Exhibit 10.63
PAYMENT AND TOLLING AGREEMENT
TO SETTLE LITIGATION WITH MUTUAL RELEASES
This Payment and Toiling Agreement ("Agreement") is entered into this 26th
day of May. 2003 by and among the following parties ("Parties"):
I. XXXXXXX 00xx XXXXX, INC., an Arizona corporation
II. XXXXXXXXXX ENTITIES:
1. Xxxxxxxxxx Enterprises, an Arizona corporation d/b/a Xxxxxxxxxx
Consulting d/b/a Xxxxxxxxxx Technology Group (collectively "Xxxxxxxxxx
Enterprises"):
2. Xxxxxxx Xxxxxxxxxx and Xxxxxxx Xxxxxxxxxx ("the Cunninghams"),
husband and wife end each individually;
The above Parties are collectively referred to in this Agreement as the
"Xxxxxxxxxx Entities" but it each such reference it intended to and does include
each party individually and all Xxxxxxxxxx Entities collectively.
III. INTEGRATED INFORMATION SYSTEMS, INC., a Delaware corporation ("IIS").
RECITALS;
1. Xxxxxxxxxx Enterprises is the tenant under a lease dated March 1
1999, originally between DMB Holding Limited Partnership; a Delaware limited
partnership, as "Landlord". and Xxxxxxxxxx Consulting, as 'Tenant", as amended
by a First Amendment to Lease dated October 31, 1999 (to expend the leasehold by
1,671 rentable square feet), a Second Amendment to Lease dated April 21, 2000
(to expand the leasehold by adding an additional 2,147 rentable square feet), a
Third Amendment to Lease dated February 15, 2001, and a Fourth Amendment to
Leased dated June 4, 2001 (collectively the "Lease Agreement"), pursuant to
which Landlord leased a combined total of approximately 10,120 rentable square
feet of commercial office space to Xxxxxxxxxx Consulting Suite 120 in the
building known as 24th Place, located at 0000 Xxxxx 00xx Xxxxxx, Xxxxxxx,
Xxxxxxx 00000 (the "Leased Premises").
2. Phoenix purchased 24th Place building on or about May 22, 2001 and
is the successor interest to the Landlord.
3. Pursuant to Exhibit "E" of the Lease Agreement, the Cunninghams
executed a Guarantee ("Guarantee") in the amount of $124,000 dated March 1.
1999. In addition, as part of the Second Amendment to Lease the Cunninghams
executed at Exhibit E-1 a "Guaranty of Lease dated April 21, 2000 wherein they
personally guaranteed additional $33,888.00 ("the Amended Guaranty Amount") for
the increased rentable square footage.
4. IIS entered into a Master Transaction Agreement ("MTA") dated
November 2002 with the Xxxxxxxxxx Entities to acquire certain assets end
liabilities of the Cunninghams and Xxxxxxxxxx Enterprises.
5. The Xxxxxxxxxx Entities requested that Phoenix consent to the
assignment of the Lease Agreement for the Leased Premises to IIS following the
Master Transaction Agreement. Phoenix refused and the Xxxxxxxxxx Entities
claimed a breach or lease and moved out of the Leased Premises.
6. On or about December 28. 2002. Phoenix brought a lawsuit against
Xxxxxxxxxx Enterprises for breach of the Lease Agreement and against the
Cunninghams for breach of the personal guarantees (being Maricopa County
Superior Court Case No. CV2002-024782 (hereinafter "the Litigation"). The
Xxxxxxxxxx Entities filed an Answer and Xxxxxxxxxx Enterprises brought a
Counterclaim in the amount $11,942.67 for return of its security deposit under
the Lease, Contemporaneous with the execution of this Agreement. the Xxxxxxxxxx
Entitles amended their Answer and Counterclaim to assert a Third-Party Claims
against IIS seeking indemnity under the Master Transaction Agreement.
7. IIS desires to indemnify the Xxxxxxxxxx Entitles pursuant to the
Master Transaction Agreement and have agreed to pay to Phoenix the sum of One
Hundred Fifty Seven Thousand Eight Hundred Eighty-Nine and 00/1000 Dollars
(157,889.OO) ("the Settlement Amount") in five payments as described herein.
8. Phoenix has agreed to compromise and settle the Litigation if IIS
makes full and complete payment of the Settlement Amount contemplated in this
Agreement.
