARs
    11  
6.7 Payment of SAR Amount
    11  
6.8 Nontransferability of SARs
    11  
Section 7 RESTRICTED STOCK
    11  
7.1 Grant of Restricted Stock
    11  
7.2 Restricted Stock Agreement
    11  
7.3 Transferability
    11  
7.4 Other Restrictions
    11  
7.5 Removal of Restrictions
    12  
7.6 Voting Rights
    12  
7.7 Dividends and Other Distributions
    12  
7.8 Return of Restricted Stock to Company
    12  
7.9 Repurchase Option
    12  
SECTION 8 PERFORMANCE UNITS AND PERFORMANCE SHARES
    13  
8.1 Grant of Performance Units/Shares
    13  
8.2 Value of Performance Units/Shares
    13  
8.3 Earning of Performance Units/Shares
    13  
8.4 Form and Timing of Performance Units/Shares
    13  

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8.5 Cancellation of Performance Units/Shares
    13  
8.6 Nontransferability
    13  
SECTION 9 BENEFICIARY DESIGNATION
    14  
SECTION 10 DEFERRALS
    14  
SECTION 11 RIGHTS OF EMPLOYEES AND CONSULTANTS
    14  
11.1 No Effect on Employment or Service
    14  
11.2 Participation
    14  
SECTION 12 AMENDMENT, SUSPENSION, OR TERMINATION
    14  
SECTION 13 TAX WITHHOLDING
    14  
13.1 Withholding Requirements
    14  
13.2 Shares Withholding
    15  
SECTION 14 INDEMNIFICATION
    15  
SECTION 15 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE
    15  
15.1 Changes in Capitalization
    15  
15.2 Dissolution or Liquidation
    15  
15.3 Merger or Asset Sale
    16  
15.4 Change in Control
    16  
SECTION 16 CONDITIONS UPON ISSUANCE OF SHARES
    17  
16.1 Legal Compliance
    17  
16.2 Investment Representations
    17  
SECTION 17 INABILITY TO OBTAIN AUTHORITY
    17  
SECTION 18 RESERVATION OF SHARES
    17  
SECTION 19 LEGAL CONSTRUCTION
    18  
19.1 Gender and Number
    18  
19.2 Severability
    18  
19.3 Requirements of Law
    18  
20.4 Securities Law Compliance
    18  
19.5 Governing Law
    18  
19.6 Captions
    18  

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Superconductor Technologies Inc.

2003 Equity Incentive Plan,
as amended May 25, 2005

     Superconductor Technologies Inc. hereby adopts the 2003 Equity Incentive
Plan, effective as of March 20, 2003, and amended as of May 25, 2005, as
follows:

SECTION 1
BACKGROUND, PURPOSE AND DURATION

     1.1 Background and Effective Date. The Plan provides for the granting of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights
(or SARs), Restricted Stock, Performance Units, and Performance Shares. The Plan
is adopted and effective as of March 20, 2003, subject to approval by the
stockholders of the Company within twelve (12) months. The Company will seek
stockholder approval in the manner and to the degree required under Applicable
Laws. Awards may be granted prior to the receipt of stockholder approval, but
such grants shall be null and void if such approval is not in fact received
within twelve (12) months.

     1.2 Purpose of the Plan. The purpose of the Plan is to promote the success,
and enhance the value, of the Company by aligning the interests of Participants
with those of the Company’s shareholders, and by providing Participants with an
incentive for outstanding performance. The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract, and retain the
services of outstanding individuals, upon whose judgment, interest, and special
effort the success of the Company largely is dependent.

     1.3 Duration of the Plan. The Plan shall commence on the date specified in
Section 1.1 and subject to SECTION 12 (concerning the Board’s right to amend or
terminate the Plan), shall remain in effect thereafter. However, without further
stockholder approval, no Incentive Stock Option may be granted under the Plan on
or after March 20, 2013.

     1.4 Termination of Old Plans. The Company’s four existing stock option
plans (the 1992 Stock Option Plan, the Nonstatutory 1992 Directors Stock Option
Plan, the 1998 Stock Option Plan and the 1999 Stock Option Plan) shall terminate
effective upon stockholder approval of this Plan, and no further grants of
awards shall be made under those plans after the date of such approval. The
termination of those plans will not affect the rights of holders of options
previously granted and outstanding under those plans.

SECTION 2
DEFINITIONS

     The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:

     2.1 “1934 Act” means the Securities Exchange Act of 1934, as amended.
Reference to a specific section of the Exchange Act or regulation thereunder
shall include such section or regulation, any valid regulation promulgated under
such section, and any comparable provision of any future legislation or
regulation amending, supplementing or superseding such section or regulation.

