SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS
RELEASE
OF CLAIMS
This
Settlement Agreement and Release of Claims (“Agreement”) is made and entered
into this 15th day of January, 2007, by and between Plaintiff X-00.xxx, LLC
(“B-50”), and Defendant XFormity, Inc., a Texas Corporation (“XFormity”). B-50
and XFormity are sometimes collectively referred to in this Agreement as “the
Parties.” B-50 and XFormity are currently parties to a Lawsuit pending in
federal district court for the Northern District of Texas, Dallas Division,
Civil Action No. 304CV-542-B (“the Lawsuit”).
W-I-T-N-E-S-S-E-T-H
WHEREAS,
the Parties wish to settle the Lawsuit, without any party making any admissions
of liability or wrongdoing;
NOW,
THEREFORE, in consideration of the promises and covenants made herein, and
for
other good and valuable consideration, the Parties hereby agree as
follows:
| 1. |
CONSIDERATION.
|
The
parties hereto acknowledge and agree that the sole consideration for the
covenants and agreements contained herein, the sufficiency whereof is hereby
acknowledged, shall be (i) the execution and delivery of the License Agreement
dated January 2, 2007 that has already been executed by both parties and the
(ii) execution, delivery and filing of the Stipulation for Dismissal with
Prejudice in the form attached to this Agreement. The agreements contained
herein and
in
the License Agreement are
subject to and contingent upon the entry of a final Order of Dismissal with
Prejudice by the Court ending the Lawsuit in accordance with the Stipulation.
The
execution and delivery of the License Agreement and this Agreement are not
an
admission of liability or wrongdoing by either party.
| 2. |
MUTUAL
RELEASES OF ALL CLAIMS OF ANY PARTY.
|
A. In
exchange for the other Parties’ promises and covenants herein, including the
consideration provided for in Paragraph 1 above, and the promises and covenants
contained in the License Agreement dated January 2, 2007, the
receipt and sufficiency of which are hereby acknowledged, B-50, for itself,
and
all of its present and former officers, directors, employees, agents, insurers,
attorneys, parents, affiliates subsidiaries and successors and assigns, hereby
irrevocably and unconditionally releases, acquits and forever discharges
Xformity and its parent corporation, XFormity Technologies, Inc., a Colorado
corporation, and all of their present and former officers, directors, employees,
agents, insurers, benefit plans (and related persons/entities), attorneys,
parents, affiliates, subsidiaries, and successors and assigns, (collectively
referred to as the “XFormity Released Parties”), from any and all charges,
complaints, grievances, actions, suits, liabilities, obligations, promises,
agreements, demands, controversies, rights, claims and causes of action of
whatever kind or nature, whether known or unknown, including claims brought
under any federal, state or local statute, ordinance or under common
law,
and and
all manner of claims, demands, causes of action, judgments, actions, suits,
levies, executions, and liabilities of whatever nature, known or unknown, fixed
or contingent, liquidated or unliquidated, indirect or direct, foreseen or
unforeseen, which B-50 may have had, may have, or may come to have against
the
XFormity Released Parties, , at any time by reason of, in any way connected
with, arising out of, bearing upon, or in any way relating to any matter, act,
fact, transaction or occurrence or thing occurring prior to the date of
execution of this Agreement, including without limitation, all claims pertaining
to, arising out of, or bearing upon the Lawsuit.
B. In
exchange for the other Parties’ promises and covenants herein, including the
consideration provided for in Paragraph 1 above, and the promises and covenants
contained in the License Agreement dated January 2, 2007, the receipt and
sufficiency of which are hereby acknowledged, the XFormity Released Parties,
for
themselves, and all of their present and former officers, directors, employees,
agents, insurers, attorneys, parents, affiliates subsidiaries and successors
and
assigns, hereby irrevocably and unconditionally release, acquit and forever
discharge B-50, and all of its present and former officers, directors,
employees, agents, insurers, benefit plans (and related persons/entities),
attorneys, parents, affiliates, subsidiaries, and successors and assigns,
(collectively referred to as the “B-50 Released Parties”), from any and all
charges, complaints, grievances, actions, suits, liabilities, obligations,
promises, agreements, demands, controversies, rights, claims and causes of
action of whatever kind or nature, whether known or unknown, including claims
brought under any federal, state or local statute, ordinance or under common
law,
and all
manner of claims, demands, causes of action, judgments, actions, suits, levies,
executions, and liabilities of whatever nature, known or unknown, fixed or
contingent, liquidated or unliquidated, indirect or direct, foreseen or
unforeseen, which the XFormity Released Parties may have had, may have, or
may
come to have against the B-50 Released Parties, at any time by reason of, in
any
way connected with, arising out of, bearing upon, or in any way relating to
any
matter, act, fact, transaction or occurrence or thing occurring prior to the
date of execution of this Agreement, including without limitation, all claims
pertaining to, arising out of, or bearing upon the Lawsuit.
