Document:

Exhibit 10.1

 

Exhibit 10.1

SUPERCONDUCTOR TECHNOLOGIES INC. ANNOUNCES

PRELIMINARY THIRD QUARTER RESULTS

Company Reaffirms Fiscal Year Revenue Guidance of $22- $25 Million

SANTA BARBARA, Calif., October 10, 2002 — Superconductor Technologies Inc.
(Nasdaq: SCON) (“STI” or the “Company”), the global leader in high-temperature
superconducting (HTS) products for wireless voice and data applications,
expects to report unaudited net revenues of approximately $4.6 to $4.8 million
for the third quarter ended September 30, 2002, compared to previous guidance
of $5.5 to $6.0 million in revenues. STI met its goals for commercial revenues
during the third quarter. However, a delay in the signing of a final purchase
order with a government agency led to the net revenue shortfall. STI
management now anticipates receiving that contract during October and the
company expects to meet its fiscal year expectations of $22- $25 million in
revenues.

“We are encouraged by our continuous progress in developing the commercial
wireless market for our flagship SuperFilter product line. Our third quarter
commercial revenues met our expectations and our full year forecast remains
firm,” stated M. Peter Thomas, president and chief executive officer of
Superconductor Technologies Inc. “For the 2002 fiscal year, we expect
commercial revenue to exceed prior years’ results by at least 130 percent. We
are also seeing indications in the market that our growth will continue through
2003 and beyond.”

The Company plans to release final financial results for the third quarter 2002
in early November. An investor conference call will be announced as soon as a
firm date is set.

In a separate press release today, STI and Conductus (Nasdaq:CDTS) jointly
announced they have signed a definitive agreement to merge the two companies.
In addition, the companies have secured firm commitments from existing
shareholders and affiliated entities for a $15 million investment through a
private placement, which is expected to close concurrent with and is contingent
upon the close of the merger. The securities offered in the private placement
have not been registered under the Securities Act of 1933 and may not be
offered or sold in the United States in the absence of an effective
registration statement or exemption from the registration requirements of the
Securities Act.

About Superconductor Technologies Inc.

Superconductor Technologies Inc., headquartered in Santa Barbara, CA, is the
global leader in developing, manufacturing, and marketing superconducting
products for wireless networks.

STI’s SuperLinkTM products are proven to increase capacity utilization, lower
dropped and blocked calls, extend coverage, and enable higher wireless
transmission data rates. SuperFilter®, the company’s flagship product,
incorporates patented high-temperature superconductor (HTS) technology to
create a cryogenic receiver front-end (CRFE) used by wireless operators to
enhance network performance while reducing capital and operating costs.

More than 1,700 SuperFilter Systems have been deployed worldwide, logging in
excess of 20 million hours of cumulative operation. In 2002, STI was named one
of Deloitte & Touche’s prestigious “Technology Fast 50” companies for the Los
Angeles area, a ranking of the 50 fastest-growing technology companies in the
area.

SuperFilter and SuperLink are trademarks or registered trademarks of
Superconductor Technologies Inc. in the United States and in other countries.
For information about STI, please visit http://www.suptech.com.

 

 

Safe Harbor Statement

The press release contains forward-looking statements made in reliance upon the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, but are not limited to, STI’s views on
future commercial revenues, market growth, capital requirements, new product
introductions, and are generally identified by phrases such as
“thinks,”
“anticipates,” “believes,” “estimates,” “expects,” “intends,”
“plans,” and similar words. Forward-looking statements are inherently subject
to uncertainties and other factors, which could cause actual results to differ
materially from the forward-looking statements. These factors and uncertainties
include: STI’s ability to expand its operations to meet anticipated product
demands; the ability of STI’s products to achieve anticipated benefits for its
customers; the anticipated growth of STI’s target markets; unanticipated delays
in shipments to customers; STI’s ability to achieve profitability; the
uncertainties of litigation and the outcome of patent litigation with ISCO
International. STI refers interested persons to its most recent Annual Report
on Form 10-K and its other SEC filings for a description of additional
uncertainties and factors that may affect forward-looking statements.
Forward-looking statements are based on information presently available to
senior management, and STI has not assumed any duty to update its
forward-looking statements.

For further information please contact Martin McDermut, Senior Vice President,
Chief Financial Officer of Superconductor Technologies Inc., +1-805-690-4500,
mmcdermut@suptech.com; or Investors, Lillian Armstrong, Lillian@lhai-sf.com or
Moriah Shilton of Lippert / Heilshorn & Associates, +1-415-433-3777, for
Superconductor Technologies Inc.

