**Exhibit 10.1**
**Superconductor Technologies Inc.**
**EMPLOYMENT AGREEMENT**
     This Employment Agreement (the “Agreement”) is made and entered into as of April 11,2005, by and between Superconductor Technologies Inc., a Delaware corporation (the“Company”), and Terry White, an individual (the “Executive”), with reference to thefollowing facts:
     A. The Company, headquartered in Santa Barbara, California, is the global leader indeveloping, manufacturing, and marketing superconducting products for wireless networks.
     B. Executive is an executive with broad sales experience in the telecommunications industry.
     C. The Company wishes to hire Executive for the position of Vice President of Worldwide Sales,and Executive wishes to be hired for such position, on the terms and conditions set forth in thisAgreement.
     NOW, THEREFORE, based on the above premises and in consideration of the mutual covenants andagreements contained herein, and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties agree as follows:
     1. Employment with the Company.
          1.1 Position and Duties. Subject to the terms set forth herein, the Company agrees toemploy Executive as Vice President of Worldwide Sales, and Executive hereby accepts suchemployment. Executive shall serve in an executive capacity and shall perform such duties as arecustomarily associated with his position, consistent with the Restated Bylaws of the Company and asreasonably required by the Company’s Board of Directors (the “Board”). Executive willreport to the Company’s President and Chief Executive Officer.
          1.2 Full Time and Best Efforts. Executive will perform his duties faithfully and tothe best of his ability and will devote his full business time and effort to the performance of hisduties hereunder. Executive will not engage in any other employment or business activities for anydirect or indirect remuneration that would be directly harmful or detrimental to, or that maycompete with, the business and affairs of the Company, or that would interfere with his dutieshereunder. Executive acknowledges that frequent travel may be necessary in carrying out his dutieshereunder
          1.3 Company Policies. The employment relationship between the parties shall begoverned by the general employment policies and practices of the Company, including but not limitedto those relating to protection of confidential information and assignment of inventions, exceptthat when the terms of this Agreement differ from or are in conflict with the Company’s generalemployment policies or practices, this Agreement shall control. This Agreement shall not beeffective until the Executive signs the Company’s standard Employee Proprietary InformationAgreement.
     2. At-Will Employment. Executive’s employment with the Company is “at-will” and maybe terminated at any time without cause by either party. Termination of the employmentrelationship is the right of each party and will not constitute a breach of this Agreement. Noprovision of this Agreement shall be construed as conferring upon Executive a right to continue asan employee or executive of the Company or any subsidiary or affiliated entity. In the event
 

 

of termination, Executive will voluntarily and immediately resign from any and all directorand officer positions he may hold with the Company and subsidiary or affiliate.
     3. Compensation.
          3.1 Base Salary. The Company will compensate Executive for services renderedhereunder at the rate of Two Hundred Twenty Thousand Dollars ($220,000) per year payable inaccordance with the Company’s normal payroll practices and subject to payroll deductions as may benecessary or customary for the Company’s salaried employees. The Compensation Committee of theBoard (the “Compensation Committee”) will review, and in its sole discretion may increase,the Base Salary each year.
          3.2 Performance Bonus. The Company will pay Executive an annual performance bonusbased upon achievement of performance goals. The sales incentive bonus for 2005 shall be based ona mutually acceptable revenue plan for net commercial product sales as follows:   *    Net Commercial*  *    Product Sales* *Bonus Formula**      (% of Plan)* *(Percentage of Base Salary)* Less than 70% 0%   70% to 100% 10% to 30% (linear scale)   Over 100% 2.0% of the amount by which net  commercial product sales exceed plan
     The term “net commercial product sales” shall mean the actual net commercial product sales for2005 as finally determined and set forth in the Company’s audited financial statements. Theforegoing sales targets and bonus payments are for the full year 2005 and will be pro rated basedon Executive’s actual start date. The bonus structure for future years is to be mutually agreedupon.
          3.3 Equity Incentive Compensation.
               3.3.1 Option Grants. The Company will grant Executive a non-qualified stock optionunder its 2003 Equity Incentive Plan to purchase One Million (1,000,000) shares of common stockwith a per share exercise price equal to the fair market value of the Company’s common stock on thedate the stockholders approve an increase in the number of shares of stock authorized for grantsunder the 2003 Equity Incentive Plan.
               3.3.2 Other Terms. All of the options granted under this Section 3.3 will (a) have aterm of ten (10) years, (b) vest 25% on the first anniversary of Executive’s start date with theCompany and 75% in 36 equal monthly installments thereafter, (c) have such other terms as arecontained in the Company’s standard form of stock option agreement presently in use and notinconsistent with the terms of this Agreement and (d) be subject to all the terms and conditions ofthe Company’s 2003 Equity Incentive Plan.
               3.3.3 Stockholder Approval of Plan Increase. The Company will submit a request to itsstockholders at the upcoming 2005 annual meeting to increase the number of shares of stockauthorized for grants under the 2003 Equity Incentive Plan. If the stockholders decline to approvethe increase, the Company will grant options to the Company’s CEO and to Executive under the 2003Equity Plan (priced with a per share exercise price equal to the fair market value of the Company’scommon stock on the date the stockholders decline to approve the increase) as and when additionaloptions become available under the plan as a result of the
2