9. Final and complete payment of the Settlement Amount by IIS and receipt
of the same by Phoenix shall satisfy the express condition precedent described
herein whereby the Parties shall settle all their disputes arising out of or in
any way related to the Litigation and payment of the Settlement Amount shall end
the Litigation.
IT IS AGREED AS FOLLOWS:
1. Incorporation of Recitals stated above are incorporated in this
paragraph 1 as through fully restated herein.
2. Release of Security Deposit. The Xxxxxxxxxx Entities hereby waive
and release any claim, right, title or interest in or to the Security Deposit
of $11,542.67 as stated in the Lease Agreement. The Parties hereto agree that
Phoenix shall have no further obligation to any other Party, person or entity as
to the security deposit, all such claims for return of the same having been
released herein.
3. Payment of Landlord's Damages: Settlement Amount. As an express
condition precedent to the termination of the Lease Agreement as contemplated in
paragraph 9, the mutual release as stated in paragraphs 6 through 8. and
stipulation for dismissal with prejudice stated in paragraph 6. IIS shall pay to
Phoenix the Settlement Amount of One Hundred Fifty Seven Thousand Eight Hundred
Eight-Nine and 00/1000 Dollars ($157,889.00) payable in installments (each a
"Cash Payment and collectively "Cash Payments") as follows:
(a) $57,889.00 by wire transfer upon the execution of this Agreement by
IIS, which execution shall be no layer than June 10, 2003, to Gold Bank Account
Number 0000000 ABA Number 000000000.
(b) $100,000.00 paid in four quarterly payments of 26,000.00 each
commencing on August 1, 2003 and continuing in a like manner thereafter on
November 1, 2003, February 1, 2004, and May 1, 2004 (thereafter 'the Cash
Payment Period"). Each payment shall be delivered to Phoenix at its mailing
address of Precor Realty Advisors, Inc., 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxx Xxxx, XX 00000-0000 or by wire transfer to Gold Bank Account Number
0000000 ABA Number 103 102795 on or before the due dates; stated above.
4. Tolling Of All Claims: Defenses During Cash Payment Period.
(a) So long as. and an the express condition that IIS makes each and every
Cash Payment on time and during the Cash Payment Period, the Parties to this
Agreement hereby agree to preserve the status quo as of the date of this
Agreement with respect to any applicable status quo of limitations and other
time-related defenses relating to or arising tram the Lucia Agreement. the
Leased Premises, and/or the Litigation (collectively. the "Tolled Claims"),
except as to the Xxxxxxxxxx Entitles' release of any claim, right, title or
interest in or to the Security Deposit of $11,542.67 as stated in paragraph 2 of
this Agreement. The Parties agree that effective as of The date of this
Agreement the running of any statute(s) of limitations with respect to any and
all possible causes of action and claims that any Party may have with respect to
any of the Tolled Claims shall be tolled and suspended until Phoenix receives
the final installment Cash Payment of $25,000.00 due on or before April 1, 2004.
The Parties agree that the running of any applicable statute(s) of limitations
and all other periods relating to the commencement of litigation (including but
not limited to laches) are tolled and suspended and the Parties hereby expressly
waive, the pleading or assertion of any statute(s) of limitations or other
time-related defense that is based, in whole or in part, on the time that has
run while this Agreement is in effect.
(b) In consideration far such tolling and waiver the Parties agree to stay
the Litigation and further agree to stay and cause of action, complaint, or
other proceeding against any Party with respect to any of the Tolled Claims
during the Cash Payment Period. The Parties reserve all rights end defenses that
they may have, except as set forth in this Agreement. to assert, contest or
defend any claim or action with respect to any of the Tolled Claims. To the
extent necessary, counsel for the Parties shall execute any and all necessary
motions or stipulations to keep the Litigation on the active end/or inactive
Calendar of the Maricopa County Superior Court. If the litigation is dismissed
by administrative order, or court order the Parties hereto waive service of
process pursuant to Arizona Rules of Civil Procedure 4 and service by United
States Mail Certified Receipt Requested to the Parties' counsel shall constitute
notice that any Party has re-instituted the Litigation.
5. Dismissal With Prejudice of Litigation. Upon receipt of all Cash
Payments due Phoenix from IIS during the Cash Payment Period as provided by
paragraph 3, which shall be an express condition precedent to the operation of
this paragraph, the Litigation shall be dismissed with prejudice. each side to
bear its own attorneys' fees and court and litigation coats. Upon the express
condition of receipt of a11 Cash Payments due Phoenix from IIS during the Cash
Payment Period as provided by paragraph 3 and at the demand of any Party hereto,
all Parties shall execute a Stipulation for Dismissal with Prejudice and Order
of Dismissal in a form acceptable to the Parties' counsel and filed with the
Maricopa County Superior Court.
