Document:

exv10w4

 

EXHIBIT 10.4

     Settlement Agreement And Release

     THIS SETTLEMENT AGREEMENT AND RELEASE (“Agreement”) is made this 4th day of February, 2008, by
and among (i) Halifax Corporation of Virginia (formerly Halifax Corporation) (“Halifax”), a
Virginia corporation, and (ii) INDUS Corporation, a Virginia corporation, and INDUS Secure Network
Solutions, LLC, a Virginia limited liability company (collectively, “INDUS”).

     WHEREAS, a lawsuit styled Halifax Corporation v. INDUS Corporation and INDUS Secure Network
Solutions, LLC, Case No. 2007-7575, is pending in the Circuit Court of the County of Fairfax
(Virginia) (the “Pending Lawsuit”); and

     WHEREAS, Exhibit 1 to the Complaint in the Pending Lawsuit is a copy of the Asset Purchase
Agreement (“APA”) dated June 30, 2005, by and among Halifax and INDUS; and

     WHEREAS, Exhibit 2 to the Complaint in the Pending Lawsuit is a copy of the Escrow Agreement
dated June 30, 2005, by and among Halifax, INDUS Corporation, and Branch Banking and Trust Company
of Virginia (“BB&T”), which Escrow Agreement establishes an “Indemnification Escrow Fund” as
defined therein (the “Escrow Fund”); and

     WHEREAS, Halifax and INDUS desire to settle their claims against one another as set forth in
the Pending Lawsuit; and

     WHEREAS, Halifax and INDUS desire to embody the terms of their settlement in this Agreement.

     NOW, THEREFORE, WITNESSETH

     That for and in consideration of the premises and mutual undertakings herein set forth,
Halifax and INDUS agree as follows:

 

 

     1. This Agreement shall not be construed as an admission or acknowledgment of liability by
anyone; such liability is expressly denied.

     2. Upon the fall execution of this Agreement, Halifax and INDUS shall deliver to BB&T a
fully-executed joint written notice, direction, and release agreement in the form attached as
Exhibit A (the “Joint Notice”) directing BB&T to disburse from the Escrow Fund (a) to INDUS
Corporation the sum of Four Hundred Ten Thousand Dollars ($410,000.00) and (b) to Halifax the
remaining balance which shall consist of Two Hundred Fifteen Thousand Dollars ($215,000) in
principal plus (i) any interest earned since the date of the initial deposit with the Escrow Agent
and remaining in the Escrow Fund at the time of disbursement and (ii) any remaining funds contained
in the Escrow Fund and less any costs, fees or expenses due and payable to Escrow Agent.

     3. Notwithstanding the above and in accordance with the Escrow Agreement, any unpaid annual
escrow fees shall be shared equally by the parties.

     4. Upon the full execution of this Agreement and disbursement from the Escrow Fund as directed
by the Joint Notice, Halifax and INDUS shall cause the Pending Lawsuit to be dismissed with
prejudice through securing the entry of a Dismissed Agreed Order in the form attached as Exhibit B.

     5. Halifax and INDUS shall be responsible for their respective costs, including
attorneys’ and expert witness fees, incurred in the Pending Lawsuit.

     6. INDUS warrants it has not assigned or in any way conveyed to others, in whole or in part,
any of its rights against Halifax, including as asserted or as could have been asserted in the
Pending Lawsuit. Furthermore, INDUS warrants it is not involved in or aware of the pursuit

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or defense of any claims by itself or others, including the United States Government, arising from
or related to (i) the APA and (ii) the Pending Lawsuit.

     7. Halifax warrants it has not assigned or in any way conveyed to others, in whole or in part,
any of its rights against INDUS, including as asserted or as could have been asserted in the
Pending Lawsuit. Furthermore, Halifax warrants it is not involved in or aware of the pursuit or
defense of any claims by itself or others, including the United States Government, arising from or
related to (i) the APA and (ii) the Pending Lawsuit.