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     2.2 “Affiliate” means any corporation or any other entity (including, but
not limited to, partnerships and joint ventures) controlling, controlled by, or
under common control with the Company.

     2.3 “Affiliated SAR” means an SAR that is granted in connection with a
related Option, and which automatically will be deemed to be exercised at the
same time that the related Option is exercised.

     2.4 “Applicable Laws” means the requirements relating to the administration
of equity plans under U. S. state corporate laws, U.S. federal and state
securities laws, the Code, any stock exchange or quotation system on which the
Shares are is listed or quoted and the applicable laws of any foreign country or
jurisdiction where Awards are, or will be, granted under the Plan.

     2.5 “Award” means, individually or collectively, a grant under the Plan of
Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock,
Performance Units, or Performance Shares.

     2.6 “Award Agreement” means the written agreement setting forth the terms
and provisions applicable to each Award granted under the Plan.

     2.7 “Board” or “Board of Directors” means the Board of Directors of the
Company.

     2.8 “Change in Control” is defined in Section 15.4.

     2.9 “Code” means the Internal Revenue Code of 1986, as amended. Reference
to a specific section of the Code or regulation thereunder shall include such
section or regulation, any valid regulation promulgated under such section, and
any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.

     2.10 “Committee” means the committee appointed by the Board to administer
the Plan pursuant to Section 3.1.

     2.11 “Company” means Superconductor Technologies Inc., a Delaware
corporation, or any successor thereto.

     2.12 “Consultant” means an individual who provides significant services to
the Company and/or an Affiliate, including a Director who is not an Employee.

     2.13 “Director” means any individual who is a member of the Board of
Directors of the Company.

     2.14 “Disability” means a permanent and total disability within the meaning
of Code Section 22(e)(3).

     2.15 “Employee” means an employee of the Company or of an Affiliate,
whether such employee is so employed at the time the Plan is adopted or becomes
so employed subsequent to the adoption of the Plan.

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     2.16 “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended. Reference to a specific section of ERISA shall include such section,
any valid regulation promulgated thereunder, and any comparable provision of any
future legislation amending, supplementing or superseding such section.

     2.17 “Fair Market Value” means as of any date, the value of a Share
determined as follows:

          (a) If the Shares are listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National Market
or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value
shall be the closing sales price for such Share (or the closing bid, if no sales
were reported) as quoted on such exchange or system on the day of, or the last
market trading day prior to, the day of determination, as reported in The Wall
Street Journal or such other source as the Committee deems reliable;

          (b) If the Shares are regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of the Share
shall be the mean between the high bid and low asked prices for the Shares on
the day of, or the last market trading day prior to, the day of determination,
as reported in The Wall Street Journal or such other source as the Committee
deems reliable; or

          (c) In the absence of an established market for the Shares, the Fair
Market Value shall be determined in good faith by the Committee.

     2.18 “Freestanding SAR” means a SAR that is granted independently of any
Option.

     2.19 “Incentive Stock Option” or “ISO” means an option to purchase Shares,
which is designated as an Incentive Stock Option and is intended to meet the
requirements of Section 422 of the Code.

     2.20 “Nonqualified Stock Option” means an option to purchase Shares which
is not intended to be an Incentive Stock Option.

     2.21 “Option” means an Incentive Stock Option or a Nonqualified Stock
Option.

     2.22 “Option Price” means the price at which a Share may be purchased
pursuant to an Option.

     2.23 “Participant” means an Employee, Consultant or Director who has an
outstanding Award.

     2.24 “Performance Share” means an Award granted to an Employee pursuant to
SECTION 8 having an initial value equal to the Fair Market Value of a Share on
the date of grant.

     2.25 “Performance Unit” means an Award granted to an Employee pursuant to
SECTION 8 having an initial value (other than the Fair Market Value of a Share)
that is established by the Committee at the time of grant.

     2.26 “Period of Restriction” means the period during which the transfer of
Shares of Restricted Stock are subject to restrictions.

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     2.27 “Plan” means the Superconductor Technologies Inc. 2003 Equity
Incentive Plan, as set forth in this instrument and as hereafter amended from
time to time.

     2.28 “Restricted Stock” means an Award granted to a Participant pursuant to
SECTION 7.

     2.29 “Retirement” means, in the case of an Employee, a Termination of
Employment by reason of the Employee’s retirement at or after age 62.

