EXHIBIT 10(u)
CONVERSION AGREEMENT
THIS CONVERSION AGREEMENT (the "Agreement") is made and entered into
effective as of this 14th day of October, 2005, by and between the Estate of
Xxxxxx X. Xxxx (the "Estate") and Superconductive Components, Inc., an Ohio
corporation (the "Company").
Recitals
A. WHEREAS, on March 18, 2002, the Company executed a Promissory Note in
the amount of $168,270.00 payable to Xxxxxx X. Xxxx and Xxxxxxxx X. Xxxx as
joint tenants, which Promissory Note represents the Company's indebtedness to
the Estate in the amount of $84,134.86 (the "Note"), and which Note is currently
outstanding.
B. WHEREAS, the Company is indebted to the Estate for additional sums
advanced by Xxxxxx X. Xxxx to the Company in the aggregate amount of $104,276.85
(together with the indebtedness represented by the Note, the "Indebtedness").
C. WHEREAS, the Estate has agreed to cancel $188,000 of the Indebtedness
(the "Indebtedness Portion") in exchange for shares of common stock of the
Company, without par value, and warrants to purchase additional shares of common
stock of the Company, pursuant to the terms and conditions set forth in: (1) the
Confidential Private Placement Memorandum attached hereto as Exhibit A (the
"Confidential Private Placement Memorandum"); and (2) the Subscription Agreement
attached hereto as Exhibit B (the "Subscription Agreement").
NOW, THEREFORE, in consideration of the mutual agreements and covenants
hereinafter contained, the parties hereto agree as follows:
Agreement
1. PAYMENT. Upon receipt of originally executed copies of (a) this
Agreement and (b) the Subscription Agreement, the Company shall transfer to the
Estate a stock certificate representing 94,000 shares of common stock of the
Company (the "Shares"), and a warrant to purchase an additional 23,500 shares of
common stock of the Company at $3.00 per share until October 14, 2010.
Furthermore, upon the conversion of the Indebtedness Portion as set forth above,
the Company shall transfer to the Estate a check in the amount of $411.71, in
full satisfaction of the remaining amount of the Indebtedness.
2. CANCELLATION OF INDEBTEDNESS. In consideration and upon receipt of the
payment recited in Section 1 of this Agreement, the adequacy of which is
expressly acknowledged, the Estate, for itself and its heirs, successors and
assigns, hereby shall cancel the Indebtedness and release and forever discharge
the Company, and future parent and subsidiary corporations, divisions,
affiliates, predecessors, successors, and assigns, all past, present, and future
officers,
directors, shareholders, employees, and agents of the Company, individually and
in their representative capacities, and their respective heirs, successors, and
assigns, of and from any and every action, cause of action, complaint, claim,
demand, administrative charge, legal right, compensation, obligation, damages
(including exemplary and punitive damages), liability, cost and/or expense
whatsoever, of every name and nature, whether known or unknown, in law, equity,
or otherwise, which arise directly or indirectly out of, or are related in any
way to, the Indebtedness including, but not limited to, any accrued but unpaid
interest thereon.
3. TRANSFERABILITY OF SHARES. (a) The Estate acknowledges that the Estate
has been advised by the Company that the Shares issued pursuant to this
Agreement have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), that the Shares are being issued on the basis of the
statutory exemption provided by Section 4(2) of the Securities Act or Regulation
D promulgated thereunder, or both, relating to the transactions by an issuer not
involving a public offering, and that the Company's reliance hereon is based in
part upon the representations made by the Estate in the Subscription Agreement.
The Estate acknowledges that the Estate has been informed by the Company of, or
is otherwise familiar with, the nature of the limitations imposed by the
Securities Act and the rules and regulations hereunder on the transfer of
securities. In particular, the Estate agrees that no sale, assignment or
transfer of the Shares shall be valid or effective, and the Company shall not be
required to give effect to any such sale, assignment or transfer, unless (i) the
sale, assignment or transfer of Shares is registered under the Securities Act,
it being understood that the Shares are not currently registered for sale, or
(ii) the Shares are sold, assigned or transferred in accordance with all the
requirements and limitations of Rule 144 under the Securities Act, it being
understood that Rule 144 is not available at the time of the original issuance
of the Shares for the sale of the Shares and that there can be no assurance that
Rule 144 sales will be available at any subsequent time, or (iii) that the
Company has received an opinion of counsel satisfactory to the Company and its
counsel that such sale, assignment or transfer is otherwise exempt from
registration under the Securities Act.
(b) Unless registered pursuant to the provisions of the Securities Act, the
certificate(s) evidencing the Shares issued pursuant to this Agreement shall
bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE, AND ARE
BEING OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND SUCH LAWS. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR SUCH OTHER LAWS."
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4. BINDING EFFECT. This Agreement shall bind the parties hereto, their
respective heirs, representatives, successors, and assigns.
5. AMENDMENT. This Agreement may not be amended, altered, or modified
except by written instrument signed by all the parties hereto.
6. GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be interpreted in accordance with the laws of the State
of Ohio, without reference to its choice of law rules.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first set forth above.
THE ESTATE OF XXXXXX X. XXXX: SUPERCONDUCTIVE COMPONENTS, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx Xxxxxx
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Xxxxxx X. Xxxxxxxx, Executor Its.: President & CEO
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