 

expiration and forfeiture of other stock options outstanding under the plan until is hasfulfilled its obligations to CEO and to Executive under Section 3.3.1. The Company will allocateshares from each available grant sixty percent (60%) to the CEO and forty percent (40%) toExecutive. The Company will not grant any further stock options under the 2003 Equity IncentivePlan until it has fulfilled its obligations to the CEO and to Executive under Section 3.3.1.
     4. Benefits. Executive shall be entitled to participate in the employee benefit plansand programs of the Company, if any, to the extent that his position, tenure, salary, age, healthand other qualifications make him eligible to participate in such plans or programs, subject to therules and regulations applicable thereto. Subject to Section 10.5.4, the Company reserves theright to cancel or change the benefit plans and programs it offers to its employees at any time.
     5. Business Expenses. The Company shall reimburse Executive for reasonable travel,entertainment or other expenses incurred by Executive in the furtherance of or in connection withthe performance of Executive’s duties hereunder, in accordance with the Company’s expensereimbursement policy as in effect from time to time.
     6. Termination Before a Change of Control.
          6.1 Involuntary Termination. If Executive’s employment with the Company is terminatedbefore a Change of Control due to an Involuntary Termination, then Executive shall be entitled toreceive the following:
               6.1.1 a severance payment equal to six (6) months of Executive’s Base Salary as in effect onthe date of the Involuntary Termination, paid in accordance with then prevailing payroll practice;and
               6.1.2 six (6) months of coverage for Executive and his spouse/dependents under group health,life or other similar insurance plans substantially comparable to the group health, life and othersimilar insurance plans in which Executive and his spouse/dependents participated on the date ofsuch termination,
          6.2 Other Termination. If Executive’s employment is terminated before a Change ofControl for any reason other than an Involuntary Termination, then Executive shall not be entitledto receive severance or other benefits pursuant to this Agreement, but may be eligible for thosebenefits (if any) as may then be established under the Company’s severance and benefits plans andpolicies existing at the time of such termination.
          6.3 Mitigation. The Executive shall not be required to mitigate the amount of anypayment or benefit contemplated by this Section 6 (whether by seeking new employment or in anyother manner). No such payment shall be reduced by earnings that the Executive may receive fromany other source.
     7. Change of Control.
          7.1 Benefits. In the event of a Change of Control, Executive shall be entitled toreceive the following in lieu of any payments or other benefits under Section 6 (Termination BeforeChange of Control) and regardless of whether Executive’s employment is continued or terminated(except as expressly provided below in Section 7.1.2 and Section 7.1.3):
               7.1.1 accelerated vesting of fifty percent (50%) of Executive’s unvested stock options;
               7.1.2 accelerated vesting of the remaining fifty percent (50%) of Executive’s options if andonly if Executive does not resign during the six month period following the date of the Change ofControl; and
3

