FULL AND FINAL RELEASE AND SETTLEMENT AGREEMENT
AND SETTLEMENT
AGREEMENT
This Full
and Final Release and Settlement Agreement (“Settlement
Agreement”) is made and entered into by and between Xxxxxxx Xxxxx LLP
(“AK”),
XFormity, Inc. and XFormity Technologies, Inc. (collectively hereinafter “the
Parties”).
Recitals
WHEREAS,
AK and XFormity, Inc. previously entered into an attorney-client relationship
pursuant to which AK provided legal services to XFormity, Inc.;
WHEREAS,
XFormity, Inc., is a wholly owned subsidiary of XFormity Technologies,
Inc.;
WHEREAS,
a dispute has arisen regarding the payment of certain of AK’s invoices for legal
services rendered by AK in connection with the B-50 patent
litigation;
WHEREAS,
the Parties now desire by this Settlement Agreement to settle the above claims,
including, but not limited to, any and all claims that have been raised or could
have been raised by the Parties relating to the above-referenced dispute, the
legal services performed by AK, or any other matter, with no party admitting any
liability to the other, but agreeing to settle solely as a means of compromise
to avoid proceeding further with this dispute;
Now,
therefore, in consideration of the mutual obligations set forth herein, and
intending to be legally bound, the Parties agree as follows:
Settlement
Agreement and Release
1. Subject
to the terms and conditions set forth herein, XFormity, Inc. shall pay the
following amounts and such other consideration provided hereunder to
AK.
(a). Forty-eight
(48) monthly payments of $10,000.00 for a total of $480,000.00. The
first two (2) of these payments ($20,000.00) are to be paid upon execution of
this Settlement Agreement. The third payment ($10,000.00) is to be
paid on the 10th day of December 2008. Thereafter, each payment shall
be due on the 10th of the month.
(b). At
such time as the Company obtains funding of at least $300,000 in net proceeds
(the “Financing”), an amount equal to the lesser of $300,000 or the amount
necessary to complete the payment in full of the $480,000, provided for in
paragraph 1(a) above, will be paid in a lump sum. The remainder, if
any, of the $480,000.00 will continue to be paid on the 15th day of the month
until paid.
(c). Upon
execution of this Settlement Agreement, XFormity, Inc. shall issue 1,000,000 of
its shares of common stock to AK, shall provide AK with stock certificates
evidencing the 1,000,000 shares, and shall make all appropriate entries on its
books and records and file all appropriate papers before all federal and state
agencies to evidence the transfer of the shares of stock
certificates. Such shares shall be “restricted securities” under the
Securities Act of 1933. XFormity, Inc. shall not do anything or take any action to significantly dilute the
value of these 1,000,000 shares except for any dilution resulting from lender or
investor funding as referred to in paragraph 1(b). XFormity, Inc.
understands that it is the intent of AK to sell the 1,000,000 shares at a time
and for a price to be determined by AK and as permitted under federal
law. AK agrees that sales of the shares will not exceed the volume
limitation of Rule 144(e) under the Securities Act. AK shall report
to XFormity Inc. all sales of the shares and the price per share so as to permit
the calculation required by paragraph 1(e).
(d). In
addition to the payments and stock referred to in paragraphs 1(a)-(c) there
shall be up to four additional bonus payments of $65,000.00, when XFormity,
Inc.’s gross annual revenue reaches the following levels: $2,000,000.00,
$3,000,000.00, $4,000,000.00 and $5,000,000.00 up to fiscal year end June 30,
2011. If these revenue amounts are reached, each bonus payment will
be paid on or before 45 days after the company’s fiscal years ending June 30,
2009, 2010 and 2011. The amount will be subject to verification upon
audit by the company’s independent accounting firm.
(e) The
cap on the aggregate of all payments referred to in paragraphs 1(a), 1(b),
1(d) and the value of the stock referred to in paragraph 1(c) (when
it is sold) shall be $1,575,000.00. If and when the cap is reached,
no future payments shall be made to AK and if any shares of common stock issued
to AK remain unsold, AK shall surrender such shares to XFormity Inc. for
cancellation.
2. For
and in consideration of good and valuable consideration paid by XFormity, Inc.
as described in paragraph 1 above, the receipt and sufficiency of which are
hereby acknowledged, AK, and its partners, employees, agents, attorneys,
assigns, insurers and assurers, hereby RELEASE, ACQUIT AND FOREVER DISCHARGE
XFormity, Inc. and XFormity Technologies, Inc., and their employees, agents,
attorneys, predecessors, successors, affiliates, assigns, insurers, and
assurers, from all liability, actions, causes of action, damages, claims,
demands, charges, costs, and expenses, including, without limitation, attorneys’
fees, known or unknown, accrued or which may ever accrue, whether based in
contract or tort, statutory or common law, of every kind and
nature.