     2.30 “Rule 16b-3” means Rule 16b-3 promulgated under the 1934 Act, and any
future regulation amending, supplementing or superseding such regulation.

     2.31 “Section 16 Person” means a person who, with respect to the Shares, is
subject to Section 16 of the 1934 Act.

     2.32 “Shares” means the shares of common stock, $0.001 par value, of the
Company.

     2.33 “Stock Appreciation Right” or “SAR” means an Award, granted alone or
in connection with a related Option, that pursuant to the terms of SECTION 7 is
designated as an SAR.

     2.34 “Subsidiary” means any “subsidiary corporation” (other than the
Company) as defined in Code Section 424(f).

     2.35 “Tandem SAR” means an SAR that is granted in connection with a related
Option, the exercise of which shall require forfeiture of the right to purchase
an equal number of Shares under the related Option (and when a Share is
purchased under the Option, the SAR shall be canceled to the same extent).

     2.36 “Termination of Employment” means a cessation of the employee-employer
or director or other service arrangement relationship between an Employee,
Consultant or Director and the Company or an Affiliate for any reason,
including, but not by way of limitation, a termination by resignation,
discharge, death, Disability, Retirement, or the disaffiliation of an Affiliate,
but excluding any such termination where there is a simultaneous reemployment or
re-engagement by the Company or an Affiliate.

SECTION 3
ADMINISTRATION

     3.1 The Committee. The Plan shall be administered by a committee of the
Board that meets the requirements of this Section 3.1 (hereinafter referred to
as “the Committee”). The Committee shall consist of not less than two (2)
Directors. The members of the Committee shall be appointed from time to time by,
and shall serve at the pleasure of, the Board of Directors. The Committee shall
be comprised solely of Directors who are both “outside directors” under
Rule 16b-3 and “independent directors” under the requirements of any national
securities exchange or system upon which the Shares are then listed and/or
traded.

     3.2 Authority of the Committee. The Committee shall have all powers and
discretion necessary or appropriate to administer the Plan and to control its
operation, including, but not limited to, the power (a) to determine which
Employees, Consultants and Directors shall be granted Awards, (b) to prescribe
the terms and conditions of such Awards, (c) to interpret the

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Plan and the Awards, (d) to adopt rules for the administration, interpretation
and application of the Plan as are consistent therewith, and (e) to interpret,
amend or revoke any such rules.

          The Committee, in its sole discretion and on such terms and conditions
as it may provide, may delegate all or any part of its authority and powers
under the Plan to one or more directors and/or officers of the Company;
provided, however, that the Committee may not delegate its authority and powers
with respect to Section 16 Persons.

     3.3 Decisions Binding. All determinations and decisions made by the
Committee shall be final, conclusive, and binding on all persons, and shall be
given the maximum deference permitted by law.

SECTION 4
SHARES SUBJECT TO THE PLAN

     4.1 Shares Available.

          4.1.1 Maximum Shares Available under Plan. The aggregate number of
Shares available for issuance under the Plan may not exceed twelve million
(12,000,000) Shares. Such shares may be authorized but unissued shares or
treasury shares.

          4.1.2 Limitation on Restricted Stock, Performance Units and
Performance Shares. The aggregate number of Shares available for issuance
pursuant to Awards of Restricted Stock, Performance Units and Performance Shares
may not exceed three million six hundred thousand (3,600,000) Shares.

          4.1.3 Limitation on Incentive Stock Options and Stock Appreciation
Rights. No Participant may receive Options and SARs for more than one million
two hundred thousand (1,200,000) Shares in the aggregate in any single calendar
year; provided, however, that a Participant may receive Options and SARs for up
two million four hundred thousand (2,400,000) Shares in the Participant’s
initial year of service to the Company.

          4.1.4 General Award Limitation. No Participant may receive Awards
under the Plan, the value of which Awards is based solely on an increase in the
value of Shares after the date of grant of such Awards, for more than one
million two hundred thousand (1,200,000) Shares in the aggregate in any single
calendar year; provided, however, that a Participant may receive Options and
SARs for up two million four hundred thousand (2,400,000) Shares in the
Participant’s initial year of service to the Company. The foregoing annual
limitation specifically includes the grant of any Awards representing “qualified
performance-based compensation” within the meaning of Section 162(m) of the
Code.

          4.1.5 Adjustments. All Share numbers in this Section 4.1 are subject
to adjustment as provided in SECTION 15.

     4.2 Number of Shares. The following rules will apply for purposes of the
determination of the number of Shares available for grant under the Plan:

          (a) While an Award is outstanding, it shall be counted against the
authorized pool of Shares, regardless of its vested status.