     8. INDUS hereby releases, remises and forever discharges Halifax and all of its officers,
directors, agents, servants, employees, parents, subsidiaries, predecessors, and affiliates of and
from all claims, damages, suits, losses, actions, demands, judgments, awards, liabilities and
causes of action of every name and nature, anywhere in the world, whether in law or equity, whether
known or unknown, whether fixed or contingent, whether pending or not pending, whether liquidated
or unliquidated, from the beginning of the world to the date of full execution of this Agreement,
to the extent such claims, damages, suits, losses, actions, demands, judgments, awards, liabilities
and causes of action arise from or relate to either or both of (i) the APA and (ii) the Pending
Lawsuit.

     9. Halifax hereby releases, remises and forever discharges INDUS and all of its officers,
directors, agents, servants, employees, parents, subsidiaries, predecessors, and affiliates of and
from all claims, damages, suits, losses, actions, demands, judgments, awards, liabilities and
causes of action of every name and nature, anywhere in the world, whether in law or equity, whether
known or unknown, whether fixed or contingent, whether pending or not pending, whether liquidated
or unliquidated, from the beginning of the world to the date of full execution of this Agreement,
to the extent such claims, damages, suits, losses, actions, demands,

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judgments, awards, liabilities and causes of action arise from or relate to (i) the APA and (ii)
the Pending Lawsuit.

     10. This Agreement constitutes the entire agreement between Halifax and INDUS, there being no
agreement between them relating in any fashion to any matters not herein set forth.

     11. This Agreement is the product of negotiation by and among Halifax and INDUS and their
respective counsel. As a result, the Agreement shall not be construed, and no presumption shall
arise, based on who drafted the Agreement.

     12. If any provision of this Agreement is determined to be invalid or unenforceable by a court
or other tribunal of competent jurisdiction, such provision shall be ineffective, and the remainder
of this Agreement shall continue in effect and be construed as if the unenforceable provision had
not been contained in this Agreement. Each provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.

     13. This Agreement shall not be modified or amended except in a writing signed by Halifax and
INDUS.

     14. This Agreement shall bind and inure to the benefit of Halifax and INDUS and to their
respective successors and assigns.

     15. This Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia, without regard to conflict of law principles.

     16. This Agreement shall be executed in duplicate original but may be executed in
counterparts, each of which is an original, and all of which comprise one agreement. One executed
original Agreement shall be retained by counsel for each party.

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
hands on the dates indicated below.

	 	 	 	 	 
	 	Halifax Corporation of Virginia

 	 
	 	By  	/s/ Joseph Sciacca
 	 
	 	 	Joseph Sciacca 	 
	 	 	Vice President — Finance and CFO 	 
	 

COMMONWEALTH OF VIRGINIA

CITY/COUNTY OF FAIRFAX, to-wit:

     Subscribed and sworn to before me this 4th day of February, 2008, by Joseph Sciacca as
Vice President — Finance and Chief Financial Officer of Halifax Corporation of Virginia.

	 	 	 	 	 
	 	 	 
	 	/s/ Suzanne K. Green
 	 
	 	Notary Public 	 
	 

My commission expires: September 30, 2009

Notary Registration Number: 123531

[SEAL]

 

	 	 	 	 	 
	 	INDUS Corporation

 	 
	 	By  	
 	 
	 	 	Donald Shoff 	 
	 	 	Vice President and CFO 	 
	 

COMMONWEALTH OF VIRGINIA

CITY/COUNTY OF _________, to-wit:

     Subscribed and sworn to before me this _____ day of February, 2008, by Donald Shoff, Vice
President and Chief Financial Officer of INDUS Corporation.