 

               7.1.3 if Executive is terminated due to an Involuntary Termination, then he shall receive alump sum payment equal to one (1.0) times Executive’s Base Salary as in effect on the date of theInvoluntary Termination.
          7.2 Excise Taxes. In the event that it is determined that any payment or distributionof any type to or for the benefit of the Executive made by the Company, by any of its affiliates,by any person who acquires ownership or effective control of the Company or ownership of asubstantial portion of the Company’s assets (within the meaning of section 280G of the InternalRevenue Code of 1986, as amended, and the regulations thereunder (the “Code”)) or by anyaffiliate of such person, whether paid or payable or distributed or distributable pursuant to theterms of this Agreement or otherwise (the “Total Payments”), would be subject to the excisetax imposed by section 4999 of the Code or any interest or penalties with respect to such excisetax (such excise tax, together with any such interest or penalties, are collectively referred to asthe “Excise Tax”), then such payments or distributions shall be limited to such amountwhich would result in no portion of the payments or distributions being subject to the Excise Tax.
          7.3 Determination of Excise Tax. All mathematical determinations and alldeterminations of whether any of the Total Payments are “parachute payments” (within the meaning ofsection 280G of the Code) that are required to be made under Section 7.2, shall be made by Deloitte& Touche LLP (or the Company’s then current tax accounting firm) (the “Tax Firm”), whoshall provide their determination (the “Determination”), together with detailed supportingcalculations regarding the amount of any relevant matters, both to the Company and to the Executivewithin seven (7) business days of the Executive’s termination date, if applicable, or such earliertime as is requested by the Company or by the Executive. If applicable, the Tax Firm shall furnishthe Executive with a written statement that it has concluded that no Excise Tax is payable(including the reasons therefor) and that the Executive has substantial authority not to report anyExcise Tax on the Executive’s federal income tax return. Any determination by the Tax Firm shallbe binding upon the Company and the Executive, absent manifest error. The Company shall pay thefees and costs of the Tax Firm.
     8. Condition to Severances Payments. All severance payments and other benefitsprovided under Sections 6 and 7 are conditioned on Executive’s continuing compliance with thisAgreement and the Company’s policies and Executive’s execution of a release of claims and covenantnot to sue substantially in the form provided in Exhibit A upon termination ofemployment .
     9. Indemnification. The Company and Executive will concurrently herewith executean Indemnification Agreement identical in form and substance to the Indemnification Agreementcurrently in effect for the Company’s other Executive Officers.
     10. Definitions.
          10.1 Base Salary. “Base Salary” means Executive’s annualized base salary underSection 3.1 and as may be subsequently adjusted upward for increases.
          10.2 Cause. “Cause” means the occurrence of anyone or more of the following:
               10.2.1 Executive’s conviction by, or entry of a plea of guilty or nolo contendere in, a courtof final jurisdiction for any crime which constitutes a felony in the jurisdiction involved;
4

 