C The
parties understand and expressly agree that the General Mutual Release contained
in paragraphs 2A and 2B above extends to all claims of every nature and
kind, known or unknown, suspected or unsuspected, presently existing or which
may arise in the future, caused by or resulting from or attributable to any
act
or omission of each party and each person released under this Agreement which
occurred or failed to occur prior to the execution of this Agreement. The
parties acknowledge that except for matters expressly represented herein, the
facts with respect to which this Agreement was entered into may turn out to
be
other than or different from the facts now known to each party or believed
by
each party to be true, and the parties hereto expressly assume the risks of
the
facts turning out to be different and agree that this Agreement shall be in
all
respects effective and binding despite any such difference.
The
parties agree that the General Mutual Releases contained in paragraphs 2A
and 2B above do not prevent any party from enforcing the terms of the License
Agreement dated January 2, 2007 that has already been executed by both
parties.
The
parties also agree that the General Mutual Releases contained in
paragraphs 2A and 2B above do not apply to any claims or causes of action
that arise after the date of execution of this Agreement.
D. Each
party does hereby represent and warrant to the other party that no portion
of
any claim, demand, cause of action or other matter released herein, nor any
portion of any recovery or settlement to which such party might be entitled
from
the other party, has been assigned or transferred to any other person, firm,
entity or corporation, either directly or by way of subrogation or operation
of
law, and (ii) covenants (a) to indemnify, defend and hold harmless the other
party from all loss, costs, claim or expense (including, but not limited to,
all
expenses of investigation and defense of any such claim or action, including
reasonable attorney's fees and accountants' fees, costs and expenses) arising
out of any claim made or action instituted against the other party by any person
or entity who claims to be the beneficiary of any such assignment or transfer,
and to pay and satisfy any judgment resulting from any settlement of any such
claim or action and (b) not to xxx the other party for any claim or claims
or
arising under any local, state or federal statutory, regulatory or common law
right, claim or cause of action whatsoever which may have existed prior to,
or
may exist at the time of, the execution of this Agreement.
E. The
parties to this Agreement warrant and represent that no promise or inducement
has been offered except as expressly set forth herein and that this Agreement
is
executed without reliance upon any statement or representation by the persons
or
parties involved or their representatives concerning the nature or extent of
any
damages or any legal liability of the other party therefor.
F. The
parties recognize and agree that by entering into this Agreement no party
admits, and each of them does specifically deny, any violation of any local,
state or federal law, common or statutory or any liability to the other. The
parties further recognize that no delivery of any document or instrument made
in
connection with this Agreement is to be construed as an admission of liability
by such party and that this instrument has been entered into in order to
consummate a compromise and final settlement of any and all claims of the
parties which might arise from any fact, transaction or occurrence prior to
the
date hereof.
| 3. |
DISMISSAL
WITH PREJUDICE.
|
Concurrently
with the execution of this Agreement, the parties agree to execute, deliver
and
file the Stipulation for Dismissal with Prejudice and take all action necessary
to dismiss with prejudice all claims, demands and causes of action asserted
or
which could have been asserted in the Lawsuit. The Parties agree to cooperate
with each other in the execution and filing of any and all papers necessary
to
cause said dismissal with prejudice, including but not limited to, the
Stipulation of Dismissal with Prejudice that is attached hereto and that is
incorporated herein by this reference. Each
party shall be responsible for obtaining the necessary signatures from its
attorneys on the Stipulation for Dismissal with Prejudice.
4. NO
FEES OR COSTS TO EITHER PARTY.
The
Parties agree that they will each be responsible for their own attorneys’ fees,
costs and disbursements incurred in connection with the Lawsuit.
5.
RECITALS.
The
recitals and facts set forth above are incorporated into this Agreement as
part
of the terms hereof.
6.
CONSTRUCTION
OF AGREEMENT.
A. The
Parties hereto acknowledge and agree that they each have been represented by
competent legal counsel of their own choosing in connection with all
negotiations, drafting and execution of this Agreement, and the License
Agreement dated January 2, 2007. Accordingly, the language used in this
Agreement and the License Agreement dated January 2, 2007 will be deemed
language chosen by all Parties hereto to express their mutual assent, and no
rule of strict construction against any party will apply to any term or
condition of this Agreement.