6. Phoenix Releases of Xxxxxxxxxx Entities and IIS. Upon receipt of
all Cash Payments due Phoenix from IIS during the Cash Payment Period as
provided by paragraph 3, which shall be an express condition precedent to the
operation of this release paragraph. Phoenix will forever re1ease, discharge and
acquit each of the Xxxxxxxxxx Entities and IIS, their agents. Insurers,
attorneys and representatives of and from all claims, demands, liabilities,
debts, obligations, damages and causes of action of every kind and nature, from
the beginning of time through the data of this Agreement whether known or
unknown, including but not limited to all claims and causes of action, that have
been asserted or could have been asserted in the Litigation, as well as any and
all claims arising out of or related to the Lease Agreement.
7. Xxxxxxxxxx Entities and IIS Release of Phoenix. Upon receipt of all
Cash Payments due Phoenix from IIS during the Cash Payment Period as provided by
paragraph 3, which shall be an express condition precedent to the operation of
this release paragraph, IIS and the Xxxxxxxxxx Entities, individually and
collectively, will forever release, discharge and acquit Phoenix and its agents,
insurers, attorneys and representatives of and from all claims, demands,
liabilities, debts, obligation, damages and causes at action of every kind and
nature, from the beginning of time through the date of this Agreement, whether
known or unknown, including but not limited to all claims and causes of action
that have been asserted or could have been asserted in the Litigation, as well
any and all claims arising out of or related to the Lease Agreement.
8. Xxxxxxxxxx Entities and Phoenix of IIS. Upon receipt of all Cash
Payments due Phoenix from IIS during the Cash Payment Period as provided by
paragraph 3, which shall be an express condition precedent to the operation of
this release paragraph, the Xxxxxxxxxx Entities and Phoenix, individually and
collectively, will forever release, discharge and acquit Phoenix and its agents,
insurers, attorneys and representatives of and from all claims, demands,
liabilities, debts, obligations, damages and causes of action of every kind and
nature related to the Lease Agreement and related to IIS' indemnity obligations
under the MTA, from The beginning of time through the date of this Agreement,
whether known, including but not limited to all claims and causes of action that
have been asserted or could have been asserted in the Litigation, as well as any
and all claims arising out of or related to the Lease Agreement.
9. Termination of Lease Agreement. Upon receipt of all Cash Payments
due Phoenix from IIS during the Cash Payment Period as provided by paragraph 3.
which shall be an express condition precedent to the operation of this
paragraph, the Lease Agreement shell be terminated.
10. No Admission of Liability. It is expressly understood and agreed
that this Agreement is not to be construed as an admission of any liability or
fault on the part of any Party; liability or fault for any and aIl damages being
expressly denied. Upon receipt of all Cash Payments due Phoenix from IIS during
the Cash Payment Period as provided by paragraph 3, which shall be an express
condition precedent to the operation of this paragraph, this Agreement shall
operate as a compromise and settlement of the Litigation and claims which were
or could have been asserted therein pursuant to paragraphs 5 through 7 above.
11. Notices. All notices required or permitted to be given hereunder
shall he in writing and may be given In person or by United States Mail or by
electronic transmission, Any notice directed to a party to this Agreement shall
become effective upon the earliest of the following: (i) actual receipt by that
party; (ii) delivery to the designated address of that party, addressed to that
party, (iii) if given by certified or registered mail, three (3) days after
deposit with this United States Postal Service, postage prepaid, addressed as
shown below or to such other address as such party may from time to time
designate in writing; or (iv) upon receipt of transmission by facsimile.
Xxxxxxx 00xx Xxxxx, Inc. Xxxxxxx and Xxxxxxx Xxxxxxxxxx
c/o Xxx Perrack, CPM c/o Xxxx Xxxxxxxx, Esquire
Senior Vice President Warner Angle Hallam Xxxxxxx & Xxxxxxxx
Precor Realty Advisors, Inc. 0000 Xxxxx Xxxxxxx Xxxxxx
825 North Broadway Avenue, Suite 300 Suite 1500
Oklahoma City, OK 73102-6008 Xxxxxxx, XX 00000
With a copy to:
Xxxxxxx Xxxxxxx, Esquire Integrated Information Systems, Inc.