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          (b) The grant of an Option or Restricted Stock shall reduce the Shares
available for grant under the Plan by the number of Shares subject to such
Award.

          (c) The grant of a Tandem SAR shall reduce the number of Shares
available for grant by the number of Shares subject to the related Option (i.e.,
there is no double counting of Options and their related Tandem SARs); provided,
however, that, upon the exercise of such Tandem SAR, the authorized Share pool
shall be credited with the appropriate number of Shares representing the number
of shares reserved for such Tandem SAR less the number of Shares actually
delivered upon exercise thereof or the number of Shares having a Fair Market
Value equal to the cash payment made upon such exercise.

          (d) The grant of an Affiliated SAR shall reduce the number of Shares
available for grant by the number of Shares subject to the SAR, in addition to
the number of Shares subject to the related Option; provided, however, that,
upon the exercise of such Affiliated SAR, the authorized Share pool shall be
credited with the appropriate number of Shares representing the number of shares
reserved for such Affiliated SAR less the number of Shares actually delivered
upon exercise thereof or the number of Shares having a Fair Market Value equal
to the cash payment made upon such exercise.

          (e) The grant of a Freestanding SAR shall reduce the number of Shares
available for grant by the number of Freestanding SARs granted; provided,
however, that, upon the exercise of such Freestanding SAR, the authorized Share
pool shall be credited with the appropriate number of Shares representing the
number of shares reserved for such Freestanding SAR less the number of Shares
actually delivered upon exercise thereof or the number of Shares having a Fair
Market Value equal to the cash payment made upon such exercise.

          (f) The Committee shall in each case determine the appropriate number
of Shares to deduct from the authorized pool in connection with the grant of
Performance Units and/or Performance Shares.

          (g) To the extent that an Award is settled in cash rather than in
Shares, the authorized Share pool shall be credited with the appropriate number
of Shares having a Fair Market Value equal to the cash settlement of the Award.

     4.3 Lapsed Awards. If an Award is cancelled, terminates, expires, or lapses
for any reason (with the exception of the termination of a Tandem SAR upon
exercise of the related Option, or the termination of a related Option upon
exercise of the corresponding Tandem SAR), any Shares subject to such Award
again shall be available to be the subject of an Award.

SECTION 5
STOCK OPTIONS

     5.1 Grant of Options. Options may be granted to Employees, Consultants and
Directors at any time and from time to time, as determined by the Committee in
its sole discretion. The Committee, in its sole discretion, shall determine the
number of Shares subject to Options granted to each Participant. The Committee
may grant ISOs, NQSOs, or a combination thereof.

     5.2 Award Agreement. Each Option shall be evidenced by an Award Agreement
that shall specify the Option Price, the expiration date of the Option, the
number of Shares to which

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the Option pertains, any conditions to exercise of the Option, and such other
terms and conditions as the Committee, in its discretion, shall determine. The
Award Agreement also shall specify whether the Option is intended to be an ISO
or a NQSO.

     5.3 Option Price. Subject to the provisions of this Section 5.3, the Option
Price for each Option shall be determined by the Committee in its sole
discretion.

          5.3.1 Nonqualified Stock Options. In the case of a Nonqualified Stock
Option, the Option Price shall be not less than one hundred percent (100%) of
the Fair Market Value of a Share on the date that the Option is granted.

          5.3.2 Incentive Stock Options. In the case of an Incentive Stock
Option, the Option Price shall be not less than one hundred percent (100%) of
the Fair Market Value of a Share on the date that the Option is granted;
provided, however, that if at the time that the Option is granted, the Employee
(together with persons whose stock ownership is attributed to the Employee
pursuant to Section 424(d) of the Code) owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or any of
its Subsidiaries, the Option Price shall be not less than one hundred and ten
percent (110%) of the Fair Market Value of a Share on the date that the Option
is granted.

          5.3.3 Substitute Options. Notwithstanding the provisions of
Sections 5.3.1 and 5.3.2, in the event that the Company or an Affiliate
consummates a transaction described in Section 424(a) of the Code (e.g., the
acquisition of property or stock from an unrelated corporation), persons who
become Employees, Consultants or Directors on account of such transaction may be
granted Options in substitution for options granted by their former employer. If
such substitute Options are granted, the Committee, in its sole discretion, may
determine that such substitute Options shall have an exercise price less than
100% of the Fair Market Value of the Shares on the date the Option is granted.

