SETTLEMENT AGREEMENT AND MUTUAL RELEASE OF ALL CLAIMS
EXHIBIT 10.27
SETTLEMENT AGREEMENT
AND MUTUAL RELEASE OF ALL CLAIMS
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 Xxxxxxx Xxxxxxx (“Xxxxxxx”) on the one
hand and Superconductor Technologies Inc. (“STI”), Conductus, Inc. (“Conductus”), and Xxxx Xxxxxxx
(“Lockton”), on the other hand. STI, Conductus and Lockton are collectively referred to as the
“STI Parties,” and the STI Parties and Xxxxxxx are collectively referred to as the “parties.”
RECITALS
A. WHEREAS, in December, 2000 and August, 2001, Xxxxxxx 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 Xxxxxxx 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. Xxxxxxx Xxxxxxx, 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, Xxxxxxx 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:
AGREEMENT
1. Payment by Xxxxxxx and Dismissal of Civil Action. On or before February 28, 2007,
Xxxxxxx 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, Xxxxxxx 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 “Xxxxxxxxx Xxxxxxx Xxxxxxxx & Xxxx LLP in trust for Superconductor Technologies Inc.”
The $610,000 check will be deposited in the trust account of Xxxxxxxxx Xxxxxxx Xxxxxxxx & Xxxx LLP.
Upon the occurrence of all of the steps listed in subsections 5(a) through 5(d) below, Xxxxxxxxx
Xxxxxxx Xxxxxxxx & Xxxx 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
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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 Xxxxxxx Payment. The $610,000 trust account deposit paid by
Eisenberg, Raizman, Xxxxxxxx & Xxxx 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 Xxxxxxx to STI, namely, $150,000, shall be applied, pursuant to the terms of
the August 2001 Note, as payment by Xxxxxxx 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 Xxxxxxx, 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 Xxxxxxx 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, Xxxxxxx agrees that, upon the occurrence of the
Effective Date, any and all claims of Xxxxxxx 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 Xxxxxxx without any further action on the part of
Xxxxxxx, and Xxxxxxx 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
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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, Xxxxxxx 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, Xxxxxxx will execute any necessary documents required to ensure
and confirm that Xxxxxxx 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 Xxxxxxx. The STI Parties shall provide to Xxxxxxx:
(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
“Xxxxxxx Family Trust” evidencing ownership by the Xxxxxxx 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.
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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 Xxxxxxx
individually or in any capacity as trustee), or against any of the current and future parents,
subsidiaries, affiliates, related entities, predecessors, successors, officers, directors,
shareholders, agents, employees, attorneys, spouses and/or assigns of any party to this Agreement
(collectively, the “Released Parties”) any and all claims, demands, liabilities and causes of
action of every nature, kind and description, whether known or unknown, suspected or unsuspected,
which the Releasing Party had, now have, or may in the future have against any of the Released
Parties, that arise out of or are in any way connected with any events that occurred prior to and
including the Effective Date of this Agreement, including but not limited to claims that were or
could have been asserted in the Action, to claims related to Shalvoy’s Board service with STI, to
claims relating to the granting by STI to Xxxxxxx of stock or options, the alleged execution by
Xxxxxxx of Promissory Notes in favor of Conductus and/or STI, and
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the termination of Shalvoy’s STI Board service (collectively, “Released Claims”). The scope
of the Released Claims also includes:
(a) Any and all common law or other claims for wrongful discharge, breach of contract (both
express and implied), breach of the covenant of good faith and fair dealing (both express and
implied), negligent and intentional infliction of emotional distress, negligent or intentional
misrepresentation, rescission, fraud in the inducement, negligent or intentional interference with
prospective economic advantage or contract, defamation, invasion of privacy, discrimination,
harassment, retaliation and general negligence;
(b) Any and all claims for violation of any federal, state or local statute, ordinance or
constitution;
(c) Any and all claims of ownership or entitlement, either individually or collectively, to
any STI stock, shares and/or stock options, whether vested or unvested, exercised or unexercised
that was purportedly purchased by Xxxxxxx by the December 2000 stock purchase and related
promissory Note transaction;
(d) STI’s claims for any indebtedness by Xxxxxxx, whether pursuant to any allegedly valid
Promissory Notes or otherwise;
(e) Any suit based on the rights of Xxxxxxx or the Xxxxxxx Family Trust as a stockholder,
including but not limited to any derivative or class action suit based on events that occurred
prior to Effective Date.