               10.2.2 Executive’s misappropriation of funds or commission of an act of fraud, whether prioror subsequent to the date hereof, upon the Company;
               10.2.3 willful disregard by Executive in the scope of Executive’s services to the Company;
               10.2.4 a breach by Executive of a material provision of this Agreement;
               10.2.5 a failure of Executive to substantially perform his duties hereunder; or
               10.2.6 a failure of Executive to follow the lawful mandates of the Board.
     Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Causewithout (a) reasonable notice to Executive setting forth the reasons for Company’s intention toterminate for Cause and (b) an opportunity for Executive to be heard before the Board.
          10.3 Change of Control. “Change of Control” means the occurrence of any of thefollowing events on or after the effective date of this Agreement:
               10.3.1 When any “person,” as such term is used in Sections 13(d) and 14(d) of the SecuritiesExchange Act of 1934, as amended, is or becomes the “beneficial owner” (as defined in Rule 13d-3under the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities ofthe Company representing thirty percent (30%) or more of the combined voting power of the Company’sthen outstanding securities entitled to vote generally in the election of directors, *other*than the following persons:
                    10.3.1.1 the Company,
                    10.3.1.2 a subsidiary of the Company,
                    10.3.1.3 a Company employee benefit plan, including any trustee of such plan acting astrustee, or
                    10.3.1.4 any person who, as of the effective date of this Agreement, has publicly disclosed infilings with the Securities and Exchange Commission the beneficial ownership of more than 5% of thecombined voting power of the Company’s outstanding securities entitled to vote generally in theelection of directors;
               10.3.2 The stockholders of the Company approve a merger or consolidation of the Company withany other corporation, other than a merger or consolidation which would result in the votingsecurities of the Company outstanding immediately prior thereto continuing to represent (either byremaining outstanding or by being converted into voting securities of the surviving entity) morethan fifty percent (50%) of the total voting power represented by the voting securities of theCompany or such surviving entity outstanding immediately after such merger or consolidation, or thestockholders of the Company approve an agreement for the sale or disposition by the Company of allor substantially all the Company’s assets;
               10.3.3 A change in the composition of the Board of Directors of the Company, as a result ofwhich fewer than a majority of the directors are Incumbent Directors. “IncumbentDirectors” shall mean directors who either (a) are directors of the Company as of the effectivedate of this Agreement, or (b) are elected, or nominated for election, to the Board of Directors ofthe Company with the affirmative votes of at least a majority of the Incumbent Directors at thetime of such election or nomination (but shall not include an individual whose election ornomination is in connection with an actual or threatened proxy contest relating to the election ofdirectors to the Company);
5

 

               10.3.4 The sale, transfer or other disposition of all or substantially all of the Company’sassets; or
               10.3.5 The stockholders of the Company approve the dissolution or liquidation of the Company.
          10.4 “Executive Officer” shall have the meaning set forth in Rule 3b-7 under theSecurities Exchange Act of 1934, as amended.
          10.5 Involuntary Termination. “Involuntary Termination” means the occurrence of anyone or more of the following:
               10.5.1 without Executive’s express written consent, a material reduction of Executive’s dutiesor responsibilities relative to Executive’s duties or responsibilities in effect immediately priorto such reduction, or the removal of Executive from such duties and responsibilities, unlessExecutive is provided with comparable duties and responsibilities over the same business unit;
               10.5.2 without Executive’s express written consent, a material reduction of the facilities andperquisites (including office space and location) available to Executive immediately prior to suchreduction;
               10.5.3 without Executive’s express written consent, a reduction by the Company of Executive’sBase Salary in effect immediately prior to such reduction, unless it occurs in connection with arestructuring or other cost-cutting measure as evidenced by a comparable reduction in the basesalary of all Executive Officers;
               10.5.4 a material reduction by the Company in the kind or level of employee benefits to whichthe Executive is entitled immediately prior to such reduction with the result that the Executive’soverall benefits package is significantly reduced;
               10.5.5 any purported termination of the Executive by the Company which is not effected forCause or for which the grounds relied upon are not valid; or
               10.5.6 the failure of the Company to obtain the assumption of this Agreement by any successorscontemplated in Section 12.
The conversion of the Company into a subsidiary, division or other business unit of any successorentity shall not constitute a triggering event under Section 10.5.1 provided Executive hassubstantially the same duties and responsibilities over such subsidiary, division or other businessunit immediately before and after such conversion.
     11. Advice of Counsel. Executive acknowledges that he has been represented by counselin the negotiation of this Agreement and is fully aware of his rights and obligations under thisAgreement.
     12. Successors.
          12.1 Company’s Successors. Any successor to the Company (whether direct or indirectand whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all orsubstantially all of the Company’s business and/or assets shall assume the obligations under thisAgreement and agree expressly to perform the obligations under this Agreement in the same mannerand to the same extent as the Company would be required to perform such obligations in the absenceof a succession. For all purposes under this Agreement, the term “Company,” shall includeany successor to the Company’s business and/or assets which executes and delivers the assumptionagreement described in this Section 12.1 or which becomes bound by the terms of this Agreement byoperation of law.
6