Xxxxxxx Law Offices, P.C. c/o Xxxx Xxxxxxxxxxx
0000 X. Xxxxxxxxxx Xx. Xxxxx 000 0000 X. 00xx Xxxxxx
Xxxxxxxxxx, XX 00000 Xxxxx, XX 00000
12. Severability. To the fullest extent possible each provision of this
Agreement shall be interpreted in such fashion as to be effective and valid
under applicable law. If any provision of this Agreement is declared void or
unenforceable with respect to particular circumstances, such provision shall
remain in full force and effect in all other circumstances. If any prevision of
this Agreement is declared void or unenforceable, such provision shall be deemed
savored from thin Agreement, and all other provisions at this Agreement remain
in full force and effect.
13. Governing Law and Jurisdiction. Except where preempted by the laws
of the United States or the rules or regulations of any agency or
instrumentality thereof, this Agreement is to be interpreted, construed and
governed by the laws of the State of Arizona. The parties irrevocably and
unconditionally submit to the exclusive jurisdiction of the Maricopa County
Superior Court in connection with any legal action or proceeding arising out of
or relating to this Agreement and the parties waive any objection relating to
the basis for personal or in rem jurisdiction or to venue which it may now or
hereafter may have in any suck, suit, action or proceeding.
14. Time. Time is at the essence of this Agreement and each and every
provision hereof. Any extension of time granted for the performance of any duty
under this Agreement shall only be effective if in writing signed by or on
behalf of all Parties to this Agreement and shall not be considered an extension
of time for the performance of any other duty under this Agreement.
15. Gender and Number. Whenever from the context it appears
appropriate, each item in the singular shall include the plural and vice verse
and the masculine, feminine, or neuter form shall include the masculine,
feminine and neuter forms.
16. Modifications and Waivers. No change, modification, or waiver of
any provision of this Agreement shall be valid or binding unless it is in
writing dated after the date hereof and signed by or on behalf of all Parties to
this Agreement. No waiver at any breech, term, or condition of this Agreement by
any Party shall constitute a subsequent waiver of the same or any other breach,
term, or condition or a continuing waiver after demand for strict compliance.
17. Attorneys' Fees. The Parties agree that in the event of any
litigation among them arising cut of or related to this Agreement, the
prevailing party in such litigation shall he entitled to reimbursement of all
attorneys' fees and costs.
18. Authority. Each xxxxxx that signs this Agreement on behalf of any
Party represents individually for the benefit of all other Parties to this
Agreement that such person has the authority to sign and bind the entity for
which he is signing this Agreement.
19. Further Acts. The Parties agree to perform all further acts
and execute and deliver all documents as may be reasonably necessary to give
effect to the provisions and intend of this Agreement.
20. Headings. The headings in this Agreement are for convenience in
reference only and in no way define, limit or describe the scope or intent of
this Agreement or the provisions of such sections.
21. Advice of Counsel. Each of the undersigned Parties represents that
the terms of this Agreement have been completely read, are fully understood and
voluntarily accepted by each of such Parties. Each Party to this Agreement
represents and warrants that each has had a fair opportunity for their legal
counsel to review this Agreement, that the same has been done and that the
effect and import of this Agreement has been fully explained to such party by
its respective legal counsel.
22. Counterparts and Fax. This Agreement may be executed in any number
of counterparts, and by facsimile, each of which shall be an original and all of
which shall be deemed to be one in the same Agreement.
23. Drafting. This Agreement has been reviewed by respective counsel
for each Party. It is agreed that it shall not be construed against any party
on the basis of that Party's identity as the drafter of this Agreement.
XXXXXXX 00XX XXXXX, INC. INTEGRATED INFORMATION SYSTEMS, INC.
an Arizona corporation a Delaware corporation
/s/ Xxxxxxxx Preflakes /s/ Xxxxx Xxxxxx
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By: Xxxxxxxx PreflasesBy: By: Xxxxx Xxxxxx
XXXXXXXXXX ENTERPRISES, INC.
an Arizona corporation
/s/ Xxxxxxx Xxxxxxxxxx
----------------------
By: Xxxxxxx Xxxxxxxxxx
Its: President
/s/ Xxxxxxx Xxxxxxxxxx /s/ Xxxxxxx Xxxxxxxxxx
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Xxxxxxx Xxxxxxxxxx Xxxxxxx Xxxxxxxxxx