	 	 	 	 	 
	 	 	 
	 	Notary Public 	 
	 

My commission expires: ________________

	 	 	 	 	 
	 	INDUS Secure Network Solutions, LLC

By INDUS Corporation, Sole Member

 	 
	 	By  	
 	 
	 	 	Donald Shoff 	 
	 	 	Vice President and CFO 	 
	 

COMMONWEALTH OF VIRGINIA

CITY/COUNTY OF ________, to-wit:

     Subscribed and sworn to before me this ___ day of February, 2008, by Donald
Shoff, Vice President and Chief Financial Officer of INDUS Corporation, the Sole Member of INDUS
Secure Network Solutions, LLC.

	 	 	 	 	 
	 	 	 
	 	Notary Public 	 
	 

My commission expires: ________________

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VIA FAX AND OVERNIGHT DELIVERY TO:

Branch Banking and Trust Company of Virginia

ATTN: Corporate Trust Administration, Wayne Bolin

223 West Nash Street

Wilson, NC 27893

And:

Halifax Corporation

ATTN: Chief Financial Officer

5250 Cherokee Avenue

Alexandria, VA 22312

Barry Genkin, Esq.

Blank Rome LLP

One Logan Square

Philadelphia, PA 19103-6998

INDUS Corporation

Attention: Chief Financial Officer

1951 Kidwell Drive, Eighth Floor

Vienna, VA 22182

FAX 703/506-6776

Barrett E. Pope, Esq.

DurretteBradshaw PLC

600 East Main Street, Twentieth Floor

Richmond, Virginia 23219

(804)775-6911 (fax)

Matthew S. Bergman, Esq.

Dickstein Shapiro Morin & Oshinsky LLP

2101 L Street, N.W.

Washington, DC 20037

Joseph C. Schmelter, Esq.

Stephen K. Gallagher, Esq.

Venable LLP

8010 Towers Crescent Drive, Suite 300

Vienna, Virginia 22182

FAX: 703/821-8949

JOINT WRITTEN NOTICE, DIRECTION AND RELEASE AGREEMENT

     This Joint Written Notice, Direction and Release Agreement (“Agreement”) is made and
entered into as of February ___, 2008 by and among INDUS Corporation, a Virginia corporation
(“Depositor”), Halifax Corporation, a Virginia corporation (“Recipient”), and Branch
Banking and Trust Company of Virginia, a Virginia banking corporation, as Escrow Agent (the
“Escrow Agent”). Capitalized terms used herein but not defined shall have their respective
meanings contained in the Escrow Agreement (as defined below).

     1. Disbursement. In accordance with Section 4 of that certain Escrow Agreement
dated June 30,2005 by and among Depositor, Recipient and the Escrow Agent (the “Escrow
Agreement”), Depositor and Recipient hereby provide their Joint Written Notice and direct the
Escrow Agent to promptly disburse the Indemnification Escrow Fund (as defined in the Escrow
Agreement and equal to $625,000 in initial principal plus (i) any interest earned thereon since the
date of its deposit with the Escrow Agent and (ii) any remaining funds contained in the Escrow
Fund)(the “Escrow Fund”) as follows:

 

EXHIBIT A

a. To INDUS Corporation, Depositor, the sum of Four Hundred Ten Thousand Dollars

($410,000.00) from the Indemnification Escrow Fund by wire transfer with the following wire
instructions:

	 	 	 	 	 	 	 	 	 
	 

	 	Bank Name:
	 	M&T Bank
	 	 
	 

	 	Acct name:
	 	INDUS Corporation
	 	 
	 

	 	Acct#:
	 	9845407262	 	 
	 

	 	ABA#:
	 	052000113	 	 

b. To Halifax Corporation, Recipient, the remaining balance of the Escrow Fund (after
payment to Depositor of the $410,000 amount set forth above), which remaining balance shall
consist of $215,000 in principal plus (i) any interest earned since the date of the initial deposit
with the Escrow Agent and remaining in the Escrow Fund at the time of disbursement and (ii)
any remaining funds contained in the Escrow Fund and less any costs, fees or expenses due and
payable to Escrow Agent, by wire transfer in accordance with the following wire instructions:

	 	 	 	 	 	 	 	 	 
	 

	 	Bank Name:
	 	Provident Bank
	 	 
	 

	 	Acct Name:
	 	Halifax Corporation
	 	 
	 

	 	Acct#:
	 	2065310679	 	 
	 

	 	ABA#:
	 	252073018	 	 

     2. Annual Escrow Fees. Notwithstanding the above and in accordance with the Escrow
Agreement, any unpaid annual escrow fees shall be shared equally by the parties.