     5.4 Expiration of Options. Unless the applicable stock option agreement
provides otherwise, each Option shall terminate upon the first to occur of the
events listed in Section 5.4.1, subject to Section 5.4.2.

          5.4.1 Expiration Dates.

               (a) The date for termination of the Option set forth in the Award
Agreement;

               (b) The expiration of ten years from the date the Option was
granted, or

               (c) The expiration of three months from the date of the
Participant’s Termination of Employment for a reason other than the
Participant’s death, Disability or Retirement, or

               (d) The expiration of twelve months from the date of the
Participant’s Termination of Employment by reason of Disability, or

               (e) The expiration of twelve months from the date of the
Participant’s death, if such death occurs while the Participant is in the employ
or service of the Company or an Affiliate.

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          5.4.2 Committee Discretion. The Committee shall provide, in the terms
of each individual Option, when such Option expires and becomes unexercisable.
After the Option is granted, the Committee, in its sole discretion may extend
the maximum term of such Option. The foregoing discretionary authority is
subject to the limitations and restrictions on Incentive Stock Options set forth
in Section 5.8.

     5.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times, and subject to such restrictions and conditions, as
the Committee shall determine in its sole discretion. After an Option is
granted, the Committee, in its sole discretion, may accelerate the
exercisability of the Option.

     5.6 Payment. The Committee shall determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the
case of an Incentive Stock Option, the Committee shall determine the acceptable
form of consideration at the time of grant. Such consideration may consist
entirely of:

          (a) cash;

          (b) check;

          (c) promissory note;

          (d) other Shares which (i) in the case of Shares acquired upon
exercise of an Option, have been owned by the Participant for more than six
(6) months on the date of surrender, and (ii) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;

          (e) consideration received by the Company from a licensed broker under
a cashless exercise program implemented by the Company to facilitate “same day”
exercises and sales of Options;

          (f) a reduction in the amount of any Company liability to the
Participant, including any liability attributable to the Participant’s
participation in any Company-sponsored deferred compensation program or
arrangement;

          (g) any combination of the foregoing methods of payment; or

          (h) such other consideration and method of payment for the issuance of
Shares to the extent permitted by applicable laws.

     5.7 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option, as it
may deem advisable, including, but not limited to, restrictions related to
Federal securities laws, the requirements of any national securities exchange or
system upon which such Shares are then listed and/or traded, and/or any blue sky
or state securities laws.

     5.8 Certain Additional Provisions for Incentive Stock Options.

          5.8.1 Exercisability. The aggregate Fair Market Value (determined at
the time the Option is granted) of the Shares with respect to which Incentive
Stock Options are

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exercisable for the first time by any Employee during any calendar year (under
all plans of the Company and its Subsidiaries) shall not exceed $100,000.

          5.8.2 Termination of Employment. No Incentive Stock Option may be
exercised more than three months after the Participant’s termination of
employment for any reason other than Disability or death, unless (a) the
Participant dies during such three-month period, and (b) the Award Agreement
and/or the Committee permits later exercise. No Incentive Stock Option may be
exercised more than one year after the Participant’s termination of employment
on account of Disability, unless (a) the Participant dies during such one-year
period, and (b) the Award Agreement and/or the Committee permit later exercise.

          5.8.3 Company and Subsidiaries Only. Incentive Stock Options may be
granted only to persons who are Employees of the Company and/or a Subsidiary at
the time of grant.

          5.8.4 Expiration. No Incentive Stock Option may be exercised after the
expiration of 10 years from the date such Option was granted; provided, however,
that if the Option is granted to an Employee who, together with persons whose
stock ownership is attributed to the Employee pursuant to Section 424(d) of the
Code, owns stock possessing more than 10% of the total combined voting power of
all classes of the stock of the Company or any of its Subsidiaries, the Option
may not be exercised after the expiration of 5 years from the date that it was
granted.

     5.9 Nontransferability of Options. No Option granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will, the laws of descent and distribution, or as provided under
SECTION 9. All Options granted to a Participant under the Plan shall be
exercisable during his or her lifetime only by such Participant.

SECTION 6
STOCK APPRECIATION RIGHTS

     6.1 Grant of SARs. An SAR may be granted to an Employee, Consultant or
Director at any time and from time to time as determined by the Committee, in
its sole discretion. The Committee may grant Affiliated SARs, Freestanding SARs,
Tandem SARs, or any combination thereof. The Committee shall have complete
discretion to determine the number of SARs granted to any Participant, and
consistent with the provisions of the Plan, the terms and conditions pertaining
to such SARs. However, the grant price of a Freestanding SAR shall be at least
equal to the Fair Market Value of a Share on the date of grant. The grant price
of Tandem or Affiliated SARs shall equal the Option Price of the related Option.