 

          12.2 Executive’s Successors. Without the written consent of the Company, Executiveshall not assign or transfer this Agreement or any right or obligation under this Agreement to anyother person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rightsof Executive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personalor legal representatives, executors, administrators, successors, heirs, distributees, devisees andlegatees.
     13. Notice Clause.
          13.1 Manner. Any notice hereby required or permitted to be given shall besufficiently given if in writing and upon mailing by registered or certified mail, postage prepaid,to either party at the address of such party or such other address as shall have been designated bywritten notice by such party to the other party .
          13.2 Effectiveness. Any notice or other communication required or permitted to begiven under this Agreement will be deemed given on the day when delivered in person, or thebusiness day after the day on which such notice was mailed in accordance with Section 13.1.
     14. Governing Law. This Agreement shall be governed by and construed in accordancewith the internal substantive laws, but not the choice of law rules, of the state of California.
     15. Arbitration. Any controversy or claim arising out of or relating to thisAgreement, or the breach thereof, shall be settled by arbitration in Los Angeles in accordance withthe Commercial Arbitration Rules of the American Arbitration Association. Discovery shall bepermitted to the same extent as in a proceeding under the Federal Rules of Civil Procedure,including (without limitation) such discovery as is specifically authorized by section 1283.05 ofthe California Code of Civil Procedure, without need of prior leave of the arbitrator under section1283.05(e) of such Code. Judgment on the award rendered by the arbitrator may be entered in anycourt having jurisdiction thereof. The Company shall bear the expense of the arbitrator.
     16. Attorneys’ Fees for Executive. The Company will reimburse Executive for up to$2,000 of legal fees and costs incurred by Executive in connection with the negotiation of thisAgreement. Further, if any litigation or arbitration is commenced (including any proceedings in abankruptcy court) between the parties concerning any provision of this Agreement and Executive isthe prevailing party in such proceeding, the Executive shall be entitled, in addition to such otherrelief as may be granted, to recover his attorneys’ reasonable fees and costs incurred by reason ofsuch litigation or arbitration. The prevailing party shall be determined by the court orarbitrator based upon an assessment of which party’s major arguments or positions taken in theproceedings could fairly be said to have prevailed over the other party’s major arguments orpositions on major disputed issues.
     17. Severability. The invalidity or unenforceability of any provision of thisAgreement, or any terms hereof, shall not affect the validity or enforceability of any otherprovision or term of this Agreement.
     18. Confidentiality and Trading Restrictions. The parties agree the existence andnegotiation of this Agreement, and any non-public information exchanged in connection therewith,are confidential (collectively, “Confidential Information”). They will not disclose anyConfidential Information except as provided herein. Either party may disclose ConfidentialInformation to its employees and advisors who are required to have the information for the purposeof providing assistance in the negotiations. The Company may disclose the existence of thenegotiations and this Agreement at such time as it determines public disclosure is required underthe applicable securities laws. The parties will not use any Confidential
7

 

Information except for the decision whether to enter into an employment relationship andnegotiating the terms of employment. Executive will refrain from trading in the Company’ssecurities until 72 hours after public disclosure by Company of this Agreement. Thereafter,Executive may trade in the Company’s securities only in compliance with the Company’s InsiderTrading Policy.
     19. Integration. This Agreement and any other agreement referred to herein orexecuted contemporaneously herewith represent the entire agreement and understanding between theparties as to the subject matter herein and supersedes all prior or contemporaneous agreementswhether written or oral. No waiver, alteration, or modification of any of the provisions of thisAgreement shall be binding unless in writing and signed by duly authorized representatives of theparties hereto.
     20. Taxes. All payments made pursuant to this Agreement shall be subject towithholding of applicable income and employment taxes.
     21. Counterparts and Facsimile. This Agreement may be executed in counterparts and byfacsimile.
*** [NEXT PAGE IS SIGNATURE PAGE] ***
8