3. For
and in consideration of good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, XFormity, Inc. and XFormity
Technologies, Inc., and their employees, agents, attorneys, predecessors,
successors, affiliates, assigns, insurers, and assurers, hereby RELEASE, ACQUIT
AND FOREVER DISCHARGE AK, and its partners, employees, agents, attorneys,
predecessors, successors, affiliates, assigns, insurers and assurers, from all
liability, actions, causes of action, damages, claims, demands, charges, costs,
and expenses, known or unknown, accrued or which may ever accrue, whether based
in contract or tort, statutory or common law, of every kind and nature
whatsoever that arise from or relate, or may arise from or relate, in any way to
the relationship between the Parties, and concerning legal services provided by
AK to Xformity, Inc, XFormity Technologies, Inc., and
their affiliates, subsidiaries, and related parties, except for
XFormity, Inc.’s rights under this Settlement Agreement.
4. The
Parties agree that the terms of this Settlement Agreement are
contractual. The Parties further agree that this Settlement Agreement
shall not be construed as an admission of liability and that this Settlement
Agreement has been negotiated and executed in order to compromise and settle
disputed claims, so that the Parties may avoid the expense, uncertainties, and
hazards of litigation.
5. This
Settlement Agreement shall not be construed more favorably for or strongly
against any Party based on a claim that one was the “Drafter” or “Maker” of the
Settlement Agreement.
6. This
Settlement Agreement constitutes the entire and complete agreement between the
Parties and there are no other side, prior, or collateral agreements, oral or
written, or representations or inducements other than as expressly set forth in
this Settlement Agreement. This Settlement Agreement supersedes any
prior agreements, if any, made between the Parties relative to such subject
matter. This Settlement Agreement cannot be amended, modified or
altered other than by signed, written agreement by the Parties
hereto.
7. Each
Party hereby represents to the other that it has relied solely and wholly upon
his/its own judgment and belief regarding the nature and the extent of the
damages allegedly sustained by said Party. Each Party further
represents to the other as follows: (a) that he/it has had an opportunity to
retain legal counsel before entering into this Settlement Agreement; (b) that
he/it is entering into this Settlement Agreement freely and voluntarily and, if
counsel has been retained, upon the advice of such counsel; (c) that no
representations, promises, or statements by any agent, partner, employee,
officer, director, attorney, or other representative of the other Party, other
than as set forth in this Settlement Agreement, have been made to or relied upon
in entering into this Settlement Agreement; and (d) that each Party’s authorized
agent has read and fully understands this Settlement Agreement. Each
Party, through its authorized agent, realizes that this settlement is final and
conclusive, and it is each Party’s desire and intent that it be final and
conclusive.
8. Each
Party hereby represents and warrants to the other that he/it has not assigned,
pledged, or otherwise in any manner whatsoever sold or transferred, either by
instrument in writing or otherwise, any right, title, interest, demand, cause of
action, or claim that is the subject of the Settlement Agreement and that no
other person or entity of any kind has or had any interest
therein. The Parties warrant that they have not entered into any
agreement or other arrangement that would limit the effectiveness of the
releases exchanged hereunder.
9. The
Parties’ duly authorized representatives expressly warrant and represent that
each of them: (a) is legally competent to execute this Settlement Agreement; (b)
has read and fully understands this Settlement Agreement; (c) is duly authorized
to execute this Settlement Agreement on behalf of the Party they represent; and
(d) is duly authorized to bind the Party they represent to the terms and
conditions contained in this Settlement Agreement; and (e) has obtained all
corporate approvals necessary to enter into this Settlement
Agreement.
10. This
Settlement Agreement may be executed in multiple counterparts, all of which
taken together shall constitute one and the same document.
11. This
Settlement Agreement and any dispute arising out of this Settlement Agreement
shall be governed by the laws of the State of Texas. Venue for all
disputes regarding this Settlement Agreement shall be Texas, and the Parties
submit themselves to the jurisdiction of Texas courts for purposes of disputes
regarding this Settlement Agreement.
12. In
the event that a court of competent jurisdiction should hold any provision of
this Settlement Agreement to be void or unenforceable for any reason, the
expressed intent of the Parties hereto is that all remaining provisions are
severable and should remain in force to the greatest possible
degree.
In
witness thereof, the Parties hereto have caused this Settlement Agreement to be
executed by their duly authorized representatives on the date(s) set forth
below.
EXECUTED
IN MULTIPLE ORIGINALS on this 10th day of October, 2008.
Xxxxxxx
Xxxxx LLP
By: /s/Xxxx
Xxxx
Name: Xxxx
Xxxx
Its: Partner
XFormity,
Inc.
By: /s/Xxxxx
Xxxx
Name: Xxxxx
Xxxx
Its: President and
CEO
By: /s/Xxxx
Xxxxx
Name: Xxxx
Xxxxx
Its: CFO