     6.2 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.

          6.2.1 ISOs. Notwithstanding any contrary provision of the Plan, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
shall expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR shall be for no more than one
hundred percent (100%) of the difference between the Option Price of the
underlying ISO and the Fair Market Value of the Shares subject to the

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underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR
shall be exercisable only when the Fair Market Value of the Shares subject to
the ISO exceeds the Option Price of the ISO.

     6.3 Exercise of Affiliated SARs. An Affiliated SAR shall be deemed to be
exercised upon the exercise of the related Option. The deemed exercise of an
Affiliated SAR shall not necessitate a reduction in the number of Shares subject
to the related Option.

     6.4 Exercise of Freestanding SARs. Freestanding SARs shall be exercisable
on such terms and conditions as the Committee, in its sole discretion, shall
determine.

     6.5 SAR Agreement. Each SAR shall be evidenced by an Award Agreement that
shall specify the grant price, the term of the SAR, the conditions of exercise,
and such other terms and conditions as the Committee, in its sole discretion,
shall determine.

     6.6 Expiration of SARs. An SAR granted under the Plan shall expire upon the
date determined by the Committee, in its sole discretion, and set forth in the
Award Agreement. Notwithstanding the foregoing, the rules of Section 5.4
(pertaining to Options) also shall apply to SARs.

     6.7 Payment of SAR Amount. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:

          (a) The difference between the Fair Market Value of a Share on the
date of exercise over the grant price; times

          (b) The number of Shares with respect to which the SAR is exercised.

          At the discretion of the Committee, the payment upon SAR exercise may
be in cash, in Shares of equivalent value, or in some combination thereof.

     6.8 Nontransferability of SARs. No SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will, the laws of descent and distribution, or as permitted under
SECTION 9. An SAR granted to a Participant shall be exercisable during the
Participant’s lifetime only by such Participant.

SECTION 7
RESTRICTED STOCK

     7.1 Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Employees, Consultants or Directors in such amounts as the
Committee, in its sole discretion, shall determine.

     7.2 Restricted Stock Agreement. Each Award of Restricted Stock shall be
evidenced by an Award Agreement that shall specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the
Committee, in its sole discretion, shall determine. Unless the Committee
determines otherwise, shares of Restricted Stock shall be held by the Company as
escrow agent until the restrictions on such Shares have lapsed.

     7.3 Transferability. Except as provided in this SECTION 7, Shares of
Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated

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until the end of the applicable Period of Restriction. All rights with respect
to the Restricted Stock granted to a Participant under the Plan shall be
available during his or her lifetime only to such Participant.

     7.4 Other Restrictions. The Committee, in its sole discretion, may impose
such other restrictions on any Shares of Restricted Stock as it may deem
advisable including, without limitation, restrictions based upon the achievement
of specific performance goals (Company-wide, divisional, and/or individual),
and/or restrictions under applicable Federal or state securities laws; and may
legend the certificates representing Restricted Stock to give appropriate notice
of such restrictions. For example, the Committee may determine that some or all
certificates representing Shares of Restricted Stock shall bear the following
legend:

“The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is subject
to certain restrictions on transfer as set forth in the Superconductor
Technologies Inc. 2003 Equity Incentive Plan, and in a Restricted Stock
Agreement. A copy of the Plan and such Restricted Stock Agreement may be
obtained from the Secretary of Superconductor Technologies Inc.”

     7.5 Removal of Restrictions. Except as otherwise provided in this SECTION
7, Shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan shall be released from escrow as soon as practicable after the last day
of the Period of Restriction. The Committee, in its discretion, may accelerate
the time at which any restrictions shall lapse, and/or remove any restrictions.
After the restrictions have lapsed, the Participant shall be entitled to have
any legend or legends under Section 7.4 removed from his or her Share
certificate, and the Shares shall be freely transferable by the Participant.

     7.6 Voting Rights. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares, unless the Committee determines otherwise.

     7.7 Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock shall be entitled to receive all
dividends and other distributions paid with respect to such Shares, unless
otherwise provided in the Award Agreement. If any such dividends or
distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.

     7.8 Return of Restricted Stock to Company. Subject to the applicable Award
Agreement and Section 7.5, upon the earlier of (a) the Participant’s Termination
of Employment, or (b) the date set forth in the Award Agreement, the Restricted
Stock for which restrictions have not lapsed shall revert to the Company and,
subject to Section 4.3, again shall become available for grant under the Plan.