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as ofthe day and year first above written.   “**Executive**” “**Company**”  SUPERCONDUCTOR TECHNOLOGIES INC.      Terry White Jeffrey A. Quiram, President and Chief Executive Officer
S-1

 

EXHIBIT A
Form of Release of Claims and Covenant Not To Sue
     In consideration of the payments and other benefits that Superconductor Technologies Inc. (the“Company”) is providing to ____________(“Executive”) under the EmploymentAgreement entered into by and between Executive and the Company, dated April ___, 2005, theExecutive, on his/her own behalf and on behalf of Executive’s representatives, agents, heirs andassigns, waives, releases, discharges and promises never to assert any and all claims, demands,actions, costs, rights, liabilities, damages or obligations of every kind and nature, whether knownor unknown, suspected or unsuspected that Executive ever had, now have or might have as of the dateof Executive’s termination of employment with the Company against the Company or its predecessors,parent, affiliates, subsidiaries, stockholders, owners, directors, officers, employees, agents,attorneys, insurers, successors, or assigns (including all such persons or entities that have acurrent and/or former relationship with the Company) (the “Released Parties”) for anyclaims arising from or related to Executive’s employment with the Company, its parent or any of itsaffiliates and subsidiaries and the termination of that employment.
     These released claims also specifically include, but are not limited to, any claims arisingunder any federal, state and local statutory or common law, such as (as amended and as applicable)Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans WithDisabilities Act, the Employee Retirement Income Security Act, the Family Medical Leave Act, theEqual Pay Act, the Fair Labor Standards Act, the Industrial Welfare Commission’s Orders, theCalifornia Fair Employment and Housing Act, the California Constitution, the California GovernmentCode, the California Labor Code and any other federal, state or local constitution, law, regulationor ordinance governing the terms and conditions of employment or the termination of employment, andthe law of contract and tort and any claim for attorneys’ fees; provided, however, that Executivedoes not release or discharge the Released Parties from (i) any of the Company’s obligations to himunder the Employment Agreement, and (ii) any vested benefits to which he may be entitled under anyemployee benefit plan or program subject to ERISA.
     Furthermore, the Executive acknowledges that this waiver and release is knowing and voluntaryand that the consideration given for this waiver and release is in addition to anything of value towhich Executive was already entitled. Executive acknowledges that there may exist facts or claimsin addition to or different from those which are now known or believed by Executive to exist.Nonetheless, this Agreement extends to all claims of every nature and kind whatsoever, whetherknown or unknown, suspected or unsuspected, past or present. Executive also expressly waives theprovisions of California Civil Code section 1542, which provides: “A general release does notextend to claims which the creditor does not know or suspect to exist in his favor at the time ofexecuting the release, which if known by him/her must have materially affected his settlement withthe debtor.” With respect to the claims released in the preceding sentences, the Executive willnot initiate or maintain any legal or administrative action or proceeding of any kind against theCompany or its predecessors, parent, affiliates, subsidiaries, stockholders, owners, directors,officers, employees, agents, successors, or assigns (including all such persons or entities thathave a current or former relationship with the Company), for the purpose of obtaining any personalrelief, nor assist or participate in any such proceedings, including any proceedings brought by anythird parties (except as otherwise required or permitted by law). The Executive furtheracknowledges that he/she has been advised by this writing that:
A-1

 

 •  he/she should consult with an attorneyprior to executing this release;  •  he/she has at least twenty-one (21) days withinwhich to consider this release;  •  he/she has up to seven (7) days following theexecution of this release by the parties to revokethe release; and  •  this release shall not be effective until suchseven (7) day revocation period has expired.
     Executive agrees that the release set forth above shall be and remain in effect in allrespects as a complete general release as to the matters released.   EXECUTIVE                                                                  Date:                                        
A-2