(f) Any and all claims for attorneys’ fees and costs.
The Released Claims do not include (i) any rights, duties or obligations incurred or specified
under this Agreement, (ii) any rights Xxxxxxx may have as a matter of law or contract to an
indemnity and/or defense as member of the STI Board of Directors and/or as a former
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officer of Conductus, and (iii) any rights the STI Parties, or any of them, may have as a
matter of law to indemnity arising from a third party claim.
8. Waiver of Civil Code Section 1542. By signing below, the parties to this Agreement
each expressly waive any and all rights and benefits conferred upon them by Section 1542 of the
Civil Code of the State of California, which states as follows:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by her must have materially affected his
settlement with the debtor. The Parties understand and agree that
the releases given by either of them pursuant to this Agreement
applies to all Released Claims, whether known or unknown, suspected
or unsuspected, which they either have against the other, or any
other Released Party, as of the Effective Date of this Agreement.
9. The Parties’ Commitment to Cooperate. In exchange for the consideration granted
them hereunder, each of the parties to this Agreement warrants and agrees to cooperate in good
faith with all lawful requests from the other arising out of or in any way related to any
litigation to which STI or Xxxxxxx is now, or may become, a party or witness for events prior to
the Effective Date, or as respects their rights and obligations hereunder. The parties agree not
to voluntarily present or make themselves available, whether for formal or informal interview,
discussion, deposition or testimony, in any dispute, litigation or other controversy to which
another other party is or may become a party, including but not limited to any shareholder
derivative suit. No party will instigate, foment, or take any other action with the intent of
encouraging a claim to be made against another party with reference to any event that occurred
prior to the Effective Date. Nothing herein, however, shall prohibit any party from testifying
truthfully when compelled to do so by lawfully issued subpoena or Court order. Any actual or
threatened breach of this Section shall give rise to an action by the STI Parties, or any of them,
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or Xxxxxxx for an injunction or damages, or both, in addition to all other lawful remedies to
which the Parties might be entitled.
10. Non-Assignment of Claims. The parties to this Agreement represent and warrant
that each is the lawful owner of all interest in the Released Claims, that each has the authority
to enter into this Agreement providing for the release and waiver of the Released Claims, and that
neither has assigned nor otherwise transferred any interest in any Released Claim.
11. No Existing Claims. Each party represents and warrants that such party (1) has
not filed and does not intend to file, any complaints, charges, grievances or lawsuits against the
other, or any other Party, with any federal, state or other court or agency in any jurisdiction in
the United States; nor (2) has not commenced, and does not intend to commence, any arbitration or
other dispute resolution process involving any other party.
12. Tax Matters. In light of the fact that the December 2000 Note has been rescinded
and all consideration restored to the parties, STI will not issue a Form 1099 as respects this
Agreement insofar as it relates to the December 2000 Note.
13. Confidentiality of Settlement. The parties understand that the fact of this
Agreement, and its terms, are strictly private. Accordingly, the parties agree that the terms of
this Agreement shall not be disclosed to any third party without the informed, written consent of
the other party; provided, however, that:
(a) The parties may disclose the terms of this Agreement as required by lawfully-issued
subpoena or court order, after prompt notice to the other in advance of such compliance and a
reasonable opportunity to object;
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(b) Xxxxxxx may disclose the terms of this Agreement to his spouse and her counsel and any
mediator or judicial officer involved in his present marital dissolution proceedings so long as
said individuals are informed of their obligation to keep this Agreement confidential and agree to
comply with the terms of this Agreement;
(c) The parties may disclose the terms of this Agreement to tax advisors and attorneys, but
only to the extent that it is required for the rendering of professional services, so long as the
tax advisor(s) and/or attorney(s) agree(s) to comply with the terms of this Agreement;
(d) STI may disclose the terms of this Agreement as necessary to fulfill legally required
corporate reporting or disclosure requirements; and
(e) If either party is asked about the terms of this Agreement or the claims made in the
Action, no comment shall be made other than “the matter has been mutually resolved.”
Any actual or threatened breach of this Section shall give rise to an action by the parties
for an injunction or damages, or both, in addition to all other lawful remedies to which the
parties might be entitled.
14. Enforcement of this Agreement. The parties agree that the terms of this Agreement
may be enforced by entry of judgment pursuant to California Code of Civil Procedure Section 664.6
and that the San Mateo County maintains continuing jurisdiction over the parties and this Agreement
for such purpose.