     7.9 Repurchase Option. Unless the Committee determines otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the Participant’s
service with the Company for any reason (including death or Disability). The
purchase price for Shares repurchased pursuant to the Restricted Stock Purchase
Agreement shall be the original price paid by the Participant and may be paid by
cancellation of any indebtedness of the Participant to the Company. The
repurchase option shall lapse at a rate determined by the Committee.

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SECTION 8
PERFORMANCE UNITS AND PERFORMANCE SHARES

     8.1 Grant of Performance Units/Shares. Performance Units and Performance
Shares may be granted to Employees, Consultants or Directors at any time and
from time to time, as shall be determined by the Committee, in its sole
discretion. The Committee shall have complete discretion in determining the
number of Performance Units and Performance Shares granted to each Participant.

     8.2 Value of Performance Units/Shares. Each Performance Unit shall have an
initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance goals in its
discretion which, depending on the extent to which they are met, will determine
the number and/or value of Performance Units/Shares that will be paid out to the
Participants. The time period during which the performance goals must be met
shall be called the “Performance Period”.

     8.3 Earning of Performance Units/Shares. After the applicable Performance
Period has ended, the holder of Performance Units/Shares shall be entitled to
receive a payout of the number of Performance Units/Shares earned by the
Participant over the Performance Period, to be determined as a function of the
extent to which the corresponding performance goals have been achieved. After
the grant of a Performance Unit/Share, the Committee, in its sole discretion,
may adjust and/or waive the achievement of any performance goals for such
Performance Unit/Share.

     8.4 Form and Timing of Payment of Performance Units/Shares. Payment of
earned Performance Units/Shares shall be made as soon as practicable after the
expiration of the applicable Performance Period. The Committee, in its sole
discretion, may pay earned Performance Units/Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the value of the
earned Performance Units/Shares at the close of the applicable Performance
Period) or in a combination thereof.

     8.5 Cancellation of Performance Units/Shares. Subject to the applicable
Award Agreement, upon the earlier of (a) the Participant’s Termination of
Employment, or (b) the date set forth in the Award Agreement, all remaining
Performance Units/Shares shall be forfeited by the Participant to the Company,
and subject to Section 4.3, the Shares subject thereto shall again be available
for grant under the Plan.

     8.6 Nontransferability. Performance Units/Shares may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will, the laws of descent and distribution, or as permitted under
SECTION 9. A Participant’s rights under the Plan shall be exercisable during the
Participant’s lifetime only by the Participant or the Participant’s legal
representative.

SECTION 9
BENEFICIARY DESIGNATION

     If permitted by the Committee, a Participant may name a beneficiary or
beneficiaries to whom any unpaid vested Award shall be paid in event of the
Participant’s death. Each such designation shall revoke all prior designations
by the same Participant and shall be effective only if given in a form and
manner acceptable to the Committee. In the absence of any such

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designation, benefits remaining unpaid at the Participant’s death shall be paid
to the Participant’s estate and, subject to the terms of the Plan, any
unexercised vested Award may be exercised by the Committee or executor of the
Participant’s estate.

SECTION 10
DEFERRALS

     The Committee, in its sole discretion, may permit a Participant to defer
receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such Participant under an Award. Any such deferral elections shall be
subject to such rules and procedures as shall be determined by the Committee in
its sole discretion.

SECTION 11
RIGHTS OF EMPLOYEES AND CONSULTANTS

     11.1 No Effect on Employment or Service. Nothing in the Plan shall
interfere with or limit in any way the right of the Company to terminate any
Participant’s employment or service at any time, with or without cause.

     11.2 Participation. No Employee, Consultant or Director shall have the
right to be selected to receive an Award under this Plan, or, having been so
selected, to be selected to receive a future Award.

SECTION 12
AMENDMENT, SUSPENSION, OR TERMINATION

     The Board, in its sole discretion, may alter, amend or terminate the Plan,
or any part thereof, at any time and for any reason. However, as required by
Applicable Laws, no alteration or amendment shall be effective without further
stockholder approval. Neither the amendment, suspension, nor termination of the
Plan shall, without the consent of the Participant, alter or impair any rights
or obligations under any Award theretofore granted. No Award may be granted
during any period of suspension nor after termination of the Plan.

SECTION 13
TAX WITHHOLDING

     13.1 Withholding Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award, the Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes required to be withheld
with respect to such Award.