B. Each
party further expressly warrants, declares and represents that before executing
this instrument, such party has fully informed himself/itself of its terms,
contents, conditions and effects; that such party understands that it may
consult an attorney of its choice concerning this instrument and their decision
to enter into this Agreement. Each party represents and acknowledges that it
has
read the foregoing instrument carefully and fully and that it understands its
terms, and each is executing such agreements voluntarily and without any
coercion, undue influence, threat or intimidation of any kind or type
whatsoever.
C. In
the
event of any conflict or inconsistency between the provisions of this Agreement
and the provisions of the License Agreement, the provisions of the License
Agreement shall control.
| 7. |
COUNTERPARTS.
|
The
Parties agree that this Agreement and the License Agreement dated January 2,
2007 may be signed in counterparts by the Parties with the same force and effect
as if the Parties had all signed the same original Agreement. This Agreement
and
the License Agreement dated January 2, 2007 may further be delivered and
executed via facsimile transmission, and receipt of a signed counterpart by
facsimile shall be considered the same as an original.
8.
GOVERNING
LAW AND DISPUTE RESOLUTION.
Any
controversy or claim arising out of or relating to this Agreement, or the breach
of the same, shall be settled through consultation and negotiation in good
faith
and a spirit of mutual cooperation. However, if those attempts fail, each of
the
parties agrees that any dispute or controversy arising out of or in connection
with this Agreement or any alleged breach hereof shall be settled by mandatory
binding arbitration in Minneapolis, Minnesota pursuant to the Commercial
Arbitration Rules of the AAA. If the parties cannot jointly select a single
arbitrator to determine the matter, one arbitrator shall be chosen by each
of
B-50 and XFormity (or, if a party fails to make a choice, by the AAA on behalf
of such party) and the two arbitrators so chosen will select a third (or, if
they fail to make a choice, by the AAA). The decision of the single arbitrator
jointly selected by B-50 and XFormity, or, if three arbitrators are selected,
the decision of any two of them will be final and binding upon the parties
and
the judgment of a court of competent jurisdiction may be entered thereon. The
arbitrator or arbitrators shall award the costs and expenses of the arbitration,
including reasonable attorneys' fees, disbursements, arbitration expenses,
arbitrators' fees and the administrative fee of the AAA, to the prevailing
party
as shall be determined by the arbitrator or arbitrators.
9. BINDING
EFFECT.
The
Parties agree that this Agreement is binding upon their respective parents,
subsidiaries, affiliates, shareholders, officers, directors, employees,
successors, predecessors-in-interest and assigns.
10.
CONFIDENTIALITY
AND NON-DISCLOSURE AGREEMENT.
Neither
party shall make disparaging remarks about the other during the term of this
Agreement, or the License Agreement dated January 2, 2007. The Parties agree
that this Agreement and its terms shall remain confidential and shall not be
disclosed to any third party, except under the following
circumstances:
Terms
of
this Settlement Agreement can be disclosed by either party if, in the opinion
of
legal counsel for either party, such disclosure is required to be included
in
either party’s reports and other filings with the Securities and Exchange
Commission under Section 13(a) of the Securities Exchange Act of 1934, as
amended or in a registration statement under the Securities Act. The Parties
agree that pertinent details of the settlement agreement can be disclosed as
necessary to applicable government agencies (including, but not limited to,
the
Internal Revenue Service, the Securities and Exchange Commission, and other
state and federal agencies). Upon consent of XFormity, which shall not be
unreasonably withheld, B-50 may also disclose the terms and conditions of the
Parties’ settlement to any other parties engaged in litigation with or against
B-50 involving the ‘851 Patent, and to any other party or parties against whom
B-50 has asserted any claim, demand or suit alleging infringement of the ‘851
Patent.
In
addition, either party may disclose the terms of this Settlement Agreement
(1)
to enable either party to obtain advice from its accountants or lawyers, and
in
that event such disclosure may only be made to that party’s accountant or
lawyer; and (2) to comply with lawfully issued process from a court of competent
jurisdiction. In all other cases, the Parties may only disclose to third parties
the fact that the Lawsuit has been settled by confidential agreement of the
Parties.
The
Parties agree that this Paragraph 10 shall constitute the non-disclosure
agreement required by Paragraph B(2) of the Settlement Term Sheet, dated
September 21st,
2006.
DATED: January
15, 2007 X-00.XXX,
LLC.
BY:
/s/
Xxxxx Xxxxx
ITS:
CEO
DATED:
January 15, 2007
XFORMITY, INC,
BY:
s/s
Xxxxx Xxxx
ITS:
CEO