15. Severability. If any provision of this Agreement is found to be unenforceable, it
will not affect the enforceability of the remaining provisions herein.
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16. Ambiguities and Construction. The parties have jointly participated in the
negotiation and drafting of this Agreement, and the parties have had the opportunity to consult
with counsel regarding this Agreement. The parties expressly waive any common law or statutory
rule of construction that ambiguities are to be construed against the drafter of this Agreement.
The parties further agree that the language of this Agreement shall be in all cases construed as a
whole, according to its fair meaning.
17. Mutual Non-Disparagement. The parties shall refrain from making, or causing to be
made, any derogatory, disparaging or slanderous statements about the other to any other person or
entity about or events that predated the Effective Date of this Agreement; provided, however, that
nothing herein to prohibit the Parties from testifying truthfully when compelled to do so by a
lawfully-issued subpoena or Court order.
18. Integration. This Agreement and any other documents referenced herein constitute
a single, integrated written contract expressing the entire agreement of the parties on the subject
matters herein. It supersedes all prior understandings and agreements, both oral and written,
covering the subject matters herein. There is no other agreement, written or oral, express or
implied, between the parties with respect to the subject matters herein. This Agreement may be
modified only by a writing signed by both the STI Parties and Xxxxxxx.
19. Advice of Counsel. The parties hereby acknowledge that each has been given the
opportunity to consult with counsel concerning this Agreement, each has read and understands this
Agreement, and each sign this Agreement voluntarily, knowingly and without duress or coercion.
20. Waiver, Amendment and Modification of Agreement. The parties agree that no
waiver, amendment or modification of any of the terms of this Agreement shall be effective
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unless in writing and signed by the parties. No waiver of any term, condition or default of
any term of this Agreement shall be construed as a waiver of any other term, condition or default.
21. Counterparts. This Agreement may be signed in counterparts and signatures
transmitted by fax or e-mail of a PDF copy of the Agreement, with said counterparts and signatures
treated as though they were originally signed as one document.
22. Binding Effect. This Agreement will be binding upon, and will inure to the
benefit of, Shalvoy’s spouse, heirs, executors, and administrators, if any, and will be binding
upon and will inure to the benefit of the individual or collective successors and assigns of the
STI Parties, and each of them, , and all of their heirs, executors, and administrators, present and
former directors, officers, employees, shareholders, agents, and all persons acting by, through, or
in concert with any of them.
23. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of California, without regard to its conflict of laws principles.
24. Information Requests. The parties agree that, upon any future request for
information concerning Xxxxxxx, STI shall direct all such inquiries to its duly authorized human
resources representative, who shall then provide information as to Shalvoy’s dates of STI Board of
Director service and the fact that his service on the STI Board ended when he resigned.
25. Authority. Each signatory executing this Agreement warrants that he has the
authority to bind the individual or entity on whose behalf he signs to the terms of this Agreement.
SINGLE SIGNATURE PAGE FOLLOWS
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AGREED TO AS OF THE DATES INDICATED BELOW:
| Dated: March 1, 2007 | By: | /s/ Xxxxxxx X Xxxxxxx | ||
| Xxxxxxx Xxxxxxx | ||||
| Dated: February 27, 2007 | Superconductor Technologies, Inc. |
|||
| By: | /s/ Xxxxxxx X Xxxxxx | |||
| Its: President & CEO | ||||
| Dated: February 27, 2007 | Conductus, Inc. |
|||
| By: | /s/ Xxxxxxx X Xxxxxx | |||
| Its: CEO | ||||
| Dated: February 24, 2007 | /s/ Xxxx Xxxxxxx | |||
| Xxxx Xxxxxxx | ||||
| Approved as to form: | ||||
| Xxxxxx Law Offices |
||||
| Dated: March 1, 2007 | By: | /s/ Xxxxx X Xxxxxx | ||
| Xxxxx X. Xxxxxx, Esq. | ||||
| Attorneys for Xxxxxxx Xxxxxxx | ||||
| Dated: February 28, 2007 | Xxxxxxxxx Xxxxxxx Xxxxxxxx & Xxxx, LLP |
|||
| By: | /s/ Xxxxxx X Xxxxxx | |||
| Xxxxxx X. Xxxxxx, Esq. | ||||
| Attorneys for Conductus, Inc., Superconductor Technologies, Inc., and Xxxx Xxxxxxx |
||||
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