SETTLEMENT AGREEMENT
AND MUTUAL RELEASE OF ALL CLAIMS
This Settlement
Agreement and Mutual Release of All Claims
(“Agreement”) is made and entered into as of the
Effective Date set forth below by and between Charles Shalvoy
(“Shalvoy”) on the one hand and Superconductor
Technologies Inc. (“STI”), Conductus, Inc.
(“Conductus”), and John Lockton
(“Lockton”), on the other hand. STI, Conductus and
Lockton are collectively referred to as the “STI
Parties,” and the STI Parties and Shalvoy are collectively
referred to as the “parties.”
A. WHEREAS,
in December, 2000 and August, 2001, Shalvoy executed two separate
promissory notes to finance purchases of Conductus stock, one (the
“December 2000 Note”) in the original principal
amount of $460,244 for the purchase price of 135,301 shares of
Conductus common stock, and the other (“August 2001
Note”) in the original principal amount of $360,000 for the
purchase price of 117,634 shares of Conductus common
stock;
B. WHEREAS
STI acquired Conductus in December, 2002 and in connection with the
acquisition each holder of common stock of Conductus became
entitled to receive 0.6 share of common stock of STI for each share
of common stock of Conductus so held (subsequently STI stock had a
1-for-10 reverse stock split);
C. WHEREAS,
STI and Conductus filed a civil action against Shalvoy to collect
on the December 2000 Note and the August 2001 Note, which
action was eventually venued in San Mateo County, California, and
is entitled Superconductor Technologies, Inc., a
Delaware
corporation;
Conductus, Inc., a Delaware corporation, plaintiffs v. Charles
Shalvoy, an individual and Does 1-10, inclusive, et al
., Civil Action No. CIV-457118
(including Shalvoy’s Cross-Complaint filed therein, the
“Action”);
D. WHEREAS,
Shalvoy has alleged that the December 2000 and
August 2001 Notes were not valid obligations; and
E. WHEREAS,
the parties desire to settle all disputes between them.
NOW THEREFORE, the
parties enter into the following Agreement in full and final
settlement of any and all disputes between them and agree as
follows:
1. Payment by
Shalvoy and Dismissal of Civil Action . On or before
February 28, 2007, Shalvoy will provide to counsel for the STI
Parties an executed copy of this Agreement in final form and an
unfiled executed request for dismissal with prejudice of the entire
Action, which counsel for the STI Parties shall execute and file
with the Court upon execution of this Agreement by all parties. On
or before April 2, 2007, Shalvoy will transmit to counsel for
STI by Federal Express delivery a fully negotiable certified or
cashier’s check in the amount of $610,000 made payable to
“Eisenberg Raizman Thurston & Wong LLP in trust for
Superconductor Technologies Inc.” The $610,000 check will be
deposited in the trust account of Eisenberg Raizman Thurston &
Wong LLP. Upon the occurrence of all of the steps listed in
subsections 5(a) through 5(d) below, Eisenberg Raizman Thurston
& Wong LLP may disburse the $610,000 held in their trust
account to STI or otherwise as directed by STI. The intent of the
parties is to achieve a complete dismissal of the Action, and all
the parties’ claims asserted therein, and any claims that
could have been asserted by each and all of them in or in
connection with the Action, and, to the extent that the filing of
the Request for Dismissal does
2
not effectuate
that intent, the parties will take such other steps as are
necessary to achieve the complete dismissal of the Action and any
claims of the parties related thereto.
2.
Application of Shalvoy Payment . The $610,000 trust account
deposit paid by Eisenberg, Raizman, Thurston & Wong LLP to or
as directed by STI will be applied as follows: $460,000 of said
payment shall be payment in full of the August 2001 Note,
$360,000 of which payment constituting principal and the balance
representing accrued interest. The balance of the $610,000 payment
by Shalvoy to STI, namely, $150,000, shall be applied, pursuant to
the terms of the August 2001 Note, as payment by Shalvoy to
reimburse STI for its attorneys’ fees and costs incurred in
its efforts to collect the August 2001 Note. Promptly upon
receipt by STI of said $610,000, the original of the
August 2001 Note shall be returned by STI to Shalvoy, marked
“Paid in full.” Effective upon receipt by STI of said
$610,000 payment, and without any further action on the part of the
STI Parties, any and all liens or other claims held by any of the
STI Parties against the present STI common stock equivalent of
117,634 shares of Conductus common stock shall be deemed fully and
completely released.
3. Disposition
of the Alleged December 2000 Transaction . The parties
agree that the purported purchase by Shalvoy of 135,301 shares of
Conductus common stock in December 2000 is deemed rescinded
and is considered to be null and void and of no force or effect, as
if said transaction had never occurred. In that regard, Shalvoy
agrees that, upon the occurrence of the Effective Date, any and all
claims of Shalvoy to the 135,301 shares of Conductus common stock
(and any proceeds thereof, including the 8,118 shares of STI common
stock into which they were converted) shall be deemed fully
released by Shalvoy without any further action on the part of
Shalvoy, and Shalvoy shall thereupon have no right to issuance of
any shares of common stock of Conductus or STI in connection with
said transaction. Upon the occurrence
3
of each of the
steps listed in subsections 5(a) through 5(d) below, and without
any further act on the part of the STI Parties, Shalvoy shall be
deemed discharged and forever released from any and all claims,
demands and obligations as under the December 2000 Note,
including but not limited to any claims for principal, interest,
attorneys’ fees and costs. Promptly upon request of STI made
at any time thereafter, Shalvoy will execute any necessary
documents required to ensure and confirm that Shalvoy has no
ownership of or interest in any of the shares of common stock of
Conductus purportedly issued and sold to him in
December 2000.
4.
Effective Date . The “Effective Date” of this
Agreement is the date upon which it has been executed by all
parties hereto.
5.
Documents to be Provided to Shalvoy . The STI Parties shall
provide to Shalvoy:
(a) On or before
April 16, 2007, the December 2000 Note, marked
“Cancelled”;
(b) On or
before March 16, 2007, an endorsed copy of the filed Request
for Dismissal;
(c) On or before
April 16, 2007, a stock certificate registered in the name of
the “Shalvoy Family Trust” evidencing ownership by the
Shalvoy Family Trust of such number of duly and validly issued
shares of common stock of STI as is the present equivalent of
117,634 shares of Conductus stock purchased by means of the
August 2001 Note, which stock certificate shall not bear any
restrictive legends of any kind, and
(d) On or before
March 16, 2007, a counterpart or counterparts of this
Agreement executed by each of the STI Parties.
4
6. No
Admission of Liability . The purpose of this Agreement is to
settle, fully and completely, any and all claims that are the
subject of this Agreement. Each of the parties understands and
acknowledges that this Agreement shall not in any way be construed
as an admission of liability or wrongdoing by any party or its
respective current or former directors, officers, shareholders,
employees, agents, attorneys, parents, subsidiaries, affiliates, or
representatives. The parties to this Agreement have entered into
this Agreement solely to buy peace and to avoid the expense of
further litigation.
7. General
Mutual Release of All Claims . Each party to this Agreement
(“Releasing Party”), for himself, herself, or itself,
his, her, or its spouses, heirs, executors, administrators,
affiliates, agents, assigns and successors, forever releases,
discharges, and promises never to assert against any adverse party
to this Agreement (including against Shalvoy individually or in any
capacity as trustee), or against any of the current and future
parents,
|