     3. Release of Escrow Agent by Depositor. For good and valuable consideration, the
receipt of which is hereby acknowledged, Depositor agrees for itself, its affiliates, shareholders,
members, successors and assigns, to waive, remise, release and forever discharge the Escrow Agent,
its respective affiliates, successors and assigns, and their respective past, present and future
directors, managers, officers, employees, trustees, shareholders, members, partners and agents
(collectively, the “Escrow Parties”) from any and all actions, causes of action, demands,
rights, suits, agreements, obligations or claims, whether at law or equity, or otherwise known or
unknown, that Depositor and its respective affiliates, shareholders, members, successors and
assigns had, have or will have against the Escrow Parties arising from or in any way related to the
disbursement contemplated by Section 1 hereof, except for any action, cause of action, demand,
right, suit, agreement, obligation or claim arising from Escrow Agent’s gross negligence, willful
misconduct or material breach of this Agreement or the Escrow Agreement.

     4. Release of Escrow Agent by Recipient. For good and valuable consideration, the
receipt of which is hereby acknowledged, Recipient hereby agrees for itself, its respective
affiliates, shareholders, members, successors and assigns, to waive, remise, release and forever
discharge the Escrow Parties from any and all actions, causes of action, demands, rights, suits,

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EXHIBIT A

agreements, obligations or claims, whether at law or equity, or otherwise known or unknown, that
Recipient and its affiliates, shareholders, members, successors and assigns had, have or will have
against the Escrow Parties arising from or in any way related to the disbursement contemplated by
Section 1 hereof, except for any action, cause of action, demand, right, suit, agreement,
obligation or claim arising from Escrow Agent’s gross negligence, willful misconduct or material
breach of this Agreement or the Escrow Agreement.

     5. Counterparts; Facsimile. This Joint Written Notice, Direction and Release
Agreement may be executed simultaneously in one or more counterparts, including by facsimile, each
of which shall be deemed an original, and all such counterparts shall constitute one and the same
instrument

     Intending to be legally bound, this Joint Written Notice, Direction and Release has been
executed by the undersigned on and as of the date first above written.

	 	 	 	 	 
	 	DEPOSITOR:

INDUS CORPORATION

 	 
	 	By  	 	 
	 	 	Name:  	Donald Shoff 	 
	 	 	Title:  	Vice President and CFO 	 
	 

	 
	 	RECIPIENT:

HALIFAX CORPORATION

 	 
	 	By  	 	 
	 	 	Name:  	Joseph Sciacca 	 
	 	 	Title:  	Vice President — Finance and CFO 	 
	 
	 
	 	Received and Accepted:

ESCROW AGENT:

BRANCH BANKING AND TRUST COMPANY OF VIRGINIA

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

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VIRGINIA:

IN THE CIRCUIT COURT OF THE COUNTY OF FAIRFAX

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	HALIFAX CORPORATION,
	 	)	 	 	 	 
	 	 
	 	)	 	 	 	 
	 	Plaintiff & Counterclaim Defendant,
	 	)	 	 	 	 
	 	 
	 	)	 	 	 	 
	 	v.
	 	)	 	 	Case No. CL 2007-7575	 
	 	 
	 	)	 	 	 	 
	 	INDUS CORPORATION,
	 	)	 	 	 	 
	 	and
	 	)	 	 	 	 
	 	INDUS SECURE NETWORK SOLUTIONS, LLC,
	 	)	 	 	 	 
	 	 