     13.2 Shares Withholding. The Committee, in its sole discretion and pursuant
to such procedures as it may specify from time to time, may permit a Participant
to satisfy the minimum statutory tax withholding obligation, in whole or in
part, by delivering to the Company Shares already owned for more than six
(6) months having a value equal to the amount required to be withheld. The value
of the Shares to be delivered will be based on their Fair Market Value on the
date of delivery.

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SECTION 14
INDEMNIFICATION

     Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, notion,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan or
any Award Agreement and against and from any and all amounts paid by him or her
in settlement thereof, with the Company’s approval, or paid by him or her in
settlement thereof, with the Company’s approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.

SECTION 15
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE

     15.1 Changes in Capitalization; No Award Repricing. Subject to any required
action by the shareholders of the Company, the number of Shares covered by each
outstanding Award, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or which
have been returned to the Plan upon cancellation or expiration of an Award, as
well as the price per Share covered by each such outstanding Award, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Shares, or any other increase or decrease
in the number of issued Shares effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares subject to an Award. Further, except for the adjustments provided
herein, no Award may be amended to reduce its initial exercise price, and no
Award may be cancelled and replaced with an Award with a lower price.

     15.2 Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, the Committee shall notify each Participant as
soon as practicable prior to the effective date of such proposed transaction.
The Committee in its discretion may provide for a Participant to have the right
to exercise his or her Award until ten (10) days prior to such transaction as to
all of the Shares covered thereby, including Shares as to which the Award would
not otherwise be exercisable. In addition, the Committee may provide that any
Company repurchase option applicable to any Shares purchased upon exercise of an
Award shall lapse as to all such Shares, provided the proposed dissolution or
liquidation takes place at the time and in the manner contemplated. To the
extent it has not been previously exercised, an Award will terminate immediately
prior to the consummation of such proposed action.

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     15.3 Merger or Asset Sale. In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Award shall be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Award, the Participant shall fully vest in and have
the right to exercise the Award as to all of the Shares as to which it would not
otherwise be vested or exercisable. If an Award becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Committee shall notify the Participant in writing or
electronically that the Award shall be fully vested and exercisable for a period
of fifteen (15) days from the date of such notice, and the Award shall terminate
upon the expiration of such period. For the purposes of this paragraph, the
Award shall be considered assumed if, following the merger or sale of assets,
the option or right confers the right to purchase or receive, for each Share
subject to the Award immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Shares for each Share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Committee may, with the consent of the successor
corporation, provide for the consideration to be received upon the exercise of
the Award, for each Share subject to the Award, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Shares in the merger or sale of assets.

     15.4 Change in Control. In the event of a Change of Control (as defined
below), except as otherwise determined by the Board, the Participant shall fully
vest in and have the right to exercise the Awards as to all of the Shares,
including Shares as to which it would not otherwise be vested or exercisable. If
an Award becomes fully vested and exercisable as the result of a Change of
Control, the Committee shall notify the Participant in writing or electronically
prior to the Change of Control that the Award shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and
the Award shall terminate upon the expiration of such period. For purposes of
this Agreement, a “Change of Control” means the happening of any of the
following events:

          (a) When any “person,” as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee) is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company’s then
outstanding securities entitled to vote generally in the election of directors;
or

          (b) The stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the total voting power represented by
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve an agreement for the sale or disposition by the Company of all
or substantially all the Company’s assets; or

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          (c) A change in the composition of the Board of Directors of the
Company, as a result of which fewer than a majority of the directors are
Incumbent Directors. “Incumbent Directors” shall mean directors who either
(A) are directors of the Company as of the date the Plan is approved by the
stockholders, or (B) are elected, or nominated for election, to the Board of
Directors of the Company with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company).

SECTION 16
CONDITIONS UPON ISSUANCE OF SHARES

     16.1 Legal Compliance. Shares shall not be issued pursuant to the exercise
of an Award unless the exercise of such Award and the issuance and delivery of
Shares shall comply with Applicable Laws and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

     16.2 Investment Representations. As a condition to the exercise of an
Award, the Company may require the person exercising such Award to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.

SECTION 17
INABILITY TO OBTAIN AUTHORITY

     The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.

SECTION 18
RESERVATION OF SHARES

     The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

SECTION 19
LEGAL CONSTRUCTION

     19.1 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

     19.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

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     19.3 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all Applicable Laws.

     19.4 Securities Law Compliance. With respect to Section 16 Persons,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3. To the extent any provision of the Plan, Award
Agreement or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.

     19.5 Governing Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of Delaware.

     19.6 Captions. Captions are provided herein for convenience only, and shall
not serve as a basis for interpretation or construction of the Plan.

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