###Exhibit 10.1

 

Exhibit 10.1

	 	 	 
		 	

SUPERCONDUCTOR TECHNOLOGIES INC. AND CONDUCTUS INC. AGREE TO MERGE

Investors Commit $15 million to New Entity

SANTA BARBARA, Calif. And Sunnyvale, Calif., October 10, 2002 — Superconductor
Technologies Inc. (Nasdaq: SCON) (“STI”) and Conductus, Inc. (Nasdaq: CDTS)
jointly announced they have signed a definitive agreement to merge the two
companies. The new company will retain the Superconductor Technologies name,
and will combine the talents, technologies and assets of the two pioneers of
commercial wireless and government applications of superconducting technology.
In addition, the companies have secured firm commitments from existing
shareholders and affiliated entities for a $15 million investment through a
private placement in the combined company, which is expected to close
concurrent with, and is contingent upon, the close of the merger.

     Under the terms of the agreement, which is subject to customary regulatory
approvals and shareholder approval from each company, Conductus shareholders
will receive 0.6 shares of newly issued STI common stock for each outstanding
share of Conductus common stock. This transaction, which is expected to be
tax-free to shareholders of both companies for U.S. federal income tax
purposes, will be accounted for as a purchase and is expected to close by
December 31, 2002.

     M. Peter Thomas, President and Chief Executive Officer of STI, stated,
“STI and Conductus have made enormous progress in driving the acceptance of
superconductive technology in the wireless telecommunications market. We look
forward to combining the strengths of the two organizations, and consolidating
our commercial product lines based on the SuperFilter® platform. We will also
continue to grow the high-performance product business for government
applications that is already in place at Conductus. STI will have the best in
cryogenic cooling technology, filter design, wafer fabrication technology, back
end assembly and testing, production, marketing, sales and service. The
combined company will be a much stronger force within the telecommunications
equipment sector, and will be well positioned to benefit from the industry’s
recovery, which we believe will begin sometime next year.”

     Thomas continued, “We are especially pleased to have received commitments
for a total of $15 million from a group of institutional investors that
includes current investors in either STI, Conductus or both companies.” The
$15 million private placement is being led by Alloy Ventures, an investment
firm in which John F. Shoch, Conductus’ Chairman, is a general partner. The
additional investors include entities affiliated with The Hillman Company,
Special Situations Funds, Palo Alto Investors and a large Boston-based
institutional investment advisor.

     Conductus will merge into a subsidiary of STI. M. Peter Thomas, President
and Chief Executive Officer of STI, will be President and Chief Executive
Officer of the new STI. Charles E. Shalvoy, President and Chief Executive
Officer of Conductus will be Executive Vice President of the new STI, and
President of the Conductus subsidiary.

     Charles Shalvoy added, “We are committed to implement a smooth, timely
combination of our two organizations and have established multiple integration
teams, with key individuals from both companies, which will develop
consolidation plans for each of the major areas of our business. In
addition to these internal programs, we will be meeting with our key
customers and investors to discuss the benefits of this merger. We are
confident that in addition to creating a better organization, we will be taking
a giant step forward in meeting customer needs. Our goal is to combine the
best people,

 

 technologies, and processes, from both STI and Conductus, in order
to accelerate our revenue growth, reduce redundant costs and expenses, and
hasten our transition to profitability”.

     Current and prospective Conductus customers will be introduced to the
SuperFilter and SuperLinkTM Rx product lines immediately. All ClearSite® users
will continue to be fully supported while transitioning to the SuperLink Rx
product family.

     The transaction is expected to allow the new STI to achieve profitability
sooner than either company would have achieved on its own. The companies
believe that together they will be able to recognize significant savings
through synergies they expect to achieve in a number of areas including sales
and marketing, R&D and product development, and general and administrative
activities. The elimination of redundancies in these areas is currently
expected to result in significant cost savings.

     STI will continue to be headquartered in Santa Barbara, Calif., and as a
result of the merger will maintain a facility in Sunnyvale, California as well.

     The companies will host a joint conference call and webcast for investors
today,
October 10th at 5:00 pm eastern, 2:00 pm pacific time to discuss this
announcement. To access the live conference call, US-based participants should
dial 1-888-747-3446 and international participants should dial 1-703-871-3086
at least five minutes prior to the start time. A replay of the call will be
available approximately two hours later for US participants at 888-266-2081,
passcode 6244740, and international participants at 703-925-2533, with the same
passcode 6244740. Live and archived webcasts of this call will also be
available on both companies’ websites at www.suptech.com and www.conductus.com.

     In separate announcements, both companies today also pre-announced their
third quarter revenues.

About Superconductor Technologies Inc.

Superconductor Technologies Inc., headquartered in Santa Barbara, CA, is the
global leader in developing, manufacturing, and marketing superconducting
products for wireless networks.

STI’s SuperLinkTM products are proven to increase capacity utilization, lower
dropped and blocked calls, extend coverage, and enable higher wireless
transmission data rates. SuperFilter®, the company’s flagship product,
incorporates patented high-temperature superconductor (HTS) technology to
create a cryogenic receiver front-end (CRFE) used by wireless operators to
enhance network performance while reducing capital and operating costs.

More than 1,700 SuperFilter Systems have been deployed worldwide, logging in
excess of 20 million hours of cumulative operation. In 2002, STI was named one
of Deloitte & Touche’s prestigious “Technology Fast 50” companies for the Los
Angeles area, a ranking of the 50 fastest-growing technology companies in the
area.