	 	)	 	 	 	 
	 	Defendants & Counterclaim Plaintiffs.
	 	)	 	 	 	 
	 	 	 	 	 	 

ORDER OF DISMISSAL WITH PREJUDICE

     This day came (i) Plaintiff/Counterclaim Defendant Halifax Corporation and (ii)
Defendants/Counterclaim Plaintiffs, INDUS Corporation and INDUS Secure Network Solutions, LLC, by
their respective counsel, and represented to the Court that all matters in controversy between
them herein have been resolved and compromised.

     Accordingly, it is ORDERED that this action be and the same hereby is DISMISSED AS AGREED AND
WITH PREJUDICE as having been fully settled, compromised and adjusted. All costs and fees are to
be taxed against the parties incurring the same.

     The Clerk is directed to remove this action from the Docket and forward certified copies of
this Order to all counsel of record.

     ENTERED this                      day of                                            
                 , 2008.

	 	 	 	 	 
	 	 	 
	 	Circuit Court Judge for the County of Fairfax
 	 
	 	 	 
	 	 	 

 

 

	 	 	 	 	 

Exhibit B

WE ASK FOR THIS:

 

Barrett E. Pope (VSB #20574)

Christine A. Williams (VSB #47074)

DurretteBradshaw PLC

600 East Main Street, 20th Floor

Richmond, Virginia 23219

(804) 775-6900 (Telephone)

(804)775-6911 (Facsimile)

Counsel for Plaintiff/Counterclaim Defendant

 

Stephen K. Gallagher (VSB #38085)

Michael W. Robinson (VSB #26522)

Edward O. Loughlin (VSB #70182)

Venable LLP

8010 Towers Crescent Drive, Suite 300

Vienna, Virginia 22182

(703) 760-1600 (Telephone)

(703) 821-8949 (Facsimile)

Counsel for Defendants/Counterclaim Plaintiffs

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Exhibit 10.23

SUMMARY OF 2008 CASH BONUS PLAN

Overview and Purpose

This plan (the “2008 Bonus Plan”) was adopted by the Board of Directors of Cardica, Inc. (the
“Company”) on February 6, 2008, and is designed to offer incentive compensation to the Chief
Executive Officer, Vice Presidents and director-level employees of the Company by rewarding the
achievement of specifically measured corporate objectives and, if applicable, individual
performance objectives.

Administration

The 2008 Bonus Plan will be administered by the Board of Directors with recommendations from the
Compensation Committee of the Board of Directors (the “Compensation Committee”). The Compensation
Committee will be responsible for recommending to the Board of Directors for approval any cash
incentive awards to officers of the Company, including any incentive awards to the Chief Executive
Officer, under the 2008 Bonus Plan.

Eligibility

The Chief Executive Officer, Vice Presidents and director-level employees of the Company are
eligible to participate in the 2008 Bonus Plan.

Corporate and Individual Performance

The 2008 Bonus Plan provides for the payment of cash bonuses to participants for the achievement of
corporate objectives relating to certain financial, sales and marketing, product development,
clinical and regulatory goals determined by the Compensation Committee. Each participant, other
than the Chief Executive Officer, will also be subject to key individual performance objectives.
The actual bonuses payable for fiscal 2008 (if any) will vary depending on the extent to which
actual performance meets, exceeds or falls short of the corporate objectives and, other than with
respect to the Chief Executive Officer, applicable individual performance objectives approved by
the Compensation Committee, as determined by the Compensation Committee in its discretion. The
Company’s Board of Directors or the Compensation Committee reserves the right to modify the
corporate or individual performance objectives at any time based on business changes during the
year.

Target Cash Bonus Amount

The 2008 Bonus Plan provides a target cash bonus amount for the Chief Executive Officer, each Vice
President and each director-level employee of the Company, expressed as a percentage of 2008 annual
base salary for each participant.

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