SuperFilter and SuperLink are trademarks or registered trademarks of
Superconductor Technologies Inc. in the United States and in other countries.
For information about STI, please visit http://www.suptech.com.

About Conductus

Conductus, Inc., founded in 1987 and based in Sunnyvale, California, develops,
manufactures, and markets electronic components and systems based on
superconductors for applications in worldwide telecommunications markets and in
defense, intelligence and law enforcement markets. For many applications, the
unique properties of superconductors offer significant performance advantages
over products based on conventional copper electronic components. These
advantages can provide improved price/performance at the system level because
of
enhanced sensitivity and efficiency as well as reduced size and weight. For
additional information, please visit our web site at www.conductus.com.

6

 

Safe Harbor Statement

This press release contains forward-looking statements about STI, Conductus and
their proposed merger made in reliance upon the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
are not guarantees of future performance and are inherently subject to
uncertainties and other factors which could cause actual results to differ
materially from the forward-looking statement. Forward looking statements are
generally identified by phrases such as “thinks”, “anticipates”, “believes”,
“estimates”, “expects”, “intends”, “plans” and similar words. Forward-looking
statements include, but are not limited to, the impact of the merger on future
revenues and earnings, the expected closing date of the merger, the ability of
the combined company to consolidate and leverage the business, technology,
sales force or marketing expertise of each company, and the plans, objectives
and intentions of the parties regarding the transaction. STI and Conductus
refer interested persons to the most recent Annual Report on Form 10-K for STI
and Conductus and their other SEC filings for a description of additional
uncertainties and factors that may affect forward-looking statements.
Forward-looking statements are based on information presently available to
senior management of each company, and neither company has assumed any duty to
update its forward-looking statements.

Additional Information

STI will be filing relevant documents concerning the merger with the Securities
and Exchange Commission, including a registration statement on SEC Form S-4
containing a joint STI/Conductus proxy statement and an STI prospectus. The
proxy statement will be sent to the stockholders of STI seeking their approval
of the proposed transaction. WE URGE INVESTORS TO READ THESE DOCUMENTS BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain
these documents free of charge at the SEC’s website (http://www.sec.gov) after
they are filed. These documents may also be obtained free of charge by
directing a request to Superconductor Technologies, Inc., Chief Financial
Officer, 460 Ward Drive, Santa Barbara, CA 93111, telephone (805) 690-4500.
STI and its directors and executive officers may be deemed to be participants
in the solicitation of proxies in connection with the merger. Information
about the directors and executive officers of STI and their ownership of STI’s
common stock is set forth in the proxy statement for STI’s 2002 annual meeting
of stockholders as filed on Schedule 14A with the SEC on April 4, 2002.
Additional information about the interests of those participants may be
obtained from reading the definitive prospectus/proxy statement regarding the
proposed transaction when it becomes available.

Conductus will file a proxy statement with the Securities and Exchange
Commission in connection with the proposed transaction which will be part of
the SEC Form S-4 filed jointly with STI. The proxy statement and prospectus
will be sent to the stockholders of Conductus seeking their approval of the
proposed transaction. WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE PROXY
STATEMENT BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors will be
able to obtain these documents free of charge at the SEC’s website
(http://www.sec.gov) after they are filed. These documents may also be
obtained free of charge by directing a request to Conductus, Investor
Relations, 969 West Maude Avenue, Sunnyvale, CA 94085, telephone (408)
923-9950. Conductus and its directors and executive officers may be deemed to
be participants in the solicitation of proxies in connection with the merger.
Information about the directors and executive officers of Conductus and their
ownership of Conductus common stock is set forth in the proxy statement for
Conductus’ 2002 annual meeting of stockholders as filed on Schedule 14A with
the SEC on April 16, 2002. Additional information about the interests of those
participants may be obtained from reading the definitive prospectus/proxy
statement regarding the proposed transaction when it becomes available.

7

 

Notice Regarding Private Placement

The securities offered in the private placement described above the first
paragraph of this press release have not been registered under the Securities
Act of 1933 and may not be offered or sold in the United States in the absence
of an effective registration statement or exemption from the registration
requirements of the Securities Act.

	 	 	 	 	 
	Contacts:	 	 	 	 
	For STI

Marty McDermut

Chief Financial Officer

mmcdermut@suptech.com

(805) 690-4500
	 	
Trade Media

Michael Williams

Director of Marketing

mwilliams@suptech.com

(805) 690-4500
	 	Investor relations contacts:

Lillian Armstrong, SF (investors)

Chenoa Taitt, NYC (reporters)

Lippert/Heilshorn & Assoc.

lillian@lhai-sf.com

(415) 433-3777 — SF

(212) 838-3777 — NYC

	For Conductus:

        Ron Wilderink

Chief Financial Officer

(408) 523-9950	 	
Charles B. Messman

MKR Group

(626) 395-9500	 	 

###

8

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